The Crisis in Venezuela

Everybody who follows the mainstream media has come across increasing concern over Venezuela’s humanitarian crisis. The only solution to this crisis — they say — is for Nicolás Maduro’s government to step down and leave room for the opposition’s coalition party (the Roundtable of Democratic Unity) to take power and stabilize the country.

In late June, the New York Times put out an article saying:

Venezuela’s economic crisis — triggered by a drop in oil prices after a decade of excessive government spending, borrowing, and corruption — has led to a shortage of medicine, food, and other goods. Meanwhile, President Nicolás Maduro, who has militarized cities in response to the crisis, is fighting a push for a recall referendum.

The article comes after several headlines showcasing the Venezuelan middle- and lower-classes’ desperation as they wait in long lines to get into supermarkets with empty shelves and pharmacies that have no medicine.

Forbes magazine, too, suddenly has a deep concern for the Venezuelan people. Over the past few weeks, they published a series of articles with the titles: “Congratulations to Bolivarian Socialism — Venezuela Has Food Riots Now,” “Congratulations to Bolivarian Socialism — Venezuela Now Faces Imminent Famine,” and most recently, “Congratulations to Bolivarian Socialism — 35,000 Venezuelans Leave the Country to Feed Themselves.”

Likewise, for Bloomberg magazine, Maduro’s government — particularly its misbehavior and hostility toward working with the United States — should be blamed. In an article published last month with the title “A Small Step From Disaster in Venezuela,” the editorial board writes:

Citizens of the country with the world’s biggest oil reserves are rioting for food and dying for want of basic medicines. Meanwhile, President Nicolás Maduro is doing all he can to neuter the opposition in the legislature that wants to recall him from office. Public frustration threatens to metastasize into violent unrest, with repercussions for neighbors near and far.

These accounts of Venezuelan crisis sometimes come with proposals. In the Bloomberg article, for example, the analyst takes a stab at what should happen:

What’s needed are smart strategies and new players to make diplomacy more effective. China — Venezuela’s biggest benefactor in recent years — has a major financial interest in persuading Maduro to change his economic policies.

At the same time, the United States should quietly make clear to Venezuela’s military that limited sanctions on officials for corruption and human rights abuses can be quickly expanded. It should also step up its efforts to help Caribbean countries wean themselves from the cut-rate Venezuelan oil deliveries that have influenced their voting patterns at the Organization of American States and the United Nations.

Certainly, Venezuela faces its worst crisis since Chávez rose to power. Supermarket shelves in most working-class areas are largely empty, and the country lacks medicine. According to recent International Monetary Fund reports, hyperinflation is about to reach 500 percent, and wages for the majority of people no longer cover basic needs.

What is also clear, however, is that neither the government nor the opposition offer real solutions. Maduro is playing defense against an emboldened right-wing opposition, trying to stop the recall referendum and blaming all the country’s problems on an economic war being waged by both local capitalists and US imperialism.

Meanwhile, the opposition has focused its energy on getting rid of Maduro and freeing their so-called political prisoners. Venezuelan citizens, on the other hand, want real proposals, and they don’t believe either party is capable of stopping the crisis.

But why can’t the government resolve the crisis? Is it only because of the drop in oil prices? Is it because of the economic war? Is it because — like the US media says — socialism has failed, yet again?

The Stage Is Set

Venezuela was long considered an unlikely place for the Left to gain power and redirect the country’s economic and political priorities. With the fifth-largest oil reserves in the world and relatively close proximity to the United States, Venezuela’s ruling class had been completely subordinated to the interests of its imperialist neighbor.

After the fall of Pérez Jiménez’s dictatorship in 1958, the nominally center-left Acción Democrática (AD) and the conservative Christian Democratic Party (COPEI) made a power-sharing deal that lasted for forty years.

The pact — better known as the punto fijo system — consisted of peacefully alternating power every four years, with the explicit goal of excluding the Communist Party, which at the time had a large influence in the labor movement. As a result, any socialist political formations struggled to make an electoral breakthrough and the Left remained small and fragmented.

This two-party system survived almost unchallenged until the early 1980s. A series of infrastructural investments — enabled by oil profits — gave the illusion that the country could continue to grow indefinitely and avoid the fate of other developing South American countries, which faced severe political and economic crises and a wave of military dictatorships in the seventies.

This hope was crushed with the dramatic fall of oil prices in 1982, which coincided with the debt crisis of 1982-83. All of a sudden, Venezuela was deep in a debt that it could not repay and therefore became highly susceptible to IMF pressures and the neoliberal turn that the rest of Latin America had already experienced.

