This thesis document was drafted, discussed, and approved by our members this past October 2015. Although it was written some months ago, it still remains valid. It reflects a correct understanding of the events that have taken place, and shows how our warnings were confirmed in the face of serious threats from the counterrevolution. We believe that the document serves as a tool in the debate that is developing within the ranks of the Chavista movement in general.
On the eve of the National Assembly elections on December 6, the Bolivarian Revolution faces perhaps the most difficult situation since the coming to power of Hugo Chávez in 1998.
A number of factors have combined to produce a downward spiral. The most important of these are:
1) the international economic situation, and above all the sharp slowdown in the Chinese economy;
2) the continued fall in oil prices;
3) the runaway rise in inflation and scarcity;
4) the corruption epidemic;
5) the cancer of bureaucracy in the ranks of the revolution.
All of these factors are related and feed into one another. The main consequence is demobilization, apathy, and skepticism among the working and poor masses who have been the motor force of the Bolivarian Revolution and who have saved it at all key moments.
The world economic situation
In terms of the international situation, the slowdown in China’s economy has had an impact on all energy-exporting countries, and at the same time limits the possibility of funding from China for the government of Venezuela.
The fall in the price of oil places sharp limits on government revenue, and thus on room to maneuver in terms of social policies and state investment. In 2014, the average price of a barrel of Venezuelan oil was US$88. In 2015, the average so far has been US$47. In September 2015, the price was US$40. This has led to a fall in international reserves and falling state revenues.
These two factors in turn are a part and consequence of the international crisis of capitalism. The system is unable to get itself robustly out of the crisis that started in 2007, and the fall in China’s economy could trigger another downturn worldwide.
The Venezuelan economy: the failure of regulation, inflation, and economic collapse
In Venezuela, the economy, which contracted by more than 4 percent last year , could fall by more than double this year.
Rising inflation and shortages acutely reflect the failure of the policy of trying to regulate capitalism and the enormous imbalances that it has caused. It is estimated that the rate of inflation, which was 68 percent last year, will increase by double or more this year.
Price controls have led to sabotage of the production of food and basic goods by the private sector, as well as to hoarding and the further rise in the black market. The attempt by the state to ensure basic goods at affordable prices for the masses creates a huge drain on international reserves.
The state purchases products at international market prices in foreign currency, and distributes these products via state distribution chains at subsidized prices. The scarcity of these products is one of the most important reasons for the existence of the black market and bachaqueo [illegal trading, smuggling, and black marketeering]. The huge differential between regulated prices and black market prices is a constant source of corruption at all levels.
The same thing has happened with exchange controls. The exchange rate for the US dollar on the black market, which was at 187 Bs per US$1 at the beginning of this year , shot up to more than 800 Bs per US$1 by October 1. The official rate for the SIMADI dollar went from 176 Bs in February to 200 Bs in October.
Far from preventing the flight of capital, exchange controls have meant a huge transfer of dollars from oil revenue to the capitalists through a series of legal, illegal, and corrupt mechanisms. Capital flight has continued through illegal and semi-legal means. Furthermore, exchange controls have been a distorting factor for the entire system of production, boosting the importation of finished products and strangling domestic production.
To the extent that it is much more lucrative to use legal and illegal means to exploit the differential on the exchange market than to invest in production, the investment rate has fallen from 27 percent to 16 percent of GDP. Thus, there has been a sharp contraction in the economy combined with hyperinflation.
The combination of an expansion in social spending with a fall in oil income and the paralyzing of the economy has led to a budget deficit of 14 percent of GDP in 2014, which is obviously unsustainable. The rate could reach 20 percent of GDP in 2015, reducing international reserves further.
After taking control of PDVSA in 2003, the Bolivarian Revolution secured a number of significant advances in terms of the living conditions of the masses. For a whole period it was possible to maintain and develop these advances using oil revenues, without decisively questioning the private property of the means of production. The factors that previously made this possible (the high price of oil, in particular) no longer exist.
The government is aware that the model of regulating capitalism and using oil revenues for social spending has been exhausted. It can be said that the turning point was the departure of Minister Giordani in June 2014.
Government policy shifted to one of making concessions to the capitalists by the gradual and partial lifting of price and exchange controls. To this can be added the creation of special economic zones to attract foreign investment and attempt to encourage the return of capital that has flown out of the country.
As we explained at the time, this policy has failed. The Venezuelan bourgeoisie has historically been particularly parasitic and rentier in nature. They are not willing to invest for several reasons:
1) they do not believe they can get what they deem is the “necessary” profit margin;
2) they feel that the legal certainty of possible investments is not guaranteed given that there is a revolution in Venezuela.
Impact on consciousness
All these factors described above have had an important impact on the consciousness of the masses. After years of sustained improvement in living conditions, in which the achievements of the revolution were palpable, the situation has been partially reversed.
Increasingly, the scales have tipped more towards the difficulties caused by shortages and inflation than towards the gains of the revolution.
The substantial increase in crime has added to all of this. This is due to several complex factors, of which the most important are:
1) the breakdown in the old bourgeois state apparatus that has lost much of its authority but which has not been replaced by a new revolutionary state apparatus with legitimacy in the eyes of the masses;
2) crime associated with economic factors related to the black market;
3) the penetration of criminal organizations is made easier by the above factors;
4) the connections between a radical section of the opposition and Colombian paramilitaries;
5) the use of contract killings by sections of the bosses and landlords as a means of fending off the offensive of the revolutionary masses.
Another factor to consider, also related to the foregoing, is bureaucracy and corruption. The destruction of the legitimacy of the bourgeois state apparatus also plays an important role here. A layer of new bureaucrats and careerists who see a possibility for personal gain has embedded itself at all levels of the state apparatus.
