The Meaning of 21st Century Socialism for Venezuela

In what appeared to be a surprise to almost everyone, on January 30, 2005, in a speech to the 5th World Social Forum, President Hugo Chavez announced that he supported the creation of socialism of the 21st century in Venezuela. According to Chavez, this socialism would be different from the socialism of the 20th century. While Chavez was vague about exactly how this new socialism would be different, he implied it would not be a state socialism as was practiced in the Soviet Union and Eastern Europe or as is practiced in Cuba today. Rather, it would be a socialism that would be more pluralistic and less state-centered.

“We have assumed the commitment to direct the Bolivarian Revolution towards socialism and to contribute to the socialist path, with a new socialism, a socialism of the 21st century, which is based in solidarity, in fraternity, in love, in justice, in liberty, and in equality,” said Chavez in another speech in mid 2006.[1] Also, this socialism is not pre-defined. Rather, said Chavez, we must, “transform the mode of capital and move towards socialism, towards a new socialism that must be constructed every day.”[2]

Given this rather vague explanation and the concrete policies the Chavez government has pursued in the past seven years, is Venezuela really heading towards something that could be called "Socialism of the 21st century"? That is, is Venezuela heading towards something that might be called a post-capitalist order in which the age-old dream of individual freedom, equality, and social justice (liberté, egalité, et fraternité, to use the motto of the French Revolution) becomes a reality for all its citizens?

Before we can answer that question, we need to clarify exactly what is meant by the term capitalism, which is a notoriously vague term. A relatively simple definition of capitalism identifies at least three predominant elements in a social order for us to call it capitalist. First, a capitalist order involves the private ownership of the means of production, that is, of land, factories, and other forms of capital that allows the production of sellable goods and services.

A second crucial element of capitalism, in its "pure" form, is that distribution and exchange are regulated via competitive markets. Competitive markets are an essential and integral aspect of capitalism, which help regulate not only distribution, but also prices and thereby guide what things are or are not produced. As long as owners are interested in making sure that they do not lose their investment to competitors who try to maximize their profit and who reinvest this profit in their business, all owners must aim to maximize profits. That is, private ownership of production combined with competitive markets also necessarily implies the pursuit of profit maximization.

Finally, the third essential element of capitalism is a regulatory system, a state, which helps correct capitalism's frequent dysfunctions and erratic behavior. That is, capitalism needs a state that not only makes sure that contracts between individuals, upon which exchanges are based, are adjudicated in cases where disputes arise, but also acts as a mediator in social conflicts, usually between owners and non-owners, who enter into frequent conflicts over issues relating to inequality. While social movements have historically managed to demand that the state responds better to their needs, mostly by democratizing the state, the state is to a large extent influenced by the owners of capital because these lobby, finance political campaigns and mass media, and generally wield much power in capitalist democracies.

Moving away from capitalism, however, does not, by itself, mean that a society is moving towards socialism. After all, it could move towards feudalism or towards some other form of undesirable social organization. What, then, would constitute socialism or, more specifically 21st century socialism? Rather than engage in a long theoretical discussion of the matter, I will just provide a rough outline, based on what it is not (capitalism) and the fulfillment of certain social ideals or values. That is, I would argue that in contrast to the actually practiced socialism of the 20th century (mostly in Eastern Europe), 21st century socialism would fulfill all three aims of the French Revolution. State socialism of the 20th century fulfilled only the aims of social justice (or solidarity or fraternité) and, to a limited extent, of formal equality (since party members were “more equal” (Orwell) than non-members). 21st century socialism would thus have to fulfill (completely) the ideals of formal equality, liberty, and solidarity (or social justice). In other words, for 21st century socialism to distinguish itself from 20th century state socialism, it would have to be a libertarian socialism, which assures that the “free development of each is a condition for the free development of all” (Marx).

Is Venezuela Moving towards a 21st Century Socialism?

With these general definitions of capitalism and 21st century socialism, we can now see how the policies of the Chavez government compare to these.

