What’s Really Causing the Crisis in the Venezuelan Economy?

The whole Venezuelan mess has been caused because the Venezuelan capitalists decided to blow up the economy. You as well as I know that there is no such thing as a shortage of anything that can be made or imported in a market economy. Bottom line is the whole economy is run by the capitalists. There are shortages of everything and tremendous demand for all of these products.

Well shit. If I were a Venezuelan capitalist, I would try to import as much of those things for which there is a shortage as possible and sell as many of them as I could! Well the capitalists are sitting on tons of money and all they have to do is make more of the shortaged products or import them. Easy peasy. But they refuse to do it because this is another one of their coups. The “economic coup!” And in case you are wondering the capitalists always do this in all democratic transitions to socialism. They did it to Allende, they did it to the Sandinistas, they did it to Mugabe, they do it to everyone.

If you wonder why revolutionary Leftists say that the peaceful road to socialism is crap and that those who advocate it are parliamentary cretins as Lenin said, this is the reason. There is no peaceful road to socialism. This is what happens every time you try to do it. This is why the revolutionaries say “power never gives up anything without a struggle” and why they even advocate violence in the first place.

Keep in mind: all they have to do is make more of the products under shortage! How hard is that! The capitalists are refusing to do so! Not only that, but the government keeps finding huge warehouses full of shortaged products all over Venezuela! These are products that the capitalists made that are being kept off the market in warehouses to deliberately create shortages.

Alternatively, the capitalists could simply import the shortaged products as they refuse to manufacture them. If something cannot be made, surely it can be imported, no? The capitalists lie and say that they have no money to import anything. The government knows they are lying but can’t do anything. So they play along. The government wants to cooperate with the capitalists so they have been giving them many many US dollars to use to import products because you generally need to use dollars to import things in Venezuela. See fiat currency for more.

Well, the capitalists take those dollars and invest them in the US in real estate and stocks and bonds! They waste most of it in purely speculative capital investment in the US apparently because they think they can make more money that way. This is the case really in all Latin American countries.

I know in particular that in Peru, the oligarchs or elite or rich take all of their money and ship it out of the country. They refuse to invest it in the country. They take all of their money and put it in stocks, bonds and real estate and other forms of rentier capital in the US. In other words, they make almost every nickel in the country but they take every penny of it and secrete it away in the US in the forms or rentier speculative investment. Result: no investment for the Peruvian economy! Which leads to: Peru, another Latin American basket case.

They government finally had enough of the Venezuelan capitalists wasting the dollars the government gave them on rentier investment in land and equities in the US, so they started restricting the amount of dollars they were giving to the capitalists, which of course led to a new problem, “government won’t give the capitalists any money to import the shortaged products.” The evil government ruining the economy once again. As you can see, you can’t win with the Venezuelan opposition. Everything you do is wrong and is set up to fail. There’s nothing you can do fix these problems either.

The capitalists do import shortaged products to Venezuela. However, fully 1/3 of these products are immediately shipped to Colombia where you can sell the same thing for a higher price. Much of the rest of the imported products are quickly diverted to the black market. Of course, due to the artificial shortages, a black market for just about everything sprung up as they always do in these cases. You can see X shortaged product for $X on the real market or you can divert it to the black market and sell it for maybe $2X the market value and double your sales income.

Of course, the presence of a black market and the artificial shortages are causing inflation. Inflation always happens with demand exceeds supply. It is an iron rule of economics. The government has taken tremendous measures to reduce the inflation but these also have come under withering critique by the Chavista-haters. First they blame the government for the inflation and next they blame the government for the measures taken to reduce the inflation! I told you you can’t win with these types. This is what happens when you go against Pax Americana.

Ever since Chavez won his election, mysterious shortages of all sorts of products have mysteriously appeared in the month or two before the election. In 95% of cases, these artificial shortages were not enough to throw the election, but it looks like the last one did.

Inflation has been a chronic problem in Venezuela dating back may decades, so the inflation in the Chavista era is nothing new. It’s just typical Venezuelan inflation, a structural feature of the economy. If you want to know the source of the inflation look up “The Dutch Disease” and there you go.

The Venezuelan capitalists as well as the capitalists in Bolivia, Ecuador, Argentina, Paraguay and Brazil are all on record saying to interviewers that they would blow up the economies of each of those countries in order to throw out the Leftist governments. Coups have been attempted in all of those countries except for Brazil and Argentina and in Brazil the PT heavily caved in to neoliberalism so there was little need for a coup. The capitalists made not one but repeated coup attempts in Venezuela to try to get rid of the Chavistas. This latest one, the economic coup, seems to have been successful.

The vile US media has played its usual sick, lying role. They have never told the truth about one single thing in Venezuela since Chavez took over. it’s been nonstop basically wartime propaganda for a decade and a half now. Consequently almost everything Americans “know” about Venezuela is a smoking pack of lies.