The structural adjustment policies imposed by the International Monetary Fund devastated the region. The income share of the poorest 40 percent dropped from 19.1 percent in 1981 to 14.7 percent in 1997, while the wealthiest 10 percent increased their share from 21.8 to 32.8 percent.

In absolute figures, this meant an increase of eighty-three million poor people in Latin America. In Venezuela it was unprecedented: the GDP fell some 40 percent.

The economic crisis followed what became the first major social movement against neoliberalism in all of Latin America. On February 7, 1989, thousands of Venezuelans from the barrios spontaneously descended on Caracas to rebel, riot, and loot in what became known as El Caracazo.

The military killed an estimated three thousand people to suppress the rebellion. The legitimacy of the punto fijo system and neoliberalism in the country were broken.

This popular uprising, as powerful as it was, didn’t transform into more strength for the organized left. The fall of the Berlin Wall that same year and the dissolution of the Soviet Union helped disorient and fragment the Venezuelan left. It missed its opportunity to turn social unrest into a sustainable mass movement, leaving room for a charismatic personality — rather than an organized mass movement — to take center stage.

Chávez entered the political arena to oppose hated neoliberal policies. He was a military officer of indigenous background, raised by his single mother in rural Barinas. In 1992 a small dissident military grouping called the Revolutionary Bolivarian Movement-200 (MBR-200), led by Chávez and three others, staged a coup against President Carlos Andrés Pérez, claiming the cause of poor Venezuelans.

The coup failed, and Chávez went to prison. But from then on he was known as a hero fighting against a broken system.

The legitimacy crisis in 1989 forced the government to allow for some political reform and pushed Rafael Caldera — the new president — to free Chávez in 1994. These minor changes also allowed parties excluded by the punto fijo system to run for office. For the first time, they won positions at the local and national level.

Chávez, still admired by many for the 1992 attempted coup, won the presidency in 1998 with 56.2 percent of the vote, the largest margin any party had ever received. His campaign wasn’t all that more radical than the other populist and center-left parties’ campaigns. Its platform promised to end the power-sharing system by creating a constituent assembly, which would include all sectors of Venezuelan society, not just the rich.

The ruling classes — accustomed to calling the shots — saw Chávez’s plan to incorporate all Venezuelans into the political process as a threat. But at first, the Bolivarian project was nothing more radical than that, a constitutional revision that would include new voices in government and end the power-sharing deal between the two dominant parties.

Towards a New Socialism

At this point, Chávez’s project was not a radical one, and his position as a center-left president had not yet been supported by other left-wing victories in the region. Quickly, however, he faced fierce opposition to his proposed reforms, especially those related to taking PDVSA, the state oil company, away from corrupt managers and American influence. One of his main goals was to use oil revenue to elevate the poor majority’s living standards, but this meant attacking the interests of a sector of the ruling class intertwined with the United States.

In April 2002, the Right, collaborating with parts of the military, bared their claws in an attempted coup against the Bolivarian government. Despite the privately owned media’s unconditional support and backing from the United States, the putsch was brilliantly confronted by the millions of citizens who gathered around the presidential palace in Caracas to demand Chávez’s safe return to office. In just forty-eight hours, this mass mobilization proved victorious.

It was the Venezuelan people’s show of strength that gave rise to the Bolivarian Revolution’s radicalization. Chávez, understanding that the ruling classes had no interest in joining his project for a more just Venezuela, turned his energy away from pacifying the center and toward building popular power with the poor majority.

Two other right-wing attacks decidedly forced the project further left. First was the bosses’ strike in December 2002, when PDVSA’s managers shut down production for two months, demanding that Chávez be removed from office. Pro-Chavista workers countered the elites, taking over the company’s management and running it without them.

Two years later, the Right tried to run a recall referendum. Thanks to the constitutional reforms Chávez ushered in, the Venezuelan president is subject to recall halfway through his or her term.

The opposition, having lost two rounds of undemocratic attacks against the government, decided to take the constitutional route and demand a recall vote — just as they are trying to do now. Chávez and his followers won the vote by the largest margin yet, and with this victory he solidified his leadership — not only in the country but also in the region.

His influence was underlined at the 2005 World Social Forum, a turning point for the continent. There, Chávez declared that the Bolivarian Revolution was now a socialist revolution. Not the socialism of the Soviet Union, he would say, but a new one, with Latin American characteristics and adapted to new social forces — socialism of the twenty-first century.

