[Marxism] VZLA: Economic tug of war

[Greg McDonald <sabocat59@xxxxxxx>]

  Venezuela: The economic tug of war between revolution and counter- 
revolution      
By Erik Demeester
Tuesday, 27 November 2007

A recent report from Datanalisis (1) [the Venezuelan statistical  
service] revealed what already many people knew and suffered from.  
Scarcity of basic foodstuff is becoming intolerable. This study  
established that milk, beef and sugar have become very difficult to  
find. Other products like chicken, cooking oil, cheese, sardines and  
black beans are also very scarce. The analysts who compiled the  
report interviewed 800 people in some 60 different shops,  
supermarkets and markets, both in the private sector and the public  
distribution network, Mercal. 73,3% of the places visited had no milk  
powder for sale. 51,7% no longer had refined sugar, 40% had no  
cooking oil, and 26,7% no black beans, a basic staple in Venezuela.

Two thirds of the shoppers declared that they experienced food  
scarcity to one degree or another in the shops where they usually  
buy. Queues of a few hours, sometimes up to four hours, to buy some  
milk are no longer the exception. This is reminiscent of the  
situation in Chile when wholesale economic sabotage was used against  
the left-wing Popular Unity government of the 1970s.

Without giving in to the panic stories and exaggerated reports of the  
right-wing media, we must understand that this is a serious  
situation. The bosses have even threatened to extend this situation  
into the first quarter of 2008, especially because of the  
uncertainties related to the questions of private property included  
in the new constitutional reform. They are grabbing the revolution by  
its throat.

The hysterical campaigns of the bourgeois media are aimed at inducing  
panic and, more importantly, they want to create dissatisfaction  
amongst the social base itself of the revolution itself.
Bosses blame government

The bosses complain of what they call a âcerco gubernemental', a  
governmental siege of private industry and commerce through all kinds  
of new laws, norms, controls and taxes.

The spokesperson of Conindustria (the industrial bosses' federation)  
Gomez Sigala, denies the accusations of the government, which blames  
the private sector for the food scarcity. The current situation, he  
says, is caused by the "wrong policies of the government."

"The fundamental task of industry is to produce quality goods and  
services...Unfortunately over recent years we have been hampered by a  
series of obstacles and barriers which have made it impossible for  
the national productive system to function normally.

     "Those obstacles are the price controls, control of exchange  
rates, import licences, the new taxes and the general insecurity."

Gomez Sigala also insists on the fact that "since 1998 industry has  
fallen by 40%. To win back this lost ground much investment will be  
needed. The governmental policies have the opposite effects. It not  
only fails to attract new investors, it also chases away existing  
investment."

Nelson Maldonado, the president of the network of traders in  
Venezuela, Consecomercio, has the same line of defence. He claims the  
government is responsible for the scarcity of basic foodstuffs.

     "Price controls and control of exchange rates generate scarcity.  
The more those controls on the economy persists the more scarcity  
there will be. The traders are not the cause of the situation. This  
is what you see in all socialist countries."

Then he goes to the core of the bosses' argument: "Scarcity is now  
the worst in many years. This is a fundamental question. The  
government claims that there is a crisis in the world market of milk  
but if you go to Cucuta or Puerto Rico or Miami you will find  
everything you need. Wherever you go you can find milk. Of course not  
at 1000 bolivares per litre. That doesn't exist. There is milk  
available at the price milk really costs."
Profit versus food

The core question is indeed that the bosses cannot make the profits  
they used to make in the past, now that the government has imposed  
low prices. So the industry basically says: "If you get between me  
and my profits, I'll starve the population."

The agricultural industry claims to be working at full capacity.  
Peasant organisations like the Frente Nacional Campesino Ezequiel  
Zamora, challenge this statement. From their own experience they know  
that in many places the bosses are refusing to buy parts of their  
crops of sugar cane, for instance. Workers in the newly established  
public milk processing plants complain that they cannot work at full  
capacity because the big owners of milk cow herds refuse to sell them  
the necessary milk. The deliberate refusal to invest and to expand  
capacity is also a fact. Actually industrial capacity has been  
drastically reduced.

Government sources indicate that the number of industrial production  
units has decreased by 35% since 1998. 6000 companies have closed  
since the beginning of the revolution. The economy is basically  
fuelled with public money. This lack of private investment amounts to  
effective economic sabotage.

Suddenly the private media is championing the case of the poor and  
their health. Recently El Universal - the bourgeois paper par  
excellence - dedicated a whole article to the consequences of an  
unbalanced diet on the health of the population. Food scarcity as a  
result of the government policies will cause anaemia, growth  
disorders amongst the children and youth and weakening the elderly!

