Venezuela: Hugo Chávez and Socialism

A contribution to the international debate

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Hugo Chávez and Socialism

Venezuela, Bolivia, and more recently, Ecuador, are today at the epicenter of the continental revolt by the workers, peasants, youth and others exploited by capitalism, which is sweeping Latin America. Mexico, Peru, Guatemala, Argentina, Brazil, and other countries have all been shaken by political turmoil and social upheaval as the masses throughout the continent have been drawn into struggle against privatizations, unemployment and neo-liberal policies.

The devastating consequences of neo-liberalism in Latin America are shown during the last 26 years. In the years 1980-2006, Gross Domestic Product (GDP) in the region grew by a mere 15% compared with 82% in the twenty years from 1960 to 1980.

It is in the Andean countries of Venezuela and Bolivia where the class struggle and conflict between revolution and counter revolution are currently being fought in the sharpest way. If Latin America is in the front line of workers struggles, Venezuela and Bolivia are its advanced guard.

Crucial issues are now posed for socialists and the working class in these countries if the continued threat of counter revolution is to be defeated and a successful socialist revolution carried through. The issues posed in these movements are crucial not only for the workers and peasants of those countries. They are also rich in important lessons for the international working class and socialists. International capitalism is poised to enter a new period of turbulence and social and political upheavals as a consequence of the qualitative changes and crisis now unfolding on the world financial markets. Many of the issues now facing the Venezuelan working class will face workers in other countries in the future.

The coming to power of Hugo Chávez, in 1998, opened a new chapter in the class struggle in Latin America and internationally. His election victory was a by-product of a mass rejection of neo-liberalism and a demand for an end of the corrupt two party oligarchies which had ruled Venezuela for decades.

From an international perspective, as the Committee for a Workers’ International (CWI) noted at the time, the election of Chávez was also extremely significant. From the 1990s, it was the first government to come to power, that was not prepared to tamely bend the knee to the demands of US imperialism and apply to neo-liberal policies.

Initially, Chávez spoke of a ‘Bolivarian revolution’ a ‘third way’ a system that was more ‘humane’ and ‘democratic’. At the time he did not speak of socialism. Yet nine years later, as a consequence of a series of clashes between the revolution and counter revolution, in the form of the attempted coup in 2002, the bosses lock out in 2002/3, a recall referendum campaign in 2003 and numerous elections and struggles the issue of socialism has been put back on the political agenda. Venezuela is now declared a ‘Bolivarian Socialist Republic’ and the building ‘Socialism in the 21st century” is the stated objective of Chávez and his regime.

Government reforms

The government has introduced a series of significant reforms to help the most oppressed and down trodden. These have been paid for by the bonanza in revenue which the state has procured from the rising price of oil. The most profound reform has been made in the provision of health care. In 1998, there were 1,628 primary care physicians for a population 23.4 million. Today, there are 19,571 for a population of 27 million. In 1998 there were 417 emergency rooms, 74 rehabilitation centres and 1,628 primary care centres. Today, there are 721 emergency rooms, 445 rehabilitation centres and 8,621 primary care centres, including 6,500 ‘check up points’, usually in poorer areas. Since 2004, four hundred thousand people had eye operations that restored their vision. These were often carried out by Cuban doctors. In 1999, only 335 HIV patients received antiretroviral treatment. In 2006, this figure had increased to 18,538.

The government also provided access to subsidised food items. Reportedly, 15,726 food stores selling subsidized food have been established. Overall the central government’s central spending has massively increased from 8.2% of GDP in 1998 to 13.6% in 2006. If the social spending by the state oil company, PVDSA, is included, the figure increases to 20% of GDP. In other words, social spending per person has increased by 170% between 1998- 2006. These important reforms are undoubtedly welcomed by the people and have boosted the popularity of Chávez.

They are in marked contrast to the neo-liberal, pro-capitalist policies implemented by governments internationally, in the same period. According to government figures, as a result of these reforms, and the growth in the economy, overall poverty has been reduced from its peak of 55.1% in 2003 to 30.4% at the end of 2006. They indicate that since Chávez came to power poverty rates have declined by 30.4%.

These tremendously positive developments have represented an important step forward for the masses in Venezuela and the international working class. The re-emergence of the idea of socialism as an alternative to neo-liberalism, capitalism and imperialism refutes the claims of the capitalists and their quislings in the former workers’ parties like Brown, Zapatero, Bachellet and Papandreou who think that socialism has been put in the basement of the history museum. They think that capitalism and the market is the only viable system.

International debate and discussion

The stormy events in Venezuela have aroused tremendous interest amongst socialists and workers internationally. All socialists have a responsibility to express in words and deeds solidarity with the Venezuelan workers and youth especially when they are threatened with attacks by imperialism and counter revolution. But genuine internationalism also includes an exchange of ideas and experiences of the workers struggle in different countries. Through such an interchange of experiences it will be possible to assist the Venezuelan workers find the right road to defeat capitalism and counter revolution. This does not mean those outside Venezuela arrogantly giving lectures about what is necessary. The CWI has never adopted this approach. Genuine dialogue with Venezuelan workers and socialists can also look at international struggles of the working class. A genuine interchange of ideas and experiences between Venezuelan and international socialists can assist workers in all countries reach the right conclusions regarding the programme, tasks, methods and actions necessary to carry through a successful socialist revolution.

While putting the idea of socialism back on the political agenda in Venezuela represents a very important positive development, it is not the same as actually achieving it. The crucial question is how to take the struggles in Venezuela forward to a successful socialist revolution.

