Venezuela: Economic war in the run-up to the parliamentary elections

If it is to succeed, the Venezuelan revolution must be taken to the very end, with the expropriation of the capitalists and landlords who still control two thirds of the economy. This is a powerful lever in their hands that they are using to organise economic sabotage to undermine the government. The right-wing, reformist fifth columnists within the Bolivarian movement are attempting to hold back the revolution. That is where the danger lies.

The forthcoming elections to the National Assembly, due on September 26, represent a serious challenge to the future of the Bolivarian Revolution. In the months preceding the elections Venezuela finds itself in a highly volatile situation. The counter-revolution is on the offensive, using its economic power to sabotage and hoarding in order to provoke food shortages.

For its part, the government is trying to solve some of the problems, but the measures it has taken are timid and don't go to the heart of the problem. A big part of the problem facing the Revolution is widespread popular resentment against the chavista bureaucracy – those elements who have joined the Movement, not to fight for socialism, but to make a career, obtain lucrative government contracts or jobs in the state or the Party. This stratum, that is becoming more and more powerful, represents a real Fifth Column of the bourgeoisie within the Revolution. And its tentacles reach high up in the government and the PSUV.

A few months ago, in April, a host of Latin American dignitaries descended on Caracas, where they dominated the airwaves for several days. There were numerous and lengthy speeches recording the achievements of Bolivar and the Liberation of Latin America from the colonial yoke. But people were also reminded that the genuine independence of this great continent remains to be conquered.

In recent months, President Chávez has repeatedly emphasised that there can be no solution for the problems of the peoples of Latin America and the world under capitalism and that the only alternative before the human race is socialism or barbarism. The demonstration of 13 April was the occasion of an impressive display of the People's Militia, armed workers, peasants and students.

At the closing congress of the PSUV thousands of red-shirted chavistas chanted Viva Chávez and Viva la Revolucion! But beneath the surface a profound sense of unease exists. Behind the official speeches, rank and file members of the PSUV are expressing serious concern about the way things are going, and what the future holds.

One Bolivarian activist, Monica expressed her concern:

“When I saw all those militiamen and women marching on the 13th I was filled with pride. But there is a problem. The numbers of Bolivarians on the streets was less than in previous years. I am afraid that these parades are drawing attention away from the political issues, away from the problems that ordinary people are really concerned about.”

Militia rally in April. Photo by Prensa Presidencial.Militia rally in April. Photo by Prensa Presidencial. She confessed:

“We Bolivarians are losing the battle in the population. Nowadays counterrevolutionaries can shout their mouths off against Chávez at the bus stops and Metro stations and nobody answers them. The chavistas have their heads down. We are on the defensive.”

Another chavista activist, Gustavo, commented bitterly:

“The mood in the poor barrios is very bad. In the past people used to fight to get on the buses to go to our rallies. Now nobody wants to go any more. Some even say: I will go if you pay me. They say: there is plenty of money in this country – for some!”

As a result, the outcome of the election is hard to guess. Many things can happen in the next few months. But one thing is clear: it will not be a pushover for the candidates of the PSUV. The vanguard of the PSUV and the Bolivarian movement look with growing alarm as the counter-revolution is undermining the revolution and preparing a new challenge to remove Chávez from office.

PDVAL – the cancer of corruption

What is the root of the problem? It is the fact that, eleven years after Chávez came to power, the Revolution has still not been carried out to the end. The President has honestly admitted that Venezuela remains a capitalist state. Important parts of the economy remain in private hands. Most of the land is in the hands of the landlords, while about 70 percent of the food is imported (although Venezuela is an agriculturally fertile country).

This has added to the problem of inflation (now one of the highest rates in Latin America). The distribution of food is still mainly in the hands of big supermarkets and food monopolies, often owned by big foreign concerns. Fraud and corruption flourish in this sector, and in others.

Despite all the efforts of the government, there are frequent and recurring shortages of certain foodstuffs. We saw the same thing on the eve of the Constitutional Referendum (which the government lost as a result of high abstention). This is conclusive evidence of a deliberate campaign of sabotage organised by Big Business to destabilise the country and spread demoralisation in the run-up to the September elections.

These problems are inseparable from the problem of bureaucracy and corruption. The role of the bureaucracy is to paralyse the advance of the Revolution, sabotage progressive legislation, and cancel the initiatives of the President. They constitute the Bolivarian right wing, stubbornly opposing revolutionary measures such as nationalization and workers’ control. In many cases, this sabotage has had very harmful effects. Nowhere is this clearer than in the sensitive food sector.