Changing Ownership of the Material and Intellectual Means of Production

Taking each of the three elements of capitalism one at a time, one can first focus on the ways in which the Chavez government’s policies affect or transform the ownership of the relations of material (as opposed to intellectual) production. While the vast majority of Venezuela’s productive capacity is still either owned privately or by the state, one of the government’s main areas of emphasis has been to expand non-private forms of ownership and control, such as via cooperatives, co-management, and expanded state management/ownership.

For example, during the Chavez presidency the number of cooperatives in Venezuela has increased from about 800 in 1998 to over 100,000 in 2005 – an over 100-fold increase in seven years. Over 1.5 million Venezuelans are thus now involved in cooperatives, which represents about 10% of the country’s adult population.[3] The government has been actively supporting the creation of cooperatives in all sectors, mostly via credit, preferential purchasing from cooperatives, and training programs.

With regard to co-management, the government has been experimenting with several state-owned enterprises in this regard, such as the electricity company CADAFE and the aluminum production plant Alcasa. Depending on how these experiments go, the government is considering turning over more state-owned enterprises to co-management. These businesses will not be turned over to complete worker control, however, because, according to the government, they are too important for Venezuela to be governed only by the people that work there. That is, they have an impact for the entire society and thus, according to the principle of subsidiarity, the society, through its representatives in the state, should also have a say in how the enterprise is run.

Another strategy for changing the ownership and control over the means of production has been the expropriation of idle factories. Currently at least four production plants, which produce paper, valves, and agricultural products, have been expropriated and turned over to worker control. Working together with the national union federation UNT, the government is evaluating 700 other idle production facilities that could also be expropriated and turned over to former workers of these plants.

Finally, with regard to expanding state management, the Chavez government has created several new state-owned enterprises, such as in the areas of telecommunications, air travel, and petrochemicals. Also, it reined-in the previously semi-autonomous state oil company PDVSA and brought it under direct government control.

Of course, just because there are more enterprises that go against the logic of capitalism, that are in essence anti-capitalist endeavors, such as cooperatives, co-managed enterprises, and state-owned enterprises does not mean that Venezuela is now a post-capitalist society with regard to the ownership of the means of production. However, there is a definite movement in this direction. Whether such forms of ownership will become predominant within the Venezuelan economy it is too early to tell. The real test of the extent to which the government is willing to go in this direction will come if and when private capital is forced to become marginal in the overall economy. Whether such a direct confrontation will take place and how it will play out is impossible to say at this point.

However, creating a sphere of non-privately owned or controlled means of production by itself is not much of a change if such ownership and control follows the same principles as private ownership does, of maximizing profit above all else and of funneling non-reinvested profits towards elite consumption. Thus, so as to ensure that the cooperative, co-managed, and state managed enterprises follow a new set of principles, the Chavez government has created a new type of economic production unit, which is known as social production enterprise (EPS, in Spanish).

Social Production Enterprises are, “economic entities dedicated to the production of goods or services in which work has its own meaning, without social discrimination nor privileges associated with one’s position in a hierarchy, in which there is substantive equality between its members, planning is participatory and operate under either state, collective, or mixed ownership.”[4] In order to qualify as an EPS and thus for preferential treatment for low-interest credits and state contracts, companies must fulfill a list of requirements, such as to, “privilege the values of solidarity, cooperation, complementarity, reciprocity, equity, and sustainability, ahead of the value of profitability.”[5] If these values are indeed fulfilled, then one can say that with regard to ownership and control over the means of production Venezuela is moving away from capitalism and towards 21st century socialism.

Moves Away from Market Exchange

With regard to moving beyond market exchange for regulating production and distribution of goods and services, the Chavez government has mainly focused on using the state as a non-market based mechanism. That is, the state has been very active in redistributing wealth during the Chavez presidency, whether through its rural and urban land reform program, its oil revenue-funded social programs for free health care, education, and subsidized food markets, or the provision of subsidies and other support for key sectors, such as cooperatives and “endogenous development nucleuses.” Of course, while state redistribution mechanisms go against a basic principle of capitalism, these do not break the logic of capital as long as most exchange still occurs in a free market context, as is still the case in Venezuela. As such, such policies are more social democratic than socialist.