All of the coup attempts were blamed on the Chavistas! This latest one, the economic coup, has sickeningly been conflated with “failed socialism” in order to smear the Bolivarian experiment. The truth is that the Venezuelan economy remains a capitalist one and the capitalists make or import much of what is sold in the country. The government only runs a few “commanding heights of the economy industries.

The government has been buying large quantities of all sorts of products from food to furniture to kitchen accessories and has been selling them for cheap in state stores. There are long lines to get into these state stores to get the deals. They did this because the Venezuelan capitalists typically jack up prices so high that 90% of the population can hardly afford to buy anything. So in order to make foodstuffs, furniture and household and kitchen items available to the masses, state stores were set up. These state stores have caused zero economic problems. Their only effect was allowing the masses to buy all sorts of things they could never afford and discounted and affordable prices.

Admittedly, command Communist economies where the state ran all industry and sold everything in state stores caused all sorts of problems. But that is not going on in Venezuela at all because nothing of this sort is occurring. Yes products are sold in state stores, but those products are purchased on the capitalist market and sold for discounted prices. Shortages and poor quality are not typical problems in those state stores because the products are coming from the capitalist market rather than state industries in a planned economic sector.


Filed under Argentina, Brazil, Capitalism, Colombia, Economics, Ecuador, Government, Journalism, Latin America, Left, Marxism, Paraguay, Peru, Regional, Revolution, Socialism, South America, USA, Venezuela

21 responses to “What’s Really Causing the Crisis in the Venezuelan Economy?

  1. e

    Kinda of reminds me of the “burn it all down” republicans in the US. The super rich are perfectly happy seeing everything around them destroyed or dismantled so they can wield even more power afterward. Government has no choice but to supplant them with their own business investments with borrowed money or tax revenue. If successful, sell the businesses back to the capitalist for a profit. It’s the only way to tame those that lie in wait for catastrophe.

    • EPGAH

      Great! And what’s your plan for “taming” illegals, Black Lies Matter, or the Moslem terrorists who actually CAUSE catastrophe?

      Don’t forget, if borrowed money and/or tax revenue–which is the peoples’ own money, spent increasingly against their will–become the driver of the economy, you’re already more fucked than you know.
      Start with “Where are the taxes going to come from for all this Glorious Government Spending”?

  2. EPGAH

    At risk of being crass, if you fuck with the economy, expect the economy to fuck you back.

  3. EPGAH

    Sandinistas were terrorists, a sort of “army of the streets” who attacked politicians at their houses…Plus a bloody war.

    The war left approximately 30,000-50,000 dead and 150,000 Nicaraguans in exile. The five-member junta entered the Nicaraguan capital the next day and assumed power.
    The State of Emergency was not lifted during the 1984 elections. There were many instances where rallies of opposition parties were physically broken up by Sandinsta youth or pro-Sandinista mobs.

    Mass murder and mob violence…What definition of “democracy” do they fit under?

    • Hasdrubal

      Funny you make no mention of the truly god awful Somoza regime and the Somoza dead enders (Contras) who were backed by ill gotten U.S dollars waging a civil war in Nicaragua. Nope it’s just all the Sandinista’s fault no blame goes towards those who actively fucked Nicaragua for decades for their Norte Americano pay masters.

      • EPGAH

        Contras were the “less bad guys”. Neither side could be truly said to be Noble Defenders™, but Contras were a little better. Sandanistas were pushing for Communism, Somoza was keeping it Capitalist. Or more to the point, keeping Capitalists’ shit from getting stolen.

        But again, this article was talking about democratic. Mob violence overthrowing the elected leader and breaking up opposition parties is NOT democratic…Unless you go by a very eccentric definition of “democracy”?
        What is so “godawful” about the Somoza regime? Go ahead and list the accusations, and let’s see which of those can be leveled against the Commies as well.

        • Hasdrubal

          Of the billion dollars in international aid given to the Somoza regime after the 1972 earthquake most was kept by the Somoza family with the rest being doled out to their lackeys and underlings. Try to blame that on the Sandinistas. The Sandinistas also modernized the economy which had was little more than a command feudal economy under the Somozas.
          The Sandanistas also massivly improved literacy. One need look no further than the Nicaraguan people themselves to see who they view as the good guys. Daniel Ortega has been the elected president of Nicaragua since 2007, try to get a Somoza elected to that office I double dog dare you.

      • EPGAH

        And you don’t consider mob violence to be actively fucking the country? As to “waging a civil war”, the Sandanistas were the revolutionaries MAKING the Civil War! What is your definition of a Civil War, exactly?
        The way to stop a Civil War is not to DEMAND it ends, we’ve been doing that for CENTURIES in Africa, Israel, etc. It’s to make sure the side you want wins.

