To make a case against the viability of a modern socialist state—particularly one that relies on exporting natural resources—one need only point to Venezuela. Since President Nicolás Maduro ascended to power following the death of Hugo Chavez, the country’s economy has spiraled into a meltdown replete with shortages of basic commodities, depletion of reserves, pawning of fixed assets, and hyperinflation north of 100 percent annually.Inflation has become so rampant that the government stopped publishing its normal, falsified statistics in February. It wouldn’t matter what number the administration arbitrarily chose for its consumer price index; the fact is that the money Venezuelans have is not enough to buy even necessities. The beleaguered bolívar makes the price of importing too high—a huge problem for a country that imports 70 percent of its consumer goods—and takes away any incentive for businesses to produce.In one case, a man used a $2 bolivar bill as a napkin for his empanada. It may sound silly, but the fact is that that unit of currency is literally less valuable than the paper it is printed on to a man who cannot use it to buy napkins.NPR offers a look at what obtaining basic goods entails for a Venezuelan family:
In Venezuela, government supermarkets sell price-controlled food, making them far cheaper than private stores. But Valero explains that people are allowed in state-run supermarkets just two days per week, based on their ID card numbers. The system is designed to prevent shoppers from buying more than they need and then reselling goods on the black market at a huge markup. […]We stop at a state-run store. There are no lines outside, but that often means there’s not much food left. Inside, the meat department is a barren landscape.“There’s just unplugged display cases, flies and a bad odor,” Valero says. She settles for three cans of sardines. She also finds diapers for Jeremy.But checkout is like clearing customs in a hostile foreign country. The checkout clerk scrutinizes Valero’s ID card and tells her to hold her index finger over a fingerprint scanner.
The condition of Venezuelans is two-tiered—a classic case of the haves and the have-nots. In this case, what you have or don’t have is foreign currency, which allows the elite class to continue purchasing foreign goods. The less fortunate are subjected to the rationing system detailed above. The apparent cronyism and mismanagement of the Maduro regime that have created this divide have led to anti-government protests, the emergence of prominent black markets, and, of course, political scapegoating.Last December, we eulogized the Venezuelan economy (the world’s 176th freest) and questioned how much longer Maduro could cling to power. Cuba’s trot in from the cold seemed to suggest that it was worried that the stream of financial support from its ideological mentee was about to run dry. This December, Venezuelans will answer this question when they head to the polls for parliamentary elections. If those elections are held in earnest, Maduro’s Socialist Party will likely take a deserved beating. But that’s a big if.It is not the case that the implementation of Venezuelan socialism has changed since Chavez died. The difference is wholly a function of oil prices. When the Bolivarian revolution brought Chavez to power in 1998, the price of crude oil per barrel was just under $30. This price rose more or less continuously for the next decade leading up to the global financial crisis and, even then, quickly rebounded back above $100 by 2010—but now crude oil sits at around $40 per barrel, and petroleum exporters worldwide are ailing. The boom powered Venezuela, but the bust has exposed the underlying fragility and inviability of the natural resource-funded socialist experiment. Put simply, the country can no longer afford to subsidize a paralyzingly inefficient and unproductive economy with petrodollars from its vast oil reserves.One wonders what the allure is of a socialism that impoverishes its citizens but enriches its leaders. But of course, this is the only kind that seems to have ever existed. At least now it is harder for Chavistas and their ilk to tout themselves as proponents of the everyman. When Venezuelans take to the polls next month, we hope they fully consider the options before them—and that their choice is honored.