The principle of moving away from market-based distribution has also been valid in international trade for Venezuela. Not only has the Chavez government vehemently opposed the free trade agreements the U.S. has been promoting, but it is also involved in a large number of trade deals that are based on principles of solidarity instead of competition. For example, the Petrocaribe agreement provides for discounted financing of Venezuelan oil for Caribbean nations and also allows them to pay for oil with in-kind payments. In the most prominent case Cuba has been providing Venezuela with 20,000 doctors and medical assistants in exchange for Venezuelan oil shipments. Similar agreements exist with Argentina, Uruguay, and Ecuador.

Again, this kind of non-market based trade, which emphasizes cooperation, complementarity, and solidarity over competition is still far smaller than traditional market exchange. How and if the Chavez government can find ways to increase non-market based exchange mechanisms remains to be seen, especially since exactly how cooperative (instead of competitive) exchange could function on a large scale is still quite unclear in Venezuela.

Governance No Longer Guided by Private Interests

With regard breaking away from the third important element of capitalism—a system of governance that is under the sway of powerful private interests—Venezuela has advanced the most. There are at least three ways in which the Chavez government has done this over the past few years. First, it has had the opportunity to break free from the sway of private capital, due to the combination of massive oil revenues and the complete delegitimation of the old regime. Second, it has instituted forms of direct democracy and increased citizen participation in the state. Third, it has weakened the possibility that the military could be used to repress the civilian population, via what it calls civil-military union.

The first aspect is perhaps the most important because it has enabled practically all other anti-capitalist measures of the Chavez government. That is, Venezuela’s oil revenues, which increased, on a per-capita basis, from $226 in 1998 to $728 in 2005,[6] has been a bonanza that has given the Chavez government a tremendous amount of freedom from private capital’s ability to threaten with investment strikes. Also, the institution of capital controls in early 2003 further expanded the government’s independence from private capital. While most leftist governments, such as that of President Lula of Brazil, are constantly faced with the choice of pursuing progressive policies and alienating capital and thereby economic well-being or abandoning progressive policies and encouraging private investment, the Chavez government is by and large freed from this dilemma. Enormous oil revenues allow the government to invest, to pursue progressive tax policies and regulations, and to spend freely, without having to worry much about capital flight or disinvestment.

This freedom, combined with the opposition’s recurring self-destruction (via the coup attempt, the oil industry shutdown, the failed recall referendum, and the boycott of the December 2005 National Assembly elections) is perhaps the main reason why the Chavez government has been able to pursue increasingly more anti-capitalist policies with every passing year in office. This stands in stark contrast to the history of most progressive governments, which time and again start out with radical rhetoric, only to eventually succumb to the demands of private capital.

The second way in which the government is shaking loose the influence of private capital is by introducing participatory democracy in numerous areas of the state. This is happening through local planning councils, citizen participation in social programs, and a variety of other institutionalized mechanisms for civil society involvement in government (referenda, selection of high-level state officials, and citizen audits of state institutions).

One of the most important forms of citizen participation are the local planning councils, which were launched in Venezuela in 2001, but were at first stillborn due to a variety of limitations in the local planning council law, such as creating councils that were too large to be manageable or participatory. A new effort was launched in early 2006 with the communal council law, which bases councils on units of 200 to 400 families and which practice direct democracy in their communities, allocating financial resources and creating local ordinances.

Participatory democracy in Venezuela also takes the form of citizen participation in the recently created “missions,” which provide education, health care, subsidized food, social services, land reform, and environmental protection. These missions, rather than being just imposed from above are largely directed by the citizens in any given community, in the form of health committees, land committees, and educational task forces.

Finally, there are the constitutionally guaranteed rights to participatory democracy, in the form of four different types of citizen-initiated referenda (recall, approbatory, abrogatory, and consultative), the right to conduct citizen-initiated audits of state institutions (contraloria social), and the right of civil society organizations to co-nominate candidates to the Supreme Court, the National Electoral Council, and the Moral Republican Council (consisting of Attorney General, Comptroller General, and Human Rights Defender).

