Venezuela: War for oil fuels economic crisis

This is an article from last year but explains the historic and current situation unfolding in Venezuela:

(excerpts)

Having secured control over oil money (and imposed strict currency controls to stop capital flight), the Chavez government began re-directing wealth towards meeting peoples’ basic needs.

In real terms, per capita social spending jumped 314% between 1998 and 2006. This fuelled important gains in poverty reduction, wage rises and higher consumption levels among the poor.

Wealth re-distribution was combined with measures beginning to give Chavismo a clear anti-capitalist character.

Rather than relying on the inherited bureaucratic state apparatus, the government circumvented these corrupted institutions by creating “social missions”. These are programs funded by oil wealth that rely on networks of community groups to facilitate access to healthcare, education and subsidised food, among other things.

The social economy was increasingly viewed less as a complement and more as an alternative to the capitalist sector. Policy initiatives in this direction such as promoting worker-run factories and cooperatives relied on a reinvigorated working class.

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In 2009, the government took a further step by promoting communes, made up of elected representatives of various communal councils to tackle larger-scale problems.

These bodies are also encouraged to create community-owned and -run enterprises, with profits raised going to social projects.

These groups were viewed as the building blocks of a new power built from below.

In sum, Chavismo represented an attempt by Venezuela’s popular class to win control of the state and use this position of power to bring strategic sectors of the economy under its control (in particular oil), and re-socialise the wealth towards meeting their needs.

Central to achieving this has been direct peoples’ participation in the political, social and economic sphere.

Current problems

The current problems have more to do with the successes rather than the failures of Chavismo. The government, nonetheless, still presides over a capitalist economy that is oil-dependent, even if it has been able to reassert a level of economic sovereignty and plant the seeds of a socialist transformation.

Shortages in basic goods, which have contributed to higher inflation, are due less to a “crumbling” economy (which grew 5.6% last year) than to a 10-year long explosion in consumption by the poor due to oil wealth redistribution.

Agricultural production levels have generally risen, but they have not been able to keep pace with demand. This led to a surge in imports.

Nonetheless, Venezuela has maintained a constant trade surplus, which last year totaled US$38 billion.

Venezuela’s economic elites have sought to take advantage of the problems to fuel discontent against the government. They seek to force it to wind back its controls over the flow of oil money or bring it down.

https://www.greenleft.org.au/node/54466