Is Socialism in Peril? by Fernando Vegas

After eighty years of socialist revolution, the almighty USSR crumbled and disappeared. Meanwhile, China´s socialist revolution was growing fast and nowadays is one of the World’s economic leaders.

No economic growth

Cuba is a wonderful example of revolutionary moral and endurance but has been unable to achieve economic growth and development. Yes, the US blockade has a lot to do with it, we are aware of that, but is it the only cause? And how about Venezuela, a rich country that at the beginning of the revolution had a big problem of unfair wealth distribution that now lies in a failed economy and a country in ruins.

If you ask a rightist politician or the Chairman of a Bank or the biggest shareholder of a big oil company which was the key common problem in all these countries, the immediate answer would be:  Socialism is to blame. And if you make the same question to a regular person that makes a living with the salary or emoluments received as a bank clerk, a public servant, construction worker, taxi driver, lawyer, bar tender and whatever else, most probably we will get the same answer.

[bctt tweet=”How about us? We, all the people that say Socialism is the only way to solve the problems of mankind. Are we going to keep saying that US Imperialism is the main cause of all problems? (Fernando Vegas T.)” username=”hispanicla”]

How about us? We, all the people that say Socialism is the only way to solve the problems of mankind. Are we going to keep saying that US Imperialism is the main cause of all problems?

With the exception of today China you will find that none of the economies of Cuba and Venezuela are sustainable, like the economy of the USSR was not either.

Not enough income

The simple reason is because they do not receive enough income to break even with the expenses. Since the State absorbs the ownership of all (or almost all) production means, enlarges bureaucracy and expands social costs (some say social investment) it also has to meet many payments compromises. But production steadily slows down in the hands of bureaucrats and diminishing income and tax payments.

This is the main problem Socialism has.

It starts very well by distributing wealth (services at no cost, very low food prices, all four stages of education for free, health national system, etc) until the income fails to come in and delays and deterioration shows up and all begins to stop and it’s the end of the socialist experiment.

If this is the difficulty then we must find a way to solve it. The Chinese Communist Party found a solution. In China an ample territorial area was declared of free market, foreign investment was invited to come in and soon factories and stores blossomed with external and also local capitals. Thousands of jobs were created, taxes were paid, the economy grew and the Chinese State received enough money to sustain the socialist part of China. 

Although is a solution, it does not answer the main question of how to make socialism progress economically to sustain the system.

In view of this, we may look at a mixed economy as an instrument of progress.

In Venezuela we should have a mixed economy according to article 299 of the Bolivarian Constitution that says: “…The State, jointly with private initiative, shall promote the harmonious development of the national economy for the purpose of generating sources of employment and a high rate of national added value, raising the standard of living of the population and strengthening the economy sovereignty of the country, guaranteeing legal certainty and solid, dynamic, sustainable, permanent and equitable growth of the economy to achieve a fair distribution of wealth through participatory democracy and strategic planning with open consultation.” 

But the leadership of the Revolution, instead of following the constitutional principle, opted for the expropriation of most of the means of production of the country.

Venezuela and Bolivia

The results are in front of us. Factories shut down or work with insufficient production because of ill management and lack of material to process. This is something that started to happen from 2010. But then we still had a healthy oil industry whose financial resources were milked away to import whatever goods were declared necessary by the leadership of government (including food and medicines). The trouble is that the Oil Corporation of the Venezuela State (PDVSA) was unable to make the needed investments to keep the production of +- 3 million barrels of crude oil per day and now can only serve around 700,000 barrels per day.

To underline the importance of this matter we can compare the economic situation of Venezuela with Bolivia. President Evo Morales and his Vicepresident, García Liniera practiced a mixed economy. They nationalized the oil and gas industry and with it received financial resources that were enlarged by the taxes that then were redirected to social expending. The Bolivian economy was not hurt because of it, on the contrary, Bolivia for the past ten years has had the fastest growing economy of South America, with less unemployment and inflation. 

The troubles of Evo Morales that conducted to his overthrowing were of a different nature. He wanted to be candidate for the presidency for the fourth time and the Constitution did not allow it. Then he decided to submit the matter to a consultation with the Bolivian People (Referendum) but the results were against him. Albeit, Evo did not rest, he went to the Supreme Court and got their support with a ruling that said he could be candidate because it was part of his human rights. Of course there is more to it but the political complexity in this case deserves an entire paper dedicated to the subject.

Permanence in power

By the way, this is something that has to be reviewed. There is a trend for the personal permanence in power of the leader. Even there are rights of heritage because the exercise of power goes to sons and grandsons like in kingdoms. North Korea is an example.

Now, so far we find that capitalism that serves ways to help accomplish the ends of socialism, to be precise, the social distribution of wealth, like in China. But it should be interesting to work on a project that takes elements of capitalism and has them work to all socialist purposes. This will be the topic of the next article we will deliver.