Whenever I bring up socialism, whether in columns or in conversation, someone will inevitably butt in with the same tired point: “But what about Venezuela, Claude? Everyone in Venezuela is starving because socialism! Why didn’t you think of that?” So, with the recent expansion of sanctions imposed on the Bolivarian nation, let’s ask ourselves: what about Venezuela?
First of all, how socialist is Venezuela? While the government has been fond of fiery left-wing populist rhetoric, private businesses remain numerous within the country. In fact, private sector’s share of the economy has remained at roughly two-thirds under the presidency of Hugo Chavez, whose election in 1998 marked the beginning of Chavist “socialism” in the country. Venezuela would probably be better described as “social democratic;” they retain a mixed economy dominated by the private sector with a number of public service policies.
Prior to the beginning of the economic crisis in 2014, Chavist policies had been generally successful: poverty fell, literacy rates rose, and numerous worker cooperatives and medical clinics were established. Why did it take over a decade for these policies to lead to ruin? Or, is there something else at play?
Venezuela’s biggest economic problem, ever since the 1970’s, has been crippling overspecialization in the petroleum industry. The current economic crisis can be attributed to the “oil glut” that started in 2014 when Saudi Arabia flooded the petroleum market. This led to a massive drop in the price of oil — and when oil accounts for about 25 percent of your country’s GDP and over 95 percent of your exports, such a crisis is inevitable.
Even with the food shortages, according to the World Bank, the Venezuelan people are far better off under Chavist policy than they were under neoliberal capitalism. In 1998, before Chavez took office, Venezuela had a “food deficit” of 116 kilocalories per day per capita. In 2016, after almost two decades of Chavismo and well into the food shortages that began in 2014, the food deficit had been reduced to a mere 9 kilocalories per day.