Marxists welcome every positive step forward in the struggle and every advance conquered by the working class and masses. At the same time, especially when dealing with crucial issues of revolution and counter revolution, it is necessary to recognize deficiencies and weakness in the programme and methods that are put forward by the leaders. These can become obstacles for the socialist revolution. If this is not done, then such weakness can, and have in other situations, open the way for set backs, defeats and the victory of the counter revolution. More favorable conditions than those which currently exist in Venezuela and Bolivia have been lost because of a failure to resolve such weaknesses.

The magnificent Spanish revolution between 1931-7 – during which the working class and peasants controlled four fifths of Spain – was lost to the fascist forces of Franco. This was not due to the lack of determination or heroism by the Spanish workers who displayed enough courage and initiative to make ten revolutions. It was lost because crucial questions of programme, organization and the building of a mass revolutionary party were not resolved.

Marxists enthusiastically support every step forward taken by the working class and are optimistic about the struggle for socialism. Marxists also need a realistic and accurate analysis and assessment of each stage of the struggle. It is therefore not the job of Marxists to act merely as cheer leaders for the movement or as a left cover for its leaders. It is necessary to propose what concrete steps are needed in programme, method and action to take the revolution forward.

Events in Venezuela have provoked debate and discussion amongst socialists internationally about how to engage with this movement, how to relate to the Chávez regime, and what programme is necessary to defeat capitalism. The CWI has enthusiastically participated and contributed to this debate and commented on the analysis and method used by some other organisations on the left. For example, the CWI produced ‘Revolutionary Socialists and the Venezuelan revolution’, in June 2004, as a contribution to this discussion. Unfortunately, some who subscribe to Marxism, for example, the comrades of the International Marxist Tendency, (whose ideas we commented on in ‘Revolutionary Socialists and the Venezuelan revolution’) and others, regard such criticism as “carping sectarianism from the side lines”. Trotsky was also criticized in a similar vein for his warnings, comments and analysis during the Spanish Civil war.

It is wrong, for Marxists, to regard such a discussion as “sectarian” or portray it as “carping criticism”. Readers are invited to re-read the analysis put forward by the CWI of events in Venezuela since Chávez came to power. They will find a consistent method and analysis of events, at each stage. Marxism is the science of perspectives and, therefore, helps to prepare the working class for the struggles it will have to face against the ruling class. Has the IMT fulfilled this role in the analysis they have put forward? It has not done this. In some countries the IMT’s activity has focused on solidarity for Venezuela but, while praising Chávez, which it is necessary to do when he has taken a positive step in the interests of the working class, the IMT have failed to put forward sufficient warnings and criticism of his political mistakes and deficiencies. Since ‘Revolutionary socialists and the Venezuelan Revolution’ was produced in 2004 events have developed further. The IMT has produced other material in which they have given a different emphasis to their previous approach and revealed a lack of consistency in their method of analysis. However, the attempts they have made to amend their previous position have only compounded the contradictions in their approach which are commented on in this document.

This, along with other important issues, is commented on in this document as a means of trying to clarify the new stage of the struggle which has developed in Venezuela.

Chávez’s election victory 2006

The election victory of Hugo Chávez on December 3 2006 undoubtedly represented an important victory and another defeat for the counter revolution. Following this election, Chávez has increasingly spoken about the need for socialism and declared his support for Trotsky’s ‘Permanent Revolution’ and the ‘Transitional Programme’. He has also proposed a series of new measures. These have included changes to the constitution to allow him to stand for re-election indefinitely, giving him temporary enabling powers to rule by decree and, refuse the renewal of the broadcasting license for the private media broadcasting network RCTV.

He promised that “Everything that had been privatized would be re-nationalised” and took into public ownership the telecommunications company CANTV, and EDC, the electricity company. Hugo Chávez has also launched a new party the – Partido Socialista Unido Venezuelano (PSUV).

For Chávez to win with 63% of the vote in 2006 was a result that most capitalist politicians can only envy. It clearly reflects the support he enjoys and the opposition that exists towards the right and the threat of counter revolution. It is, however, an exaggeration to claim, as Jorge Martin of the International Marxist Tendency, wrote in a recent article, ‘The challenges facing the Venezuelan Revolution’ (05/9/07): “There is no real precedent for such a massive electoral support for a revolutionary movement anywhere”. During the Portuguese revolution the parties and organizations which proclaimed the idea of socialism were endorsed by over 66% on elections to the Constituent Assembly in April 1975.

The CWI explained that during the course of the 2006 election campaign there was a decisive change which occurred as the masses became aroused in opposition to Manuel Rosales and the right-wing. Jorge Martin also correctly comments on this development in the campaign. During this election, the right-wing counter revolution was able to present its most united face since the re-call referendum in August 2004. During the election campaign the largest anti-Chávez protest, of over 300,000 people, took place. Despite resurgence in support for Chávez, the right-wing candidate Manuel Rosales was able to win over 30% of the vote. In Caracas, the capital city, the vote was almost evenly split. This is a warning of the threat from the right, which still exists. The question is why has the counter revolution been able to begin to regroup and increase its support?

In the early stages of the 2006 election campaign, the level of activists participating in it was considerably lower than in previous elections. Chávez limited himself to speaking about “peace” and “love” and the right-wing seemed to be gathering increasing support. It was only when it appeared that the threat from reaction was very real that the masses rallied to vote for Chávez. This was similar to what had taken place during the attempted coup in 2002 and the employers lock-out in 2002/3. Faced with the threat of counter revolution, the masses spontaneously mobilized from below to defeat it. At the same time, Chávez then began to speak about socialism and turned further to the left.

