Venezuela's economy

A funny way to beat inflation

Hugo Chávez invites the private sector to help him build socialism

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Readers' comments


thomas n tancredi

People are still proponents of socialism as a government?! How 20th century! I suppose you also enjoy other 20th century golden times like mile-long bread-lines; glacial technological progress; and 1950s Chevies. Maybe you can ask Russia to do a Soviet Union revival? Or even get China to stop with their silly capitalistic flights of fancies into individual property rights, personal investments into businesses, or the evolution of a middle-class. The 20th century cured polio, small pox and socialism, and there's just no place for any of these diseases in the 21st.


Imagine all the power in the hands of a national council of workers, soldiers and farmers. It's easy if you try. Imagine the working people themselves running and administering the economy. It isn't hard to do. Imagine the death of capitalism. I wonder if you can.


Socialism like Communism is a failed dogma. In the case of Venezuela and Hugo Chavez it is no different. The European Socialist movement is in the wane as it is trying to come out of that system. Sweden is one such country that has been trying to curtail Government policies towards more market oriented system. As a matter of fact, they are trying to restructure the current tax system while taking control over social spending.

Hugo may try anything to stay in power even by putting pressure on the investment companies to lessen the interest rate from investment. This type of program will not bode well because it will discourage investors to invest in major economic sector in the country. Also, the pressure on the inflation will really be the Achilles hill for Hugo Chavez to navigate his political machine. The supporters of his main constituents like the poor people in that country will be fed up by the rising food and commodity prices and eventually demand lower prices in the market while Chavez will try to control prices through Government intervention. That itself will be enough to weaken his Presidential power and for that matter end of his dictatorial power and an expansion of Socialism in Venezuela.

lev. d.

to southpole.
you cant build socialism in one country. n. korea has nothing in common with socialism whatsoever. only a nationally/internationally planned economy, with the working people themselves running and administering the economy, all elected officials with the immediate right of recall- rotation of official posts, no standing army but the armed people,
there was noyhing remotely like this in allendes chille. or venezuela. only a national council of workers could begin this process. expropriate the expropritors!

lev. d.

venezuela will not be unique as far as a socialistic/ left reformist government is concerned. as the "death-agony" of capitalism gathers pace, the workers,toilers and the exploited, will be forced to take action, as their living standards will come under attack.
a successful socialist revolution in venezuela will transform the political landscape internationaly. all power to a national council of workers, soldiers and farmers!
"the blind hand of the capitalist market" is a myth. bush"s billions of dollars give away to the populace to spend is proof of this! the problem is the surplus value/capital/profit is the reason the world economy is entering a slump. only the fictitous credit boom, artificialy held up the markets, with the saviour china, swamping the markets with cheap-goods deflation. if it wasnt for this, world inflation would have rocketed, and we would be in the steepest slump in history.


Southpole should look at statistics of people death by malnutrition in allendes time and birth per 1000 compared to pinochet years in gods wine yard you have always all kind of people and to make a cake you have to break some eggs.


I think the real problem is thinking either socialism or capitalism to save an economy and increasing life standards of people of a country. A country with a complex and dynamic mix of these two systems (and with a strong past) presents the best example like Japan, UK, Scandinavian countries etc.In my country, there is a free market oriented economy. However, I can't say I am proud of it because as you can see one person works whole month to be paid 200 € whilst others can spend 200 € per day in a summer holiday. Also, corporate greed only sees people as cheap labor and expects them to work outstanding hours and performance as there are too few laws protecting employees.If the country has an advanced technology, infrastructure and a very productive population it becomes easier to adopt free market economy. Also, they find it easier to increase tax rates which generates whole governmental revenue. Those developed countries also has some wage controls and wide worker rights in order to create a huge middle class in a country.But what if a country does not have enough initiatives? Then if they nationalise oil (or other natural resources) they are suddenly isolated and pressed by developed nations. It is very hard for developing (3rd) countries to compete with developed ones on equal terms. It is something like you throw a deer among lions and see if it survives or not.


