Is Venezuelan Socialism A Disaster?

Venezuela is often cited in discussions about the possibility or desirability of socialism. Commonly, the country is referred to as a “failed state” [1]. This is taken as evidence that socialism will necessarily lead to disaster. In this essay, I would like to assert the opposite: for all its faults, Venezuelan socialism has dramatically improved the lives of the poorest and most oppressed in the country. It should serve as a beacon for all those who want to build a better world.

Here, I want to address the state of Venezuela’s economy. It is indeed true that Venezuela is having a food crisis. A study released by researchers from three Venezuelan universities reported that nearly 75 percent of the population lost an average of 19 pounds in 2016 for lack of food. The report, titled, “2016 Living Conditions Survey,” noted that about 32.5 percent of Venezuelans eat only once or twice a day, compared to 11.3 percent the previous year [2]. The situation is dire, to be sure, but it is not as dire as we have been led to believe. Venezuela is, in fact, food secure. The United Nations Food and Agricultural Organization or FAO gauges food security in terms of the amount of food available, measured in kilocalories per person per day. This is usually calculated over a complete year, based on the total quantity of foodstuffs produced and imported. The FAO says a country enjoys food security when food availability stands at 2,720 kilocalories per person per day, or more [3].

The numbers supplied by the government’s own Institute of Nutrition, and validated by the FAO, show a rising trend, with some ups and downs, from 1999, when availability stood at 2,200, to 2011, when it reached a peak of 3,500 [4]. Since 2011, there has been a decline to 3,000 in the most recent figures, for 2015 [5]. By this measure, Venezuela remains well above the FAO’s minimum food security level. There is not hunger in Venezuela, as defined by international standards. On a world scale, after being one of the best performers during the first decade of this century, Venezuela has slipped a bit, but is still quite high up the scale. Again, there are certainly problems related to food access in Venezuela. The point here is not to deny hardships, but to present a more complete picture of the situation.

It should be stressed that economic deficiencies are not the fault of socialism. There are a variety of factors that account for the situation in Venezuela other than socialism. These include natural conditions, sanctions, and illegal hoarding by the opposition.

It is impossible to understand the economic situation in Venezuela without understanding oil. The price of oil began to decline massively in 2014. This decline lasts today, in the beginning of 2017 [6]. Obviously, countries whose economies are based on oil will suffer from this. Venezuela, of course, is one of these. Oil makes up about ninety-five percent (95%) of the country’s exports [7]. Naturally the decline in oil prices had a profound negative effect on Venezuela. It is no coincidence that the country’s economy began to stagnate in 2014, right as oil prices began to fall [8].

Starting in 2014, the Kingdom of Saudi Arabia flooded the market with cheap oil. This is not a mere business decision, but a calculated move coordinated with U.S. and Israeli foreign policy goals. Despite not just losing money, but even falling deep into debt, the Saudi monarchy continues to expand its oil production apparatus. The result has been driving the price of oil down from $110 per barrel, to $28 in the early months of 2016 [9]. The goal is to weaken these opponents of Wall Street, London, and Tel Aviv, whose economies are centered around oil and natural gas exports.

Venezuela, as I have said, is a country that depends on oil. Saudi efforts to drive down oil prices have drastically reduced Venezuela’s state budget and led to enormous consequences for the Venezuelan economy. The United States and its allies are intentionally driving down oil prices in order to wreak havoc on Venezuela. This is a common practice of capitalist countries attempting to bring down socialism. Writing for Town Hall in 2014, Michael Reagan bragged that his father did the same thing to hurt the Soviet Union during the 1980s. He writes, “Since selling oil was the source of the Kremlin’s wealth, my father got the Saudis to flood the market with cheap oil. Lower oil prices devalued the ruble, causing the USSR to go bankrupt, which led to perestroika and Mikhail Gorbachev and the collapse of the Soviet Empire” [10]. Claims of economic war on Venezuela are not conspiracy theories. The capitalist rulers of many countries have openly acknowledged it. Venezuela’s economic situation is principally the fault of imperialism.