Jorge Martin points out in his article that amongst the masses a “mood of impatience” was developing, a feeling that “we have been talking about revolution for a long time, but nothing decisive seems to have changed”. This is undoubtedly true and poses the question of what processes have been at work in Venezuela, and how far the revolution has yet encroached on capitalism.

This belated recognition of some complications and contradictions in the Venezuelan revolution is in contrast to what the International Marxist Tendency previously told us. In ‘Encounters with Hugo Chávez’, by Alan Woods, in April 2004, the IMT argued: “Chávez has grasped the fact that the revolution needs to make this qualitative leap”. We are still waiting for this to happen! Alan Woods continued, “There are many things that indicate that Chávez is preparing a sharp turn to the left”. He also argued, in 2004 (‘Theses on revolution and counter revolution in Venezuela’): “The Venezuelan revolution following the excellent example of the American Revolution (1776) will likewise not hesitate to take measures to eliminate the economic power of the counter revolutionary minority”.

Aside from the fact that the American Revolution did not carry through a social revolution, in Venezuela the regime has hesitated to eliminate the economic power of the “counter revolutionary minority”. It is for that reason that many of the contradictions and obstacles now exist.

If it was possible through a series of progressive reforms to permanently eliminate poverty then this would of course be a good thing. But under capitalism it is not possible to achieve this. By the time of the elections at the end of 2006 these expectations had not been fulfilled. The counter revolution, feeding on accumulating discontent, was in the process of beginning to regroup its forces. This was possible precisely because, up until now, capitalism has not been defeated. Despite the reforms, there is widespread poverty and increasing anger against a state bureaucracy, which is growing. This point is not lost on John Pilger, as can be seen in his recent film, ‘War on Democracy’. In an interview with Hugo Chávez, the filmmaker challenges the Venezuelan leader about the widespread poverty which is still very evident in Venezuela and seen in the massive slums any visitor to the country will pass when traveling from the airport to Caracas.

Poverty and economic growth

Against the background of vicious attacks on the working class by governments through-out Latin America and internationally, it is understandable that Chávez, and now Morales, have won enormous sympathy from workers’ and youth, internationally. Together with Cuba, and now possibly Ecuador, they are seen as the only governments that are seen to stand up to US imperialism and offer a left, radical alternative to neo-liberalism.

However, at the same time, massive poverty remains in Venezuela – over 30% of the population according to official figures. Yet, while health, education and food subsidies have helped millions, there is a massive crisis in infrastructure. The mass of the population in Caracas remain trapped in squalid housing conditions in the ‘barrios’ on hill tops overlooking the city. While 90,000 new homes were constructed in a year, the massive housing deficit of 1.5 million still remains to be solved.

Unemployment has fallen – from 15% in 1999 – but it still remains relatively high at 8.3%. This is despite the economy having grown by 76%, since 2003.

The economic growth has been fuelled by an economy awash with revenue from oil that has led to a bonanza for sections of the middle class and the private sector. While it is true that the growth was driven by massive public sector investments, it is not true, as Jorge Martin argues, that the “private sector stagnates”. Since 2004, most of the economic growth has been in those sectors of the economy outside the oil industry. Manufacturing has grown 91% in the last eight years and construction by 144%, trade and repair services by 127.5% and communications by 99.5%. During this period, oil production has not risen at all. As Alan Greenspan points out in his recent autobiography, ‘The Age of Turbulence- Adventures in a new world’, Venezuelan crude oil output dropped from an average of 3.2 million barrels, a day, in 2000, to 2.4 million barrels, a day, during the spring of 2007.

As the economy expanded, the banks, which remain untouched, got some of the best deals in the international financial markets. Profits in the banking sector were up 33% in 2006. This was led by a 100% increase in credit card loans and a 143% jump in loans to the middle classes to buy new cars. The Venezuelan banking system is now the envy of the capitalist banking world, with returns on equity of 33% of the norm, and amongst the biggest banks up to 40%. As Román Mayoraga, the Venezuelan representative of the Inter-Development Bank put it in December 2005: “The banks have been making loads of money”.

Despite all the protests by the right-wing and imperialism about growing state control of the economy, the opposite has been the case. As a result of the growth of the private sector and stagnation of the oil industry, by 2006, the private sector’s total value was 63% of GDP – up from 59% when Chávez came to power in 1998/9! Central government spending in Venezuela accounts for 30% of GDP. Yet, it remains far below European capitalist countries, such as France (49%) and Sweden (52%) (‘The Venezuelan Economy in the Chávez Years’, July 2007, Centre for Economic and Policy Research).

When coupled with inflation, which is running at nearly 20%, the failure to resolve the massive social problems has inevitably led to a frustration and even anger amongst significant sections of workers and the urban poor. This has been re-enforced by a massive growth in bureaucracy, corruption and cronyism within the public sector. Even the Missiones, which administer the reforms in health and education, are infected by this sickness. Although Chávez remains popular and enjoys massive support, reflected in the 2006 December elections, the frustration and anger about the failure to resolve these social problems for millions can serve to undermine his support.

