Over the last two decades the beautiful, inspiring, maddening, and deeply contradictory project of Chavismo has given hope to millions in Venezuela and around the world. This was not merely because of Chavismo’s undeniable accomplishments: dramatically reducing poverty and inequality fostering a significant, if uneven, degree of popular empowerment and doing all this in a context of massive, sustained electoral support. Equally impressive was Chavismo’s ability to restore millions of people’s faith in the idea that “another world,” and specifically a world beyond capitalism, was possible.
Behind the Food Lines in Venezuela
Sadly, it is difficult to see Chavismo as a source of hope today. Venezuela is in the midst of a severe crisis. In June government sources put year-on-year inflation at 370 percent, and the IMF predicts that it will exceed 700 percent for 2016. For the third straight year the economy will contract estimates are that there will be 8-10 percent negative growth this year. There are chronic scarcities of food, basic goods, and medicine. Hunger, unrest, and discontent with the government are not universal (nor as bad as mainstream media images in the US and elsewhere would lead one to believe), but are undoubtedly growing.
As Venezuela has descended into crisis, so has Chavismo. In December 2015 the ruling Partido Socialista Unida de Venezuela (PSUV) suffered a major loss at the hands of the opposition. Since that time the popularity of President Nicolás Maduro and the PSUV have both continued to decline. Polls indicate that if a recall referendum were held this year (a possibility recently discounted by the National Electoral Council) Maduro would lose by a substantial margin. Of greater concern than the declining popularity of specific political leaders are fears that the emancipatory potential of Chavismo has been exhausted, which Roland Denis, among others, have recently voiced.
Can Chavismo be saved, not in the superficial sense of keeping the government in office, but in the more important sense of reinvigorating Chavismo’s transformative potential? For this to occur three things must happen simultaneously. First, the government must move to address three weaknesses: correcting its disastrous currency policy tackling corruption in a serious manner and, taking steps to diversify Venezuela’s economy. These measures involve complex, technical policy shifts. Yet they cannot succeed without major shifts in power relations as well. This is why saving Chavismo cannot be equated with a technocratic fix. A second, indispensable need is a revitalization of the popular movement, without which the state will lack the will and ability to confront entrenched interests, inside and outside the state, that are committed to the status quo. Third, international writers and activists must work to expose and help mitigate the damage wrought by the economic war being waged against the government by the domestic opposition and US government, which have taken multiple actions (e.g. violent protests, sanctions, pressuring investors and bankers to steer clear of Venezuela) that have prolonged Venezuela’s crisis, with the express purpose of toppling the government.
Irrespective of the actions of the opposition and US government, Chavismo will not stay in office beyond the next presidential election unless the government succeeds in turning Venezuela’s economy around. Economists from across the political spectrum agree that the most important step needed to make this happen is to address Venezuela’s currency crisis. As is well known, Venezuela currently has a three-tier currency system involving two official rates – the “Dipro,” currently pegged at 10 bolívares/dollar, and “Dicom,” which sits at 646 bolívare/dollar – and a parallel, black market, rate, which exceeds 1,000 bolívare/dollar. The 100-fold gap between the Dipro rate, which is much more widely used than the Dicom rate, and the parallel rate has exacerbated a number of long-standing problems in Venezuela, notably inflation and corruption. It has also contributed to a severe shortage of dollars and imported food, basic goods, medicine, and industrial inputs, which Venezuela is highly dependent upon to meet its needs.
The key to fixing Venezuela’s currency crisis is to create a single, unified exchange rate. This can only be done by implementing a free float of the bolívar. Doing this would eliminate the gap between the official and black market rates, and, at the same time, close a major source of corruption: the enormous profits made by those who obtain dollars from the government at the lower Dipro rate and then trade these dollars on the black market, rather than using them for the official purpose of importing needed goods (e.g. food, basic goods, medicine, industrial inputs).
