Thursday, August 16, 2007

Is Venezuela Moving towards a 21st Century Socialism?

The following article written by Gregory Wilpert originally appeared on the website, July 11, 2006. This is a revised version of a paper that was presented at the University of Wisconsin-Madison Havens Center, April 11, 2006.

With these general definitions of capitalism and 21st century socialism, we can now see how the policies of the Chavez government compare to these.

Changing Ownership of the Material and Intellectual Means of Production

Taking each of the three elements of capitalism one at a time, one can first focus on the ways in which the Chavez government’s policies affect or transform the ownership of the relations of material (as opposed to intellectual) production. While the vast majority of Venezuela’s productive capacity is still either owned privately or by the state, one of the government’s main areas of emphasis has been to expand non-private forms of ownership and control, such as via cooperatives, co-management, and expanded state management/ownership.

For example, during the Chavez presidency the number of cooperatives in Venezuela has increased from about 800 in 1998 to over 100,000 in 2005 – an over 100-fold increase in seven years. Over 1.5 million Venezuelans are thus now involved in cooperatives, which represents about 10% of the country’s adult population.[3] The government has been actively supporting the creation of cooperatives in all sectors, mostly via credit, preferential purchasing from cooperatives, and training programs.

With regard to co-management, the government has been experimenting with several state-owned enterprises in this regard, such as the electricity company CADAFE and the aluminum production plant Alcasa. Depending on how these experiments go, the government is considering turning over more state-owned enterprises to co-management. These businesses will not be turned over to complete worker control, however, because, according to the government, they are too important for Venezuela to be governed only by the people that work there. That is, they have an impact for the entire society and thus, according to the principle of subsidiarity, the society, through its representatives in the state, should also have a say in how the enterprise is run.

Another strategy for changing the ownership and control over the means of production has been the expropriation of idle factories. Currently at least four production plants, which produce paper, valves, and agricultural products, have been expropriated and turned over to worker control. Working together with the national union federation UNT, the government is evaluating 700 other idle production facilities that could also be expropriated and turned over to former workers of these plants.

Finally, with regard to expanding state management, the Chavez government has created several new state-owned enterprises, such as in the areas of telecommunications, air travel, and petrochemicals. Also, it reined-in the previously semi-autonomous state oil company PDVSA and brought it under direct government control.

Of course, just because there are more enterprises that go against the logic of capitalism, that are in essence anti-capitalist endeavors, such as cooperatives, co-managed enterprises, and state-owned enterprises does not mean that Venezuela is now a post-capitalist society with regard to the ownership of the means of production. However, there is a definite movement in this direction. Whether such forms of ownership will become predominant within the Venezuelan economy it is too early to tell. The real test of the extent to which the government is willing to go in this direction will come if and when private capital is forced to become marginal in the overall economy. Whether such a direct confrontation will take place and how it will play out is impossible to say at this point.

However, creating a sphere of non-privately owned or controlled means of production by itself is not much of a change if such ownership and control follows the same principles as private ownership does, of maximizing profit above all else and of funneling non-reinvested profits towards elite consumption. Thus, so as to ensure that the cooperative, co-managed, and state managed enterprises follow a new set of principles, the Chavez government has created a new type of economic production unit, which is known as social production enterprise (EPS, in Spanish).

Social Production Enterprises are, “economic entities dedicated to the production of goods or services in which work has its own meaning, without social discrimination nor privileges associated with one’s position in a hierarchy, in which there is substantive equality between its members, planning is participatory and operate under either state, collective, or mixed ownership.”[4] In order to qualify as an EPS and thus for preferential treatment for low-interest credits and state contracts, companies must fulfill a list of requirements, such as to, “privilege the values of solidarity, cooperation, complementarity, reciprocity, equity, and sustainability, ahead of the value of profitability.”[5] If these values are indeed fulfilled, then one can say that with regard to ownership and control over the means of production Venezuela is moving away from capitalism and towards 21st century socialism.

Moves Away from Market Exchange

With regard to moving beyond market exchange for regulating production and distribution of goods and services, the Chavez government has mainly focused on using the state as a non-market based mechanism. That is, the state has been very active in redistributing wealth during the Chavez presidency, whether through its rural and urban land reform program, its oil revenue-funded social programs for free health care, education, and subsidized food markets, or the provision of subsidies and other support for key sectors, such as cooperatives and “endogenous development nucleuses.” Of course, while state redistribution mechanisms go against a basic principle of capitalism, these do not break the logic of capital as long as most exchange still occurs in a free market context, as is still the case in Venezuela. As such, such policies are more social democratic than socialist.