Natural weather conditions have exacerbated the problem. Venezuela has been in or near drought since 2010, and that drought became catastrophic with the onset of El Nino. Venezuela receives seventy percent (70%) of their electricity from hydroelectric sources [11]. Fully sixty percent (60%) of it is from the Guri Dam [12]. Because of this, the drought has crippled their electrical infrastructure and ability to export energy to neighboring countries. This, too, was a major source of capital for the country. The inability to do this has also contributed to the economic crisis in a major way [13]. The drought has secondary effects as well. Over ten percent (10%) of Venezuela’s labor force is employed in the agricultural sector, and the drought has heavily impacted their ability to produce food [14]. On top of this, Venezuela relies on reservoirs and rivers for public drinking water and irrigation, and the government has been forced to divert water from drinking reservoirs to keep the turbines turning [15]. The weather plays a significant role in Venezuela as it does everywhere. For all the good socialism does, it does not grant anyone the power to manipulate the skies. Therefore, we can confidently say that factors other than socialism have resulted in Venezuela’s current economic predicament.

One of these factors, it should not be forgotten, is illegal hoarding by those in the country opposed to socialism. Since the early 2000s, supermarket owners affiliated with Venezuela’s opposition have been purposefully hoarding food products so they can resell them at higher prices and make large profits [16]. Food importing companies owned by the country’s wealthy right-wing elite are also manipulating import figures to raise prices. In 2013, former Venezuelan Central Bank chief Edmee Betancourt reported that the country lost between $15 and $20 billion US dollars the previous year through such fraudulent import deals [17]. In 2015, over 750 opposition-controlled offshore companies linked to the Panama Papers scandal were accused of purposely redirecting Venezuelan imports of raw food materials from the government to the private sector. Many of these companies sell their products to private companies in Colombia, which resell them to Venezuelans living close to Colombia [18]. Even the bourgeois media outlet Reuters admitted in 2014 that Venezuelan opposition members living in border states are shipping low-cost foodstuffs provided by the Venezuelan government into Colombia for profit [19]. The food crisis is the direct result of deliberate sabotage by anti-socialist forces, not socialism itself. If the government is at fault here, it is because they have not arrested the  leaders of Venezuela’s right-wing.

The impact of sanctions on Venezuela’s economy should also be mentioned. The most visible recent example of such sanctions was President Obama’s March 9, 2015, executive order declaring that “the situation in Venezuela” poses an “unusual and extraordinary threat to the national security and foreign policy of the United States” [20].  The order placed sanctions on seven high-ranking Venezuelan government officials accused of human rights abuses and corruption.

It is worth pointing out that when this occurred, Venezuela’s anti-government opposition rejected the “extraordinary threat” language and declared, “Venezuela is not a threat to any nation” [21]. There is, of course, a direct economic effect of US sanctions against a country, or high-ranking officials within a country. Arguably more important are the indirect effects, which, as Mark Weisbrot has pointed out, send a message to would-be foreign investors that the country being targeted may not be a safe place to invest in. Weisbrot notes that foreign “financial institutions that wanted to arrange a swap for Venezuela’s gold…a couple years ago, they couldn’t do it” [22]. According to Alex Main, a senior associate for international policy at the Center for Economic and Policy Research, “Contacts in the financial sector have noted that the U.S. Treasury Department has strongly urged investors and bankers to avoid making loans to the Maduro government. Recent U.S. sanctions targeting Venezuelan officials also serve to discourage U.S. and European banks from doing business with Venezuela” [23]. Recent US actions have had a considerable and highly detrimental impact at a time when Venezuela is in desperate need of dollars but is prevented from gaining access to them by Washington, which has made little secret of its support for Venezuela’s anti-government opposition [24].

I have just argued that socialism is not the primary cause of Venezuela’s economic crisis. In fact, Venezuela itself is proof of this. The country’s socialist economic system has resulted in a great many achievements that ought to be highlighted, especially in the face of imperial aggression.