The existence of the bureaucracy and corruption is an additional corrosive factor that undermines the revolutionary moral of the masses.
Not only are material living conditions deteriorating, but there is also the perception that the government does not have a clear or effective plan to combat these problems. Above all, the government’s response has been police-like, bureaucratic and top-down, without seriously using at any time the revolutionary initiative and the self-organization of the masses. Thus, we have seen, for example, the closure of the border, the OPL [Operativo de Protección y Liberación del Pueblo (Operation for the Protection and Liberation for the People)], the struggle against hoarding, etc.
This does not mean that the revolutionary consciousness of the Chavista masses has disappeared. During the Guarimbas [violent street blockades organized by the reactionary opposition] of 2013, those in 2014, and the imperialist provocations at the start of 2015, we saw the rekindling of the revolutionary fervor of the masses, who mobilized and organized to defend the revolution. The extraordinary vitality and strength of the revolutionary mobilization of the masses is one of the most significant features of the Bolivarian Revolution. But everything has its limits.
The government also has a bureaucratic approach to the mobilization of the masses, like a faucet that can be turned on and off at will. The expropriation of Polar was threatened, but it was not carried out. Calls were made for the formation of popular and workers’ militias, but these were left as half measures. The bureaucracy is organically incapable of channeling the revolutionary mobilization of the masses because they fear it.
The assembly elections
The result of the last presidential elections, which were held in 2013, was already very close. Nicolás Maduro won by a minimal margin (just over 1 percent, a difference of 120,000 votes). These elections also took place shortly after the death of President Chávez, which was a significant event. The National Assembly elections in 2010, while Chávez was still alive, were also very close (a difference of less than 1 percent, 100,000 votes between the PSUV and the MUD, to which it must be added that the PPT took 350,000 votes).
In the December 2015 elections there will be a number of additional factors:
1) the revolutionary authority that Nicolás Maduro has is not the same as what Hugo Chávez had;
2) in the National Assembly elections the vote will not be for Maduro but for the members of the Assembly, whose political authority is even lower, with many of them being seen as bureaucrats, corrupt, or as careerists.
It is obvious that the government will try to go on the offensive in order to try to win the elections that are crucial for its own survival. The OPL and the conflict on the border are an attempt to solve and alleviate the problem of crime and, partly, the problem of shortages. It is possible that in the next few months major initiatives will be taken in terms of the misiones sociales [social programs] and that international reserves will be used extensively to import basic goods and guarantee supply.
However, as we saw above, the economic room for maneuver is much more limited. Even if these measures could be taken now, the bill would have to be paid after the elections, aggravating the crisis further still.
The government has also taken steps to dismantle the most golpista section of the opposition [those pushing hardest for a coup d’état], imprisoning several of the most prominent leaders. Despite all the shouting, the bourgeoisie has not been able to mobilize its base, not even to the levels of the Guarimba in 2014. The defeat they suffered at that time resulted in demoralization.
The opposition has been divided in this conflict, has demobilized and been weak. However, these elections are also decisive for the bourgeoisie. Winning a majority in the Assembly would allow them to launch a recall referendum and block government laws. It is obvious that they will try to regain ground, unifying their forces and providing the means necessary for the mobilization of their social base.
The result will depend on the correlation between the level of demobilization of the Chavista ranks and the level of demobilization of the ranks of the counterrevolution. It cannot be absolutely ruled out that the opposition wins on this occasion, or at least, that the Chavista majority in the Assembly is substantially reduced. The opposition managing to mobilize a similar number of votes as in 2013 and the Chavistas losing 1.5% of their votes to abstention would be all it would take for a defeat.
The way in which the electoral system is organized and the different districts could also result in a situation where the opposition gets a majority of the votes but does not win a majority in the Assembly. This scenario would be a morale boost and prepare the ground for a new offensive towards a presidential recall referendum.
A partial or total defeat in the elections for the Chavistas would also open up all sorts of divisions within the movement. A very important section of the bureaucrats would abandon ship, going over to the opposition as soon as they see their own future threatened. An electoral defeat would have a healthy impact in that it would clean the Chavista ranks of the careerists. Serious cracks could also be opened in the state apparatus. The loyalty of the majority of the commanders in the armed forces is primarily based on maintaining their own privileged positions and personal gain.
Among the Chavista masses, a defeat would have a demoralizing effect, more so due to the fact that it would occur in the context of economic difficulties, etc. However, among a section of the advanced layer, this could have a radicalizing effect, with a desire to settle the score with the reformists and bureaucrats. This is what took place, for example, in the Spanish Revolution following the defeat of the Republican-Socialist government in 1933 and the subsequent defeat of the insurrection in October 1934. These defeats resulted in a massive radicalization in the socialist organizations, particularly among the youth, which prepared a new revolutionary offensive in 1936.
An attempt by the oligarchy to destroy the gains of the revolution too quickly could cause a backlash, as we saw, for example, in the reaction of the masses in defense of the misiones when Capriles won the governorship of Miranda.
A narrow victory for the Chavistas in the Assembly elections would only prolong the situation a little longer. All the key economic factors that we outlined above would continue to develop, preparing the ground for an electoral defeat sooner or later.
What is to be done?
The situation is serious. The half measures, the corruption, the bureaucracy, and reformism are damaging the revolution. There is certainly a critical mood among the most advanced layers. They are critical of the bureaucracy and the reformists who are truly responsible for this situation.
The revolution must be completed by nationalizing the means of production under workers’ control and by destroying the bourgeois state, replacing it with a workers’ state. The main obstacle to this being carried out is not the consciousness of the masses, which is very advanced, but rather the incorrect policies of our leaders.