The principle of moving away from market-based distribution has also been valid in international trade for Venezuela. Not only has the Chavez government vehemently opposed the free trade agreements the U.S. has been promoting, but it is also involved in a large number of trade deals that are based on principles of solidarity instead of competition. For example, the Petrocaribe agreement provides for discounted financing of Venezuelan oil for Caribbean nations and also allows them to pay for oil with in-kind payments. In the most prominent case Cuba has been providing Venezuela with 20,000 doctors and medical assistants in exchange for Venezuelan oil shipments. Similar agreements exist with Argentina, Uruguay, and Ecuador.

Again, this kind of non-market based trade, which emphasizes cooperation, complementarity, and solidarity over competition is still far smaller than traditional market exchange. How and if the Chavez government can find ways to increase non-market based exchange mechanisms remains to be seen, especially since exactly how cooperative (instead of competitive) exchange could function on a large scale is still quite unclear in Venezuela.

Governance No Longer Guided by Private Interests

With regard breaking away from the third important element of capitalism—a system of governance that is under the sway of powerful private interests—Venezuela has advanced the most. There are at least three ways in which the Chavez government has done this over the past few years. First, it has had the opportunity to break free from the sway of private capital, due to the combination of massive oil revenues and the complete delegitimation of the old regime. Second, it has instituted forms of direct democracy and increased citizen participation in the state. Third, it has weakened the possibility that the military could be used to repress the civilian population, via what it calls civil-military union.

The first aspect is perhaps the most important because it has enabled practically all other anti-capitalist measures of the Chavez government. That is, Venezuela’s oil revenues, which increased, on a per-capita basis, from $226 in 1998 to $728 in 2005,[6] has been a bonanza that has given the Chavez government a tremendous amount of freedom from private capital’s ability to threaten with investment strikes. Also, the institution of capital controls in early 2003 further expanded the government’s independence from private capital. While most leftist governments, such as that of President Lula of Brazil, are constantly faced with the choice of pursuing progressive policies and alienating capital and thereby economic well-being or abandoning progressive policies and encouraging private investment, the Chavez government is by and large freed from this dilemma. Enormous oil revenues allow the government to invest, to pursue progressive tax policies and regulations, and to spend freely, without having to worry much about capital flight or disinvestment.

This freedom, combined with the opposition’s recurring self-destruction (via the coup attempt, the oil industry shutdown, the failed recall referendum, and the boycott of the December 2005 National Assembly elections) is perhaps the main reason why the Chavez government has been able to pursue increasingly more anti-capitalist policies with every passing year in office. This stands in stark contrast to the history of most progressive governments, which time and again start out with radical rhetoric, only to eventually succumb to the demands of private capital.

The second way in which the government is shaking loose the influence of private capital is by introducing participatory democracy in numerous areas of the state. This is happening through local planning councils, citizen participation in social programs, and a variety of other institutionalized mechanisms for civil society involvement in government (referenda, selection of high-level state officials, and citizen audits of state institutions).

One of the most important forms of citizen participation are the local planning councils, which were launched in Venezuela in 2001, but were at first stillborn due to a variety of limitations in the local planning council law, such as creating councils that were too large to be manageable or participatory. A new effort was launched in early 2006 with the communal council law, which bases councils on units of 200 to 400 families and which practice direct democracy in their communities, allocating financial resources and creating local ordinances.

Participatory democracy in Venezuela also takes the form of citizen participation in the recently created “missions,” which provide education, health care, subsidized food, social services, land reform, and environmental protection. These missions, rather than being just imposed from above are largely directed by the citizens in any given community, in the form of health committees, land committees, and educational task forces.

Finally, there are the constitutionally guaranteed rights to participatory democracy, in the form of four different types of citizen-initiated referenda (recall, approbatory, abrogatory, and consultative), the right to conduct citizen-initiated audits of state institutions (contraloria social), and the right of civil society organizations to co-nominate candidates to the Supreme Court, the National Electoral Council, and the Moral Republican Council (consisting of Attorney General, Comptroller General, and Human Rights Defender).