An example of this is the recent scandal in the PDVAL state food company which delivers more than 1,000 tons of food on a daily basis in Venezuela. At the end of May, the Venezuelan intelligence service found a secret reserve of 2,334 containers of food goods which had been hidden by corrupt managers of the company. As a result, former PDVAL president Luís Pulido was arrested on corruption and robbery charges.

Later investigations indicate that the problems go much further than just one individual. According to an article in Últimas Noticias from the 9th of June, workers of PDVAL have handed in a report to Chávez showing how an organized mafia was operating in the state-owned food company.

The report informs that 12 top managers had organized a gangster network which systematically hoarded the containers and hid them for a while, so that they would go beyond their sell-by date, and then they could sell them on the black market and order new containers through PDVAL. Anyone who dared oppose them was silenced by death-threats. Heartfriend Peña, a worker who had denounced the existence of over 400 hoarded containers was fired immediately by the corrupt managers.

The right-wing opposition has tried to “prove” that the PDVAL affair shows that the revolution itself is a failed project. On the other hand, the workers of the state sector have marched to show their continued support for the government's food programmes.

The PDVAL case shows how it is impossible to build a new, socialist society with the old bourgeois state still largely intact. Without the democratic control of the working class, it is impossible to avoid corruption and bureaucracy. Corruption is a cancer which is destroying the revolution from within. Either the Revolution will destroy the bureaucracy or the bureaucracy will destroy the Revolution.

The chavista right wing

The bureaucracy, those agents of the bourgeoisie with red shirts, are waging a bitter war of attrition against the left wing chavistas. They operate a black list to prevent genuine revolutionary elements from having access to the President. They spread lies and rumours against left wingers in the PSUV, accusing them of being counterrevolutionaries!

The slogan of the day of these elements is now: discipline! By this they mean that ministers must do what the bureaucracy tells them to do! Before a minister can do anything, he or she is told: you must first consult so-and-so, to get approval. But so-and-so will never approve any progressive or revolutionary measures. In this way, the Revolution is gradually paralysed.

When a minister stubbornly refuses to tow the line, he or she can be sidelined or removed. The most scandalous case was the recent sudden removal of Eduardo Saman, the most popular minister in the government, who had consistently lent his active support to factory occupations and nationalizations.

Saman was very popular with the people, but very unpopular with the bourgeoisie and the Fifth Column because he was demanding a state monopoly of foreign trade – an absolutely correct and necessary measure in a socialist economy. He was also engaged in what was practically a one-man crusade to keep down the prices of basic food products. The man who replaced him immediately increased the price of a whole series of basic food products, and lifted the price controls on basic products which Saman had kept in place. This is hardly the best way to win the support of the chavista masses in an election year!

The capitalists (both foreign and Venezuelan) are systematically sabotaging the economy. For example, the inability to produce enough cars to meet local demand was the basis for a huge swindle involving the big US car producers, the banks and insurance companies, who are deriving huge profits from people who have to join a queue, paying, say 60,000 bolivars for a car, which in the end will cost 200,000.

Some companies that are supposed to be involved in the food sector make fortunes speculating in dollars and bolivars, and in practice produce nothing. Even some of the nationalisations that have taken place are dubious. In many cases, the bureaucracy has destroyed workers’ control and installed the old managers. In other cases, the old owners continue to run the companies. In other cases, all that has changed are the labels on tins of coffee, and so on.

By contrast, there is the case of the Gaviota factory, which produces sardines and has been nationalized and is successfully operating under workers’ control. The problem is that cases like this are the exception and not the rule.

Need to complete the revolution

In his classic analysis of the Spanish Revolution, the US Marxist Felix Morrow recounts a typical argument between a militiaman and a poor peasant during the civil war. The former tries to convince the latter of the necessity of defending the Spanish Republic. The latter replies by asking a simple, straightforward question: “What has the republic ever given us to eat?”

This anecdote has a profound significance for Venezuela today. It is not enough to have good intentions or to defend Socialism as an ideal. For the poor masses, Socialism must signify bread, butter and milk. It must signify an end to the high crime-rate, an end to price-hikes, and an end to poverty altogether.

While some government officials and ministers are busy giving lengthy speeches about “popular democracy”, the enemy is referring to the real issues, such as inflation, food scarcity and the crime-rate. Of course the corrupt Venezuelan opposition (which is financed by US imperialism) does this for its own cynical purpose and with the sole aim of undermining the revolution. Should they come back to power we can rest assured that matters will be a lot worse, just as matters were much worse for the Spanish workers and peasants after Franco's victory than during the Republic.