However, it is not possible to resolve these massive social problems, which still remain, despite the reform programme, within the confines of capitalism. The reforms have been mainly financed by the massive growth in government revenue that has resulted from the high price of oil. The US State Department estimates that oil accounts for 15% of GDP – although some estimates put the figure as high as 30%. In 2006, government revenue from oil was US$28.9 billion. Half of government revenue now comes from oil. This means that Venezuela is still held in the economic straight-jacket, like most economies in the neo-colonial world, of being dependent on a limited commodity to export. Under capitalism, it is not possible to fully develop these economies to over come this limitation because of the grip of imperialism and dominance of the world market. In the case of Venezuela, while it holds vast oil reserves, it lacks the technology and development to refine, it making it dependent on the more industrialized imperialist powers.

Oil dependency

The dependence on oil poses the question what would be the consequence of a change in world economic situation which triggered a fall in the price of oil?

A fall in oil prices as a result of a world economic recession would have potentially devastating effects in Venezuela. The economic recession which hit Venezuela in the 1970’s followed a period of high oil prices, which resulted in a windfall for the government, allowing increased state expenditure on social reforms. This was all rolled back and dismantled following the collapse in oil prices, as a result of the world economic downturn. This is a warning for Venezuela, today, if capitalism and landlordism are not ended. The crucial question is how and which class is to achieve this in Venezuela.

In addition to these threats to the reforms that have been introduced, are the constant attempts at sabotage of the economy by the capitalist class as a means of trying to undermine support for Chávez. There are regular shortages of beef, sugar, corn, eggs, oil, chicken and sometimes coffee.

Despite the economic growth it is clear that widespread poverty remains, along with all the other social problems, like social alienation, found in capitalist society. This is reflected in the high levels of crime and violence in Caracas and the other major cities. Jorge Martin writes that economic growth is “exacerbating all its contradictions rather than solving them”. But the main reason for this is the continuation of capitalism and the failure, so far, to defeat it. The popular reforms Chávez introduced, and his other radical policies, have brought him into collision with the interests of capitalism. Here is the classic contradiction of reformism. The crucial question is what programme and organization is necessary to resolve this clash of class interests.

Chávez’s contradictions

Jorge Martin, like many other commentators on Venezuela, now goes some way in recognizing some of the contradictions now emerging in Venezuela under Chávez. In relation to the food industry, Jorge Martin criticizes the government for not “confronting the issue head on” by “ownership of the land and food distribution chain” and setting up a parallel structure to compete with the private sector. (Mercal – the state run subsidised super markets). This is a very vague programmatic formulation. It is not sufficient only to speak of ‘ownership’ but to raise the clear demand for nationalization. Marxists need to be precise in the programme and slogans they put forward, especially in a struggle between revolution and counter-revolution. The demand for nationalization under democratic workers’ control and management is what is needed.

Jorge Martin also argues, “Chávez clearly reflected this [the contradictions in the economy] when he threatened nationalization of the banks and the Argentine owned SIDOR steel works.” Jorge Martin continues by quoting Chávez as saying, “we cannot have a situation where the state is the only one lending money to national producers to develop production”.

Chávez may have reflected the contradiction which exists when he threatened nationalization of the banks. Yet this was not carried out and Chávez continues to preside over what is still fundamentally a capitalist economy despite his proclamations supporting socialism.

Marxists always adopt a positive attitude and welcome progressive steps forward taken by the working class which advance its interests. But the role of Marxists is not to provide a left cover for the wrong policies, deficiencies and prevarications of the leadership of the movement. It is to help workers and youth involved in the struggle to find a way forward for the revolution and break through contradictions and obstacles that exist. Above all, it is necessary to assist workers to build their own independent organizations, with a programme to achieve a successful revolution. This is not the approach of the International Marxist Tendency. Rather, the IMT tries to act as benevolent advisers to the Chávez leadership, neglecting the reality of what happens on the ground.

In his document, Jorge Martin, when dealing with the ‘nationalisations’ that Chávez has undertaken, argues: “Some people have argued that these are not real nationalizations because they have been carried out with compensation.” Jorge Martin continues: “However, if we want to understand the real meaning of these nationalizations, we have to look at how the workers and the capitalists have reacted to them”. He then explains that the workers’ welcomed them, set up a ‘Socialist Batallion’ of the newly formed PSUV and demanded workers’ control.

This positive reaction by the workers concerned is very significant. The enthusiastic response from the workers, however, reflects more what they thought they were getting rather than what was actually on offer.

The capitalists reacted by reducing foreign direct investment by US$1050 million in the first quarter of 2007 compared to the first quarter of 2006. Undoubtedly this reflected the fear of imperialism of the processes unfolding in Venezuela. Yet, however significant the reaction of the workers and capitalists are, they do not explain the limitations of what Chávez has actually done and what is taking place in the Venezuelan economy.

The question of nationalization

Marxists support nationalization of the major companies. The imperialists and big national capitalists who have robbed and plundered Venezuela at the expense of the mass of the population do not need or deserve compensation. At the same time, if there are small share holders, sections of the middle class who have some savings, the working class has no interest in punishing them. Democratic committees, representing the workers in the companies, the poor and the population, as a whole, including small business people and the middle class, should be elected to investigate all claims for compensation, which should be paid on the basis of proven need. One of the tasks facing the workers’ movement is to reach out and try and win the support of the radicalized sections of the middle class who are also exploited by capitalism and, thereby, undermine the potential base of the right-wing.

With a genuine revolutionary socialist programme, the workers’ movement needs to take all the necessary steps to try and split the middle class, and not drive it into the arms of the counter revolution. The middle class, who are also exploited by capitalism, are not the real enemy of the working class. The real enemies are the big share holders, capitalists and imperialists, who have robbed and plundered the country’s resources for their own interests.

