What On Earth Has Gone Wrong In Venezuela?


Depravity and a shortage of basic supplies have become far too common in Venezuela.

Inflation of the Venezuelan Bolivar is predicted by the IMF to rise almost exponentially, hitting a high of 480% by the end of the year. This has caused severe shortages of basic food staples, forcing people to go to desperate lengths to survive, with the Colombian migration figures reporting that over 5.5 million Venezuelans entered and exited the country since the border crossing between Colombia and Venezuela was reopened around three months ago, mainly to obtain food and medical supplies unavailable in their own country.

The price of food has skyrocketed as a result of the inflation, with a dozen eggs costing 1020 Bolivars, or 1500 on the black market, up from 400 in December last year, and with an average monthly income of roughly 15,000 Bolivars, life in Venezuela at present is impossibly difficult. The extent of this desperation would have been almost unimaginable for the majority in Chavez’s golden era in the mid to late 2000’s, so how has one of the great pillars of ‘twenty-first century socialism’ been reduced to rubble?

Venezuela’s dream of offering a progressive alternative to neoliberalist capitalism has been left in tatters since the crash of oil prices in 2014. Before the crash, Venezuelan oil was sold for $88 per barrel, but it has now fallen sharply and was at a 3 month low as of November 15th. Seeing as oil accounts for around 95% of Venezuela’s export revenue, this has greatly reduced the amount of capital available for investment in state infrastructure, including the food subsidization programmes that serviced around 13 million civilians, virtually eliminating hunger in Venezuela.

The dire economic situation sparked by the oil crisis has caused rampant social discontent, the brunt of which has been levelled at Nicolas Maduro, the man tasked with the unenviable position of following Chavez. Maduro’s approval ratings are at their lowest level for months and have now fallen below 20%; but while Maduro and the United Socialist Party of Venezuela suffer the wrath of the public, are they really to blame? Should the majority of the blame perhaps be directed at mismanagement under the irrepressible leader that was ‘Chavisimo’?

History has proven time and time again that people need a scapegoat, and Maduro fits the part perfectly, with the public calling for a recall that is likely to take place next year. However, there are numerous signs that suggest he inherited a sinking ship. Certain parties point the finger at Chavez’s notorious hostility towards America.

Particular scrutiny has also been projected at the price controls placed on basic foods, which are argued by neoliberal economists to increase demand to the point where supply cannot keep up, resulting in an over reliance on imports from key allies such as China. However, one cannot blame price controls that are a genuinely efficient Keynesian method of making food affordable; instead, blame should be directed at the over reliance on imports, stemming from a lack of national focus on agricultural production and industry diversification. Chavez’s criticisms of America should not be derided either; by refusing to bow to the demands of modern imperialism and the monopoly of the US government, his socialist empire proved that twenty first century socialism was a realistic and effective system.

Venezuela under Maduro is continuing its refusal to cooperate with the ‘cut your way to growth’ mentality that runs deep through the US backed IMF. It is therefore likely the inflation rate will increase until Venezuela absolutely has to resort to financial support from the IMF; whereby harsh neoliberal austerity measures will be ushered in and proposed as the only logical solution. In the likely event that this occurs, it will be seen as a major coup for right-wing ideologues the world over that Socialist policies don’t work, and that capitalism is the only viable system in which a country can survive, despite an absolute refusal to allow any socialist policies to succeed. Such western ethnocentrism has been accused of ensuring that socialism is not allowed to work, illustrating that the desire of America to crush the progressive, state-centric ideology embodied by Venezuela is therefore largely to blame for the economic collapse.

However, alongside the over reliance on imports, the over reliance on oil that Chavez established is equally to blame for the current situation. A lesson that should serve as a wake-up call to the entire global economy, which floats upon a bed of sticky, black oil. It should be evident that building an entire economy on a finite resource is dangerously unstable, particularly when a country lacks diversity in its production, as is the case in Venezuela. When oil prices crash, as they inevitably do in the crises ridden global markets, national economies dependent on oil will be left reeling. This is where Chavez faltered, and while good inarguably resulted from revenue generated by Venezuela’s oil industry, he should not have left the country’s outstanding social framework so dependent upon a single resource that can fluctuate so wildly in the global free market.

It is unclear how Venezuela will recover from its current paralysis, however, the current issues should not be seen as an excuse by the Venezuelan people, or the international community, to abandon hope of creating a viable alternative to corporate capitalism. What the world can learn from Venezuela is that the ruling powers that control the economy will not allow such an alternative to flower, and without constructive social activism on a colossal scale, nothing will change.


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