With all the due respect and esteem that you deserve for the titanic task of leading this revolutionary process on behalf of the Venezuelan people, which has had to face enormous difficulties and threats in order to maintain the legacy of Commander [Hugo] Chavez, I say to you that the real possibility of limiting the criminal speculative market and of more effectively protecting the subject of our Bolivarian Revolution lies in our hands.
I am not an economist but rather an “outdated” communist who believes firmly in historical and dialectical materialism, and who is trying to be as objective as possible in analysing the political moment and economic reality of our country based on the historic development of our productive forces, and the particularities and possibilities that a revolution has in a country such as our own. I am in no doubt at all that our economic crisis is a conjunctural set of circumstances, and that it is the result of a decadent, oil-rentier state and economic structure, a backwards capitalism that is too dependent on our ports, and which is worsened by the tenacious internal economic war, the financial and commercial blockade by US imperialism, and a lack of correct economic policies.
I want to emphasise this last point, because there are those who say that corruption and our “failed socialist mode” are “to blame for our ills,” which is unfortunately repeated by idealist and infantile people. I say to them that they are hugely ignorant and/or political opportunists, because corruption is intrinsic to and created by our backwards and dependent capitalist economy, and also because this so-called “socialist model” is still non-existent in our country, except for some small areas that have been won over by the revolution but which do not have an impact on the correlation of economic forces. Let nobody be deceived! I know that you are clear on this point comrade President, but it is necessary to clarify it constantly because the fourth generation [communication] war is brutal.
On the other hand, allow me to say that, though I am not an economist, I agree with the position of many leftist economists who propose ending the preferential foreign currency market and implementing policies to create a scheme of differential subsidies in our society*.
The market has a visible hand, hairy and covered in blood, that is true. And in our conditions – backwards capitalism, scare agricultural production – a policy of generalized subsidies has not yielded results**. On the contrary, it has deepened the crisis. Simple logic tells us that if we want to correct the economic disorder then we must do things differently to the way we have been doing them.
We cannot continue to subsidize both the rich and poor equally as long as we continue to live in a society divided by social classes, which will take a long time to transcend. The sale of preferential dollars at 10 Bolivars has ended up creating huge economic distortions. Through their power, big business, the rich and the upper-middle classes linked to commerce have ended up benefiting much more than our working class. Meanwhile, this distortion has created ideal opportunities for corruption, smuggling, and exaggerated speculation.
A state policy aimed at supporting the most vulnerable classes through the system has ended up by damaging them more, because we underestimated the strength of the internal and external enemy, but also because we over-estimated our own possibilities.
What would be more appropriate would be for state efforts aimed at the equal distribution of wealth and subsidies to be re-directed towards the classes rendered most vulnerable by the system, the working class. On the margins, the upper-middle classes of businesspeople and the rich should remain subject to their much admired “free market”, which will never be so “free”.
Through a half-liberalized foreign exchange system and with the intervention of the state to put an end to fluctuations, we can obtain greater income in Bolivars [by selling dollars at market-price] that can be used to pay for direct monetary subsidies as opposed to through the sale of foreign currency. How? Let’s see.
You, comrade-president, created an instrument that made it possible to really direct our policy on subsidies to the people. Through the Homeland Card*** we can make sure that our people directly receive the subsidies that the bourgeois enemy is exploiting today. How? In the same way as our brave brothers in Syria and Cuba, but with a much more sophisticated tool that allows greater control over the process.
Through the Homeland Card, we can establish for each Venezuelan, according to her age, condition, and needs, a list of subsidized products that could be obtained through private establishments and the state. In this way, the state would pay the real cost of the product on the market and only for the beneficiary, making payment immediately to the trader. This policy of direct subsidies does not deny the need for the intervention and/or balancing regulation of the state over the market. It will also make the work of institutions related to implementing price controls easier. The infamous law of the market, supply and demand, would be practically limited.
In conclusion, direct subsidies for the subject of the revolution, class struggle, the effective defense of our people, real control of the economy and investment in production.
* Since the early 2000s, Venezuela has had a state-controlled currency exchange system whereby the state auctions off government-held petrodollars at highly subsidized prices to mostly transnational importers. The system is aimed at ensuring that Venezuela can meet national consumer demand for key products such as food and medicine. Nonetheless, many observers have argued that the system has been abused by importer businesses to carry out embezzlement and importer fraud through buying subsidized dollars, only to sell them back on the black market at astronomical prices. Several cases of multi-million dollar corruption were unearthed earlier this year by new Attorney General Tarek William Saab.
** Venezuela has a network of state-owned food markets where goods are sold at subsidized prices to all citizens. Nonetheless, this system has also been exploited and led to food racketeering. Some people known as “bachaqueros” buy the subsidised food en masse to then sell it on at inflated prices, leading to a distortion in the market and scarcity.
*** Millions of Venezuelans registered en masse for the Homeland Card earlier this year. In the registration process, state authorities gained information on each citizen in relation to their living conditions, salary, dependents, employment, etc. The author argues that this information could be used to implement a system of direct subsidies. Early in November, President Nicolas Maduro revealed that the government would provide four million Venezuelan families with a Christmas bonus of 500,000 Bolivars through the card.
Translated by Rachael Boothroyd-Rojas for Venezuelanalysis.com.