Has Venezuela Finally Figured Out A Socialist Economy Doesn't Work?

Imagine that. It appears the Socialists running Venezuela have come to the conclusion that top to bottom Socialist control of the economy, particularly when it comes to the means of production, doesn’t work.

So what are the Venezuelan socialists going to do to fix this problem of their own making?

They are abandoning socialist doctrine by offloading key enterprises to private investors.

In 1998, Venezuelans voted in [Hugo] Chavez, a populist and self-described Marxist. He was re-elected in 2000 (59.8% of the vote) and in 2006 (62.8%), at which point he began to nationalize various sectors of the economy—including agriculture, the steel industry, transportation, and mining—and confiscating more than a thousand companies, farms, and properties.

At the time of Chavez’s death, his socialist policies were heralded by Salon as an “economic miracle”—but in reality the Venezuelan economy was already in a free fall.

By 2014, with the price of oil collapsing, Maduro’s government admitted it was in severe recession and Venezuela was suffering from the highest inflation in the Americas. By January 2016, the country was on the verge of “complete economic collapse.” Not long after, the Venezuelan government abandoned any pretense of being a “democratic” regime.

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The collapse of Venezuela, once the most prosperous country in Latin America, is hardly a secret. But Maduro’s pivot toward private enterprise in an attempt to stabilize the collapsing country is a new revelation.

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Maduro’s effort to quietly form private-public partnerships, a strategy that began in 2017, reveals the total failure of Venezuela’s command economy. Bloomberg points out, for example, that once-successful food processing plants have been “mostly idle” since being seized by the government, plants that could have been feeding a starving population.

This revelation is both tragic and infuriating, but it’s not surprising. By their very nature, command economies are doomed to fail because they lack the basic incentive and price structures that are present in a market economy.

But what Maduro is building is something that has been done before, something dating back to the 1930’s…in Italy and Germany: Fascism. Is Venezuela’s economy shifting to fascist economy, once described by Sheldon Richman as “socialism with a capitalist veneer”?

Time will tell.