Venezuela shows the answer to austerity is economic democracy

The “sequester” took effect Friday, as Republicans and Democrats couldn’t agree on the details of their austerity plan, triggering $85 billion in across-the-board cuts to spending in areas like housing, education, health services, unemployment assistance, and food aid to children in poverty. It’s widely accepted that the cuts risk causing a recession. President Obama, for his part, blasted Republicans for failing to avoid the “dumb, arbitrary cuts”. But one point deserves emphasis: Those “dumb, arbitrary cuts” were Obama’s idea. As Glen Ford pointed out on Black Agenda Report, the President used his debt commission, Simpson-Bowles, as a basis for the cuts he “offered” to the GOP in 2011. “When the Republicans balked at even a modest tax increase for the rich, it was the White House National Economic Council Director, the corporate deal-maker Gene Sperling, who came up with the sequestration scheme, which was timed to explode right after the 2012 elections.” But don’t panic yet – Obama’s got your back. Right after he cuts that pesky deficit. It’s not like your taxes just went up or anything.

On February 9 I wrote about the cult of personality that leads 78% percent of MSNBC viewers to approve of the extrajudicial killing of US citizens: “How can anyone realistically assess the obstacles to ‘progress’ if you’d rather have a drink with the President than see him tried for war crimes in the Hague?” Many of our friends and community members “trust” Barack Obama to fight for “us” against evil Republicans when he’s been clear from the start that he wants to dismantle our already limited welfare state. Maybe they’ll come to see their trust as the textbook leader worship that it is. Maybe they’ll be alarmed at the bipartisan consensus on austerity, privatization, and war. Maybe they’ll admit that the course of the US as global capitalism’s superpower in decline is towards a more and more neo-feudal society. I suggest we not wait for them before we start planning how to change it.

In a 1976 interview for German TV, Herbert Marcuse was asked about the accusation that his philosophy, by providing no practical alternative to the capitalism and authoritarianism it critiques, is utopian. “The responsibility,” he replied,

of the philosopher today, of the Marxian philosopher, is to preach nothing, to advocate nothing, but on the contrary, to not underestimate the power of violence today. To tell those who truly want to work for change: The risk that you bear is unspeakable. You must know that; it probably can’t be helped. But here are the ways that might lead us to stave off a new fascism, or maybe even avoid it.

I’d like to try and point out tendencies in the world today that remind us that a world without poverty and suffering is not a utopia. There’s a lot to be learned from the rise of economic democracy in its many forms. Whether or not participatory government and workplace democracy are truly alternatives to capitalism, they’re clearly alternatives to the “Washington consensus” that champions disastrous neoliberal policies and the extreme hierarchy of corporate structures. They show us that it’s not only possible, but necessary to re-imagine democracy in the face of globalized capital, shrinking governments, and widening inequality.

The one region that has largely broken with neoliberal institutions like the IMF and World Bank is Latin America. In particular, Venezuela and Ecuador, both members of the Bolivarian Alliance or ALBA, successfully weathered the global recession while reducing poverty and inequality through increased social spending and comprehensive reforms. President Chavez, so hated in the corporate media that they gleefully jumped the gun in reporting his death, has been branded a “dictator” in every mainstream US news outlet, from Fox News to NPR. So it’s worth taking some time to look at what he’s done to deserve his reputation, and what we in the US can learn from Venezuela’s Bolivarian Revolution. In fact, Chavez has overseen Venezuela’s transformation from neoliberal guinea pig into the most participatory democracy in the world.

A little context: Because Venezuela, unlike many of its neighbors, had thrown off the yoke of dictatorship in 1958, it was introduced to the Washington Consensus through a highly unequal, corporate-friendly representative democracy. After running on a platform of opposition to neoliberal policies, President Carlos Andres Perez in 1989 turned around and began a new wave of austerity and privatization, sparking mass protests in Caracas. The state response was to kill around 3,000 people, mostly in the barrios. The experience of seeing the President so clearly on the side of the ruling class informed the broad-based grassroots movement that brought Chavez to power in 1998.

