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Cooking the Books: Another One Bites the Dust

Venezuela. Another country to add to the long list of failed attempts to make capitalism work in the interest of the excluded majority of wage and salary workers.

It began well enough with the election of the populist army officer, Hugo Chavez, as president in 1999. His government diverted oil revenues (Venezuela has more proven oil reserves than Saudi Arabia) from luxuries for the rich to provide better housing, health care and education and subsidised food for the poor.

He proclaimed himself a socialist and that his government was implementing '21st century socialism'. North American and West European Trotskyists beat the drum for him. Some moved to Venezuela to help build 'socialism' there. For them, this was it. But it didn't last.

With the world-wide slump that followed on from the crash of 2008, the demand for oil fell and so too did its price. The Venezuelan government resorted to printing money to maintain its social reforms and then to price controls to try to prevent the inevitable rise in prices this led to. A black market developed. The currency depreciated and import controls were introduced. Venezuela ended up with a siege economy.

Chavez died in 2013 and his successor, Nicolas Maduro, was left to pick up the pieces and face the growing discontent of the better-paid workers.

For apologists for ordinary capitalism, Venezuela represents another failure of socialism. According to the obnoxious Tory MEP Daniel Hannan, writing in the Sun (3 August), 'Venezuela isn't remote from socialism. It's a textbook example. Chavez and Maduro set out to replace the market with a system of state production and distribution.'

Actually, they wanted to regulate the market using state intervention to make it work to benefit people especially the poor, not to replace it (not that socialism is a system of state production and distribution, though it will replace the market). Hannan had earlier inadvertently let slip the correct characterisation of the economic system in Venezuela when he quoted Noam Chomsky:

'I never described Chavez's state capitalist government as “socialist” or even hinted at such an absurdity. It was quite remote from socialism.'

Incidentally, this must be the first time that Sun readers have been introduced to the concept of state capitalism. Chomsky, however, was being a bit disingenuous as he is on record as expressing support for what the Venezuelan government was doing. Hannan quotes him as having previously talked of a 'better world' being created there. Taking both of Chomsky’s statements together, they imply that he thinks that a policy of state capitalism can create a better world.

Well, it can't. The most it can do – and did do to an extent in Venezuela – is to bring about a temporary improvement in the living conditions of some workers. The point is that this can't last, because capitalism cannot be made to work to meet people's needs. Pursued over a long period – and the Chavists have been in power for 18 years now – such a policy will fail, creating the sort of economic and political conditions that now exist in Venezuela.

Venezuela represents a failure not of socialism but of government-financed reformism. Yet another.