However, the question posed with the ‘nationalizations’ in Venezuela is that the major monopolies and banks have not been touched and there is no democratically planned nationalized economy. Jorge Martin again invokes Chávez, when Chávez declared “all privatized companies should be nationalized”. In other words, those privatized by the former governments representing the oligarchs who rule Venezuela. This, of course, is supported by Marxists but it is not enough to take control of the economy from the capitalist class.

At the same time, it is necessary to clearly raise the question of how nationalized industries should be run and managed democratically, by and in the interests of the working class. The demand for workers control in the industries concerned has been an important discussion in Venezuela. The need for elected committees in the workplaces, to be responsible for the day-to-day functioning of factories, is an urgent task. These committees need to be elected by the workers themselves, receive no special privileges and with the delegates to them subject to immediate recall. This is distinct from the government and union appointed bodies which have been set up in Venezuela.

There needs to be a system of democratic workers’ management in the nationalized companies. The boards of such companies should be comprised of elected representatives of the workers in the industry, the wider population, and representatives of a workers’ and peasants government to integrate the industry into the overall planning of the economy. Such a system of democratic workers’ management is distinct from workers’ control. This applies to the day-to-day running of workplaces, and can also be fought for in private companies, to act as a school to prepare workers to manage the industry and economy, as a whole, when capitalism has been defeated.

It is necessary to distinguish between phrases and deeds. What Chávez has done is to re-nationalise CANTV and EDC (the telecommunications and some electricity generating companies). While this is a welcome step, it is not enough. As the Washington-based Center for Economic and Policy Research (CEPR) points out in its report, ‘The Venezuelan Economy in the Chávez Years’ (July 2007), which is very sympathetic to Chávez: “Theses moves [nationalization of CANTV, EDC and government intervention in oil industry in the Orinoco basin] generally have been portrayed as very negative not only for Venezuela’s investment and for its economic future. However, it is important to keep some perspective in these changes. The telecommunications sector was nationally owned and then privatized in the early 1990’s. The recent nationalized companies were compensated fully for their assets … ” It then goes on to quote the AES Chief Executive, Paul Hanrahan, “I think this deal is a fair one and has respected the rights of investors.”

The CEPR also point out that 80% the electricity generating companies nationalized were already, in fact, owned by the state.

In the Orinoco oil basin, the government increased the amount of tax revenue paid by the private sector. In essence, it has re-negotiated joint ventures which have limited the amount of assets foreign companies can hold, giving the state a majority holding. In the first round of negotiations, 31 out of 33 contracts were agreed with only Total and ENI rejecting the new contracts. In subsequent negotiations, Exxon-Mobile also pulled out.

However, although the new contracts increased government tax revenue they have done nothing exceptional compared with other oil producing countries in the neo-colonial world. Venezuela is one of the only major oil producing countries in the developing world that allows foreign investment in oil production! Even US allies such as Mexico and Saudi Arabia, for example, do not!

It is clearly very positive that Chávez speaks about socialism but the decisive question is how to achieve it and defeat capitalism. The programme that has, so far, been introduced by Chávez has many of the features of Keynesian reformism that were introduced in many countries during the 1950s, 1960s and early 1970s. As a friend of the Chávez regime, Tariq Ali explained in his book, ‘Pirates of the Caribbean – Axis of Hope’: “New Bolivarianism combines continental nationalism and social-democratic reforms fuelled by oil revenues.” In other words, a Latin American version of ‘Old Labour’ in Britain or of other social democratic reformist governments in other European countries.

Keynesianism and reformism

In these cases, through an increase in state expenditure and state intervention in the economy, a series of reforms were introduced which benefited the working class. This was used to justify the ideas of a reformist road to socialism – of incremental steps encroaching on capitalism until it was eventually replaced by socialism.

These ideas have never allowed a successful socialist transformation of society to take place. The capitalist class have never permitted such a development without directly intervening to defend its interests and its system. During periods when its interests are decisively threatened, the ruling class will attempt the bloody crushing of the working class through a military coup, like it in Chile, in 1973. During the 1930s, in a different historical period, the bosses looked to fascism to save their system, as they did in Hitler’s Germany and in Franco’s Spain, for example.

While Marxists defended all of the reforms won through the introduction of Keynesian policies, it is not possible for them to be sustained on a lasting basis within capitalism. For this reason, the reforms conquered by the working class during the period of capitalist upswing are being destroyed and rolled back in the most brutal way in Europe, Latin America, Asia and Africa.

Venezuela is in a somewhat unique situation, in that very few left radical regimes which have come to power in the neo-colonial world have had such an oil bonanza to pay for reforms. This has given Chávez a certain room to maneuver and to maintain his base of support. Without the oil, if he had not defeated capitalism and established a nationalized planned economy, it is unlikely his regime would have been able to maintain itself in power as long as it has. This point has not been lost on Alan Greenspan, who warned in his autobiography: “He [Chávez] needs ever-higher prices [of oil] to prevail. Fortune may not smile on him forever”.