At a time when even the Western European social democracies, like Germany and Sweden, have embraced neoliberal reforms in order to “compete” in the global marketplace, the Chavez administration – pushed by popular will from below – has made it a priority to rethink the very idea of democracy. Since 2006, Venezuela has created more than 20,000 communal councils that empower communities (made up of 200-400 families) to set local priorities and control budgeting to ensure that their needs are met. It may not be obvious that this departs from the ways liberal capitalism has historically dealt with structural poverty and inequality. I think Slavoj Žižek hits the nail on the head when he writes that Chavez “is not including the excluded in a pre-existing liberal-democratic framework; he is, on the contrary, taking the ‘excluded’ dwellers of favelas as his base and then reorganising political space and political forms of organisation so that the latter will ‘fit’ the excluded.” And local councils are only the foundation for future restructuring: Long-term goals include forming regional councils and, ultimately, a national council.

But there’s more to Venezuela’s Bolivarian Revolution than participatory government. For one, Chavez’s economic policy incentivizes workplace democracy. Since his first election, workers’ cooperatives have increased by a factor of one thousand. More broadly, in the last decade, social spending has increased by 60.6%. As Pepe Escobar noted on Al Jazeera,

The record of Chavismo is a story of how to progressively horizontalise a vertical society. Chavismo channels no less than 43 per cent of the state budget to an array of social policies.

Unemployment went down from over 20 per cent to less than 7 per cent. No less than 22 public universities were built in the past 10 years. The number of teachers went from 65,000 to 350,000. Illiteracy has been eradicated. There is an ongoing agrarian reform – still a dream in most South American latitudes.

Under Chavez, poverty has been reduced by 44% and inequality by 54%, while both are on the rise in the US. In fact, wealth inequality in Venezuela is half of what it is in the US, and a recent Gallup poll ranked Venezuela the fifth happiest country in the world (the US came in 12th). What are people suffering under Chavez’s “dictatorship” so happy about? Could it be the increased access of millions to health care, affordable higher education, and pensions? Could it be that Venezuela, in contrast to some of its neighbors, is progressive and responsive on indigenous rights?  Could it be that using nationalized oil revenues for public investment, and cutting all ties to the IMF and World Bank, can lead to sustained, broad-based economic growth? In other words, could it be that the prevailing neoliberal dogma is a crock of shit?

As more and more Americans accept unemployment, underemployment, and financial insecurity as the “new normal”, Venezuelans have inspired many other Latin American nations to embrace greater democracy and regional autonomy. They’ve made Venezuela the only nation on earth where it would be practically impossible to impose austerity. No amount of corporate propaganda can dispute that.

So is Venezuela a “capitalist” country? Does it even matter? I think the answer is complex. Clearly, Chavez is financing the Bolivarian Revolution by exploiting Venezuela’s vast oil reserves and selling it in the global marketplace. Private enterprise and foreign investment are alive and well. In that sense, the “Bolivarian model” still depends on the economic instability and environmental damage we find in all existing forms of industrial capitalism.

Still, it appears that economic democracy, the communal and cooperative ownership of resources and political influence, is at odds with the tendency of capitalism towards greater and greater concentrations of wealth and power. The changes in Venezuela, and in Latin America, are ongoing; the revolution must tackle corruption and keep pushing the President further than he wants to go. And yes, there is also a thriving personality cult around Chavez – but unlike the US President, Chavez has delivered for most Venezuelans, especially those in poverty. His success signals to the rest of the world that reform can be revolutionary. And there’s something reassuring about that.


8 thoughts on “Venezuela shows the answer to austerity is economic democracy

  1. Thanks for yet another well-researched, informative, and inspiring post. The lies we’ve been fed about Venezuela need to be exposed and be replaced with discussions over the dynamics of local political and economic decision-making processes.
    Does Venezuela rely solely on its oil revenue or does it diversify its investments?

    Just heard the news. No matter what one thinks of Hugo Chavez, his death is a loss to the world of politics. Who will now stand up to the Big Bully? Ahmadinezhad?!

    • It’s a good question. Most of what Venezuela exports is oil, but exports only make up around 20% of the economy. Most of it is domestic goods and services, which are boosted by other policies like devaluation. I try to address this point in more depth here:

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