by Michael Roberts
As the Maduro regime tries to impose its new Constituent
Assembly as a rival or replacement of the existing Venezuelan Congress
and arrests the leaders of the pro-capitalist opposition, the dire
economic and social situation in the country continues to worsen.
According to the IMF, Venezuela’s GDP in 2017 is 35% below 2013 levels, or 40% in per capita terms.
That is a significantly sharper contraction than during the 1929-1933
Great Depression in the US, when US GDP is estimated to have fallen 28%.
It is slightly bigger than the decline in Russia (1990-1994), Cuba
(1989-1993), and Albania (1989-1993), but smaller than that experienced
by other former Soviet States at the time of transition, such as
Georgia, Tajikistan, Azerbaijan, Armenia, and Ukraine, or war-torn
countries such as Liberia (1993), Libya (2011), Rwanda (1994), Iran
(1981), and, most recently, South Sudan.
So, on this measure, according to Ricardo Haussman, former chief economist of Inter-American Development Bank, Venezuela’s economic catastrophe dwarfs any in the history of the US, Western Europe or the rest of Latin America.
Back in 2013, I warned that
the achievements of the ‘Bolivarian revolution’ under Chavez were
seriously under threat. Chavez had improved the conditions of the
poorest with increased wages, social services and reduced inequality.
But these improvements were only possible within the confines of
capitalist economy by using the revenues of oil exports at a time of
very high global oil prices. But oil prices started to mark time and
have virtually halved in the last two years.
Oil exports fell by $2,200 per capita from 2012 to 2016, of
which $1,500 was due to the decline in oil prices. The Maduro
government started to rack up huge foreign debts to try and sustain
living standards. Venezuela is now the world’s most indebted country.
No country has a larger public external debt as a share of GDP or of
exports, or faces higher debt service as a share of exports.
The government resorted to the devaluation of the currency to boost
dollar revenues, but this only stimulated outrageous inflation and cuts
in real wages. At the same time, the government decided to ‘honour’ all
its foreign debt payments and cut imports instead. As a consequence,
imports of goods and services per capita fell by 75% in real
(inflation-adjusted) terms between 2012 and 2016, with a further decline
in 2017. Such a collapse is comparable only to that of Mongolia
(1988-1992) and Nigeria (1982-1986) and bigger than all other four-year
import collapses worldwide since 1960. This led to a collapse in
agriculture and manufacturing even larger than that of overall GDP,
slashing almost another $1,000 per capita in locally produced consumer goods.
The minimum wage – which in Venezuela is also the income of the
median worker, owing to the large share of minimum-wage earners –
declined by 75% (in constant prices) from May 2012 to May 2017.
Measured in the cheapest available calorie, the minimum wage declined
from 52,854 calories per day to just 7,005 during the same period, a
decline of 86.7% and insufficient to feed a family of five, assuming
that all the income is spent to buy the cheapest calorie. With their
minimum wage, Venezuelans could buy less than a fifth of the food that
traditionally poorer Colombians could buy with theirs.
Income poverty increased from 48% in 2014 to 82% in 2016,
according to a survey conducted by Venezuela’s three most prestigious
universities. The same study found that 74% of Venezuelans involuntarily
lost an average of 8.6 kilos (19 pounds) in weight. The Venezuelan
Health Observatory reports a ten-fold increase in in-patient mortality and a 100-fold increase in the death of newborns in hospitals in 2016.
According to a study carried out between October and December 2016 by
Caritas Venezuela, in collaboration with Caritas France, the European
Commission and the Swiss Confederation, there are clear indications of
chronic malnutrition among children in Venezuela. In some areas, it
reaches levels close to what, according to international standards, is a
crisis. The report says: “Insecure and irreversible survival
strategies are being recorded from an economic, social and biological
point of view, and the consumption of street foods is especially
worrying.” “According to a survey conducted in June 2016 in the state
of Miranda, 86% of children feared to run out of food. Fifty percent
said they went to bed hungry for lack of food in their homes. “
Erika Guevara, director of Amnesty International’s Regional Office for the Americas in June 2016, wrote: “J.M.
Children’s Hospital. Of the Rivers in Caracas, once a source of pride
as a model of pediatric care in Venezuela, today is a tragic symbol of
the crisis that is sweeping this South American country. Half the
gigantic building is collapsing, the walls stagger, the floors are
flooded and the rooms are so deteriorated that they are no longer used.
