The opposition in Venezuela waged economic war against the socialist governments of Hugo Chávez and Nicolás Maduro.  The central strategy was for privately-owned importing companies to reduce the importation of goods and to horde goods in warehouses, causing shortages and price increases, and thereby stimulating discontent among the people.

      Venezuela was declared socialist by Chávez, and so it is.  The United Socialist Party of Venezuela is the largest single party, and it is by far the largest party in a progressive popular coalition that has governed the country for seventeen years.  Prior to Chávez, the state-owned petroleum companies in Venezuela functioned autonomously, in collusion with international petroleum interests.  The government of Chávez took effective control of the industry, incorporating it into a comprehensive plan for national development, which has included the development of a wide variety of social missions, attending to the social and economic rights of the people; and which has included a foreign policy of cooperation and the promotion of Latin American unity and integration.  At the same time, popular councils have been developed, seeking to facilitate popular participation and education.   

      But socialist Venezuela has a mixed economy, which includes private ownership of importing companies.  Venezuela is highly dependent on the importing companies, since the country imports seventy to seventy-five percent of the goods that it consumes.  When these companies, with foreign financial support, reduced the availability of food, medicine and consumer goods through hording and the reduction of imports, a wave of price speculation was unleashed, leading to an increase in the cost of living.  The government responded by purchasing goods in the international market and making goods available in state stores, but the desire of the people for goods could not be completely satisfied by the state-owned system.  Moreover, the price speculation forced the state stores to also raise prices, in order to prevent buying from state stores in order to sell in an informal market.  So the result of these dynamics was that desired goods were not always available, and when they were available, there were long lines to purchase them at high prices.

    Other international factors have contributed to economic difficulties in Venezuela.  (1) In the last eighteen months, the price of oil has fallen from 155 to 30 dollars per barrel.  This has had a dramatic effect, inasmuch as petroleum accounts for ninety percent of the income from foreign trade.  (2) China has adopted a model of slower economic growth, which has reduced the prices of metals and soy bean exported by Venezuela’s trading partners in Latin America.  (3) The value of the US dollar has increased, resulted in a higher cost for all imported goods in Venezuela.  
      
      In conjunction with a media barrage against the government (most of the media remains privately owned in Venezuela) and the economic problems, the economic war was effective in stimulating a lack of satisfaction with the government among the people.  Most people think concretely.  They focus on the shortage of goods and higher prices, and they attribute the problem to those who have political power, without understanding the dynamics that created them.  They blame the government for its inability to manage things well.

     But rather than blame the government, it would be more on the mark to blame the capitalists and their political allies for adopting an unethical and unpatriotic political strategy.  Is it morally acceptable for a capitalist to withhold desired goods from the people in order to advance a political project of opposition against the government, elected by the people?  Is it patriotic to promote political instability in order to defend particular interests?  

     The economic war and media campaign had its impact on the December 6, 2015 elections for the national assembly, converting a majority for the coalition of progressive parties headed by the United Socialist Party of Venezuela into a nearly two-thirds majority for the opposition coalition.  

      As occurred in Argentina (“The Right takes power in Argentina” 1/4/2016), the Right in Venezuela played a political game of pretending to be in support of the people but in reality representing corporate interests.  The French journalist Ignacio Ramonet observes that the opposition candidates hid their intention of neoliberal restauration during the election campaign.  But once the results were in, they announced their plan of privatizing companies, reducing public services, revoking labor laws, eliminating social gains, and dismantling international agreements.  Ramonet further notes that the Bolivarian Revolution continues to have the support of the majority of the people, and that those who voted for an opposition candidate for the national assembly in the context of the current economic difficulties did not imagine a dismantling of the revolution.  Ramonet argues that to proceed to dismantle the gains of the revolution would be an error by the opposition, for it would provoke popular rejection.

