The Tragedy in Venezuela

Are developments in Venezuela proof that Socialism must always fail? That is the neoliberal view, but I think the Tragedy of the Commons fits better.

Chavez democratically came to power in 1999, and as late as 2013 Jeremy Corbyn was able to praise the regime as a template for Socialism without suspecting what a huge hostage to fortune that would shortly turn out  to be.

For many decades oil-rich Venezuela was a net importer of people. When Chavez came to power, some wealthy Venezuelans left, fearing Cuban-style Communism. But the vast majority stayed and many enjoyed the benefits of oil financed social programmes . As this graph shows, there was net emigration during the global financial crisis, but otherwise it is only with Maduro at the helm [since 2013] that Venezuelans have departed in large and growing numbers.

This account of the reasons for the Venezuelan crisis appears in the financial Times. I am not sure it is entirely unbiased: it does not take Maduro’s explanation seriously enough to mention it (that a neoliberal plot is afoot}. However, the following appears among the comments:

The current situation is due to many factors. Neither Chavez nor Maduro had any background in economics, government or anything else, and both relished being anti-establishment and anti- expert- a populism of the extreme left.

This however does not ‘prove’ that one system is better than another. Venezuela had real social and economic issues prior to Chavez, and failure to address them enabled his ‘Bolivarian’ revolution.

We can debate to what extent market solutions can address social issues, but that is a different discussion.

This chart of oil prices over the last 5 years shows the dramatic fall in the oil price as occurring shortly after Maduro succeeded Chavez.

But the crisis, already serious due to the fall in oil revenue was suddenly worsened in January 2017, by the appointment of Manuel Quevedo as head of PDVSA, the state run oil firm, with no experience of the oil industry. Due to Quevedo’s crass mishandling, first, key workers left, followed by thousands. Oil production plummeted 30% in a year.

Compare Venezuela with Cuba. Ever since 1960 Cuba has survived the same neoliberal hostility, but that did force it to become a working example of ‘reuse, recycle, repair’. No other country has seen fit to replicate this ecologically sound template, because economic growth always promised better. But if the ‘Paris’ Climate Change Agreement, that we must keep the global temperature down, is to have a ghost of a chance, then growth is extremely bad news. The immediate necessity is that fossil fuels everywhere must remain in the ground.

But Venezuela’s prosperity depended on oil. The core problem of Tragedy of the Commons is that the world is still hooked on strategies for growth which have become not merely unrealistic, but dangerous to the ecosphere. So the ‘Paris’ Agreement never had a chance anyway. But however unintentionally, Venezuela is now a classic example of what happens when one country unilaterally does what is absolutely essential..

2 responses to “The Tragedy in Venezuela

    • What you say is correct, but my point is more fundamental: using Venezzuela as an example of the Tragedy of the Commons: doing the right thing unilaterally is just stupid. It happened purely by accident

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