Nonetheless, it is particularly dangerous at this stage to try to avoid dealing with the real problems. Some Reformist sectors, both in Venezuela and internationally, have tried to deny Venezuela's social and economic problems as simple “opposition propaganda”. But if you deny what is evident for everyone, you will become more and more distanced from the masses who feel the effects of the economic crisis on their daily life.

The need to complete the revolution is more urgent than ever. Incredibly, after more than ten years of revolution, the situation remains favourable. Chávez could use his majority in Parliament to pass an Enabling Act nationalizing the biggest companies, the food and supermarket sector, the banks and the industry that remain in private hands. This could be accompanied by a state monopoly on foreign trade, allowing Venezuela to get full control over the country's economy. Furthermore, a decree introducing workers' control throughout the state sector would surely get an enthusiastic response and the workers would be setting up factory committees in all the enterprises, as we saw in an embryonic form in SIDOR and the other Basic Industries of Guayana.

A development on these lines would quickly allow the government to genuinely tackle the problems of inflation, speculation, housing, food hoarding, and infrastructure. A radical agrarian reform could be introduced which would abolish the dominance of the latifundia in the countryside and give land to the peasants. Control of credit on a large scale would enable the state to give cheap loans to small farmers and incentives to agricultural production thus bringing an end to the absurd mass importation of food products.

Nationalize the banks under workers’ control!

On Monday, June 14th, Venezuelan authorities announced the temporary closure and investigation of Banco Federal, the country's eighth biggest bank. One of the reasons was that the bank didn't comply with a Venezuelan law that stimulates the minimum investment for productive purposes.

This measure comes after the intervention and subsequent nationalizations of a number of medium-sized banks in November last year, which led to the founding of a new state sector bank, the Banco Bicentenario. This means that the state-owned sector now owns between 20-25% of the financial system.

Although these nationalizations are surely a step forward, it must be pointed out that the capitalists of Venezuela’s financial sector (several of them multinationals) are still largely free to suck enormous wealth out of the country. An article in the bourgeois financial journal Reporte Diario de la Economía from February 5, 2010 revealed that they had obtained US$2,615 billions of profits in 2009. 83% of this amount came from fees alone. This is a grotesque figure, taking into account that millions of Venezuelans live in extremely poor shanty towns, surviving on 5-10 dollars a day.

Quite apart from the obvious social injustice, what this indicates is that, over a decade since the start of the Bolivarian Revolution, the Venezuelan economy is clearly still a market economy, a fact which is even admitted by government officials. According to figures from the Banco Central de Venezuela, the private sector still creates 70% of wealth generated in Venezuela.

The private sector had a steeper fall than the public sector, but it is still larger. For instance, in 2009, GDP fell by 3.3%, the private sector falling by 4.5% and the public sector growing by 0.9%. GDP (in Bolivars) was 56 billion, of which 33 billion were created in the private sector and 17 billion in the public sector and 6 billion were net tax on products. It is difficult to calculate exactly, but that would mean the private sector accounts for 66% of GDP, so the figure of 70% is not too far off. So what we have in Venezuela is not socialism but a mixed economy, in which the capitalist element predominates. Certain things follow from this fact.

Maintaining the capitalist system has meant that Venezuela has been hard hit by the world recession. 2009 ended with the country's GDP shrinking by 3.3% and the first quarter of 2010 has resulted in a further drop of 5.8%. In 2008 GDP grew by 4.8%. But in the same period the private sector fell by 0.1% and the public sector grew by 16.3%. This means that at present it is the state sector that is propping up the economy. The reason is clear: The capitalists are unable and unwilling to expand the productive forces.

The last 10 years have seen the closure of 4.000 small and medium-size factories in Venezuela. At the same time, inflation is extremely high. Recent figures show that accumulated inflation for the first four months of 2010 is 11.3%, while it was only 6.7% in the same period last year. This situation is making life increasingly difficult for working class families, because wage rises have been the exception. Thus there is a real fall in the purchasing power of Venezuelan workers.

The revolution must take account of this situation and draw the necessary conclusion: within the boundaries of the market economy, there is no way of solving the urgent problems of the masses. In the run-up to Venezuela's parliamentary elections, the Venezuelan Marxists will fight for a genuine socialist programme in the PSUV, the PSUV youth and in the UNT. The nationalization of INAF is the first victory in this sense and shows how it is possible to win a struggle, if the methods of Marxism are at the forefront.

