There seem to be cycles in the Venezuelan economy: a kind of pendulum swing that goes from oil booms to profound crises, which are followed by adjustments, belt-tightening, and liberalization (such as the hike in the sales tax and the freeing of the exchange rate that is going on now). In that sense, the government’s new measures seem to be proof that we have not gotten out of the old labyrinth of dependent capitalism. How can we break with the inertia of this ongoing cycle?
How to break with the inertia and stop the pendulum swings? I think that historically in Venezuela there has been a mistaken interpretation of rentism and oil dependence: the mono-producing, mono-exporting nature of the Venezuelan economy. Oil is seen as the problem. The tendency is to treat oil dependence as if having oil were the root of the problem. In fact, I think that oil is a comparative advantage that the Venezuelan economy has and we have not known how to take full advantage of it.
Instead, I think that the structural problem of the Venezuelan economy is that it has a structural duality, as the old Latin American theorists called it, in which there is a primary economic sector that is very developed, with a level of productivity comparable to the first world (I am speaking of the petroleum industry, leaving aside its current problems). On the other hand, there is the second sector of the economy, industry and manufacturing, that is very dependent on importation for its inputs, and is also technologically backward.
In effect, I think the problem is not petroleum. The problem is that the second sector, which was weak even before oil entered the picture (in fact, the little that it has developed, has been due to support, leveraging with oil profits). So the challenge of a country like Venezuela is how do develop sector two. Now, that brings us to another problem: With whom should it be developed? With the existing industrial group? With a new emergent group? Or with whom else to do it?
In Venezuela, there is an old slogan which is “sow petroleum.” The intellectual Arturo Uslar Pietri invented the slogan, and it was put into action by the government of Medina Angarita. The proposal was to transform Venezuelan capitalism, which was essentially commercial and financial, not very productive, even “parasitic” (as it was called at that time), toward developing the national bourgeoisie. But it was the national bourgeoisie itself who opposed that project and brought down Medina Angarita in 1945. In fact, the principal resistance to the project of industrialization comes from the national bourgeoisie, for whom it is inconvenient.
In that sense, the most important steps taken have been under Chavez, especially later on, when it was understood that it didn’t make much sense to develop an industrial capitalism in Venezuela with private sector capitalists, though one didn’t have to deny them participation. Instead, one needs to industrialize, thinking not only about productivity but also including new productive actors, based on diverse kinds of productive relations. That is is were the EPSs (2) come in to play, and also the cooperatives and communes. There were a bunch of non-private economic projects, in which new kinds of producers emerged.
I think it’s always rhetorical or cliché to say that in Venezuela we have to produce more. Yes, we have to produce more, but also we have to produce with other actors and agents. At least that is what history has shown and even the present points to: the private sector in Venezuela does not have the vocation to carry out a process of industrialization. It has to be a process leveraged by the state’s forces (the main economic agent in the country) that will reach out to other sectors that can include the private sector, but essentially it must involve economic actors in relations of social property and other forms of organization, alternative ones…
Since one cannot separate the economy from a range of social, cultural and historical factors, I would say that no macroeconomic measure (or even a battery of such measures) could solve the current crisis. If that is the case, what transformations are needed in our society so that ordinary people can begin to live better?
In effect, this is a multi-factorial situation, and it also requires multi-factorial solutions, not just macroeconomic measures. The solution would have to involve elements of a cultural order, etc. Now, I think that the first big step in the solution to the Venezuelan structural crisis would be a greater inclusion of the population into national life. That was achieved with Chavez between 2003 and 2012. But the medium-term problem has to do with the sustainability of that inclusion, which is exactly what was lost from 2013 to the present.
In principle, no national policy makes any sense without that inclusion. It is not only a matter of social justice and people living well, but also a matter of economic effectiveness. Importantly the process of social inclusion between 2003 and 2012 led to people having more access to education. They became more educated and trained, and thus prepared to participate in a process of economic transformation.
An example of that is all the brain drain that has happened in the last few months to a year, in which people here were given free education (of a kind that would be impossible for many people in other parts of the world to access), and now they are leaving to become cheap wage labor in other parts of the world. In economic terms, it is as if we were exporting multipliers in the sense that all the investment that we made in education and technology is going to benefit other countries…
People got formation and training, but simultaneously something took shape that hadn’t existed before in Venezuela: the emergence of an internal market sufficiently robust to sustain an industrialization process. In Venezuela, there has always been a tendency to consumerism, but in the framework of an economy that was highly exclusive. Although consumerism did not go away, in Chavez’s epoch (in fact, we saw much evidence of it), that should not hide the fact that there was a widening of the economic sphere and of the salary, leading to increased buying power. That, in turn, led to an effective demand that made the Venezuelan economy work for a long time. So I think that there are important elements that we need to consider, that should not be overlooked: social inclusion is fundamental, but also economic and political sustainability.
Is there anything else you would like to add?
If today’s private sector, without a push in the petroleum industry, is going to return to the level of production similar to that of 2012, it would need to grow annually for a decade at about four or five percent. Moreover, it would have to surpass its current productive capacity by 350 times to supply the local market and generate exports, if we are talking about profits from other sectors substituting for the petroleum profits! That would involve an effort that from my point of view is simply impossible.
There is another element, which is usually not mentioned, which is that that big push in petroleum production will need to go hand in hand with an equally giant injection of electrical energy. Everyone knows about the problems that the Venezuelan economy confronts with regard to the supply of electricity. Our capacity to generate electricity is very run down. Some say that it is operating at about 50 percent of its capacity. To recover the other part, a great deal of investment is necessary.
As long as that is not done, there cannot be any alternative industrial development, because the businesses simply need electricity to function and they can’t take it away from the residential sector, because that would lead to people being without electricity. In summary, to begin recuperation, it’s necessary to get the petroleum industry going and update the electrical system, because the other option amounts to putting the cart before the horse. It doesn’t make sense and the goal wouldn’t be achievable.
(1) Salas refers to practices such as smuggling, hoarding and speculation with subsidized goods that became widespread in Venezuela from 2013 to the present.
(2) EPS initially stood for Empresas de Producción Social (Social Production Enterprises). The initiative began in 2006 as an attempt to provide an alternative model for businesses in which production would be community‐based and there would be a more humanized workplace. A couple of years later, due to an awareness that only enterprises based on social property instead of private property could produce a significant transformation, people began to speak instead of Empresas de Propiedad Social (Social Property Enterprises), changing the meaning of the “P” in the acronym.