Citizen involvement in all levels of government like this increases accountability and weakens the sway of powerful private interests. While citizens might still succumb to threats of disinvestment from private capital, at least they have more influence over decision-making than when elected representatives decide matters mainly under the influence of powerful private groups that are constantly lobbying them and paying for their electoral campaigns.

The third area where the Chavez government has made a conscious effort to enable a more direct democracy has to do with transforming one of the traditional means for suppressing citizen involvement and discontent: the military. Historically, the military in Latin America was used to repress the citizenry and to keep it from resisting the imposition of government policies it did not like. For Chavez and for most poor Venezuelans, the 1989 riots against IMF-imposed economic policies, which dramatically increased the price for public transportation and for many food staples, was an expression of discontent with the relatively undemocratic[7] government of Carlos Andrés Perez. This outburst of discontent was immediately suppressed with massive military force, which ended up killing anywhere between 300 and 3,000 poor Venezuelans.

According to Chavez, the reason Venezuela’s and Latin America’s military forces were able to repress their own populace so often and so easily was because the military was always kept separate from the population. That is, their lack of contact with civilians, their sequestration, made it easier for them to act without sympathy or remorse against their own people. In contrast, Chavez, following a Maoist maxim, argues that “the military should be to the people like the fish is to water.” The application of this principle is called “civil-military union,” and means, in practice, that the military should be as integrated as possible with the civilian population, being in constant contact with them and even taking on civilian tasks in the process. The military has thus become heavily involved in the various “missions,” often providing services such as food distribution, construction help, and transportation, for example. Furthermore, the civilian population is being asked to sign up for Venezuela’s military reserves, to learn to fight a guerilla war, should an outside force such as the U.S. ever invade. This, according to Chavez, is supposed to further strengthen the civil-military union.

Critics of this re-conceptualization of Venezuela’s military argue that it has militarized civilian society and could become a means for doing precisely what Chavez says it is supposed to ward against, of repressing the population. However, there is no concrete evidence for this. As any visitor to Venezuela can attest, the military in Venezuela has a far less militaristic presence in the general population than it did in countries where the military was indeed used for repression, such as in Argentina in the 1970’s or in El Salvador in the 1980’s. No one in Venezuela fears the military and its activity in the general population is limited to fulfilling the civilian functions mentioned above, but not to repress. Human rights groups such as Human Rights Watch do not cite the military as being perpetrators of human rights violations. Rather, in Venezuela, the main culprit in this regard remains (since long before Chavez’s coming into office) the notoriously corrupt and local government controlled police force. In other words, it would appear that rather than militarizing civil society, the civil-military union has served to “civilize” the military.

These three factors, the tremendous oil revenues, the creation of a more participatory democracy, and the “civilizing” of the military, have meant that the Chavez government is far freer to pursue policies that are independent of the powerful private interests that normally shape government policy in capitalist countries. The freedom the Chavez government enjoys to pursue leftist policies is unique in comparison to most of the rest of world in many ways. While there are other countries that enjoy such a freedom due to their wealth in natural resources (such as a state-owned national oil industry), these other countries tend to be in the hands of extremely conservative authoritarian regimes (such as in the Middle East) and have no interest in pursuing progressive policies.

This freedom has allowed the Chavez government to pursue policies that clearly move away from private ownership and control over the means of production, away from market-determined allocation and distribution, and towards what could be called more socialist economic and governance forms. However, this is clearly not the state-socialism of the 20th century, as was practiced in Eastern Europe and China and still is in Cuba. Rather, it is a more libertarian form of socialism, in that it actively seeks citizen participation and even forms of direct democracy.

Obstacles for 21st Century Socialism in Venezuela

The main obstacles to 21st century socialism in Venezuela fall into the two general categories of external and internal obstacles. The external obstacles are those that are external to the Bolivarian project, such as a domestic opposition that continuously seeks to undermine the Chavez government without engaging in the political process, a U.S. government that is intent on isolating the Chavez government, and domestic and international forces of capital that make 21st century socialism in one country extremely difficult to institute. The internal obstacles include the persistence of an anti-democratic political culture of patronage and of personalism.

