“Critics claim Venezuela’s failure as proof that socialism itself is a failure.”
In 1999 Hugo Chavez swept into power, promising a socialist revolution that would uplift his country and its masses. Poor and working class voters had turned out to support him en mass, and once in office, Chavez supported a wide range of social welfare programs that increased his popularity. For several years, his “socialist” experiment delivered, paid for by high oil prices that filled government coffers. However, Chavez died some years ago, of cancer, and now his “socialist” dream is following him to the grave.
Now, Venezuela is on the verge of collapse. Low oil prices have gutted the country’s finances, while anemic corruption and poorly designed programs have resulted in widespread waste. While Chavez’s programs promised to up lift the masses, in practice, they simply put more people on the dole without effectively developing the local economy.
As a result, Venezuela’s economy only grew more dependent on oil. Shockingly, as much as 50% of Venezuela’s GDP comes from oil, as do 95% of its exports, in terms of total value. Relatively high tariffs, including 15% on agricultural goods and 12.1% on non-agricultural goods, make imports expensive, while the local economy itself is not diversified or strong enough to meet local demand.
The situation is so desperate that the Venezuelan government has been forced to sell shady bonds on the global market to the likes of Russia, China, and Goldman Sachs, promising repayments of several times the loan amount. To raise but a billion dollars, the Venezuelan government has been willing to accept as much as $11 billion dollars in repayments.
With protests breaking out across the government, embattled President Nicolas Maduro, Chavez’s hand-picked successor, is relying on security forces to remain in power. Only, those security forces will only continue to maintain the “law” if their paychecks continue to clear. Once the money dries up, and it appears that it is, Venezuela may spiral into a complete collapse.
Instead of waning, protests continue to break out at a regular pace. Each crackdown, each death and violent confrontation, has so far only riled up the opposition. As of July 2016, Maduro’s support rate had plummeted to only 21%. Polling has since stopped, but almost certainly, support has only shrunk in recent months.
The current Venezuelan government likely won’t last the year. Rampant inflation, severe shortages, and continued protests could overwhelm the government in the near future. Meanwhile, increasing reports of police and military defections and protests hint that Venezuela has entered a death spiral from which it is unlikely to recover.
Critics claim Venezuela’s failure as proof that socialism itself is a failure. It’s fair to question whether Venezuela’s economy is indeed “socialist”, or if it was simply a corrupt petrol-state that bribed the masses for years with cheap handouts as corrupt leaders robbed the coffers. It’s also important to remember and recognize that the pre-Chavez government and its seeming lack of concern or care for working class Venezuelans led to Chavez’s rise in the first place. Regardless, Maduro’s government appears to be a dead man walking.