Venezuelan-born sociologist María Páez Victor commented on the state of the Venezuelan economy in 2014, writing, “the Venezuelan economy is doing very well. Its oil exports last year amounted to $94 billions while the imports only reached $59.3 billions -a historically low record. The national reserves are at $22 billions and the economy has a surplus (not a deficit) of 2.9% of GDP. The country has no significantly onerous national or foreign debts” [25]. The fact that the United States press chose not to spotlight these successes at the time should tell you something about what “freedom of information” means to capitalists.

The UN’s Human Development Index ranked Venezuela the 71st out of 188 countries examined in 2016. In the report, each of the 188 countries is given a measurement between zero and one. The closer to one, the higher the level of human development. Venezuela was measured at 0.767 — better than Brazil’s 0.754, Peru’s 0.740 and Colombia’s 0.727 — only slightly lower than its 2013 rating of 0.771, and significantly higher than its ranking of 0.677 in 2000, just as President Hugo Chavez came to power and initiated his Bolivarian Revolution. In South America, only Chile, Argentina and Uruguay had higher rankings than Venezuela. [26].

Venezuela’s economy is focused squarely on meeting the needs of the people. Under Chavez, the country saw a massive reduction in poverty. This was made possible because the government took back control of the national petroleum company PDVSA, and has used the abundant oil revenues, not for benefit of a small class of renters as previous governments had done, but to build needed infrastructure and invest in the social services that Venezuelans so sorely needed.  During the last ten years, the government has increased social spending by 60.6%, a total of $772 billion [27].

Venezuela is now the country in the region with the lowest inequality level (measured by the Gini Coefficient) having reduced inequality by 54%, poverty by 44%. Poverty has been reduced from 70.8% in 1996 to 21% in 2010. Extreme poverty was reduced from 40% in 1996 to a very low level of 7.3% in 2010. About 20 million people have benefited from anti-poverty programs, called Misiones. Up to now, 2.1 million elderly people have received old-age pensions – that is 66% of the population while only 387,000 received pensions before the revolution [28].

The Bolivarian government has placed a particular emphasis on education allotting it more than 6% of GDP. UNESCO has recognized that illiteracy been eliminated [29]. furthermore, Venezuela is the third country in the region whose population reads the most [30]. There is tuition free education from daycare to university [29]. Seventy-two percent (72% )of children attend public daycares, and eighty-five percent (85%) of school age children attend school [31]. There are thousands of new or refurbished schools, including ten (10) new universities. The country places second in Latin America and second  in the world with the greatest proportions of university students [32]. In fact, 1 out of every 3 Venezuelans are enrolled in some educational  program [33].

.Before the Chavez government took power in 1998, twenty-one percent (21%) of the population was malnourished. Venezuela now has established a network of subsidized food distribution including grocery stores and supermarkets. While ninety percent (90%) of the food was imported in 1980, today this is less than thirty percent (30%).  Misión Agro-Venezuela has given out 454,238 credits to rural producers and 39,000 rural producers have received credit in 2012 alone [34].  Five million Venezuelan receive free food, four million of them are children in schools and 6,000 food kitchens feed 900,000 people [35].  The agrarian reform and policies to help agricultural producers have increased domestic food supply [36].  The results of all these food security measures is that  today  malnourishment  is only five percent (5%), and child malnutrition  which was 7.7% in 1990 today is at 2.9%. This is an impressive health achievement by any standard [37].