The opposition includes practically all sectors that used to have a determining role in Venezuelan society, such as the former governing parties, the old union federation, the church hierarchy, big business, and almost all of the private mass media. The key problem for the Chavez government with this opposition is not so much its power, which it has lost steadily largely due to its own disorganization and failures, but its unwillingness to play the democratic game, as it did during the April 2002 coup attempt, the December 2003 oil industry shutdown, and the December 2005 boycott of the National Assembly elections. Rarely during the Chavez presidency has this opposition come forward with concrete proposals about how it would govern Venezuela differently. Currently the opposition is continuing on this track of denying the government’s legitimacy by threatening to boycott the December 2006 presidential elections, on the basis that the electoral registry is flawed. However, an audit by the Inter-American Human Rights Institute showed that errors in the registry were negligible. The gradual self-destruction of the opposition, though, has made the opposition less of an obstacle and has thus increased the government’s freedom to maneuver.

The second external obstacle to creating 21st century socialism is the Bush administration. From documents that have become available in the past few years it is clear that the Bush administration knew about the 2002 coup attempt in advance, but instead of opposing it beforehand or while it was in progress, Bush gave it support by denying that it was a coup and by blaming Chavez for his own downfall. Also, via the National Endowment for Democracy and the U.S. Agency for International Development (USAID) the Bush administration has been funneling several million dollars per year to opposition groups in Venezuela, in an effort to create an opposition in its own image. And, in terms of applying overt measures against the Chavez government, the Bush administration has been applying a variety of minor economic sanctions[8] and has been conducting a campaign to isolate Venezuela internationally. All in all, each one of these measures has been a relative failure. For example, the opposition, despite its receiving funds and advice from the U.S., is hopelessly disorganized and of little consequence in Venezuela, following its many failures during the Chavez presidency.[9] The economic sanctions have little effect, given that Venezuela’s foreign currency income comes almost entirely from oil revenues, which the U.S. will not cut off. Last, the efforts to isolate Venezuela have met with little approval elsewhere in the world.

Finally, the third external obstacle is for many countries the most serious obstacle to progressive governing because of its ability to initiate an investment strike if a government initiates too many policies against its interests. Venezuela, though, with the recent boom in oil revenues (essentially since mid 2003) remains a lucrative place for investment, despite the government’s anti-capitalist rhetoric and its frequent tax increases for the oil industry. Also, capital flight has been held in check via a restrictive exchange rate policy. As a result, domestic and international capital is not that much of an obstacle now as it was earlier in Chavez’s presidency.

The much more serious obstacles to instituting 21st century socialism in Venezuela thus are the internal obstacles. The most serious of these is probably the persistence of a culture of clientelism-patronage. That is, there is much anecdotal evidence that despite Chavez’s criticism that previous governments were riddled with patronage systems, new forms of patronage have taken their place. While previously it was practically impossible for people who were not members of one of the ruling parties to get government jobs or services, evidence has emerged that although party membership is not an issue now, officials in the Chavez government are often preventing anti-Chavistas, as Chavez opponents are known, from acquiring government jobs and some kinds of services.

The most notorious example of this practice has been the so-called “Tascon List,” which pro-Chavez National Assembly deputy Luis Tascon set up, which lists all Venezuelans who signed the petition in favor of a recall referendum against President Chavez.[10] The original purpose of the list was to allow Chavez supporters to make sure that they did not appear on the list because they were concerned that the list fraudulently included many who did not intend to be on it.

Patronage that gives government jobs and services mainly to Chavistas not only counteracts Chavez’s campaign promise of creating a government that will not exclude anyone, but it also undermines the rule of law, thus providing an opening for corruption and the delegitimization of the government and it counters the principle of formal equality. More than that, patronage systems encourage a limited form of solidarity, which extends only to one’s own group (in this case one’s political group) and is fundamentally at odds with an effort to create a society in which solidarity includes all people, regardless of nationality or political beliefs.

