If there were a modern remake of the TV series Fawlty Towers, it would probably contain an episode called 'The Socialists', in which the one-liner 'Don’t mention Venezuela!' would become a running gag.
Mentioning Venezuela in the presence of a self-described socialist is considered boorish and impolite these days. Yes, a lot of people on the left have said foolish things about Venezuela over the years. But do we have to hold that against them forever? And why does this matter anyway? We live in Britain, not Venezuela.
If 'Venezuela-mania' had no domestic policy implications, and if there were no wider lessons to be learned from it, I would sympathise with that sentiment. That is why I am not particularly bothered about, for example, Cuba-romanticism. A lot of people on the left have a soft spot for Cuba, and parade their support for it, but they do not seem to draw any policy conclusions from it. It is just something they feel obliged to say. After Fidel Castro’s death, Canada’s Prime Minister Justin Trudeau delivered a eulogy which bordered on a glorification. It angered some of his critics, but Trudeau clearly has no intentions of turning Canada into an arctic version of Cuba. So his Cuba guff doesn’t matter. It’s just idle talk.
The glorification of Venezuela was never remotely like that. In my forthcoming book Socialism: The Failed Idea That Never Dies, I look at what exactly it was that attracted Venezuela’s former cheerleaders to that system. What did they see in it? What did they say about it?
I find that Chavismo has always been praised, first and foremost, as an overall social and economic model – a new model of socialism, a model which would be nothing like all the earlier, failed attempts. This time would be different. Venezuela was held up as the living proof that a socialist system did not have to turn out like the Soviet Union, Maoist China or North Korea. Socialism could be democratic, humane, and economically viable.
Venezuela seemed to confirm what socialists had always asserted, namely, that there was nothing inherently wrong with socialism – it had just been badly implemented a number of times. One day, somebody would get it right.
And then along came Chavez.
Even today, some still try to cling to the illusion that Venezuela had somehow found a way to make socialism work, desperately looking for excuses. Ken Livingstone, for example, blames the fall in oil prices and US sanctions for the country’s downfall.
But oil prices are not particularly low today. Rather, they were abnormally high during the Chavez years, and they have since fallen back to a level more in line with the long-term average. But they are still considerably higher, in real terms, than they used to be throughout most of the 1980s, 1990s and early 2000s. Chavez’s predecessors would have given an arm and a leg for today’s oil prices. If an economic 'model' requires oil prices to remain permanently in excess of US-$100 per barrel, then it is not much of a 'model' at all.
Even then, a lot of the problems we currently associate with Venezuela were already in evidence when oil prices were still close to historic peak levels. Shortages of basic essentials first became an issue in 2003, just after the introduction of price controls.
What about sanctions? In 2014, the US government brought in personalised sanctions against a handful of members of the regime. Sanctions of that type could not possibly have an impact on the wider economy. It was not until August 2017 that the US government brought in a measure which you could reasonably describe as an economic sanction, namely, a ban on the purchase of Venezuelan government bonds (which also applies to bonds issued by Venezuela’s state-owned oil company). But by then, Venezuela had already been in crisis for nearly four years and its economy had already contracted by a third. Unless the US government has found a way to bend the space-time continuum, and enact sanctions with retroactive effect, they cannot have caused the crisis.
In fact, even retroactive sanctions could not have caused it. They could, at best, have raised Venezuela’s financing costs by restricting the pool of potential lenders. US sanctions do not stop European, Japanese, Chinese, Canadian or Australian investors from buying Venezuelan bonds.
What really destroyed the Venezuelan economy was fiscal and monetary recklessness, economically illiterate price and exchange rate controls, and above all, the Chavistas’ contempt for private property rights and the rule of law. Pre-Chavez Venezuela was already characterised by an over-reliance on oil, over-reliance on the public sector, macroeconomic instability, patronage, clientelism and political populism. But it was not a banana republic. It was a place where property rights were protected, and the independence of institutions, such as the judiciary, was respected.
But the Chavistas are ultimately Marxists. From a Marxist perspective, notions like the rule of law and judicial independence are bourgeois nonsense, which only serves to protect the interests of the elites. A socialist government should not bother with any such tedious formalities. A socialist government is, after all, the voice of The Masses.
And so the Chavistas dismantled the rule of law. Their Western supporters, meanwhile, cheered them on not despite, but precisely because of their revolutionary impatience. Owen Jones, for example, specifically praised the forced nationalisation of cement producers.
Plenty of Western socialists remain wedded to such a mindset. For example, the New Statesman’s Grace Blakely writes for Novara Media:
'Those of us on the left who remain materialists know that liberal institutions operate as a veil over underlying power relations. Liberalism survives by presenting the state as a neutral enforcer of a legal code […] rather than what it is: a committee for managing the affairs of the bourgeoisie.'
This is unreconstructed Marxism, and undiluted Chavismo. The problem is not that so many of the left were wrong about Venezuela. The problem is that they refuse to learn anything from it.
Kristian Niemietz is head of political economy at the Institute of Economic Affairs. His book Socialism: A failed idea that never dies is out today.