Halfway through, hundreds of children are being treated. But both
medicines and basic medical supplies are in short supply, and the
children’s mothers have already given up ordering them. (…)”. The
Voices of Hunger, a report made by Telemundo and led by the Venezuelan
journalist Fernando Girón, shows how Venezuelan children fight with
birds of prey for bones discarded by butchers (El Nacional, 02/28/17).
Before Chavez, most Venezuelans were desperately poor after a series
of right-wing capitalist governments. But now once again, under Maduro,
this is the situation for the poor and the majority of the Venezuelan
working class. No wonder support for the Maduro government has subsided
while the forces of reaction grow stronger. While the majority
struggle, many at the top of the Maduro government are as comfortable as
the Venezuelan capitalists and their supporters who are trying to bring
the government down.
The Maduro government is now relying increasingly not on the support
of the working class but on the armed forces. And the government looks
after them well. The military can buy in exclusive markets (for
example, on military bases), have privileged access to loans and
purchases of cars and departments, and have received substantial salary
increases. They have also won lucrative contracts, exploiting exchange
controls and subsidies, for example, selling cheap gasoline purchased in
neighboring countries with huge profits.
As Rolando Asturita has pointed out in a series of posts. the
army has strong direct economic power, since the FANB directs and
controls a whole series of companies: the bank BANFANB; AGROFANB, for
agriculture; EMILTRA, transport; EMCOFANB, company communications
systems of the FANB; TVFANB, an open digital TV channel; TECNOMAR, a
mixed military technology projects company; FIMNP, an investment fund;
CONSTRUFANB, constructor; CANCORFANB, Bolivarian Mixed Company; Water
Tiuna, water bottling plant; And then there is CAMINPEG, the anonymous
military, mining and oil and gas company.
Many of the Maduro government elite have used the economic crisis to
their own personal benefit. They have bought up government debt for
rich returns, while at the same time ensuring that there is no default,
all at the expense of falling living standards for the people who must
pay this debt through taxes and foregone oil revenues. Foreign exchange
earmarked for the payment of foreign debt has been offset by the
reduction of imports of food, medicines or essential industrial inputs.
So, as anti-government protestors fight the police and army on the
streets and the Maduro government moves ever closer to outright
authoritarian rule, the working class is left in the cold. The economic
and social program of the opposition is the traditional one of the
national capitalists backed by imperialism: namely, reform of the labor
laws (ie more exploitation and sackings), privatization or
re-privatization of state enterprises, deregulation of controls over
investment (ie ensuring a high rate of labor exploitation) and, of
course, the lifting of price controls and exchange reunification. The
implementation of this program would impose even more losses on the
majority. As would the planned sanctions by US imperialism and its
acolytes in the region.
What went wrong with the laudable aims of Chavismo? Could this
tragedy been avoided? Well, yes, if the Chavista revolution had not
stopped at less than halfway, leaving the economy still predominantly in
the control of capital. Instead, the Chavista and Maduro governments
relied on high oil prices and huge oil reserves to reduce poverty, while
failing to transform the economy through productive investment, state
ownership and planning. Between 1999 and 2012 the state had an income
of $383bn from oil, due not only to the improvement in prices, but also
to the increase in the royalties paid by the transnationals. However,
this income was not used transform the productive sectors of the
economy. Yes, some was used to improve the living standards of the most
impoverished masses. But there was no plan for investment and growth.
Venezuelan capital was allowed to get on with it – or not as the case
may be. Indeed, the share of industry in GDP fell from 18% of GDP in
1998 to 14% in 2012.
Now the right-wing ‘free marketeers’ tell us that this shows
‘socialism’ does not work and there is no escape from the rigors of the
market. But the history of the last ten years is not the failure of
‘socialism’ or planning, it is the failure to end the control of capital
in a weak (an increasingly isolated) capitalist country with apparently
only one asset, oil. There was no investment in the people, their
skills, no development of new industries and the raising of technology –
that was left to the capitalist sector. Contrast that with ‘socialism with Chinese characteristics’, albeit in the largest country and now economy in the world.
Just over a year ago, I argued in a post that, to save the aims of Chavismo, “it
is probably too late, as the forces of reaction gain ground every day
in the country. It seems that we await only the decision of the army to
change sides and oust the Chavistas.”
- AFSCME Local 444 negotiations assesment 1997
- Preparing for Revolution: A discussion document
- The Internal lives of Revolutionary Organizations
- Socialist Alternative members: Questions and Answers
- Sanders: Our Alternative
- The Nature of the New European Left
- Catastrophic Climate Change: Caused by Capitalism
- University of California workers and Unions
- An Invitation to Our Readers
- Facts For Working People Weekly Phone Conferences and Discussions