     With respect to the political game of the Right, questions should be asked.  Is it ethical for a candidate for public office to speak vaguely in support of change, with the full intention of implementing specific measures that promote corporate interests?  If a candidate intends to return to the neoliberal agenda of the 1990s, should it not be fully declared?   Should not political campaigns be characterized by open, honest and respectful debate among the candidates?  The difference between the Left and the Right in Latin America is not merely a difference in political parties.  It is a difference between two alternative ways of being political.  The one is rooted in an informed understanding and a commitment to the people; and the other seeks to manipulate the people and defend corporate interests.

      The election of an oppositionist majority in the National Assembly creates a situation of political polarization in Venezuela, which will be discussed in the next post.


Key words: Chávez, Maduro, Venezuela, United Socialist Party of Venezuela, Latin American Right, opposition, socialism

      A government that pretends to defend the people but in fact defends the interests of corporations must play a constant political game.  The government of Mauricio Macri, which took power in Argentina on December 10, 2015, is in this situation (see “The Right takes power in Argentina” 1/4/2016).  In pursuit of this political game, the government of Macri has indicated its interest in establishing free-trade agreements with the United States and the European Union.  “Free trade” pretends to promote economic development for all, but in reality it serves the exclusive interest of corporate profits.

     “Free trade” has been a powerful ideological tool of the bourgeoisie since Adam Smith extolled the virtues of the market in opposition to government-issued overseas monopolies in the era of mercantilist capitalism.  Smith’s classic work, The Wealth of Nations, was published in 1776, at the beginning of the transition of the capitalist world-economy from agricultural capitalism to industrial capitalism.  In opposing government-issued monopolies, Smith was taking the vantage point of the newly emerging industrial bourgeoisie, and he was seeking to eliminate restraints on the development of industry. Smith’s analysis constituted an important advance in the science of political economy.  His concepts, however, were formulated before the emergence of large-scale and concentrated capitalism, and they therefore must be reformulated, taking into account this development and others in the evolving world-system (McKelvey 1991:61-64).

      When concentrated industry emerged during the nineteenth century height of British hegemony, British economists used the concept of free-trade to argue against the government protection of national industries, seeking to promote the sale of British manufactured goods in other core nations.  In spite of its contradiction with the interests of their nations, the economists of other industrializing nations used the concept, because it justified the determination of workers’ wages on the basis of the market principle of supply and demand, thwarting state intervention in support of workers’ needs.  

     In removing the concept of free trade from the theoretical and historical context of Adam Smith, and in using the concept to justify national and international policies, economists were taking free trade from the domain of science and placing it in the sphere of ideology, where ideas distort reality in order to defend and promote particular interests.  But as is typical of ideological distortions, free trade as ideology was characterized by contradictions: it was not followed in practice by core nations that needed to protect their industries; nor by governments with respect to labor, as courts intervened to declare union activities to be restraints of trade and police intervened violently to repress workers’ strikes.

     The ideology of free trade suffered a setback during the era of welfare state capitalism, which was provoked by the Great Depression of the 1930s.  The period was dominated by the concepts of Keynesian economics, which advocated state investment in order to expand the economy, increase employment, and create greater social equality.  The capacity for core states to invest in the economy and society was made possible by the colonial and neocolonial superexploitation of vast regions of the earth, providing core nations with high levels of capital and revenue.  The idea of free trade did not completely die; its virtues were proclaimed by a few economists, including Milton Friedman, a well-known economist of the University of Chicago.  But most economists considered that events had shown that free trade was limited in its validity, and that governments would never again be guided by it.

     During this period of welfare state capitalism from 1929 to 1980, global elites made concessions to the Third World project that sought independence and national sovereignty for the colonized regions of the planet.  The concessions gave Third World states a degree sovereignty, in order that they could adopt measures for the protection of their national industries and national currencies.  The protective measures had benefits for the people, however limited.  During this period, there ruled in the Third World the idea that sovereign states had the right and the duty to take necessary measures to promote national economic and social development.  

