How Venezuela Turned Back to Capitalism when Socialism Failed

Cooking arapas in Venezuela. Photo by Víctor Jesús Carrasco on Unsplash.
Cooking arapas in Venezuela. Photo by Víctor Jesús Carrasco on Unsplash.

Ah, the glories of socialism. 

In one generation, Venezuela went from being one of the wealthiest countries in Central and South America to having a poverty rate of 96 percent. The monthly minimum wage of $2 made it the poorest country in Latin America and the Caribbean.  (Yes, they are worse off than Haiti.)

Yep, that’s what socialism will get you. Four percent of the population living on the hard work and sweat of the other 96 percent. Four percent, the elites, living in high-end houses with armed guards while the rest of the country cannot afford to buy food or medicine, has intermittent electricity, and little or no clean water to drink. 

I wrote earlier this year about the tens of millions killed in China and Russia implemented socialism. They don’t have an accurate count of the dead in Venezuela yet, where malaria and other diseases made a comeback and where a simple infection can kill you due to a lack of antibiotics. They do know that millions fled the country. Among them are the ballerina that escaped to Columbia and became a prostitute, and the highly paid professional who made it to the U.S. and worked as a butcher.  Sadly,  they are the lucky ones. 

A Socialist Utopia No More

This news article reports that after hitting inflation of 10 million percent in 2019, the country has stabilized somewhat. How? By letting some capitalism creep in, allowing the free market to function, and by using the U.S. dollar instead of the bolivar. According to the article in the Telegraph:

“The trend towards liberalizing the Venezuelan economy—which has also been mirrored in Communist Cuba this year—took a giant leap in 2019 when a massive power outage plunged most of the country into the dark for seven days.

With no electricity to power credit card machines, and shortages of local banknotes due to hyperinflation, many Venezuelans started using US dollars and other foreign currencies for regular purchases.

Eventually, even formal establishments like supermarkets and pharmacy chains started accepting dollars. Only a few years before, state price regulators regularly monitored and temporarily closed stores that exceeded price controls or used anything other than the local currency.

The government proudly broadcasted these raids on national TV to show its commitment to protecting the purchasing power of average Venezuelans.

In 2019, nobody from the government showed up to the stores or even mentioned the trend. Maduro later went as far as expressing support for the widespread use of the US dollar.”

Guess who is objecting to this capitalism?  The Venezuelan Communist Party. Apparently they enjoyed being the only ones who could afford chicken with their rice.

We’ve Seen This Before

Venezuela is not the first county to learn the hard way that nationalizing private companies, fixing prices, setting wages, and mandating companies meet certain production plans is a path to economic ruin. Russia tried it. China tried it. Neither government wields that much control today. In fact, both are examples of governments that finally let the markets have a free hand in what was produced, how much was charged, and who they sold to. Central planning is a failure. Just as it makes little sense for California and South Dakota or West Virginia to have the same COVID-19 regulations, it makes little sense for a central department in Washington to govern power usage, hunting regulations, or agricultural production.

What was life like in the Soviet Union when central planning ruled?  An article by Richard M. Ebeling that appeared on on February 23 gives his first-hand experience of living and traveling to USSR before it collapsed.

I encourage you to read the entire piece, but if you lack the time or patience, jump down to the subhead “The Absurdities and Corruptions of Socialist Central Planning,” and read from there to the end. The section “Witnessing Soviet Consumer Life in the Soviet Socialist Utopia,” mirrors the experience a friend of mine who grew up in Poland experienced: Endless lines for bread, and often settling for the type of food they had rather than the food you wanted.

A Dead End

Don’t expect them to admit it, but this is what socialists in the liberal Democratic Party want for America. They want to limit the amount of electricity we can use or the gasoline we can consume. They want to stop you from eating meat. Socialists also want you to learn only what they approve to be taught, believe only what they approve of, and depend on the state–run by the elite or their puppets—for the food on your plate and the roof over your head, even if it leaks.

As Maduro learned only after an attempted coup, socialism does not live up to its hype. It has failed in Venezuela, Cuba, China, Russia, Poland, Angola, and many other countries.

People like to say that freedom and Democracy has lifted millions out of poverty, but actually, it was capitalism that did that. Of course, capitalism flourishes in a free and open society.

Socialism is going to drag this country down. Don’t fall for its lies and empty promises.