To lev.d.:
You evidently weren't there when Allende tried his socialist experiment in Chile. I was. The workers were handed factories and companies by the government, or they took them by force, but they invariably proved not very apt at running them. They all eventually collapsed into the arms of the government and contributed to worsen the latter's finances. Although an idealistic youth back then, who was all for Allende's "third way", I couldn't but notice that the majority of people actually cheered when he was toppled by the military (of course, what they didn't know at the time, was that the military would stay in power for the next 17 years and commit an atrocious range of human rights violations in the process. But that's another story). The point is, all the "measures" you enumerate are the perfect recipe for turning a working economy into a basket case. Just look at North Korea.

lev. d.

the only way for the social revolution to succeed, is if the workers groups demand, and chavez agrees, to set up a national congress of workers, soldiers and farmers deputies, to be set up in caracus.(or without chavez agreement)
to defend the gains of the revolution, the working class must be armed, to defend itself and its gains, from attack. particularly from north of its borders.
the council must also demand that the government nationalise the banks and the multi-nationals, to be run and administered by the workers themselve
the workers must learn the lessons of the allende episode, where the lack of an armed working class, and the absence of an organised council of deputies, led to the crushing of that particular "popular uprising"


There is nothing wrong with roaring down the highway with a forced top speed of 140 kms/hour, unless of course you’re driving a Ferrari. Venezuela has all the makings of a sexy racer. Not only oil, but gold and other minerals, plus an amazingly breath-taking nature, especially its coastline and women. Unfortunately, since 1958 the country has been taken over by inept socialist blunderers with a handicapping inferiority complex and its ensuing populist hatred of any attempt at class and success, each president worse than his predecessor, Ch�vez the very worst of all. You do not build up a country’s economy nor stimulate its investment by fomenting the crime rate with class warfare, by controlling the financial exchange and facilitating real money only to yes-chanting cronies, by calling all attempts at individual freedom a state crime, by spending millions on third-rate military equipment, by supporting xenophobia, by promoting racism, by denigrating people with hand-outs, by giving away the national fortune to crackpot political schemes within and without, by behaving like a raving lunatic at diplomatic venues and exhibiting the culture and education of a potato planter, or by not lifting one finger to build the land’s infrastructure which has been deteriorating steadily since 1958. Give Ch�vez enough time, and he’ll have that Ferrari crawling along the international highway, not at 140, but more like an empty petrol lorry, bouncing from one pothole to the next with mind-torturing stalling and jerking.


What is funny, is that Chavez has had the luck (i.e. high oil prices) to learn Econ 101 at his own pace...
Sometimes people forget that Latin America has been stagnated in terms of standards of living since the 1980's, so any argument against Chavez on the economic front has one "but": Venezuela has been growing strong and continues to do so. They may not reach 7% this year but I bet they will grow more than my country, Mexico, which also has oil and liberalized its economy wildly but grows at a sluggish 2 to 3 percent a year.
To summarize, as Clinton put it, "It's the economy, stupid!" the day Venezuela stops growing, you'll see Chavez fall. In elections, I mean.


We decent and long suffering Venezuelans only wish the train wreck wasn't in such slow motion. Chavez has had so much luck on the economic front before that we sometimes feel that the Economics 101 lesson has been going on far too long. This is definitely not the most stupid thing he has done economically in his almost 10 years in office.Chavez is dangerous in the sense that a monkey with a machine gun is dangerous. In the end he is his own worst enemy and the US knows it.


I fully agree with gdelvin. It's pathetic, and I feel bad for Venezuelans (especially the ones Chavez keeps ignorant enough to vote for him). But there are other issues that require some scrutiny from 'The Economist': the U.S. is buying the guy's oil (heaven forbid the gallon of gas should jump 3 cents if they didn't), perpetuating his rule. And yet the U.S. State Department (quite rightly) accuses him of funding terrorism.... ah, I guess that's up to smarter people to think about. Anyway, if he wasn't so dangerous for the world, I would still appreciate Chavez much as the oddity he is.


This is an incredible lesson in Economics 101. Watching him is like watching a train wreck in slow motion.



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