[Marxism] The Socialist Revolution in Venezuela

Joaquin Bustelo jbustelo at gmail.com
Sat Nov 17 22:36:28 MST 2007

Paula writes: "In 2006, Venezuela's GDP was $176bn; New Zealand's was $93bn
(PPP figures from the World Bank...."

Paula insists on using PPP figures (Purchasing Power Parity), claiming these
make the case that various countries are imperialist. 

This is clueless beyond belief, for what it does is OBSCURE unequal exchange
which is one of the main mechanisms through which colonial and semicolonial
countries are exploited. 

Different national markets have different value scales for products,
expressed in local currency. In addition, there is a value scale for
products traded on the world market, in other words, a world market price --
but many products made for local consumption aren't traded on the world
market, and when their price is translated to, say, dollars at current
exchange rates, the result is absurd. That's why PPP measurements exist, so
if a pound of rice is valued at, say, one dollar in the United States, a
pound of rice in China, which in a rural market might sell for the
equivalent of 10 cents in local currency, is instead counted as being worth
as much as in the U.S. for the purpose of measuring China's total

There is a big problem in using PPP figures, however, when the issue being
discussed is imperialism, because one of the main ways colonial and
semicolonial countries are exploited is PRECISELY through unequal exchange,
which takes place at exchange rate prices, not at PPP prices. 

The actual MARKET PRICES based on CURRENT EXCHANGE RATES are the figures
which show that commodities produced by colonial and semicolonial countries
are sold BELOW their value whereas the ones produced by imperialist
countries are sold at prices ABOVE their value. Through this mechanism,
there is a constant TRANSFER OF VALUE from the semicolonial countries to the
imperialist countries.

WITHIN a given country you get much the same phenomenon. A manufacturer of
widgets that, thanks to a monopoly on new technology, is able to produce
widgets embodying only half as much labor as those form other manufacturers
nevertheless gets paid as much as the other manufacturers for his widgets.
That extra profit he is receiving comes not from the surplus value generated
by his own workers, but from a fraction of the surplus value created by the
workers of the other manufacturers.

Similarly, as a general rule, products from more advanced economies traded
for products from less advanced ones result in the transfer of value from
the underdeveloped country to the developed one, or, viewed another way, in
an "equal" exchange (equal in money terms) the two countries swap products
that are unequal in value as understood by Marxists, i.e., in the quantity
of labor time they embody. 

Paula is saying, to all intents and purposes, that she can PROVE Venezuela
isn't exploited by imperialism PROVIDED you ignore the real dollar figures,
which are PRECISELY the figures that show this exploitation.

How big is the difference between something that more closely approximates
value as Marxists understand it (purchasing power parity measurements) and
the value recognized by the capitalist world market? 

According to this web page
<http://www.indexmundi.com/venezuela/economy_profile.html>, in 2006
Venezuela's PPP GDP was $186.3 billion; exchange rate GDP was $149.9
billion. The question is, what happened to the $36.4 billion dollars in
value that Venezuela produced but the market did not recognize? That's 20%
of that year's value that just disappeared thanks to the "invisible hand" of
the market. 

Compare that to New Zealand, which produced $106 billion (PPP) and,
calculated on an exchange rate basis, $98.77 billion, as presented by
indexmundi, a much smaller difference.

Or consider Mexico which produced $1.149 trillion on a purchasing power
parity basis, but only $743.5 billion on an exchange rate basis. That's $400
billion dollars and change in value actually produced but not recognized by
the market prices, 35% of the country's production.

Compare to Canada, which has a similar-sized economy, weighing in at $1.178
trillion (PPP) of which the market recognized $1.088 trillion, a drop of
only 7.6%.

And then look at the major imperialist powers.

The U.S. and the European Union, similarly sized $13 trillion+ economies.
The exchange rate GDP for the U.S. was $80 billion HIGHER; for the EU, the
figure was $670 Billion HIGHER. Japan's figure was almost the same, the
market recognized $665 billion more in their products than PPP calculations
say they were worth, but that's on the basis of a total PPP GDP of $4.218
trillion, a jump of 16%!

PPP is not an EXACT measure of economic Value as Marxists might define it,
just a rough proxy, but close enough to appreciate in a ballpark sort of way
how unequal exchange robs colonial and semicolonial countries of value and
how this value then shows up in the imperialist countries. And of course,
the transfer of value takes place through trade, but GDP is measured for all
production, not just that destined for export. Still, the figures are an
illustration that help in understanding the phenomenon of unequal exchange,
even if they do not measure it exactly.

Paula's procedure OBSCURES this key aspect of imperialist exploitation of
the Third World. Moreover, because countries have to buy on the world market
what they don't produce internally but nevertheless consume, the figures
give the impression of much greater resources to import than are actually
there in the case of Third World countries. 

One more thing about Paula's comparison of New Zealand and Venezuela: New
Zealand's population is 4.1 million; Venezuela's is 26 million, about 6-1/2
times as large. The per capita GDP in New Zealand is $26,000; in Venezuela
it was $7,200 (2006 est). And that $7,200 was a BIG jump from previous
years, thanks to the rise in oil prices and Venezuela's increasing success
in reducing how much it is exploited by reorienting its trade towards the
Third World.

Also, look at income distribution (GINI index): Venezuela 49.1 (1998), New
Zealand 36.2 (1997). This means that not only are Venezuelans poorer in
general, but a bigger share of the country's wealth is in the hands of the
rich and a smaller proportion in the hands of the poor in comparison to New
Zealand. (or rather, was towards the end of the 1990's just when Chavez was
elected. It would be interesting to see how the GINI figure has evolved over
the past several years).

All these figures, BTW, are from the indexmundi website, which cites the CIA
Factbook as its source. I mention this as Paula likes to dismiss facts she
doesn't like by saying they're unsourced, as if this list were some sort of
peer-reviewed academic magazine.

The kind of comparison Paula presented of the absolute magnitude of the PPP
GDP between two countries with such disparate populations is absurd; it
shows absolutely nothing save that Paula's case is so weak she's left with
nothing but sleight-of-hand tricks with numbers. For all the probative value
they have, she might as well roll dice and present that as evidence.


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