Why does the Venezuelan Election matter?

Yesterday the results of the Venezuelan Legislative elections were announced and it was a humiliating defeat for President Maduro’s PSUV. The MUD, the united opposition coalition of conservatives, liberals and some social democrats, have won around 100 of the 167 seats in the National Congress with some results yet to be declared. This result, along with the failure of Christina Fernandéz de Kirchner, is being hailed as the end of populism, and in the case of Venezuela, the beginning of the end of the Bolivarian Revolution. The assertion about Venezuela is, I believe, correct however no analysis as to why this is the case has been shown by the mainstream media in the West…until now.

Why did the Venezuelan people reject the PSUV in these elections? Two words: the economy. According to the IMF and the World Bank, in 2015 GDP shrank by 10% and the projected unemployment rate in 2016 is around 18%. This is essentially due to the collapse in oil prices. According to OPEC, Venezuela’s oil exports account for 95% of all of the country’s exports; the oil and gas sector of the economy accounts for 25% of GDP. With oil prices reducing by essentially half, the social programmes that these exports provided funding for disappeared and the government had to borrow money in order to sustain them. This situation I believe is the reason why the implementation of the philosophy dubbed ‘Socialism of the 21st Century’ is flawed.
Nicolas Maduro simultaneously conceding defeat and displaying his fantastic moustache. (BBC)
The essence of this philosophy is fairly standard leftism: creating a more democratic economy; using plebiscites to settle issues directly by the people; protecting the rights of minorities; and combating the negative consequences of capitalism like poverty and exploitation for example. In the case of Venezuela the implementation of these noble goals have been predicated on the sale of oil, which, irrespective of the size of the reserves, is a finite resource.  In addition to this, oil is a highly volatile commodity, and to have a huge section of your economy based on such a product is risky to say the least.
According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), poverty rates in Venezuela fell from 49.4% in 1999 to 23.9% in 2012. I’m not here to argue that spending money to reduce the number of people in poverty is a bad thing, however what this meant was that the economy became too dependent on oil exports, and those exports being based on a high oil price. As is the case currently, as soon the oil price dropped the economy tanked.
Take the example of Cuba before the collapse of the Soviet Union. Cuba was only economically stable because it exported huge amounts to COMECON, with the biggest importer being the Soviet Union. Around 95% of its citrus crop was bought by COMECON and the USSR paid premium prices for Cuban sugar in order to support the country. In exchange Cuba was reliant on the USSR for 63% of its food imports and 90% of its petrol. After the fall of the Berlin Wall and the subsequent collapse of the Soviet Union, the Cuban agricultural sector found itself producing goods but no customers. Unsurprisingly Cuba’s agricultural sector contracted and, according to the US Department of Agriculture, agricultural production fell by 54% between 1989 and 1994.
What the Chavez and Maduro governments should have done was use the oil exports to fund investment in renewable energies, thus making the country totally energy independent for the rest of time. Only once this shift had been done should further revenues be spent on social programmes. My reasoning for this is that giving the entire population access to electricity would create jobs and lead to technological advancements. Although the government was left-wing for the last decade and a half, there is still a private sector. Access to renewable electricity would enable these companies to better project future revenues thus giving them confidence to invest in jobs and/or training.
This guy should’ve changed his priorities. (AP)
Because we are now watching history repeat itself it is imperative that we acknowledge the elephant in the room. Capitalists point to Cuba’s problems in the 1990s and Venezuela’s problems currently and use it as evidence that socialism fails. This is false. In actual fact both these systems illustrate how economic systems with socialist principles but that still focus on trade and exports rather than self-sufficiency are doomed to fail. Basically, I believe that these economies failed because they were too capitalistic.
This is why I believe ‘Socialism of the 21st Century’ to be flawed: it needs to stop focussing on trade in order to fund social programmes, and instead shift its focus to achieve economic and ecological sustainability. It must be the pointed out that the same economic problems are not present in Bolivia under President Evo Morales who also follows this philosophy. With this in consideration, we must therefore conclude that this current situation is a uniquely Venezuelan problem, and that I may well be incorrect with my analysis. Even if I am proven wrong about ‘Socialism of the 21st Century’ I stand by the premise that any economy that is solely reliant on one finite resource will sooner or later collapse.

3 thoughts on “Why does the Venezuelan Election matter?

  1. i guess will it really hard to maintain a mixed economy that adopt the advantages of both ecosystems the capitalist and the socialism. and i honestly don’t that capitalism works for those countries


    • I agree. Socialism is preferred to capitalism however I would argue it is impossible to implement without achieving economic self-sufficiency first. As long as a country is dependent on imports and exports, the profit motive remains and the potential for the human greed of politicians at the expense of the people is still a possibility.

      Liked by 1 person

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