The new socialist Venezuela, he would argue, had to come about through a gradual transition from capitalism motivated by the slow building of popular power from below. The main idea was this: the construction of small pockets of autonomous power based on the logic of solidarity, workers’ self-management, and cooperation would slowly take over for the capitalist state until its existence became redundant and irrelevant.

Since Chávez held state power, the process could start right away. He would use his position to give working people the resources to allow them to take political and economic control of their communities. He encouraged other Latin American heads of state to do the same.

He called this process “the five motors of socialism for Venezuela,” which set it apart from the revolutionary socialist tradition of taking state power through a workers’ revolution. According to Chavez, the most important motor — and the one that is still being discussed today — was number five: the explosion of “communal power,” the last step toward socialism in which communal councils that self-manage their communities eventually replace the capitalist state.

According to Chávez and his Marxist mentor Istvan Mészaros — author of the renowned book Beyond Capital — the key to a successful twenty-first-century socialist revolution is that it does not entail one class imposing on another, but instead requires socialists to win over the social majority by showing how their system works in daily practice.

And like this, the Venezuelan president had placed the goal of socialism — long ago rejected — as the only alternative to neoliberalism and US imperialism. The Bolivarian process had taken a more radical turn, with its most charismatic and admired leader at its head.

Community councils were formed, some unproductive companies were nationalized and made into cooperatives, the National Union of Workers replaced the right-wing-controlled labor union that had participated in the failed coup, and the social missions to extend health care services and education to the barrios reached their peak of efficiency.

This process greatly elevated the popular classes’ quality of life, arguably above most of Chávez’s allies like Brazil or Argentina. As Lee Sustar writes:

These gains include a reduction of poverty from 55 percent of the population to 34 percent; the achievement of literacy for 1.5 million adults; the virtual elimination of hunger through subsidized grocery stores that service 13 million people; medical care provided by Cuban doctors via free clinics in slums, reaching 18 million people, nearly 70 percent of the population; access to higher education for the poor and working class; and special affirmative action programs for indigenous people.

The gains were undeniable — but some argued that they were only made possible by surging oil prices.

The Golden Decade

In 2003, a commodity boom driven by high demand from emerging markets like India and China opened up new economic possibilities in Latin America. Copper, soy, iron ore, and, most importantly, oil prices rose, and all the countries able to take advantage of this opportunity for unprecedented economic growth did so.

This period came to be known as the golden decade. Among other things, it allowed the pink tide governments — Chávez’s (and later Maduro’s) Venezuela, Lula’s (and later Rousseff’s) Brazil, Evo Morales’s Bolivia, José Mujica’s Uruguay, Rafael Correa’s Ecuador, and Nestor Kirchner’s (and later Cristina Fernández Kirchner’s) Argentina — to carry out, in varying degrees, popular social measures, while avoiding a direct confrontation with the bourgeoisie. Growth could minimize tensions and pacify conflict between social sectors, granting these governments the stability needed to pass progressive measures.

In addition to underpinning social spending, the boom also provided the new Latin American governments with increased leverage against US imperial control, especially as the United States’s attention was focused on the costly debacles in Iraq and Afghanistan.

At the same time that US influence waned, China’s hunger for Latin American raw materials resulted in new commercial relationships — China’s trade with the region increased by 1,200 percent from 2000 to 2009.

Venezuela exemplifies this trend: before Chávez’s presidency, China didn’t invest more than $500 million per year. In 2009, it reached $7.5 billion, making Venezuela the largest recipient of Chinese investment.

However, recent economic slowdowns — including in China, which saw its slowest year of economic growth in twenty-four years, and Europe, which continues to face economic and political crisis — weakened demand. This combined with an overproduction crisis brought on by the boom period resulted in a drastic drop in the price of primary commodities — most importantly, of oil.

Commodity prices hit a twelve-year low this year, which goes a long way to explain why export-dependent Latin American economies have seen their GDP growth slow, falling from an average of 4-6 percent between 2003 and 2013 to 1.2 percent in 2014 and even lower in 2015. The golden decade of strong economic growth seems to have ended.

Stuck in Capitalism

In Venezuela, Chávez and his allies developed a new socialist theory that inspired millions of people to believe that a new road toward socialist revolution was open. But today, in crisis and disarray, the country could not look less like a socialist society.