It is true that price controls and all kinds of other controls have  
disorganised the normal workings of what is still a capitalist  
economy in Venezuela. Those measures have been taken with the best of  
intentions: to guarantee and expand access to basic foodstuff for the  
broadest layers of the population. Thanks to controlled and low  
prices the most downtrodden layers of the population now have access  
to these products. In general the purchasing power of the poor has  
also increased. A recent report of the Venezuelan American Chamber of  
Commerce and Industry revealed significant increases in income  
between 2004 and 2006. 58%, the poorest section of the population,  
had their real income increased by 130% after allowing for inflation.  
These gains do not include the benefits associated with the different  
social programs or âMisiones' which provide free education,  
healthcare, etc. A common explanation for the shortages by the  
government is that the increase in demand - thanks to increased  
purchasing power â has not been matched by what the market has to  
offer.

That is why the Minister of Food, Division General Rafael Oropeza,  
"invites the industry and agribusiness to increase its production  
with the aim of covering the local demand in foodstuffs." He fears  
that the current situation of scarcity is creating a situation of  
despair amongst the population.

Rafael Oropeza also declared recently that he did not know if this  
situation has been caused for political reasons or for administrative  
problems. He also pretends not to know if it is done "on purpose or  
not"!!!

In reality the public network of food distribution, via Mercal, is  
trying to cover the demand which is not met by the private sector,  
that is refuseing to increase production.
Bold measures and mass action needed

Rafael Oropeza's appeal to business to "satisfy demand" is to say the  
least a bit naive. It also reveals a lack of knowledge of the  
workings of a capitalist economy. Capitalists do not invest and  
produce to "satisfy demand" even if they claim to do so. They do it  
for one reason only: to make profit. If they can no longer make  
profits they will withdraw investment or reduce it to its minimal  
expression. This is what is happening today in Venezuela. All the  
progressive reforms such as price controls, etc., tend to disorganise  
the normal workings of the capitalist economy. They distort the  
functioning of a market economy. Reformists in the Bolivarian  
movement believe those reforms are compatible with capitalism. The  
reaction of the capitalists should be a lesson, however. They are not  
compatible with the functioning of a capitalist economy. That is what  
they are saying every hour of the day. The main demands of the  
different bosses' organisations are to remove all the control  
measures of the government. Then they will be ready to respond to the  
demands for more goods, they claim. This situation pleads for the  
opposite course. The revolution cannot retreat on this or any other  
question. Bold measures are needed. Nationalisation of food  
production and distribution under the democratic control of workers,  
peasants and communal councils is the best answer to those who are  
starving the people. The peasant organisation, the FNCEZ, is right  
when it says to the bosses: "If you refuse to feed us we will take  
over your factories". It is time to put those words into practice.
Economic sabotage threatens revolution

The situation of scarcity of foodstuff is not a recent phenomenon,  
but in the last months it has taken a sharp turn. The timing is of  
course not accidental. In the run-up to the referendum on the new  
constitutional reform they hope to reduce the âyes' vote or even to  
win the referendum on a "no" campaign. It is part of a generalised  
campaign to undermine the revolution on the economic front.  
Especially the poorest are hit by this scandalous campaign. The aim  
is evident. By organising artificial scarcity they hope to demoralise  
exactly those layers of the population who constitute the social base  
of the revolution. Scarcity, and its inevitable side effect of a  
black parallel market of high priced goods, can neutralise the effect  
of increased purchasing power and controlled prices. "What is the  
point of a revolution if you cannot buy milk anymore?" is a feeling  
the counterrevolution wants to induce among the population. The  
politically most backward layers of the revolution can be tempted by  
this reaction. Especially when bombarded daily by panic reports in  
the media.

The reaction of the government is a combination of appeals to  
business to increase production, massive imports of the missing goods  
and distribution through the network of Mercal and efforts to develop  
a parallel public food industry. To this must be added limited and  
very partial expropriations of abandoned companies in the food  
production chain and mild measures against blatant examples of  
hoarding, corruption and speculation.

Because Mercal is not working under democratic control it is riddled  
with corruption. This is also one of the reasons why Mercal is  
suffering from food scarcity. Huge amounts of Mercal products have  
"found their way" on to the informal black market. They are being  
smuggled out of the public network by venal bureaucrats eager to make  
a fast buck in this situation. Those products are sold by some  
buhoneros or street sellers at uncontrolled - therefore very high -  
prices.

The revolution in Venezuela is again at a crossroads. It is being  
attacked on all fronts. On the economic front it needs urgently to go  
on to the offensive. Halfway measures applied half-heartedly will not  
be able to combat the threat of economic sabotage. The economy is the  
Achilles' heel of the revolution. Until now the reformists in the  
government have been able to answer those weaknesses with massive  
public investment and imports financed by the oil revenues. All this  
is done within the confines of a capitalist economy. They hope to  
postpone and avoid a confrontation with the oligarchy. All to no  
avail, as the recent situation shows. The socialist battalions, as  
the local branches of the newly formed mass United Socialist Party  
are called, should take the lead with a programme of mass action of  
workers' control of prices, of the food production chain and  
nationalisation.

     (1) Monitoreo exploratorio del mercado de productos con precios  
regulados por el Estado Datanalisis, 16 octubre 2007 
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