[Marxism] Venezuela: oil royalties versus capital flight:

Xxxxxx Xxxxxxxx rakeshb at stanford.edu
Thu Aug 19 10:06:22 MDT 2004


Jurriaan wrote:


>To get Chavez's "oil rents" in perspective, I was curious to find out a few
>facts.
>
>The proportion of annual export sales going to Venezuelan government
>actually dropped massively since 1992. Between 1976 when a large part of the
>oil industry was nationalised and 1992, the Venezuelan government collected
>an annual average about 71% of total export sales. In the period 1993-2000,
>this annual average was halved to about 36%
>
>For example in 1981, you had US$ 19.1 billion of export sales, which yielded
>US$ 13.9 billion in royalties and income taxes. But in 2000, US$ 27.3
>billion of export revenue generated only US$ 11.3 billion in royalties and
>income taxes. That is to say, royalties and income taxes were 73% of export
>revenues in 1981, but only 41% in 2000.


Yes but all this suggests is that as rent is price determined, weak 
prices determined less rent that could be appropriated. Note Cyrus 
Bina URPE newsletter, Fall 1995 (p.13):

"During the oil gluts, when the larger supply of oil from more
productive regions is rendering the production from the least
productive regions unprofitable, the magnitude of the global
differential productivity decreases. Conversely during the oil
shortages the magnitude of global differential productivity
increases. Persistent gluts thus would correspond with the smaller
amount of differential oil rents and enduring shortages with the
larger ones. This universal rule applies equally to both OPEC and non
OPEC oil nations alike. That is why OPEC oil revenues are no longer
immune from the determining  (and often undermining) imact of (spot)
oil prices in the global oil market. Therefore, OPEC may seem the
'clumsy cartel, as it apears to MA Adelman of MIT, during the gluts
and tactful during the shortages. Adelman thus confuses the
competitive formation of differential global oil rents with the
anachronistic notion of a global cartel...OPEC's challenge, far from
indicating the formation of a country cartel, was a direct
consequence of the post cartelization of the oil industry. In
reality, the so called OPEC offensive was, in effect, an offensive
against the system of administrative pricing that allowed the
companies to make large profits, while also skimming off the lion
share of the differential rents that could have otherwise been
received by the ownersof the oil in place."





>So all that Chavez's government is economically attempting to do, in an
>aggregate sense, is to recover to some extent to the previous government
>position qua income and expenditure.

He is trying to appropriate fully DRI and II as its magnitude is 
raised as a result of higher oil prices. Still the question remains 
what is the source of this rent and the determinant of its magnitude?


>Venezuela's GDP 2003 was valued at about US$117.9 billion in ppp terms, the
>same as Ireland; the output of the petroleum sector is between a quarter and
>one-third of GDP and generates 80% of export earnings, and half of
>government operating revenues; the total government budget is about US$27
>billion).
>
>However... now consider that during the 1970s and 1980s, an estimated US$34
>billion in private capital exited Venezuela, and that this drain of capital
>has continued to increase year by year.  Thus,  since 1990, the overseas
>assets bought by  Venezuelan residents have exceeded Venezuela's foreign
>borrowing by about US$20 billion.
>
>In 2000 alone, an estimated $4.65 billion in capital fled Venezuela (mostly
>to Miami). That capital outflow alone was equal to 4% of Venezuela's GDP,
>and 12% higher than in the preceding year, when GDP shrunk by perhaps 7%.
>Then just in January 2002 alone, a reported $1.6 billion in private
>investment funds were taken out of Venezuela.
>
>Whatever "oil rents" are obtained, they canb hardly compete with that.

Chavez charges that PDVSA makes non economical investments abroad 
(through CITGO in refineries and gas stations) and 'transfer prices' 
profits abroad in order to evade taxation. Right now Chavez can make 
a bigger absolute claim on profits only because PDVSA is so awash 
that such taxation does not interfere with its own investment and 
probably not much with the consumption standards of its elites.  But 
this is not the capital flight that you are talking about. I suppose 
some of this capital flight was the result of the strike and some is 
probably structural: rentier states usually suffer from Dutch disease 
and cannot sustain (as a result of over valued exchange rates) 
domestic productive investment.



>
>So anyway, while the opposition to Chavez talks about "improving Venezuela's
>democracy and economy", in reality what consistently happened for three
>decades, is that private investment capital owned by Venezuelans is taken
>out of the country, and not invested in the country. This is balanced only
>to some extent by foreign direct investment in Venezuela.
>
>The average gross income per head of population in Venezuela (abstracting
>from the very unequal distribution of incomes) is now about 15% of that in
>the United States (ppp terms), and that is actually less than in the former
>Dutch colony of Suriname !

Yes but it still seems to me that the rent that Chavez is 
appropriating is a pure value transfer from the world working class. 
A populist revolution built on the appropriations of a rentier state 
is not generalizable to the rest of the world.

Xxxxxx




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