     In the 1970s, the first signs of a long structural and possibly terminal crisis of the world-system emerged.  Historically, since the sixteenth century, the world-system had expanded by conquering new lands and peoples, thus making available new sources of cheap raw materials and cheap labor as well as new markets for surplus manufactured goods.  But by the 1970s, two factors emerged to block this historic mechanism of expansion.  First, the world-system had reached the geographical limits of the earth, so that there were no more lands and peoples to conquer.  Secondly, the colonized peoples of the earth had attained a capacity to politically mobilize in defense of their natural resources and the rights of the people (see various posts on the crisis of the world system).  

     In response to this situation, the global elite launched the neoliberal project, giving new life to the ideology of free trade.  Core governments and think tanks launched an ideological attack on the state, seeking to reverse the modest concessions that had been made to Third World governments during the era of welfare state capitalism.  They maintained that state intervention by Third World states in their economies had promoted poverty, and that the implementation of free market principles would allow them to finally overcome poverty.  This claim of the global elite represented the highest form of deceit and hypocrisy: in fact it was imperialist interventions by core states in the affairs of Third World nations, in pursuit of the particular interests of the core, which had deepened the underdevelopment of the Third World since the attainment of political independence.  The deception was understood in the Third World, where popular movements could not lose sight of the fact that colonialism is the author of underdevelopment, and that imperialist policies maintain the economic and cultural structures of colonialism.  But because national elites in the Third World, in collusion with international financial actors, had betrayed their nations and accepted untenable loans, Third World governments were now in debt, providing a lever for the core to impose the neoliberal project.

      The global elite was able to impose the neoliberal project and resurrect the free-trade ideology as a result of the vulnerability of the Third World project during that historic moment.  In the first place, there was the high indebtedness of Third World governments, exacerbating their lack of capital for investment in industry, infrastructure and education.  But in addition, the Third World project from the outset had been forged by a mixture of reformers and revolutionaries, with the former having economic interests tied to international capital, and with the latter seeking a decisive rupture with colonial economic, financial, cultural and ideological structures.  Although some nations, like Cuba and Vietnam, took decisive revolutionary steps, many did not sufficiently seek transformation of colonial structures, with the result that promises of improvement in the material conditions of the nation could not delivered.  So by the late 1970s, the hopes of the people had not been fulfilled, and the governments were in debt, rendering the Third World project powerless to prevent the implementation of neoliberal policies.

     But the neoliberal project further impoverished the impoverished, thus giving rise to waves of popular indignation.  At first the popular protests focused on concrete issues, such as the price of water.  But charismatic leaders emerged to teach the people a more comprehensive understanding of neoliberal policies, exposing the ideological character of the free-trade doctrine.  Proclaiming that a “Better world is possible,” the movements brought to power alternative political parties that would defend the rights of the people, a process particularly advanced in Latin America, where a number of progressive governments have been established on a foundation of popular support since 1998.  These governments reversed the trend toward free-trade agreements with the United States and other core governments, and they have moved toward the development of South-South cooperation (see also “The fall of FTAA” 3/7/2014 and other posts in the category of Latin American union and integration).  The Right in Latin America today seeks to bring down these progressive governments.

     We should not lose sight of fundamentals.  An objective analysis of human history and the modern world shows that the state commonly has played a central role in the development of a nation and in the formation of a national social project.  An unregulated market contributes to economic development, under conditions in which buyers and sellers are small scale and more or less equal.  But such conditions do not pertain to today’s world-system, characterized by the concentration of production and by the concentration of power in the hands of a few states.  And they did not pertain to many empires in the past.  Throughout human history, in pre-modern empires as well as in the development of the modern capitalist world-economy, the state has played a central role in economic development.  The important role of strong state action to promote national development has been historically demonstrated, and this lesson from history especially applies to nations today that have been made underdeveloped through colonial and neocolonial domination.  

     The fundamentals that we should keep in mind include moral principles.  In accordance with the democratic value of the equal sovereignty of nations, all states have the right to pursue projects of national development, seeking to utilize natural and human resources in accordance with long-term national needs.  Those nations that have been historically colonized should be free to exercise this right, without being subjected to ideological attacks, in which false assumptions and distortions abound in order to justify military interventions and political interferences in defense of the particular interests of the powerful.  

