To: Detroit Workers' Voice mailing list
December 10, 2015
RE: Oil and the Venezuelan elections of Dec. 6, 2015

Oil, the Chavistas, and
the Venezuelan elections of 2015

The Venezuelan legislative elections of December 6 resulted in a devastating defeat for the "United Socialist Party" of the late Hugo Chavez. The opposition has ended up with a two-thirds majority in the legislature. This is a huge setback to the Bolivarian movement created by Hugo Chavez and continued by present Nicolas Maduro.

The fall in support for the Chavistas is the result of an economic crisis in Venezuela caused in part by the collapse of oil prices. This drop has resulted in economic difficulties for many oil producing countries: not just Venezuela, but Iraq, Russia, Iran, oil emirates like Qatar, and others. Even the US economy is feeling some effects from it. But these are not socialist countries, while the Bolivarian movement of the late Hugo Chavez and of the present Venezuelan president Nicolas Maduro boasted that it was implementing, not just socialism, but "21st century socialism". Indeed, Chavez and Maduro brought some important social programs to the people, but they didn't know how to maintain these programs or transform the Venezuelan economy. This was not socialism, but a reformed capitalism, and it was only going to go so far.

Since 1999, the Chavista government used the revenues from the sale of Venezuelan oil to finance reforms that improved the life of poor majority of Venezuelans. Education and health care was dramatically extended; malnutrition declined radically; many more people had pensions; and the percentage of people living in poverty declined sharply.

This was financed mainly with oil revenues. During much of the Bolivarian period, oil prices on the world market soared, becoming several times higher than the historic lows at the time that Chavez assumed the Venezuelan presidency in 1999. It is entirely just that the Venezuelan working people should get some benefit from the oil, rather than all the profits flowing to the Venezuelan bourgeoisie. But socialism isn't just a matter of redistributing oil revenues. It refers to the working people taking over and directing production as well as deciding the path for the country, whereas the Chavistas have presided over a mixed capitalist economy, albeit one with much better social programs than previous Venezuelan governments. Aside from cooperatives and the state-owned oil company, most production remains directed by the bourgeoisie. And although the Chavez and then Maduro governments relied on mass support from the poor for their many electoral victories, they ruled through accommodation with the military and a section of the bourgeoisie. It's not the working people and the series of new cooperatives and microbusinesses that settled economic policy in Venezuela, but the deals between the Chavista leadership, the military, and a section of the Venezuelan bourgeoisie. These deals were greased by oil money.

So this system depended on continued high prices for oil. The present price is low, although higher then when Chavez became president. With oil prices way below the heights where they were for a time during Chavez's presidency, the economy has gone into deep crisis. Inflation this year is far over 100%. There are deep shortages of basic goods, from medical supplies to eggs to toilet paper. People wait hours in line for small amounts of goods with subsidized prices. The system of artificial exchange rates for the bolivar has turned into a nightmare, with the official and actual value of the Venezuelan bolivar differing by 100 times. And the Chavista movement had no serious plan about what to do in this situation.

The Venezuelan economy had long been built around oil, and this couldn't be changed overnight. But change is necessary; "21st century socialism" can't be petro-socialism, when oil and other fossil fuels threaten to destroy the 21st century, at least as far as human welfare is concerned. Yet underneath the loud words of Chavez and Maduro about global warming, they have championed a vast 25-year "Oil Sowing Project", which would be the axis not only for Venezuelan development, but for regional cooperation. This is justified with the hope of prosperity for the peoples of Latin America, but oil capitalism has its own logic.

Indeed, even aside from the environmental devastation from oil, the tremendous profitability of oil production has been a mixed blessing for capitalist countries. In Venezuela, the high oil revenues covered over many problems which the Bolivarian movement ignored. Something similar has happened in other countries. In the worst cases in the middle East, the huge oil revenues of countries such as Iraq, Iran, Saudi Arabia, Libya, and Syria provided the basis for long-standing dictatorships and for their territorial ambitions. It's also been noted that oil and gas windfalls can sometimes stunt an economy. One might think that this wealth would provide funds for diversifying the rest of the economy and economic growth, but instead there is the experience of "Dutch disease"; Wikipedia says "The term was coined in 1977 by 'The Economist' to describe the decline of the manufacturing sector in the Netherlands after the discovery of the large Groningen natural gas field in 1959." In Venezuela, the windfall from the period of high oil prices provided social programs, but also seems to have fostered corruption and distortions in the economy. The masses benefited greatly from the increased social programs, but these programs are now in jeopardy, and would be even if the Maduro government had won the election.

The collapse of oil prices would have been a major shock for any Venezuelan government. But one might have expected that an actually socialist government, in power for over a decade and a half, would have been moving away from reliance on higher and higher prices for oil. One might have expected that the Bolivarian movement would have openly discussed the economic situation with the masses and recognized the need for improving its policies, instead of insisting that all the problems were simply the result of the fierce political struggle in Venezuela and the hostility of the American government. But the Chavistas have had a high-handed attitude to the masses from the start, priding themselves on bringing some benefits but keeping the major decisions away from them.

A difficult period is in store for Venezuela. The masses will have to fight hard to retain the social benefits they enjoyed for a time, but this will not simply be a fight to maintain the old Chavista system. At least, if the struggle is to be successful, it better not simply look towards maintaining the old system. The economic crisis is a crisis of the Chavista economic system, which was going to change even if Maduro had won the election: the money was running out. Much will depend on whether a movement gradually emerges that more truly represents the masses than the Bolivarian movement has, and which has a better idea of how to transform the Venezuelan economy. The working class will and should support reforms of all types, but it needs to put forward its own independent stand in the midst of this struggle.

  -- Joseph Green, editor, "Communist Voice" <> 

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Posted on December 11, 2015