The media loves to highlight Venezuela’s health crisis, but it ignores the many successes the country has had in this field. These include infant mortality, which dropped from 25 per 1000 in 1990 to only 13/1000 in 2010 [38]. An outstanding 96% of the population has now access to clean water [39]. In 1998, there were 18 doctors per 10,000 inhabitants, currently there are  58, and the public health system has about 95,000 physicians [40]. It took four decades for previous governments to build 5,081 clinics, but in just 13 years the Bolivarian government built 13,721. This marked a 169.6% increase [41]. In 2011 alone, 67,000 Venezuelans received free high cost medicines for 139 pathologies conditions including cancer, hepatitis, osteoporosis, schizophrenia, and others; there are now 34 centres for addictions [42]. In 6 years 19,840 homeless have been attended through a special program; and there are practically no children living on the streets [43]. Venezuela now has the largest intensive care unit in the region [44]. A network of public drugstores sell subsidized medicines in 127 stores with savings of 34-40% [45].

An example of how the government has tried to respond in a timely fashion to the real needs of its people is the situation that occurred in 2011 when heavy tropical rains left 100,000 people homeless. They were right away sheltered temporarily in all manner of public buildings and hotels and, in one and a half years, the government built 250,000 houses [46]. The government has obviously not eradicated all social ills, but its people do recognize that, despite any shortcomings and mistakes, it is a government that is on their side, trying to use its resources to meet their needs.

According to Global Finance and the CIA World Factbook, the Venezuelan economy presented the following indicators: unemployment rate of  8% 45,5% government (public) debt as a percent of GDP (by contrast  the European Union debt/GDP is 82.5%) and a real GDP growth: GDP per capita is $13,070. In 2011, the Venezuelan economy defied most forecasts by growing 4.2 percent, and was up 5.6 percent in the first half of 2012. It had a debt-to-GDP ratio comfortably below the U.S. and the UK, and stronger than European countries; an inflation rate,  an endemic  problem during many decades,  that had fallen to a four-year low, or 13.7%, over the most recent 2012 quarter [47].

The revolutionary changes in Venezuela are not abstract. The government of President Chávez significantly improved the living conditions of Venezuelans. This new model of socialist development has had a phenomenal impact all over Latin America, including Colombia. Progressive governments that are now the majority in the region see in Venezuela the catalyst that that has brought unparalleled economic and social progress to the region [48]. No amount of neoliberal rhetoric can dispute these facts. Venezuelan socialism has the potential to be a massive success. It betters not only the lives of the Venezuelan people themselves, but also serves as a reminder of what is possible for others. The existence of a viable alternative to capitalism and neoliberalism in Latin America has motivated the creation of numerous popular movements in the region. Venezuela, as I argued in the beginning of the piece, is a beacon for the oppressed. However darkened it may be, it should be resolutely defended against the machinations of imperialists and anti-communists.