        When it’s Capitalists vs. Communists, make sure the Capitalist side WINS!
        Now, of course, America doesn’t send in tanks like the Commies did in Cuba, we train locals and hope&pray they don’t turn on us. This is less effective, for obvious reasons. If Russia had just tossed the Cubans guns and wished them good luck, instead of accompanying them with tanks and nukes, Castro would never have stolen a damn thing, right? Or at worst, he would’ve been MADE to give back what he stole. Or we would’ve just taken it back from Castro’s cold, dead hands? 6 of 1.
        Che’s head would be on a spike instead of a bunch of T-Shirts and a shrine in his honor.

        Remember, a dictator in the Third World is only “horrible” to our refined (And arguably rather spoiled) Civilized World sensibilities. It takes a much harder hand to keep savages in order.

        Chile was on the verge of a Communist revolution–a CIVIL WAR–thanks to the Cuban “advisers” surrounding Allende. Pinochet stopped the war, and saved more lives than would have been lost had he done nothing.
        We can get into the metrics of infant mortality, if you’d like?
        Pinochet also WILLINGLY stepped aside for democratic elections after about 2 decades. Castro’s holding onto power in a very NON-Democratic way after over 50 years!

        Or we could take Iraq, where us killing the dictator turned out to be a bad thing as far as “stability of the region”? Or our current war against Assad, which is driving terrorists deep into Europe, under flag of “refuge”?
        Could you imagine begging to be let into your betters’ house because some of your own people are going to kill you–then raping and murdering the idiots who let you in? That’s what the “refugees” are doing!

        When you talk about paymasters, why do you leave out the Communist paymasters who overthrew and fucked country after country? Or do mass executions, starvation, and millions of people fleeing to the Civilized World as GENUINE refugees give you a warm feeling inside?

        • Hasdrubal

          I’m not a communist or even a socialist, on economics I’m a New Deal Democrat. So I feel no compunction to defend the any communist regime except maybe Yugoslavia because I think Tito was interesting and cool and maybe a little Hoxa in Albania because he was kind of interesting too.

          There is a pretty long and grotesque history of the U.S. overthrowing popularly elected governments because those governments were more interested in serving the interests of their people than the interests of United Fruit Company or western oil companies. The fact is life for most Cubans improved under Castro and the same occurred for Nicaraguans under the Sandanistas.
          Even if Ortega himself directed ruffians to beat up people at opposition rallys that’s still a damn sight better than the death squads the Somozas used.
          It should also be pointed out that the legitimate opposition to the Sandanistas led by Violeta Chamorro was anti-Contra, it was the assassination of her husband by the Somozas that sparked the revolution.
          The Contras were awful and nothing more than a glorified right wing death squad. The Sandanistas while far from perfect were light years better the Contras and the Somozas they wanted to bring back.
          Unlike the Contras the Sandanistas never ran illegal drugs into the U.S.

          I leave you with a quote from Edgar Chammoro (son of Violeta) who did join the Contras for a while “The CIA did not discourage such tactics. To the contrary, the Agency severely criticized me when I admitted to the press that the FDN had regularly kidnapped and executed agrarian reform workers and civilians. We were told that the only way to defeat the Sandinistas was to…kill, kidnap, rob and torture…”

  4. Jason Y

    Robert Lindsay has a point. The Venezuelan capitalists don’t like Chavez, so they try to sabatoge the economy with their own money. It’s very much similar to the times kulaks in the Soviet Union destroyed their crops to protest Stalin.

    What is there to argue here? It looks pretty obvious.

    • EPGAH

      In 80s movies, there’s a saying, “Better to die than be killed”. It leads to bad guys or “Honorable Stupid” good guys killing themselves rather than letting the enemy kill them.

      This is the economic version of it: Better to destroy your own shit than be robbed.

      Don’t forget the times Russians burned their own crops to stop invaders from stealing and usurping the crops. Am I talking about Napoleon’s invaders or Nazis? The answer is YES!

    • EPGAH

      Next question: Why is it “bad” for some people to destroy their own shit rather than let others rob them, and other times, it’s considered an “Heroic Sacrifice”?

      • Jason Y

        Well, if that’s what they want. If I was running a Communist regime, I’d have to just expect captialists are not going to cooperate. So the government would have to set up thier own government controlled industries etc., assuming the other stuff will be destroyed.

  5. Jason Y

    Land is a major problem in Latin America. Only a certain few have it, and the poor can never hope to get it. It’s much like the situation that existed in Europe from the 1400s to the 1900s. However, the solution was always to go to the New World to get land. Nonetheless, now all the free New World land is taken up, except in Alaska or remote parts of Canada.

    Anyhow, if there is no escape valve for all these angry landless peasants, then they will forment revolution. One escape valve nowadays, is illegal immigraton to the USA.