To restore Venezuelans’ severely eroded faith in public institutions, and prevent a major outflow of state funds, the government must tackle corruption in a serious way. Closing the currency-gap loophole is but one component of this, given how pervasive corruption is within public and private institutions. In a June 2015 interview, Roland Denis lists more than a dozen public and private institutions – the state-owned electric, telecommunications, food distribution, banking, oil and other companies, as well as Toyota, Colgate and other private businesses – where misappropriation of funds has reached alarming levels. Those involved in this must be held accountable.
The government must also move to diversify Venezuela’s economy. The prolonged fall in the price of oil, dating to June 2014 (when oil sold for $112/barrel, nearly three times the current price of $40/barrel), underscores the vulnerability of Venezuela’s economy. Despite near-constant promises to wean Venezuela from oil dependence, the government currently obtains 96 percent of its export earnings, and 40-45 percent of its total budget, from oil. In addition to lost revenue, prolonged drops in the price of oil hurt Venezuela because of the flipside of oil dependence: weak domestic production of food, basic and manufactured goods. Figuring out a way to stimulate domestic production must be part of any long-term strategy of development in Venezuela.
Given that 70 percent of Venezuela’s economy is still privately owned, it is hard to imagine how the above measures can be implemented without involving the private sector. Yet the role of the popular sectors is much more important than that of business in terms of the possibility of ending Venezuela’s crisis and, most importantly, doing so in a way that retains and restores the emancipatory potential of Chavismo.
Mass organization and mobilization is key to the success of each of the measures proposed above. Without a strong, autonomous popular movement that may be linked, but must not be subordinate to, the state, it will be impossible for Maduro, or any other president, to fix the currency mess and tackle corruption. This is because there are very powerful interests – mafia-like networks linking state officials, military generals, and private entrepreneurs, who control hundreds of billions of dollars – who benefit from the current system. Changing this system will require action from above that is brought on and backed by continuous pressure from below.
A reinvigorated popular movement is also key to diversifying the economy. This is because Venezuela’s business class is too dependent on the current system to push for real change. To create the type of public, private, and socially controlled enterprises that can survive in a competitive global economy and generate meaningful development organized workers and communities must be front and center. The reason for this is not romantic but eminently hard-nosed and pragmatic: it is only organized workers and communities who have the interest and capacity to hold state institutions and private entrepreneurs accountable.
There are two formidable obstacles standing in the way of the type of state-popular sector alliance called for here. (It is worth pointing out that this type of alliance, in which the state facilitates without fully controlling popular organization and mobilization, existed in Venezuela under Chavez and was key to many of Chavismo’s signature achievements.)
The first is the erosion of the relationship between the state/ruling party and the popular sectors. In June, Atanea Jimenez, a founder of the National Communards’ Network (Red Nacional de Comuneros) commented that, “The [PSUV] leadership doesn’t know the anguish and anxiety that the people are living through. The leadership is acting like we’re still in the same situation we were in three years ago.” This echoes remarks from other grassroots Chavistas I have spoken to in the last year, who say that there is a large and growing gap separating the party/state elite from the base. Closing this gap, and ensuring that the government actively listens to the popular sectors, whose courageous actions (e.g. establishing communal networks of food production and distribution) have been one of the few bright spots in recent years, remains a critical, unresolved task.
The second obstacle is grassroots Chavistas’ and leading state officials’ rejection, on ideological grounds, of certain reform measures needed to address the crisis, in particular, implementing a free float of the currency and stimulating domestic production, in part by working with domestic business. These measures are seen as a “betrayal of Chavez’s legacy,” partly because they involve economic policies pushed by mainstream and conservative economists (with most leftist economists also backing the measures). A second critical task, for reformist state officials and critical intellectuals, is to explain to grassroots Chavista activists, ordinary citizens, and state officials opposed to reform on ideological grounds, that the real threat to Chavez’s legacy is the profound damage being wrought to Venezuela’s economy by misguided economic policies that privilege the well-connected, while hurting the population at large.
Gabriel Hetland teaches at University at Albany and has written about Venezuelan politics for the Nation, NACLA, Qualitative Sociology, and Latin American Perspectives.