  1. Finnegan, William. “Venezuela, A Failing State.” The New Yorker, The New Yorker, 4 Nov. 2016, www.newyorker.com/magazine/2016/11/14/venezuela-a-failing-state.
  2. Pestano, Andrew V. “Venezuela: 75% of population lost 19 pounds amid crisis.” UPI, UPI, 19 Feb. 2017, www.upi.com/Top_News/World-News/2017/02/19/Venezuela-75-of-population-lost-19-pounds-amid-crisis/2441487523377/.
  3. “Chapter 2. Food Security: Concepts and Measurement[21]” http://www.fao.org/docrep/005/y4671e/y4671e06.htm
  4. “FAO Country Profiles:Venezuela.” http://www.fao.org/countryprofiles/index/en/?iso3=VEN
  5. Ibid.
  6. “Crude Oil Prices – 70 Year Historical Chart.” MacroTrends. http://www.macrotrends.net/1369/crude-oil-price-history-chart
  7. “Crude Oil Supply Vs. OPEC Output Target:Venezuela.” IEA Oil Market Report. 11 August 2015.
  8. Davies, Wyre. “Venezuela’s Decline Fuelled by Plunging Oil Prices.” BBC News. BBC, 20 Feb. 2016. http://www.bbc.com/news/world-latin-america-35622188
  9. Puko, Timothy. “Oil Settles Below $28 a Barrel.” The Wall Street Journal. Dow Jones & Company, 09 Feb. 2016. https://www.wsj.com/articles/oil-prices-rise-on-output-uncertainty-1454993303
  10. Critchlow, Andrew. “Cheap Oil Will Win New Cold War with Putin – Just Ask Reagan.” The Telegraph. Telegraph Media Group, 10 Nov. 2014. http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11220027/Cheap-oil-will-win-new-Cold-War-with-Putin-just-ask-Reagan.html
  11. “World Energy Council.” Venezuela. https://www.worldenergy.org/data/resources/country/venezuela/hydropower/
  12. Ibid.
  13. “U.S. Energy Information Administration – EIA – Independent Statistics and Analysis.”Venezuela – International – Analysis – U.S. Energy Information Administration (EIA). https://www.eia.gov/beta/international/analysis.cfm?iso=VEN
  14. Background Note: Venezuela Archived 8 March 2016 at the Wayback Machine. U.S. Department of State.
  15. Marquez, Humberto, “Venezuelans Thirsty in a Land of Abundant Water.” Inter Press Service. June 4 2014 http://www.ipsnews.net/2014/06/venezuelans-thirsty-in-a-land-of-abundant-water/
  16. Arsenault, Chris. “Is Hoarding Causing Venezuela Food Shortages?” Al Jazeera English. March 2, 2014. http://www.aljazeera.com/indepth/features/2014/03/hoarding-causing-venezuela-food-shortages-20143210236836920.html
  17. Torres, William Neuman and Patricia. “Venezuela’s Economy Suffers as Import Schemes Siphon Billions.” The New York Times. The New York Times, 05 May 2015 https://www.nytimes.com/2015/05/06/world/americas/venezuelas-economy-suffers-as-import-schemes-siphon-billions.html
  18. Ibid.
  19. Gupta, Girish. “Smuggling Soars as Venezuela’s Economy Sinks.” Reuters. Thomson Reuters, 20 Jan. 2016. http://www.reuters.com/article/us-venezuela-smuggling-insight-idUSKCN0UY1IT
  20. “50 U.S. Code § 1701 – Unusual and Extraordinary Threat; Declaration of National Emergency; Exercise of Presidential Authorities.” LII / Legal Information Institute https://www.law.cornell.edu/uscode/text/50/1701
  21. Miroff, Nick, and Karen DeYoung. “New U.S. Sanctions Lost in Venezuela’s Translation.” The Washington Post. WP Company, 11 Mar. 2015. https://www.washingtonpost.com/world/the_americas/new-us-sanctions-lost-in-venezuelas-translation/2015/03/11/f8f3af6a-c7ff-11e4-bea5-b893e7ac3fb3_story.html?utm_term=.2e895661f47b
  22. Weisbrot, Mark. “Is There an Economic and Political War Against Venezuela?” The Real News Network. 02 June 2016. http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=16421
  23. LEDERMAN, JOSHUA GOODMAN and JOSH. “Trump Sanctions Venezuela Vice President on Drug Trafficking.” Associated Press. Feb 13, 2017. http://bigstory.ap.org/article/fd8f13f1afa14261a7109a2d92d4ea27/ap-sources-us-sanctions-venezuelas-new-vice-president
