Socialist Suicide in Venezuela

Just how far will politicians go in order to maintain power? And who bears the brunt of political mismanagement? The Gryphon investigates the relationship between socialism and corruption in Venezuela, and how the stagnation of social-welfare policies has drastically altered the country’s economy.

From each according to his ability, to each according to his needs” – a renowned mantra of socialism which many left-wingers hold to heart. Socialism boils down to a belief in an economic system where the factors of production are equally owned by society through a democratically elected government. Socialists take into account both individual needs and greater social needs which include transportation, defence, education, healthcare and preservation of natural resources. 

Assuming that the basic nature of people is to cooperate, socialism portrays an ideal (some would say perfect) society where the general public shares the production based on how much each has contributed with no traits of greed involved. However, with the government being in full authority and control of the status quo, in terms of whom the people rely on for basic needs and the regulation of income, socialism can easily transform into kleptocracy and authoritarianism if power falls into the wrong hands.

A brief look through history takes us back to 1970, when Venezuela was the richest country in Latin America and one of the twenty richest countries in the world. Now ranked outside the top thirty richest countries, and ranked ninth when it comes to corruption, the question remains: what provoked such a precipitous downfall in Venezuela, a country which, in 1970, had a per capita GDP higher than Spain, Greece, and Israel?

At the present time, the population of Venezuela is plagued with shortages and hyperinflation of basic necessities, causing starvation and the outbreak of multiple pandemic diseases. The extreme poverty that Venezuela now faces is a far cry from what was once one of the wealthiest countries in South America. This catastrophe has meant that many Venezuelans’ lives have been lost, including those of young infants and children, due to escalating prices and the scarcity of food and medication. Additionally, the public health system has fallen through, resulting in a rapid increase of preventable diseases. With no humanitarian aid at hand, more than three million Venezuelans have migrated to seek better lives amidst the current chaos in their homeland. 

Venezuela’s inflation has spiked to an alarming level which has left many citizens struggling to afford their basic needs. The country’s principal revenue of oil production has gone into a major freefall. With its oil output declining dramatically, Venezuela has been left to rely heavily on the US for its oil revenue. Lower oil revenue translates to cuts in public spending, currency devaluation, rising unemployment and runaway inflation. 

When the late President Hugo Chavez took advantage of the oil boom in 2004 as an opportunity to introduce socialism into his country, Venezuela did not expect to see this economic downfall just over ten years later. Chavez spent billions from the profits on social-welfare programs to aid the poor. Subsidising food, improving the education system and developing the healthcare system went a long way, reducing poverty in the country by more than half. Keeping poor Venezuelans happy was necessary in order to be re-elected and one way of doing so was to rig the economy, resulting in a growing deficit. The fact that Chavez failed to reduce Venezuela’s dependence on the revenue from oil production meant that all these commendable welfare schemes and projects were unsustainable if the oil prices were to fall – exactly the predicament that Venezuela has now faced.

When the oil bonanza came to a halt and prices plummeted in 2014, the country took a hit as it could no longer depend on its oil revenue, which accounted for 95% of foreign-currency earnings, to pay for imports. By this time, Chavez’s protégé and current dictator, Mr. Nicolas Maduro, was in office. Maduro has now been re-elected for a second six-year term amidst Venezuela’s financial and humanitarian crises. In order to keep himself in power, Maduro also decided to rig the economy. But this time, his corruption was not intended to benefit the poor. 

Many have deemed Maduro’s incumbent government accountable for debilitating the Venezuelan economy since 2013 due to the President’s desire to cling on to power. Despite rumours of coercion, the rigging of votes and the blatant mismanagement of his nation, Maduro has gained the support of numerous countries including Russia, China and Turkey. However, by the time of his inauguration on 10th January, many countries, including the US, Canada and those across Europe, withdrew their support for Maduro by disregarding his new term, claiming it to be illegitimate. 

Instead, they recognised Mr. Juan Guaido as the interim president. As the leader of one of the country’s opposition parties, Guaido has long been a critic of the Maduro and Chavez regimes and has led protests against Chavez’s clampdown on press freedom. After declaring his intention of removing Maduro from office, Guaido faced detention by the security forces earlier this month. He has since reitereated that his intention is to now serve as the interim president until the new national elections can be held. 

The socialist experiment upon the Venezuelan people entailed socialist policies being enacted and the industries and properties of thousands of privately-owned businesses being nationalised. Experts have suggested that, in the beginning, Chavez had shown some progress in reducing poverty, but this was only possible with the oil revenue which the country was heavily relying on. The question that remains then is whether it was the concept of socialism itself or chronic mismanagement which caused the decline of the Venezuelan economy? Under socialism, there was less incentive for individuals to be more productive or, in Venezuela’s case, to invest more in harvesting oil. Unlike capitalism, Venezuelan socialism exercised the distortion system, whereby the management and production of precious resources was left to the state to oversee. And in Venezuela, mismanagement inevitably occurred. 

Socialism is the cause of the Venezuelan misery. Young people are out in the streets protesting for freedom and for a change in the government. The distortion of the economy needs to end now before it leads to a massive famine. The only feasible way to recover now would be if the people and the government realise that authoritarian socialism will eventually destroy Venezuela’s economy.