Some on the Left blame Nicolás Maduro — Chávez’s successor — and his government for betraying the revolution through corruption and mismanagement of funds. But the problem began with Chávez’s leadership and the idea that socialism could be a state-led enterprise.

Two years after his announcement to the World Social Forum, Chávez called for the formation of the United Socialist Party of Venezuela (PSUV) to unite all the forces committed to advancing the Bolivarian Revolution. Socialists who supported the president, but remained critical of the bureaucracy already forming around him, were put in a bind: they either joined a top-down party that had the support of millions of workers or entered the political margins.

In the end, most socialist formations agreed to participate, and in no time, the PSUV’s ranks swelled. The party, however, did not rely on its members’ active participation no matter how much Chávez liked to say it did. Instead, a bureaucratic structure, where criticism, open debates, and rank-and-file power were more often the exception than the rule, took over.

The party formalized the bureaucratic layer of nominal Chavistas who were put in charge of different state sectors. In no time, this new caste engaged in corrupt behavior while continuing to deploy socialist rhetoric. The government’s ideas of funding and supporting popular power didn’t work in practice.

With Maduro’s government, this bureaucratic layer seems to have consolidated even more power through clientelistic relationships to some of the very social programs that were designed to build power from below.

The wealth provided by high oil prices during the golden decade could mask this unsustainability, but the dramatic drop in oil prices worldwide has brought the deeper problems in Venezuela’s project to light.

Contrary to what the corporate media says, however, socialism did not cause the crisis, but the opposite: the popular measures enacted during the most prosperous years of the revolution were never socialist, but rather attempts to fix capitalism and avoid a full confrontation with the ruling class.

The dual fixed exchange rate — meant to subsidize food production and distribution in the country — demonstrates this. To make food accessible to all, the minister of economy drafted a plan to provide preferential dollars to businesses that imported these essential goods and sold them at a subsidized rate in the supermarkets.

From the beginning, long-established local capitalists worked with the new bureaucracy to take advantage of the system. Some outright stole the money, never importing the goods they declared. Others did import the promised goods, but then smuggled them through Colombia to get a better price or sold them directly on the black market, where the gains were much higher.

This profit-seeking logic is how every capitalist system operates, but this case is especially galling because the ones in charge of funding “the socialism of the twenty-first century” were the ones actively engaging in price-gouging.

This situation, when combined with the low price of oil and right-wing tactics to sabotage any progressive measures, gave rise to a crisis that — as always — hit the poorest majority the hardest.

Across the continent, popular, left-wing governments are all receding. Brazil’s Dilma Rousseff has just been impeached on corruption charges, and her Workers’ Party hasn’t been able to mobilize its base to defend her or her predecessor. Kirchner’s party did not put forward an electable candidate, giving the latest round of elections to conservative Macri. Evo Morales lost in Bolivia for the first time — this time around a referendum that would have granted him permission to seek a fourth term.

This turn to the right, however, does not constitute a vote for conservativism. It is a protest vote against the left-wing parties’ inability to respond to the crisis in any way that could actually resolve it. These parties’ hesitance to go all the way against capitalism as a system has stalled the process and made this progressive cycle solely dependent on the dictates of the market.

In Search of Alternatives

The failures of the much-touted “socialism of the twenty-first century” harken back to familiar debates within the socialist tradition. The Bolivarian process put too much faith in the idea that socialism could be brought about from above through the goodwill of leaders like Chávez. No matter how true these leaders remain to their ideals, socialism has to come from the working class’s conscientious role in fighting for its own emancipation.

Second, it obscured the idea that capitalism cannot be completely reformed away. As long as wealth enters the country, projects that build popular power and help the poor could coexist with capitalism. But as soon as capitalism comes into crisis — which it always does — and the funds dry up, wealth redistribution comes into direct conflict with the capitalist class’s needs.

A similar dynamic was at play in European social democracy: unless a system takes the levers of power away from capitalists and puts in the hands of workers, gains will always be rolled back.

Faced with these contradictions, and an unwieldy party and state bureaucracy, Maduro seems stuck. If he were to tackle corruption, he would have to confront the local bourgeoisie as well as people from his own party who are using the state to accumulate a massive amount of wealth.

The Right, although divided, knows only the usual neoliberal formula: get rid of Maduro, privatize the state-owned oil company, devalue the currency, and welcome the United States and US-backed institutions like the IMF into the country.

The dire need for an alternative is why so many on the Venezuelan left — and across Latin America — are looking outside the center-left parties that lead pink tide governments.