  24. Weisbrot, Mark. “US Support for Regime Change in Venezuela Is a Mistake | Mark Weisbrot.”The Guardian. Guardian News and Media, 18 Feb. 2014 https://www.theguardian.com/commentisfree/2014/feb/18/venezuela-protests-us-support-regime-change-mistake
  25. Victor, Maria Paez. “Venezuela Under Attack Again.” Counterpunch. 04 Nov. 2014. http://www.counterpunch.org/2014/02/17/venezuela-under-attack-again/
  26. Julija Sardelic and Aidan McGarry., Szilvia Rezmuves, Isak Skenderi & Violeta Vajda, Miriam Krenzinger, Amílcar Sanatan, and Ajamu Nangwaya. “Venezuela Maintains High Human Development: UN.” News | TeleSUR English http://www.telesurtv.net/english/news/Venezuela-Maintains-High-Human-Development-UN-20170325-0003.html
  27. Páez Victor, Maria. “Why Do Venezuelan Women Vote for Chavez?” Counterpunch, 24 April 2012 http://www.counterpunch.org/2012/04/24/why-do-venezuelan-women-vote-for-chavez/print
  28. Ibid.
  29. Venezuela en Noticias, Venezuela en Noticias <venezuelaennoticias@minci.gob.ve> Venezuela en Noticias, Venezuela en Noticias venezuelaennoticias@minci.gob.ve
  30. Gallup Poll 2010
  31. Muntaner C, Chung H, Mahmood Q and Armada F. “History Is Not Over. The Bolivarian Revolution, Barrio Adentro and Health Care in Venezuela.” In T Ponniah and J Eastwood The Revolution in Venezuela. Harvard: HUP, 2011 pp 225-256; see also 4, Muntaner et al 2011, 5, Armada et al 2009; 6, Zakrison et al 2012
  32. Armada, F., Muntaner, C., & Navarro, V. (2001). “Health and social security reforms in latin america: The convergence of the world health organization, the world bank, and transnational corporations.” International Journal of Health Services, 31(4), 729-768.
  33. Zakrison TL, Armada F, Rai N, Muntaner C. ”The politics of avoidable blindnessin Latin America–surgery, solidarity, and solutions: the case of Misión Milagro.”Int J Health Serv. 2012;42(3):425-37.
  34. Ismi, Asad. “The Bolivarian Revolution Gives Real Power to the People.” The Canadian Centre for Policy Alternatives Monitor , December 2009/January. http://www.policyalternatives.ca/publications/monitor/latin-american-revolution-part-iv
  35. Carmona, Adrián. “Algunos datos sobre Venezuela”, Rebelión, March 2012
  36. Weisbrot, Mark and Johnston, Jake.  “Venezuela’s Economic Recovery: Is It Sustainable?”  Center for Economic and Policy Research, Washington, D.C., September 2012.
  37. Hunziker , Robert. “Venezuela and the Wonders of Equality”.  October 15th, 2012
  38. Golinger, Eva. “US$20 million for the Venezuelan Opposition in 2012”, http://www.chavezcode.com/2011/08/us-20-million-for-venezuelan-opposition.html
  39. Páez Victor, Maria. “Chavez wins Over Powerful Foreign Conglomerate Against Him”, Periódico América Latina, 11 October, 2012
  40. Milne,Seumas.  “The Chávez Victory Will be Felt Far Beyond Latin America” , Associate Editor, The Guardian, October 9, 2012:
  41. Alvarado, Carlos, César Arismendi, Francisco Armada, Gustavo Bergonzoli, Radamés Borroto, Pedro Luis Castellanos, Arachu Castro, Pablo Feal, José Manuel García, Renato d´A. Gusmão, Silvino Hernández, María Esperanza Martínez, Edgar Medina, Wolfram Metzger, Carles Muntaner, Aldo Muñoz, Standard Núñez, Juan Carlos Pérez, and Sarai Vivas. 2006. “Mission Barrio Adentro: The Right to Health and Social Inclusion in Venezuela”. Caracas: PAHO/Venezuela.
  42. Weisbrot, Mark.”Why Chávez Was Re-elected”. New York Times. Oct 10th 2012
  43. Ibid.
  44. Ibid.
  45. Ibid.
  46. Ibid.
  47. Ibid.
  48. “How Did Venezuela Change under Hugo Chávez?” The Guardian. Guardian News and Media, 04 Oct. 2012 https://www.theguardian.com/news/datablog/2012/oct/04/venezuela-hugo-chavez-election-data

2 thoughts on “Is Venezuelan Socialism A Disaster?

  1. I enjoy your articles about actually-existing socialism. I was wondering, could you write an account of the fall of the Soviet Union? It would be really interesting to hear your perspective on this.

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