Thursday, October 16, 2014

Paralysed Venezuela vs Thriving Bolivia: Two Faces of Socialism

By Hernán Luis Torres Núñez –

Hernán Luis Torres Núñez, a frequent economics commentator on leftist Venezuelan community forum Aporrea, argues that Venezuela should learn from Bolivian president Evo Morales’ pragmatic style of governance for “21st century socialism”. 

A few days ago a friend asked me if I’d written about the situation in the country again. I answered no, because the government hadn’t taken any action on the economy that served as an excuse for me to write something. The only thing that’s happened worth mentioning is the assassination of Robert Serra, which is in an area of events that isn’t my strength. Also I don’t like speculating about this type of issue, above all because the investigations haven’t finished solving the crime.

However it should be pointed out that not making decisions is a way of deciding. That is, maintaining the status quo is a way of signalling that although the situation is very difficult, making decisions can worsen the situation. This reminds me of the second government of [Rafael] Caldera [1994 - 1999]. When he was elected he put the economy in the freezer and let time pass. Caldera was clear that the economic adjustment measures of [former president] Carlos Andres Perez [1989 - 1993] had cost him his job. [Caldera] finally implemented these measures two years into his term, when the political atmosphere had calmed down.

These are very difficult times for the Venezuelan economy. We can’t exaggerate when we see indices of inflation and shortages of all kinds of products (because we no longer see the shortages indicator); when we see that dollars [for imports] are sporadically shared out to different economic sectors at a drip drop; when we see that oil is dropping to 80 dollars a barrel; when we have three official exchange rates to the dollar, each one overvaluing the bolivar and generating deep distortions in the economy; when we see that property prices reach 50 million bolivars (US $7.9 million at highest official rate); when the prices of used cars are crazy, etc. Therefore we can speculate that no economic decisions are being taken to stabilise the situation because these would have a very strong impact on Venezuelans’ quality of life. A strong devaluation toward one exchange rate, a generalised increase in prices (which has been happening surreptitiously), a petrol price increase, and a possible tax rise would make poverty rates violently shoot up. This situation would put the government against the wall, as its banner all these years has been the eradication of poverty. The goal of zero poverty would be smashed to smithereens.

On the other hand, it’s important to point out that politicians pursue power, and once obtained, they try to keep it for the longest time possible. Good economic performance is something that can favour the politicians in government, and bad management sooner or later ends up taking its toll and hastening the fall of the governors, above all if we live in an effective democracy. By virtue of what’s happening in the economy and with parliamentary elections next year, the fear of losing political power is a close possibility. As such, in these moments political calculation can impose itself over economic reality.

Meanwhile, Evo Morales has just won his third term in Bolivia, and overwhelmingly. Bolivia is experiencing economic growth, and in 2015 is expected to be the country that grows most in the region. There is a construction boom in La Paz, with new shopping malls full of foreign brands. In Bolivia there are no currency controls, and yet, international reserves reach 48% of GDP. It appears that there hasn’t been capital flight, and rather Bolivia is today a very attractive site for foreign investment. An important reduction in poverty has also occurred.

The opposition to Morales’ government, that at one point backed the division of the country, has softened its posture. Apparently Evo Morales has been capable of gaining the support of the middle class and some business. The conflict of his first years in government has given way to social, political and economic stability.

All of this drives us to think about what the key to success in Bolivia is, a country with far less resources than Venezuela but that has been capable of establishing a successful popular government, very different from the Venezuelan case. It’s necessary in the field of Venezuelan socialism that the Bolivian case is studied and the necessary lessons taken.

I’ve often heard the argument that other countries don’t have anti-patriotic parasitic bourgeoisies, a reasoning that seems contradictory and a little naïve, because in some way it’s saying that the success of socialism depends on the kindness and patriotism of the bourgeoisie, which is nonsense. The industrial bourgeoisie in all countries behaves in the same way, it invests to profit, and if it can’t profit it moves its capital somewhere else. We can’t forget that there was a moment that the Bolivian bourgeoisie and its half moon movement wanted to remove Morales from power the underhand way. If today the Bolivian bourgeoisie is investing and not encouraging capital flight it’s because it trusts that its investment will be respected and will perform well. All of this has occurred due to negotiation between the Bolivian bourgeoisie and Evo’s government.

The above is notable because Evo Morales has declared himself a Marxist and admirer of Fidel [Castro], however, it would appear that he is also a pragmatic man who understands that socialism of the 21st century has to be radically different than that of the 20th, something that the person who was our economic flag bearer, [former minister Jorge] Giordani, could never understand and less so put into practice. Strong applause for Evo Morales.

October 14, 2014

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