    • Jason Y

      Yeah, just as the New World was a convenent way to prevent Revolution in Europe, the Latin American elites now know that immigration to the USA prevents revolution on thier home turf.

      Actually, but this may be far fetched, I bet if France hadn’t lost the French and Indian wars, then perhaps they could have sent their troublesome population to Quebec, and hence stopped the French Revolution.

    • EPGAH

      Since Third Worlders like killing each other, why not kill their criminals instead of dumping them on America? That way, they LOSE malcontents and criminals, and America doesn’t gain them!
      Or they could force their landless parasites to not breed if they can’t afford it!

      Like you just said, all the land is taken up, so therefore, when illegals gain land in America, AMERICANS LOSE IT!

      Here’s the thing, though: Where do these poor live if they’re landless? Maybe you meant they have a little land, a little shack? But then they breed a litter of 8, each one gets 1/8 of a shack…which is almost nothing.
      Why doesn’t the Government limit their breeding? Hasdrubal keeps saying the Third World uses “Death Squads” to maintain order, abortion seems a natural extension to a Death Squad, right?

  6. Actually Pretty Funny

    Uncle Bob has classified me as anti-communist but I forgot to mention I had almost been one of the Noclamentura. My father definitely looked like one Noclamentura. We weren’t Party Members though.
    We quit.

    Back to the problem.
    Who is policing the police aka checking on people working in those Venezuelan state owned stores? If one of the shopkeepers take some kitchen wares from those places and set up his/ her own hidden shop is that acceptable? What about hiding some of the wares and only sell it at a “lil” higher price? Etc…..
    “You know, everything is in shortage, so I need some ‘encouragements’ to sell this to you.”
    At the end of the day, those very people will form the new oligarchs, the new capitalists.
    And of course, the local Bobs(noclamentura) would complaint, and of course the local colectivos, Red Guard, Youth Guard whatever,…. would swiftly fix that problem. Or State owned stores would stop selling goods to the Bobs. After all, everyone is super happy about the state of things, and Bob is the troublemaker.
    And the Bobs would flee to America. I know many former Bobs in the States.
    I am rude because I was somewhat a Red Guard, but wasn’t really into that fad too. I acted like one, but hadn’t confiscated anything yet.
    Moreover, sometimes people just wanted to clean the stockpiles of such chains really fast. They literally hand free stuffs to everyone. Why? Because the more you “spend,” I mean waste things, the more the State will resupply, and the more properous overall for your community. Only question is who would produce anything, then?

    About Maduro, you should check the oil price:

    Maduro’s rating:
    It went up a bit after Dakazo, and now is going down forever with the oil price.

    • There is little to no theft occurring from those state stores from what I have heard. The shortages are brand new as there had never been any shortages of anything anymore. Venezuelan economy is basically capitalist. Shortages of any product that can be manufactured or imported are not really possible in a capitalist economy because new capitalists will take advantage of the short supplies and high demand to import or make more stuff.

      The shortages are caused 100% by the Venezuelan capitalists deliberately trying to blow up the economy so they can get rid of the Chavistas.

      Maduro inherited a lot of problems that are not his fault. Oil price went down. Not his fault. Massive shortages in the economy. Not his fault – his opponents are doing that deliberately.

      A recent survey found that 63% of Venezuelans wanted to Chavista Revolution to continue. Thing is that the capitalists have made life so miserable in Venezuela that people might just vote the Opposition back in to stop the torture.

      Why do you continue insanely conflating Venezuela with Vietnam and other Communist countries. There is no nomenklatura in Venezuela. There is non state owned economy. There is no command economy. That economy is almost completely in capitalist hands. You mention state stores but guess what? Those state stores are all competing with private stores that are selling the same thing. Sound like Communism to you.

      Yes you are basically a radical rightwing anti-Communist fanatic. Seen a lot of your type.

      • EPGAH

        Thing is, those State stores compete at a loss, right?
        How could any store keep going at a LOSS–UNLESS they made up the loss in TAXES? Oh, wait, that’s a “competitive” advantage that non-State actors don’t get!

        Have you been to my Website? I sell computers cheap. You could buy them and sell them for half my price. But you couldn’t maintain that because YOU need to make a living too.

        It sounds like the State is using taxes FROM the businesses to put them OUT of business!

  7. Jason Y

    quote by ep-gah

    America turned anti-intelligence (Make your own jokes about that, I’ll join you), the intelligence community stopped protecting us. Note that under Republican Presidents, we have smooth sailing, under Democrat Presidents, we have riots. Is that because the thugs sense a weak hand on the reins, or their adversarial relationship with our intelligence community leading to these scum not being broken up before they can do damage?
    Or are the rioters Democrat voters, therefore left alone?

    The LA riots were under Bush Sr.’s watch.

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