The impending onset of a downturn or recession in the world economy is likely to trigger a fall in the price of oil, as demand falls. Some have argued that Venezuela could weather such a storm. The Washington-based, CEPR, argues that because Venezuela has budgeted conservatively the price of oil (at US$29 per barrel – 52% lower than the average price in 2006), it has accumulated a large international reserve of US$25.2 billion. This which means, they argue, when taken together with other funds it holds, it could, according to the CEPR, absorb a 20% fall in oil prices. However, what if the price falls further and does not rapidly recover? Even the optimistic scenario put forward by the CEPR points out; “Thus, while a fall in oil prices will not cause a budgetary crisis [sic], it could lead to reduced government spending. This could slow the economy from its present very rapid pace…”

Such developments have happened before in Venezuela. The left of centre nationalist populist Carlos Andrés Perez government was able to introduce some significant social reforms between 1974-79 using revenue from oil. By 1979, oil had reached $US80 per barrel. However, all of these social reforms were brutally destroyed and reversed in the 1980’s, as a major economic recession gripped Venezuela. This followed a crash in oil prices to US$38 per barrel. A fall of nearly 50%!

This had devastating consequences and plunged Venezuela into an economic decline which last more than two decades. Between 1979 and 1999, per capita GDP fell by a staggering 27%. Those living below the poverty line rocketed from 17% in 1980 to 65% in 1996. This is a warning for Chávez and the Venezuelan masses.

Even if, and it is a big ‘if’, the more optimistic scenario of the CEPR proves to be correct, it would mean cutting back on the reforms and a slow down in the economy. This is certain to mean a rise in unemployment.

The frustration and anger amongst some sections of the workers, urban poor and peasants today, during a period of economic growth, would be greatly re-enforced in such a situation. Chávez, having already been in power for nine years, in that situation, could see deep disappointment affecting large layers of the masses which could undermine his support.

These developments would be an even more fertile ground for reaction to re-group its forces and prepare to make a comeback. This could possibly take place in a similar way to how the Sandinista FSLN was voted out of office when the pro-imperialist right won elections in 1989, following frustration, disappointment and exhaustion at the failure of the revolution in Nicaragua to go forward and overthrow capitalism. Now Ortega has been returned to power having made his peace with capitalism and the former right-wing Contras and Catholic Church, and scandalously agreed to abortion being completely illegal.

Despite Chávez’s election victory in 2006, the threat of a creeping counter-revolution remains very real. This was seen during the early stages of the election campaign. This was despite Chávez’s verbal swing to left and embracing of socialism, which he made during and after the 2006 election campaign.

Chávez, Trotsky and populist trends

The latest speeches of Chávez, supporting socialism, and referring to Trotsky, represent a very important change and a welcome step forward; but it also important for Marxists to distinguish between words and deeds. Chávez is not the first leader to defend Trotsky in words but then fail to apply his method and ideas in practice. In Spain in the 1930s, Andrés Nin adhered to Trotskyism, for a period, but later broke with Trotsky when he helped found the POUM (Workers’ Party of Marxist Unification) in 1935. Nevertheless Nin and his party were still dubbed ‘Trotskyist’ but, against Trotsky’s advice, they joined the pro-capitalist Popular Front Government in Catalonia in 1936.

More recently Miguel Rossetto, in 2003, a member of the United Secretariat of the Fourth International at the time, which subscribes to Trotskyism, joined the Lula’s neo-liberal Brazilan government as Minister of Land Reform. When Chavez came to power he had many of the features of a radical, populist nationalist. Now he is defending, in very radical speeches a more classic version of reformist socialism.

The left radical, nationalist populist trend which Chávez reflected has a strong tradition in Latin America, although it can also be seen in other continents, as well. Populism, by its nature has many features and can be of both a left and right variety. An element of right-wing populism has been used by Sarkozy in France and in Britain in the recent ‘left’ turn by Cameron, the leader of the Conservative Party. However, the radical left populist forces which have emerged in Latin America represent a cry of the masses against the poverty and exploitation they suffer. This has generally developed where the independent organizations of the working class that defend socialist ideas are weaker. The leaders of these movements reflect the anguish of the masses but limit the programme to reforms within capitalism, including greater state intervention, and can zig- zag in the policies and methods they use.

In the case of Latin America such leaders reflect the impasse in capitalist society but do not show a way out of it. The leaders of these forces generally have not emerged from the independent organizations or parties of the working class but from the military or radical left petty bourgeois parties. Significantly this was commented on by Alan Greenspan in his latest autobiography. In relation to Chávez he observes: “I see economic populism as a response by an impoverished populace to a failing society, one characterized by an economic elite who are perceived as oppressors…” he continues “Economic populism seeks reform, not revolution.” In other words it does not directly threaten capitalism but seeks to reform it. Since Chávez came to power on a radical nationalist populist basis he has verbally gone further to the left and defended the idea of socialism and more classic ideas of reformist socialism.

There are many other leaders of the workers’ movement in the past have also made very left, revolutionary sounding speeches and declarations. But, it is also a question of deeds and programme to achieve it, which are the ultimate test.

Salvador Allende and his Socialist Party proclaimed support for Marxism. The left-wing General Secretary of the Chilean Socialist Party Altamirano in words supported the arming of the working class. In Greece, Andreas Papandreou, who founded PASOK in 1974, argued in 1975; “If by the word Marxist we mean the method of analysis which we inherited from Marx, which talks of class struggles, of the structure of power, are to Marxist … we are obliged as a socialist movement to say YES”. Mario Soares, the leader of the Portuguese Socialist Party following the revolution in 1974, proclaimed the party to be Marxist and offered to show anybody the door who did not accept this, although he later turned to the right.

When in government many of these leaders went a lot further in encroaching on the interests of capitalism than Hugo Chávez has so far done. In Chile Allende nationalized 40% of the economy. During the Portuguese revolution approximately 70% of the country’s economy was in state hands.

