Socialist Transformation in an Oil-Dependent Economy: a Venezuelan Perspective

Pablo Gimenez is a Professor of political economy at the Bolivarian University of Venezuela (UBV) in Caracas. He spoke about the challenges posed by Venezuela’s oil-dependent economy and about the difficulties involved in trying to forge a new way of teaching political economy in the context of the Bolivarian Revolution.


[RCG 10.10.12] Since the beginning of the 20th century, Venezuela has been one of the world’s largest exporters of oil and a favoured destination for international investment. Oil exportation first began in 1917 and has defined – some would say distorted – the Venezuelan economy ever since. Pablo Gimenez is a Professor of political economy at the Bolivarian University of Venezuela (UBV) in Caracas. He spoke to us both about the challenges posed by Venezuela’s oil-dependent economy and about the difficulties involved in trying to forge a new way of teaching political economy in the context of the Bolivarian Revolution.

“I am an economist at the central university of Venezuela and national co-ordinator of its programme of political economy for the Bolivarian University of Venezuela, which is a very specific programme. Our school of political economy is somewhat unique, in that it came about as the result of a big debate amongst professors at the university over the necessity of considering economic issues within the context of a revolution.

Our programme of political economy was born out of this great debate, with a view to shifting the paradigm and perspective of the school of traditional economics.  In contrast to classic economics, we offer a programme that is very critical of it, and in fact sets out to deconstruct it. So we are not a school of political economy in the traditional sense. We are a school of political economy that is quite explicitly in open confrontation with economic orthodoxy.

Many people confuse the teaching of political economics with an adherence to the teaching of the economics of the Soviet Union. They think that political economics can only refer to the experience of the Soviet Union.  But what we are doing is offering a critique of classical economics, in particular of liberal economic thought, and specifically, with a particular emphasis on a critique of political economy as set out by Karl Marx – the theoretical basis on which he explained capitalist society and which lays bare the reality of much of what is actually happening in the world.

The other major paradigms that make up our programme of study is the resurrection of what we can call a specific understanding of the economic critique of Venezuela in particular – economic thinking in Latin America overall, and specifically about Venezuela. That is to say, when we speak of understanding the economic situation of Venezuela, we need to study the writings of Venezuelans. During the period of neoliberalism, these Venezuelan economic thinkers were ignored.

In the university where I was, the Central University of Venezuela, these writers were not studied. Political economy was not studied, the issues of an oil economy were not studied, the specific questions of the Venezuelan economy were not studied. We studied instead from textbooks published by international publishing houses which were founded on the neo-classical principles of political economy, that is to say neoliberalism, with the case studies being almost all based on the economy of the United States.

'Drowning in the Devil's Excrement' Pablo highlights some of the books that clarify his point‘Drowning in the Devil’s Excrement’ Pablo highlights some of the books that clarify his point

The economic model of the US was put forward as the model that Venezuela should aspire to, despite the fact that the Venezuelan economy was and remained in a state of macro-economic disequilibrium. So our school of economics sets out to critique that  model and to re-establish  critical thinkers from Latin America, critical thinkers from Venezuela, and to study classical economic thought in the context of the political critique of Karl Marx.

The point of this enormous effort to create a school of thought that is pluralistic and open to critical thinking is the context of the Bolivarian Revolution. From that perspective, we have engaged in an open debate about the content of this programme, but our specific concern has been over the economic content.  And from that point of view we have wanted to consider in the first instance a theme put forward by a number of Venezuelan writers, which is a fundamental tenet of classical economics, that of a ‘renta la tierra’ economy (land rentierism).  La renta de la tierra in Venezuela is mineral rentierism, a specific form of development which we can call renta petroleo, or an oil-rentier economy.

Between 1936 and 1979, or even up to 1983 according to some writers, the Venezuelan economy was characterised by the development of what has been described as a rentier capitalism. That is to say, what developed was a very particular form of capitalism in Venezuela inextricably linked to the influx of oil money. When we talk of oil rentierism, we are talking about an interest and flow of international investment that is the result not of productive labour by the Venezuelans but rather comes about as a product of exporting oil, seen as a rich resource by some.

