Oil rich Venezuela is continuing to suffer under a
Imperialist Capitalist stranglehold quite delusional Nicolás Maduro, the President. Mr Maduro, and his predecessor Hugo Chavez, would fight against the evil neoliberal order by principally redistributing huge amounts of wealth to the oppressed working class.
Except they didn’t. Here in the UK, we have a redistributive system in that the rich are taxed huge amounts (the top 1% pay 25% of all income taxes) and that money is given to the poor. This isn’t necessarily a bad thing, and although we could have a huge debate about welfare, practically the poor must be given some support. I am personally in favour of a Negative Income Tax, because of its lack of complexity; you are incentivised to go to work, and if you don’t work, you won’t starve. In Venezuela however, the Bolivarian inspired socialists simply declared that the rules of economics were wrong, and henceforth they would set prices and production.
For a while, the damage done was mainly superficial because of high oil prices. After Chavez’s death, the cracks in the system began to show, and the cracks are now so wide that it is uncommon to queue for hours to get something as essential as toilet paper. Inflation is running at over 800%. The economy is expected to contract by at least 5%.
Oh dear. Even the Guardian says capitalism is necessary.
Prices aren’t just arbitrary numbers, they are signals to consumers and suppliers about where to concentrate their scarce resources. In a world where people are limited by their cognitive capacities, the overlapping knowledge of mostly rational actors is sufficient to deliver goods and services close to equilibrium. Suspend these hundred of millions of decisions, and you very quickly seize up the economy, and bang, you are being arrested for bringing in condensed milk.
The situation could get far worse, because all of the money the country gets from oil, and needed to pays its debts has effectively already been spent and the country may well default. Hopefully the lower house of the parliament, which has since last December a minority of lunatics in it will succeed in turning the country around, and kick out one of the few remaining socialist throwbacks left.