Like, Chávez, all these leaders at a certain stage were immensely popular with the masses and played a crucial role. Yet as the class struggle sharpened and reached crucial conjunctures in the last analysis it was not the left, revolutionary sounding speeches or popularity which proved decisive. It was the programme, policies, methods and actions which were the ultimate test. None of these ‘left’ leaders defended a programme in action and deeds that was sufficient to defeat capitalism and allow the working class to take over the running of society.

Allende heroically died during the course of the military coup in 1973. Papandreou, who had hidden, arms in hand, as the military seized power in Greece in 1967, became reconciled with capitalism and moved to the right. Mario Soares and the Socialist Party became the vehicle through which capitalism was able to re-establish its rule in Portugal.

In 1930’s Spain, Largo Caballero, who had served in the right-wing dictatorial government of Primo de Rivera in the 1920’s, was dramatically radicalized and emerged as the leader of the left of the Socialist Party (PSOE). He studied Lenin in prison and emerged a supporter of “Bolshevism” and “Leninism”. In the elections in 1933, Largo Caballero urged that in the event of a right-wing victory the working class should take up arms. His newspaper, ‘El Socialista’, carried a headline in 1934: “Harmony? No! Class War! Hatred of the Criminal Bourgeois until death!” Before his death, in 1946, Largo Caballero was to suffer the horrors of the fascist concentration camps in Germany following the defeat of the Spanish civil war. However, Largo Caballero wrongly joined the ‘popular front’ government of Republican, Socialists and Communists; a coalition, which included what Trotsky referred to as the “shadow” of the capitalist class. The overwhelming majority of the ruling class had gone over to the fascists. The policy of popular fronts was applied under the tutelage of Stalin and flowed from the so-called ‘two stage theory’ of the revolution. It supported the idea of forming a coalition with the “democratic” “progressive” capitalist class. The socialist revolution was to be delayed until fascism was defeated. Only following a period of capitalist development would the revolution “grow” over into socialism.

Through the application of this policy, the workers’ struggles and the peasants’ attempts to redistribute land, and other mass actions, were held in check. It was a fatal break on the magnificent movement of the Spanish masses, who were drowned in Franco’s blood bath, after fighting a heroic revolution. The ‘stages policy’ never resulted in a victory for the working class, wherever it was applied and very often ended in bloody disaster.

History never repeats itself in exactly the same way but there are fundamental laws of the process of revolution and counter revolution, which need to be drawn on and applied to the situation in Venezuela, today.

A parallel economy

What Chávez is attempting to do is to try and construct a ‘parallel’ economy and state, alongside the existing capitalist monopolies and state machine. Under certain conditions, for example, where a situation of ‘dual power’ exists, it may be possible for such a ‘parallel’ economy to temporarily develop and make some advances. ‘Dual power’ is the term given by Marxists to a situation where the ruling capitalist class is not fully in control of the economy or state because it is being challenged by a revolutionary movement of the working class which has developed to such a degree that the ruling class cannot govern society. However in this situation, although it has challenged the rule of the capitalism, the movement has not yet taken power completely into its hands and defeated the ruling class. Such a situation cannot last indefinitely and will either result in the working class taking power and defeating the ruling class or the capitalists will reassert their rule and control over the economy and the state machine. However, this is not yet the situation which exists in Venezuela, today.

Despite his verbal threats to nationalize the banks and some other industries, Chávez has not done this. For example, the subsidized state supermarkets (Mercal) run in tandem to the private food chains. Chávez is also trying to strengthen his support within the armed forces to use it as instrument in the “service of the people.”

The capitalist class will fight to the bitter end to try and prevent the state sector becoming gradually strengthened, until it ‘overtakes’ and replaces the economic and state levers of capitalist power. Where necessary, the ruling class will resort to brutal military dictatorships. In the 1930’s, when the social basis existed for it, the ruling class turned to fascism in Spain, Italy and Germany. During the Spanish civil war, when the working class, for a period, controlled four fifths of Spain, the capitalist state and economy disintegrated and the ruling class temporarily lost control of the situation. However, because the working class did not finally overthrow capitalism and take power into its hands and establish workers’ and peasants’ democracy, capitalism was able to reconstitute itself, and via the fascists, regained power and control of society. In Nicaragua, the Somoza state collapsed and the Sandinista FSLN took power. However, because capitalism and landlordism were not overthrown, and new democratic workers’ state was not established, capitalism and landlordism were able to regain control of society and to re-establish their full power.

Chávez has said that he supports the ideas of Trotsky’s Theory of the Permanent Revolution. Jorge Martin writes: “The process in Venezuela is a clear example of the Permanent revolution”. Well, yes, in that it illustrates the tasks of the revolution which are posed. But surely not, as yet, in what is the policy and programme that is actually being carried out by Chávez and the leadership of the workers’ movement.

Permanent Revolution

The Theory of the Permanent Revolution explains that historically the tasks of the bourgeois revolution – the solution of the land question, development of industry, a solution to the national question, securing of national independence and establishing a parliamentary democracy – were carried through by the national bourgeoisie. This was accomplished during the bourgeois revolutions, mainly in the 17th and 18th centuries, in Europe, which swept away feudalism. However, in the modern epoch of imperialism, in the neo-colonial countries where the tasks of the bourgeois revolutions remain to be completed, they cannot be accomplished by the national capitalist class. They are too weak and corrupt, and remain shackled to imperialism.