Citizen involvement in all levels of government like this increases accountability and weakens the sway of powerful private interests. While citizens might still succumb to threats of disinvestment from private capital, at least they have more influence over decision-making than when elected representatives decide matters mainly under the influence of powerful private groups that are constantly lobbying them and paying for their electoral campaigns.

The third area where the Chavez government has made a conscious effort to enable a more direct democracy has to do with transforming one of the traditional means for suppressing citizen involvement and discontent: the military. Historically, the military in Latin America was used to repress the citizenry and to keep it from resisting the imposition of government policies it did not like. For Chavez and for most poor Venezuelans, the 1989 riots against IMF-imposed economic policies, which dramatically increased the price for public transportation and for many food staples, was an expression of discontent with the relatively undemocratic[7] government of Carlos Andrés Perez. This outburst of discontent was immediately suppressed with massive military force, which ended up killing anywhere between 300 and 3,000 poor Venezuelans.

According to Chavez, the reason Venezuela’s and Latin America’s military forces were able to repress their own populace so often and so easily was because the military was always kept separate from the population. That is, their lack of contact with civilians, their sequestration, made it easier for them to act without sympathy or remorse against their own people. In contrast, Chavez, following a Maoist maxim, argues that “the military should be to the people like the fish is to water.” The application of this principle is called “civil-military union,” and means, in practice, that the military should be as integrated as possible with the civilian population, being in constant contact with them and even taking on civilian tasks in the process. The military has thus become heavily involved in the various “missions,” often providing services such as food distribution, construction help, and transportation, for example. Furthermore, the civilian population is being asked to sign up for Venezuela’s military reserves, to learn to fight a guerilla war, should an outside force such as the U.S. ever invade. This, according to Chavez, is supposed to further strengthen the civil-military union.

Critics of this re-conceptualization of Venezuela’s military argue that it has militarized civilian society and could become a means for doing precisely what Chavez says it is supposed to ward against, of repressing the population. However, there is no concrete evidence for this. As any visitor to Venezuela can attest, the military in Venezuela has a far less militaristic presence in the general population than it did in countries where the military was indeed used for repression, such as in Argentina in the 1970’s or in El Salvador in the 1980’s. No one in Venezuela fears the military and its activity in the general population is limited to fulfilling the civilian functions mentioned above, but not to repress. Human rights groups such as Human Rights Watch do not cite the military as being perpetrators of human rights violations. Rather, in Venezuela, the main culprit in this regard remains (since long before Chavez’s coming into office) the notoriously corrupt and local government controlled police force. In other words, it would appear that rather than militarizing civil society, the civil-military union has served to “civilize” the military.

These three factors, the tremendous oil revenues, the creation of a more participatory democracy, and the “civilizing” of the military, have meant that the Chavez government is far freer to pursue policies that are independent of the powerful private interests that normally shape government policy in capitalist countries. The freedom the Chavez government enjoys to pursue leftist policies is unique in comparison to most of the rest of world in many ways. While there are other countries that enjoy such a freedom due to their wealth in natural resources (such as a state-owned national oil industry), these other countries tend to be in the hands of extremely conservative authoritarian regimes (such as in the Middle East) and have no interest in pursuing progressive policies.

This freedom has allowed the Chavez government to pursue policies that clearly move away from private ownership and control over the means of production, away from market-determined allocation and distribution, and towards what could be called more socialist economic and governance forms. However, this is clearly not the state-socialism of the 20th century, as was practiced in Eastern Europe and China and still is in Cuba. Rather, it is a more libertarian form of socialism, in that it actively seeks citizen participation and even forms of direct democracy.

[3] SUNACOOP (National Superintendency of Cooperatives),

[4] “Empresas de Producción Social,” article in PDVSA’s corporate magazine, Siembra Petrolera, Issue, No. 1, Jan.-Mar. 2006, p.55

[5] Article 3 of Decree No. 3,895, of September 13, 2005, published in Gaceta Oficial No. 38,271

[6] Author’s own calculation, based on data from Venezuela’s finance ministry, the national statistics institute, and the Central Bank of Venezuela.

[7] Chavez’s Bolivarian movement, as well as many outside analysts, considered the period of 1958-1993 to be a fairly undemocratic period because state repression and an elite pact (Pacto de Punto Fijo) between the two main political parties prevented challengers from coming to power in this period.

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