[Marxism] Venezuela: the Revolution Devalued?

Louis Proyect lnp3 at panix.com
Fri Feb 15 06:08:59 MST 2013

Counterpunch Weekend Edition February 15-17, 2013

Where There be a "Voto de Castigo"?
Venezuela: the Revolution Devalued?

After months of rumors in opposition circles of a forthcoming 
devaluation, and denials of the rumor by Bolivarian government 
officials, the Venezuelan bolívar was finally devalued  by 47% on 
February 8th . Even though devaluation has become a fairly regular 
event, especially since currency controls were put in place in 2003, 
this devaluation has a potentially far greater significance for the 
future of the Bolivarian Revolution than the previous economic measures 
and an undeniably greater immediate impact on the base of support for 
the Bolivarian government.

The reasons for the devaluation are many and complex. Some analysts 
argue that that the devaluation is aimed at controlling inflation 
(Venezuela’s, at 20% last year, is the highest in Latin America) while 
others, like economist Pedro Palma, argue that it will increase 
inflation. The devaluation will certainly help the government’s balance 
sheet and effectively reduce its deficit and it will also bring the 
official exchange rate a bit closer to that of the “parallel” or black 
market rate. The devaluation will also likely address the problem of 
scarcity and shortages of basic goods.

Vice-President Nicolas Maduro explained the devaluation by saying that 
the root of the problem is speculation and a conspiracy of foreign, and 
internal enemies, to destroy the process of change in the country by 
creating scarcity through hoarding or withholding essential goods. Such 
activity in the business sector aims at raising prices and increasing 
profits at the same time the government attempts to maintain low 
“solidarity” prices to keep essential commodities affordable to the poor 
and working people.

“Speculation,” some might argue, is just the way business works, but it 
becomes economic sabotage when the drive for profiteering is directed to 
political ends. One area of great vulnerability in countries like 
Venezuela, attempting to build alternative economic models, is the 
policy of currency controls. The ostensible aim of currency controls is 
to prevent or limit capital flight from the country and in such a 
context black markets in currency exchange inevitably open up new, 
parallel markets in money that upend the government controls. Currency 
manipulation, besides being a lucrative business, then becomes a weapon 
of choice for the United States and its allies in the local oligarchies 
when directed at governments targeted for destruction.

While the corporate press in the US described the devaluation as a blow 
to US corporations with investments in Venezuela, the most devastating 
impact will be on Venezuelans, particularly the poor and working people. 
Life savings have suddenly been cut nearly in half, with further cuts 
promised in the future. While the minimum wage, and wages in general, 
will likely eventually rise to compensate for what is effectively a 
nearly 50% cut in consumer spending power across the board, the raise 
won’t come immediately and inflation will erode what’s gained. The 
opposition has described the new measure as a “paquetazo rojo,” or what 
could be roughly translated as “red austerity” or “structural adjustment 
package” usually associated with World Bank neoliberal measures, but 
which is now being carried out by the  “red” or “socialist” Bolivarian 

Widespread outrage over the devaluation was immediately apparent as even 
a number of Chavistas protested by posting articles at the 
pro-government website, aporrea.org.  In articles such as the one 
titled, “The Opposition was Right,” frustration and anger at the 
government poured out with unusual honesty in a context of extreme 
polarization in which Chavistas hesitate to publicly criticize 
government policies for fear of being called “escualidos” (quislings) of 
the opposition.  Writer Henry Escalante ended his piece, agreeing that 
the nation’s money must be protected, but he asks “How will the people 
be protected from what is to come? More inflation, more speculation, 
poverty salaries, and probably a new devaluation…” In “The Devaluation 
of the Bolívar: A Betrayal of the Bolivarian Revolution” the author, 
Jose Juan Requena, opines that the “betrayal” consists in the government 
not having “consulted with the people” on the matter beforehand, 
especially after the people came out to support Chavez and the 
Bolivarian Process so forcefully in the October 2012 elections.

My Venezuelan friend, a Chavista who would prefer not to be named, 
echoed this sentiment. In a telephone interview made on February 11th, 
she said she felt that the announcement made on Friday, the eve of 
Carnival, was underhanded: “it was obviously put out at that moment to 
make sure the policy went under the radar and happened without anyone 
noticing it. It’s like Obama announcing his ‘kill’ policies on December 
31st so no one would notice. “ But worse still, my friend pointed out, 
“the government lied. Just a week or so before [Minister of Finances 
Jorge] Giordani said there would be no devaluation and that everything 
was fine. So many of the measures the government said they’d implemented 
didn’t work or weren’t really implemented: price controls, consumer 
protection and so on. We never saw those things realized.”

With Chavez absent from the scene, there was no one to soften the impact 
of the devaluation with clear, cogent explanations. Whatever weaknesses 
the Venezuelan leader has, his undisputed charisma, his natural gift as 
a teacher to be able to break things down and express them simply, his 
compelling and reassuring presence, would have made the overnight 
impoverishment of millions somewhat more bearable.

Somewhere between 92 and 94% of export income in Venezuela comes from 
oil, and the attempts to build “endogenous development,” local 
manufacturing, and self-sufficient agriculture have failed or have met 
with only minimal success. My friend Juan, who I called the same day, 
commented on this failure, saying, “why would anyone want to go out to 
work in the fields and sweat over produce that could fail with bad 
weather or work in a factory when we have a sure income from oil?” As a 
result, everything continues to be imported, and that with US dollars. 
This strengthens the power of the central government, but it makes the 
country extremely vulnerable to inflation and recurring devaluations.

What is increasingly coming into question from these economic shocks and 
the ongoing death-by-a-thousand-cuts that inflation represents, is the 
government’s ability to manage the economy. Certainly there are the 
Missions that have improved the lot of the masses in innumerable ways; 
there is a great flowering in culture, subsidized by oil; there is 
enthusiasm and support for the policies that Chavez has implemented over 
his thirteen years in power, but the economy is dragging all that down.

My friend, speaking of the weeks before the devaluation, tells of 
shortages in everything and prices that in a matter of a week have gone 
up six times. Tomatoes, my friend complains, were five bolívares a kilo 
at the local outdoor Soto Rosa Market (known as the “cheap” place to buy 
fresh food in Mérida), and a week later they’d gone up to thirty (from 
roughly US $1.15 to US$7). “I think the business community knew this was 
coming. Why didn’t we, the Chavistas, know?” My friend is sure that over 
this long Carnival weekend the stores and supermarkets will bring out 
the goods they’ve held back and hoarded and mark them up to the new 
prices when they open for business again. “And I’m sure there’ll be no 
shortage of anything next week – if you can afford to pay the prices.”

Given the unlikelihood that Chavez will be returning to take the 
presidency means new elections will almost certainly be held once again 
in the near future.  Since the opposition presents no viable alternative 
to the Bolivarian revolution, most feel Maduro will be promoted from the 
Vice Presidency to the Presidency. But given the current outrage over 
not just the devaluation but over economic management as a whole, a 
“voto de castigo” (a vote of punishment) is not out of the question.

Clifton Ross is the director of “Venezuela: Revolution from the Inside 
Out” (2008, PM Press) and co-editor with Marcy Rein of  “Until the 
Rulers Obey: Voices from Latin American Social Movements,” due out in 
November with PM Press.

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