The experience of the 1917 Russian Revolution showed that the resolution of these tasks falls to the working class in the neo-colonial countries, with the support of the poor peasants, radical sections of the middle class and others exploited by capitalism and landlordism.

However, having taken power, the working class immediately comes into collision with capitalism and landlordism. Overthrowing capitalism and landlordism, and establishing a nationalized and democratically planned economy, is the only way to develop the productive forces. To achieve this, and to begin the task of developing the resources necessary to begin to build socialism, becomes wholly interlinked with spreading the socialist revolution internationally, including to the industrialized imperialist countries.

However, the idea of the ‘permanent revolution’ can also be wrongly used and totally distorted to justify a policy of incremental steps being taken – one at a time, little by little, until eventually capitalism disappears and “grows” over to socialism. In that sense, it is claimed the revolution is “permanent”. During the Spanish civil war, the Stalinists counter posed to the ideas of the permanent revolution the ‘stages theory’ of first defeating the fascists, then developing capitalism, and only when these tasks had been achieved could the socialist revolution be posed.

It is extremely positive that Chávez has put the idea of the permanent revolution on the political agenda in Venezuela. The crucial question is how it is understood and applied.

Jorge Martin favorably quotes Chavez, when he invited the ruling class to participate in developing the national economy. If they refuse Chávez warned: “We will take away the levers of power that they have, one by one”. [My emphasis – TS].

Jorge Martin concedes that the Venezuelan state is still “in the main, a capitalist state apparatus” and if “it remains untouched it will become a tool for smashing the revolution”. But it is already being used to attack workers who have been involved in struggle. More than 5,000 petrol workers at Anzoátegui have been involved in strike action, during September, this year. These workers continued to work during the bosses lock-out in 2002/3. At one demonstration, the police were turned on the marches and opened fire with live ammunition, wounding three workers. Health workers who occupied the Ministry of Labour were subject to a vicious attack and locked in the government building by thugs and denied food and water for days. These, and other attacks on workers involved in struggle, reflect a section of the state machine that still support the right-wing reaction and also a layer of Chávez’s regime who are opposed to the working class undertaking any struggles to defend their class interests.

Is Jorge Martin arguing that capitalism can be overthrown by taking away the levers of power the capitalists have “one by one”? The experience of Venezuela has already shown that the capitalists would seriously fight such an attempt at carrying through a revolution by incremental steps. The history of the international workers’ movements is tragically littered with failed attempts to achieve socialism in this way.

An animal is at its most dangerous when it is wounded. Any attempt to defeat capitalism in this way is akin to trying to disarm a tiger by removing one claw at a time. It will strike back and savage anybody attempting to do so. The same is true for the capitalist ruling class.

Lessons of the Portuguese Revolution

The developments in the Venezuelan state machine, and especially the army, are of crucial importance. Jorge Martin makes some very revealing comments about the splits which exist within it. He quotes a retired army general, Alberto Rojas, commenting on how the army is split: “There is a left wing, a right wing and within the left wing a section which calls itself socialist but are not and then there are those of us [Rojas] who are real socialists but who have always been in a minority”.

This raises important issues about the balance of forces in the army. It has increasingly been incorporated into government and the running of society. Of the 61 ministers that have served in the Chávez government between 1999 and 2004, 16 (or 26%) were military officers. Following the 2004 regional elections, of the country’s 24 governors, 22 were supporters of Chávez. Of these, 41% come from a military background. Chávez has an important base of support in the army but these forces are not homogeneous. Despite the radicalized layer which exists amongst the junior officers, the process of radicalization has not gone anywhere like as far as it did in Portugal from 1974/75.

Following the April 1974 overthrow of the Caetano dictatorship in Portugal by the junior army officers, the masses began to move into struggle and a revolutionary process began to unfold. Reaction made repeated efforts to halt this and on 11th March 1975 a group of reactionary army officers then attempted a coup. This provoked a massive social explosion and revolutionary ferment. In response, the workers took to the streets and factories and banks were occupied. The coup collapsed and not a single regiment could be found to act for the counter revolution.

By then the MFA (Armed Forces Movement), a radical organization of army officers that had led the April 1974 uprising, issued a declaration saying the revolution is a “transition to socialism”. Later, a wing proposed a plan “towards a socialist society” and called for neighborhood and workers’ councils”. Seventy per cent of the economy was nationalized. The London ‘Times’ carried an article with the headline: “Capitalism is dead in Portugal”. It almost was. However, because it was not snuffed out, capitalism was able to regroup and make a come back. This was done through the agency of the Socialist Party which had begun to turn to the right and was being advised by the German Social Democratic Party, which, in turn, was acting as a conduit for the American CIA.

There were different wings in the MFA and it was more radicalized than the army in Venezuela is at this stage. The MFA rightwing in Portugal, around Melo Antunes, collaborated with the Socialist Party in initiating the rolling back of the revolution. However, the ‘left-wing’, which included many officers who genuinely regarded themselves as revolutionary socialists, made important mistakes. In particular, because they lacked a rounded-out, clear understanding of the role of the working class, and what a real workers’ democracy entailed, they tried to impose their ideas from above, without an organized base amongst the working class. This allowed the Socialist Party and others to present themselves as the ‘defenders’ of democracy against the ‘undemocratic army officers’ and the Stalinist led Communist Party. This has important lessons for Venezuela.

Jorge Martin’s document is revealing about the assessment of the Intern

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October 2007