Venezuela has been oil-dependent for almost a century. Its economy is neither agricultural nor industrialized; like many Global South countries, it floats precariously on the periphery of the global capitalist system, dependent on the demand for its raw material exports in the U.S. and other industrialized nations. These imperialist powers, which industrialized first and thus own the technology and capital necessary for economic advancement, leverage this power to dominate peripheral countries – either by direct colonization by propping up local dictators and business elites. These local elites, in turn, exploit the local population by using their privileged access to export-import and currency exchange markets. Venezuela’s economic structure is a lose-lose deal: when oil prices drop, Venezuelans suffer from shortages and inflation. Ironically, when oil prices soar, the currency rises in value and investment is diverted to the oil sector, so domestic industry declines because it cannot compete with the booming oil sector and cheap imports, and the country deepens its dependence on oil.
Chávez sought to forge a different economic path: end oil dependence, develop domestic industry, and eliminate exploitation by establishing socialist work relations – that is, democratically managed production. In this endeavor, a key policy tool was the state’s control of the foreign exchange system. Chávez initially placed controls on the sale of dollars and on domestic prices, but he left the actual importing and exporting to mostly private merchants along with a few state-owned or nationalized companies. Private merchants took advantage of this system and the government’s inability to effectively regulate it, maximizing their profits by purchasing imports at stabilized prices and then selling at speculative prices on the market. This policy outcome, Chavez states in the video, made the government look like “fools” because private importers were gaming the system.
In Chávez The Radical I, Chávez proposes a state company to manage all exports, imports, currency exchange, and distribution. This company would replace profit-driven intermediaries, allowing the government to protect Venezuelans’ purchasing power while channeling investments toward domestic industries other than oil, in order to gradually reduce the country’s oil dependence. Such a policy would also be a step toward economic democracy, since the government was democratically elected and would transfer control of production to democratic worker councils. The proposal to create a state company to manage foreign trade one of Chávez’s fundamental policy proposals that would allow Venezuela to reduce its dependence on both capitalist centers internationally and capitalist merchants domestically.