There are liberal currents within the process who believe in state capitalism, who want a stable capitalism with less international exploitation, who follow the state capitalist model for example of Brazil, of Lula. In Venezuela we have witnessed the phenomenon whereby investment in social production has risen alongside salaries, yet we have not been able to raise the levels of production. It has led to more imports. 

This is the phenomenon of the oil rentier state. We need to develop secondary industry and food production. We have been able to develop as fast as we have done due to the profits from petroleum, but this undermines the need and impulse to develop the forces of production.

It is one of the greatest problems faced by the Bolivarian Revolution, or at least one of its greatest challenges. How do we confront this challenge? Well, on the left, and especially in this programme we are developing, we have to ask, what is the real problem here – capitalism, or rentierism? Is the problem rentier capitalism, or rentierism, or capitalism itself? That is the big question we have to answer.

Neoliberalists propose the construction of a normal, stable capitalism, for example, the proposals of Capriles, who proposes ‘popular capitalism’ where the companies make profits, and the workers receive salaries, without having the distortion of petroleum deposits. They have resuscitated a theory of liberal thought – to take this oil-rentier state and turn it into industrialisation. This programme is not sufficient, as analysed by Chavez in his ‘programa patria’ who acknowledged that the character of the Venezuelan state is one of rentier capitalism.

The UBV and Chavez alike, argue the need to transcend the oil rentier economy, and also capitalism itself because socialism must be constructed fearlessly. This requires the development of the material bases of production, which guarantee the necessities of the majority of humanity. Socialism must be a system where everyone can satisfy their basic needs, and a system where the conditions to satisfy the necessities of one person involves satisfying the needs of everyone.

In the particular case of Venezuela, we have to take these oil deposits, take this rentier economy and transform it into social investments, but not only social investments, but investments into social production. What does this mean? This means converting petroleum rent into a form of socialist accumulation.  And so, this leads to the alliances, that Chavez speaks about, strategic alliances with productive sectors of the economy, such as the business sectors, the bourgeois who adapt a progressive manner, for example the communal companies, the worker-controlled companies, the social property companies, the cooperatives.

This is why currently Chavez is proposing to develop strategic alliances, where the state owns 40% of private companies or cooperatives, in order to develop the forces of production necessary to progress to socialism.

Of course international development is necessary, with MERCOSUR, with ALBA with UNASUR, so the Venezuelan state is not only developing strategic alliances with private companies in Venezuela, but across Latin America. This is the first step towards transforming the rentier oil state in a way which is necessary for the construction of socialism.

First is the theme of strategic alliances to develop the forces of production, the second is developing an analysis of Venezuelan critical thought, on the theme of the connection between the basic industries and the light industries, between the cooperatives and the small self-employed business people, or the worker-controlled businesses, and the self-employed.

What does this mean? Well, the Venezuelan economy, which is still capitalist, needs to develop within specific conditions; The petroleum industry is the most developed and connected with the world market, compared to any other industry in Venezuela. The heavy industries of Guyana, aluminium, iron etc., are more developed for exportation of these resources, than for domestic production.

In order to develop socialism, we need to develop the interconnection between these basic industries, and petroleum production, such as plastic production from petrol. National production and national industry are needed for national development to transform the relations of social production. And so our school of thought, this programme we are developing has these concerns.

We are trying to develop both technical and political perspectives. Technical because we have to work concretely within the Bolivarian Revolution, where our needs involve technical knowledge that can be used for administration, innovation and development in the process of socialist industrialisation. Political, to ensure that this process remains firmly within a model of the socialist transformation of the bases of production. So these are the main themes of political education in the UBV.

When we look at Chavez’s Progama Patria, we can see the important theme is about saving humanity, these are not lightweight proposals, such as the proposals of Capriles. Rather, concretely, Chavez develops the theme of national independence and sovereignty, how to construct Latin America as a power, developing the theme of ecology, important for humanity and the country. He sets out concrete tasks of the revolution.

Since Chavez has won the election, we now need to reflect on the main tasks of the Bolivarian Revolution. As Chavez says, we will never win as long as the economy of Venezuela maintains the characteristics of a capitalist rentier state. Socialism has barely started in our country, we are starting to learn, we are dependent on our people and the people of the world, to answer the question, how we can start to construct this new model of production; the new productive model of socialism?”

Translated by Cat Allison and Sam McGill