The second internal obstacle is the latent personality cult around Chavez and the tendency towards personalistic politics in Venezuela in general. On the one hand, Chavez’s ability to bring people together in a large “Bolivarian” movement for radical change in Venezuela is practically unparalleled in recent Venezuela history. On the other hand, this ability has resulted in an extreme dependency of the movement on Chavez, to the exclusion of a clearly defined political program or political organization. Thus, if Chavez were to disappear from one day to the next, the entire movement would fall into a thousand pieces because it would have lost it unifying glue. This extreme dependence on Chavez also means that it is extremely difficult for Chavez supporters to criticize Chavez because every criticism threatens to undermine the project because it gives rhetorical ammunition to the opposition. A further consequence is that the lack of criticism insulates Chavez and makes it very difficult for him to test his ideas and policies against the outside world. Criticism from within the ranks is rarely present and criticism from outside the ranks is easily dismissed. The result is a strong potential for wrong-headed policies.[11]

The third internal obstacle is a strong tendency towards top-down leadership, not only by Chavez, but by everyone in the public administration. Despite the very real pursuit of participatory democracy at local levels, the government bureaucracy is still by and large a top-down operation, which Chavez’s military instincts have reinforced. Such leadership in the public administration further exacerbates the problems mentioned of a personalistic political culture, so that questioning of one’s superiors and correcting errors in the administration of public policies is extremely difficult.

Prospects

It is very probable that the Chavez government will continue on its course of increasing radicalization because it has managed to either defeat or avoid nearly all of the obstacles to governing that progressive governments normally face. That is, most governments face what some political scientists have called, the “contradictions of the welfare state,” whereby democratically elected governments in capitalist countries have to answer to two contradictory masters.[12] On the one hand, governments have to fulfill the wishes of the population that elected them, lest they be removed from power in the next electoral cycle. On the other hand, they have to fulfill the wishes of capital, lest they face a capital strike and economic crisis. These two pulls on governments is a serious problem because they tend to pull in diametrically opposite directions. Citizens generally want the government to protect them from the ravages of capitalism (advocating for regulations on businesses, environmental protection, workplace safety, protection from economic crisis, etc.), while capital wants to be as free of government regulations and taxes as possible. Following an effort to at least partially resolve this contradiction via debt spending, governments in both the First and Third World borrowed heavily, so that they could fulfill the financial needs of the welfare state, without having to tax either capital or the general population. However, once the debt crisis became too much of a burden, governments cut back government spending and by and large adopted neo-liberalism as a supposed way out of the contradiction. Neo-liberalism, though, did not resolve the contradiction, but shifted the balance of power in favor of capital.

Recently, though, with the failure of neo-liberalism to provide for any meaningful increase in people’s standard of living and with a dramatic increase in inequality, the peoples of Latin America have been voting against neo-liberalism and in favor of a wide variety of leftist governments. The contradiction between the pulls of capitalism and of the general population remains in nearly all of these countries. The only exception seems to be Venezuela, which, by virtue of its oil wealth, is far less dependent on private capital and thus on its demands. Added to this economic independence comes the Venezuelan old elite’s repeated failures to topple Chavez. Chavez, who started out as a fairly moderate politician in 1998, could thus easily afford to become increasingly more radical with each subsequent defeat of the opposition. Also, as someone who was not formed politically by a political party or ideology, but more as a result of his confrontations with state power, Chavez steers a path that is pragmatic and free from orthodoxies of any kind, thus opening him up to steering a more radical path, should opportunity and his perceived analysis of what Venezuela needs lead him in that direction.

In other words, while further advances in defining and applying 21st century socialism in Venezuela are very possible, due to the relative lack of external obstacles, it is the internal obstacles of the cultures of patronage and personalism that are most likely to threaten to derail the project. Figuring out how to overcome these obstacles, which would require a re-building of the state, in order to overcome patronage structures, and the creation of an effective political movement that does not depend on Chavez, in order to overcome personalism, remain the greatest challenges for 21st century socialism in Venezuela.

This is a revised version of a paper that was presented at the University of Wisconsin-Madison Havens Center, April 11, 2006.