     The long-term negative consequences of free-trade agreements in today’s global reality are not self-evident.  Charismatic leaders were able to delegitimate the ideology of free trade in the immediate aftermath of the imposition of the neoliberal project.  But only a minority of people, twenty-five or thirty percent, are able to internalize an historical and global understanding of the problems that the nation confronts.  The majority is susceptible to the distortions of the major news media, which is characterized by selectivity and superficiality, driven by corporate interests.  In the contest between, on the one hand, educating the people, and on the other hand, manipulating and seducing the people, the latter is easier to do, especially when undertaken by those with wealth, power, and control of the means of communication.

     The concept of free trade once pertained to science.  But it now belongs to ideology.  We who are committed to the development of a just, democratic and sustainable world-system must undertake the difficult task of educating the people.  This mission includes the delegitimation of “free trade,” an idea that is inconsistent with empirical reality and that has vibrancy, not because it is valid, but because its serves the interests of the wealthy and the powerful.

     See further “Imperialism as neoliberalism” 10/7/2013 in the category US Imperialism; and “Free trade in the 19th century” 8/26/2013 in the category Colonialism, semi-colonialism, and neocolonialism in Latin America. 

​Reference

McKelvey, Charles.  1991.  Beyond Ethnocentrism:  A Reconstruction of Marx’s Concept of Science.  New York:  Greenwood Press. 
 
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Key terms: free trade, unregulated market, Adam Smith, political economy, neoliberalism, free-trade agreements, FTA, Third World project, Third World socialism

     On November 22, Mauricio Macri, of the rightist party Cambiemos (Let us change) won the presidential elections in Argentina, defeating Daniel Scioli, candidate of the Front for Victory, by a margin of 51.32% to 48.68%.  He assumed office on December 10, 2015.

      The Front for Victory is the party of Nestor Kirchner, who assumed the presidency in 2003, initiating an era of policies in defense of the needs of the people, continued by the presidency of Cristina Kirchner.  The policies of the Front for Victory have established a low rate of unemployment of 5.9% in Argentina and a reduction of government debt to its lowest level since 1976, and they have led to significant gains in education, health, and science and technology, including the establishment of nineteen universities.  In addition, the Kirchner governments have nationalized the petroleum industry and the airlines, and they have created other public companies that have contributed to national development.  The Kirchner governments brought to an end an era of neoliberal governments that had defended corporate interests and that had generated intense waves of popular protest.  In addition to defending the rights of the people in Argentina, they also played an important role in the process of Latin American union and integration.

     The Right won the November 22 presidential elections in Argentina with the strategy that the Latin American Right has been using in opposition to the progressive governments that have taken power during the last fifteen years:  forming a new political party, taking into account the fact that the traditional political parties have been discredited by their collusion in the implementation of the neoliberal project of the global powers during the 1980s and 1990s;  making promises that are supportive of popular desires, such reducing poverty, expanding the economy, extending the reach of social programs, improving housing, and launching campaigns against corruption and crime, without providing specifics or a developed plan; developing a media campaign designed to discredit the progressive governments, playing on the fact that no government, no matter how committed to the people, can fully deliver on all of the people’s hopes; and offering candidates with a certain degree of popular appeal.  Corporate ownership of the media, which plays an intense role in the campaigns, makes the success of the strategy possible.  Representative democracy, as distinct from popular democracy, is vulnerable to this kind of demagogic maneuver, and it is particularly successful in influencing the middle class (see “Popular Democracy” 11/6/2013, found in the category on the American Revolution).

