Skip to main content

Understanding Maduro’s successful socialist economic strategy

After years of calling Venezuela's economy a dismal failure that demonstrates the dangers of socialism, Western media is now lauding its recovery for 'embracing capitalism' — but this is not accurate, argues FRANCISCO DOMINGUEZ

IN ITS intensely biased coverage of Venezuela during the hard years of 2014-21 the mainstream media wheeled in every imaginable academic pundit to “demonstrate” that the country’s economic woes were the result of President Nicolas Maduro overseeing Venezuela’s slide “into authoritarianism and economic collapse” (the Guardian, January 24 2019) and not of cruel US sanctions.  

In 2019, the Economist for instance, in line with US policy, published a front cover with a clench-fisted Juan Guaido titled “the battle for Venezuela’s future,” positing “the world democracies are right to seek change.” Very rarely, if at all, the mainstream media or the activated pundits gave any significant weight to the well over 500 illegal and criminal unilateral coercive measures (aka sanctions) inflicted on Venezuela and its people by the US and its European and Latin American accomplices.  

US economic warfare — the almost total blockade of its economy — led to a shrinking of 99 per cent of its revenues, with Venezuela living on 1 per cent of its pre-sanctions income.

Given current world developments (the mess US efforts to stop its decline are inflicting on the world economy) and the undeniable economic recovery of Venezuela, the Economist is now writing pieces such as “Can Venezuela help the West wean itself off Russian oil?”  

We now see key world financial media competing with each other in predicting by how much Venezuela’s economy will grow in 2022, with percentages ranging from 4 to 20 per cent. This confirms Maduro’s success in steering his country steadily out of steep recession, hyperinflation, severe scarcity, the collapse of exports, and eight consecutive years of externally induced GDP contraction.

Furthermore, Venezuela’s economic and now political strength led a shamefaced EU to finally derecognise Guaido as “interim president” with many countries following suit. Maduro — over whose head the US has placed a $15 million reward — has obtained de facto recognition as the real and only government of Venezuela by the US itself.  

However, the mainstream media has been quick to attribute Venezuela’s economic recovery to the supposedly capitalistic nature of his strategy. A piece in Spain’s rabid anti-Chavista El Pais (May 26 2022) has characterised Venezuela’s recovery as “rampant capitalism.”

This false view has sadly contaminated a tiny and marginal section of Venezuela’s left who maliciously charge the Venezuelan government with selling out to neoliberalism and betraying the principles of Hugo Chavez. This is not just false but utterly absurd.

What was Chavez’s vision? Article 299 of the 1999 Bolivarian Constitution, Chavez’s brainchild, stipulates “The State, jointly with private initiative, shall promote the harmonious development of the national economy, to the end of generating sources of employment, a high rate of domestic added value, raising the standard of living of the population and strengthen the economic sovereignty of the country.”  

Furthermore, in Chavez’s Plan of the Nation’s Socio-Economic Development (2001-07) this guiding principle is combined with the objective of maximising the collective wellbeing through the expansion of democracy and higher standards of living, aimed at a fair distribution of national wealth. This model additionally seeks economic diversification and is open to international markets but is based on a strong state presence in strategic industries where private enterprise participates.  

Even Chavez’s radical constitutional reform — defeated in the 2007 referendum — consecrated the development of public-private mixed enterprises and recognised mixed and private as two of five forms of property. However, constitutionally, the state is entrusted with the responsibility to protect national industry and agriculture from unfair competition.  

Neither did Chavez deviate — nor has Maduro ever deviated — from these parameters.

Furthermore, economic policy is developed and implemented in the context of the state monopoly over the country’s key foreign revenue sources (oil, gold, rare minerals, foreign trade and so forth), which due to the government’s dexterity, persistent US economic aggression notwithstanding, has produced impressive results.  

In his 2021 state of the union speech Maduro reported that Venezuela’s economy had grown 7.6 per cent, foreign trade had increased 33 per cent, households had augmented their consumption by 4.9 per cent, there was 60-70 per cent food self-sufficiency (more than 90 per cent in 2022), with over 90 per cent of what goes into the CLAP boxes (state food distribution programme) being domestically produced, inflation was reduced to single digits and shortages of food and other items had disappeared.

Furthermore, in recent visit to a number of Eurasian countries (Turkey, Algeria, Iran, Kuwait, Qatar, and Azerbaijan) Maduro skilfully expanded Venezuela’s trading partners in the world (with China, Russia and Iran already among the most important). The combined effect of Venezuela’s huge assets and the anti-blockade and special economic zones has made the national economy an attractive foreign investment location.

Two factors stand out in Venezuela’s economic revival: the digitalisation of its economy and the explosive rise of small and medium-sized productive enterprises. In 2020 there were 121,432,000 digital transactions — that went up to 201 million in 2021, covering 80 per cent of total domestic transactions (to be much greater in 2022). Saren, the body in charge of registering small enterprises, reports that 7,657 registered in 2020, 19,284 in 2021, and 13,096 by the end of May 2022.  

Both developments were vigorously encouraged by the Bolivarian government with its expansion and consolidation greatly facilitated by the Homeland Card — a personalised QR identity available to all citizens — and a generous policy of state credit for new small entrepreneurs.  

Domestic consumption has been expanded through a number of bonuses (Christmas; gasoline; family economy; lactating and pregnant women, single mothers, the elderly, youth apprenticeships and much more), all paid electronically. Additionally, 76 per cent of the national budget was devoted to social expenditure in 2021.

Thus, Bolivarian Venezuela has guaranteed food security to all — but particularly its most vulnerable citizens; has protected the population from the ravages of the Covid-19 pandemic and kept key public services functioning; has deftly circumvented the global minefield of US sanctions including challenging US prohibition to trade with Iran, Russia, China and others; has increased oil and other exports, attracted foreign capital while ensuring state pre-eminence over such investment to protect national sovereignty; has sustained and expanded domestic consumption while simultaneously bringing hyperinflation under control and has delivered 4.1m new houses.

Venezuela has achieved all of this while at the same time has vastly expanded, strengthened and empowered the mass organisations of the working class, peasants, and grassroots communal bodies not only as a means of mass political mobilisation but as a deterrent to militaristic, terrorist adventures unleashed from Colombia by Washington’s “regime change” machinery. This is Bolivarian socialism at work.


We're a reader-owned co-operative, which means you can become part of the paper too by buying shares in the People’s Press Printing Society.



Become a supporter

Fighting fund

You've Raised:£ 8,738
We need:£ 9,262
12 Days remaining
Donate today