     This is not the first setback of the Left in the current wave of Latin American governments, initiated by the election of Hugh Chávez as president of Venezuela in 1998: the party of Chávez failed to win a constitutional reform referendum in 2007; the president of Paraguay, a former Catholic Bishop who emerged to defend the poor and who was elected in 2008, was removed from office by a legislative coup d’état; and the constitutionally-elected president of Honduras, who represented a traditional political party but was moving toward closer relations with the most radical governments of the region, also was removed from office in a legislative coup d’état in 2009.  But the presidential elections in Argentina on November 22 mark the first time in the current progressive stage in Latin America that a Leftist government has been removed from power by an electoral process.

     What happens now in Argentina?  The Front for Victory remains strong in the legislature and in the provincial governments.  It likely will attempt to block any effort to reverse the policies that have resulted in an improvement of conditions of life for the people.  Insofar as the new government considers certain progressive policies untouchable, as a result of their evident benefits for the people, such policies would become consolidated, accepted even by governments of the Right.  On the other hand, to the extent that the government seeks to reverse policies that defend the needs of the people, it could generate intense popular mobilizations that would undermine its capacity to govern, as occurred with the governments of the neoliberal era.   The political game of the Right is inherently contradictory: it comes to power through a vaguely populist rhetoric, but then it seeks to govern in the interest of national and international corporations.  To the extent that it adopts pro-corporate measures that have anti-popular consequences, its true character is made manifest. 

      Thus far, on the one hand, the government of Macri has promised to keep intact the nationalizations and the social programs of the Kirchner governments and to continue cooperation with the governments of the region in the process of Latin American and Caribbean union and integration.  On the other hand, the Macri cabinet has been staffed with former directors of multinational corporations and with persons who are linked to the military dictatorship of 1976; and the government has indicated its orientation to free-trade agreements, it has eliminated protection of the national currency, and it has decreed a new law over the media of communication.  

     The Media Law of Argentina was approved by the National Congress in 2009.  It sought to democratize the media, which has been under the control of the media conglomerates, and to ensure a plurality of voices.  It established the Federal Authority of Audiovisual Communication Services (AFSCA for its initials in Spanish) and the Federal Authority of Information and Communication Technologies (AFSTIC) as state organisms with autonomy.  The new Macri government issued a decree placing the functions AFSCA and AFSTIC under the direct authority of the Ministry of Communications through a newly-created National Entity of Communications (ENACOM).  The degree has generated popular protest in defense of the 2009 Media Law.

     The Macri government’s elimination of protection of the national currency defends the interests of corporations and has negative consequences for the people.  The value of Argentinian peso fell with respect to the US dollar, with the rate of exchange going from 9.7 to 14.7 pesos for the dollar, a devaluation of 34%.  The result was an increase in prices for domestic goods sold in pesos, such as beef, wheat and water, according to a consumers’ association, diminishing the purchasing power of the people.  A leader in the truckers’ union has calculated that the workers would need a salary increase of 28% to compensate for the devaluation and attending inflation.  On the other hand, the devaluation benefits exporting companies, which receive dollars for exported goods and at the same time pay salaries in Argentinian pesos.  It is estimated that the estate bourgeoisie will have an additional four to eight billion dollars in profits for their sales of beef, wheat, corn and soy bean.  

     Such elimination of government protection of national currencies was one of the principal components of the neoliberal project imposed on the peoples of the world in the 1980s and 1990s, giving rise to popular movements of indignation, which in Latin America led to the sweeping aside of traditional political parties and the establishment of a different political reality from the period of 1998 to 2015.  The Latin American Right at the present time hopes that the presidential elections in Argentina are the beginning of the end of the era of progressive governments in Latin America.  But we could be in a moment in Argentina in which the reforms of the Left are consolidated, accepted even by governments of the Right; or in which a new wave of popular rejection demonstrates the political impossibility of the agenda of the Right in Latin America.  Either would reinforce the Latin American movement toward governments that defend the people and the nation, standing in opposition to the neoliberal and militarist policies of the global elite, which seeks to defend its privileges and its interests at all costs, creating a precarious condition for humanity.  

Key words: Macri, Scioli, Front for Victory, Argentina, Kirchner, devaluation, media