However, partial nationalization will not work. What is required is a socialist planned economy. In order to put an end to the chaos, all the commanding heights of the economy, including the banks, must be expropriated without compensation. And in order to eradicate the cancer of bureaucracy and corruption, it is essential that the economy and the state be in the hands of the working class.

On various occasions, Chávez has quoted Lenin's State and Revolution as a must-read for all PSUV members. What were the basic conditions that Lenin put forward for the setting up of a workers' democracy and moving towards socialism?

1) Free and democratic elections with right of recall.
2) No official to receive a wage higher than that of a skilled worker.
3) No standing army or police but the armed people.
4) Gradually, all the tasks of administration should be done by everyone in turn: when everyone is a bureaucrat in turn, nobody is a bureaucrat.

These measures should be implemented immediately in Venezuela. This is the only way of putting an end to corruption and bureaucracy. In his speech to the PSUV Congress in April, Chávez pointed to the world crisis of capitalism and once again emphasised that only socialism can save humanity. He again quoted Lenin (State and Revolution and Imperialism) and Marx, underlining the fact that the PSUV stood for the class struggle. It is high time that the President’s words were put into practice!

How to win the middle classes

One of the key objections raised by the reformists to the socialist programme is that it will alienate the middle classes. This is entirely false. The expropriations are not directed at the small proprietors, the owners of small businesses, shops and bars, or the peasant with a small plot of land and a few chickens. They are directed exclusively at the big banks and monopolies that exploit, cheat and rob the small businessman.

The small shopkeeper, the small peasants, and the other so-called intermediate layers stand between the working class and the bourgeoisie. They are a very heterogeneous class. In their upper layers they stand close to the bourgeoisie. The prosperous lawyers, university professors, economists, journalists and other professional people have a stake in the existing society and are prepared to serve its interests. Their sons and daughters in the universities provide the shock troops of reaction.

However, the lower layers of the middle class are especially volatile and constantly swing between revolution and counterrevolution. These layers will tend to follow the class which shows a way forward. They can only be won by a consistent and firm policy. The reformists always call for moderation in the name of “winning the middle classes”. But vacillation and restraint is exactly the way to lose the support of the middle class, and push it into the arms of reaction.

The reformists talk of being “realistic”, but in practice their policy of “moderation” is utterly utopian. This is shown by experience. A couple of years ago, ex-mayor of Caracas Metropolitana, Juan Barreto started a programme of expropriations of buildings and unused land (including some golf courses) which initially got a very good response from the inhabitants, many of them coming from middle class families. They saw that the government was finally beginning to attack the speculators and the housing sharks who are making money out of the lack of access to cheap housing. But this policy was quickly reversed under pressure from the reformists.

This alienated the middle class that was in favour of expropriating the wealthy parasites. The lesson is clear: the middle classes can only be won if the government, basing itself on the working class, adopts a clear Socialist policy and shows courage and determination. As long as the revolution has only gone half-way, the small shopkeeper will suffer under the dictatorship of the monopolies and the small peasant will suffer under that of latifundism. It is impossible to win over the middle classes with timid and half-way measures. Only if the revolution takes decisive steps to destroy the economic power of the oligarchy will it be possible to win big sections of the middle classes to the side of the revolution.

The PPT and the call for a “tolerant” chavismo

As the Revolution approaches a critical phase, it inevitably tends to polarize between the left and right wings, representing respectively the pressure of the workers and peasants who are striving to defeat the bourgeoisie and complete the socialist revolution, and the pressure of the bourgeoisie and its Fifth Column, striving to defeat and destroy the Revolution under the false flag of “democracy” and “tolerance”.

It is in this context that the PPT (Patria Para Todos), a party which used to belong to the pro-government bloc, has now jumped ship and is trying to present itself as a more “tolerant” version of chavismo, than the one advocated by Chávez himself. This party is led by the ex-PSUV governor of Lara, Henry Falcon who entered into conflict with Chávez, among other things because he resisted government attempts to expropriate an industrial area in Lara that belongs to the millionaire Mendoza (the owner of the Polar food and beverage chain).

The PPT is now trying (in much the same way as Violeta Chamorro did in Nicaragua in the late 1980s) to present itself as a “third option”, which can pave the way for a reconciliation without bloodshed, a compromise between the classes which can restore “normality” and at the same time end the hardships of the masses, such as inflation, food shortages and so on. This rhetoric is very dangerous because it hides the real position of these people: counter-revolution with a social and democratic mask.

If the government remains incapable of solving many of the main problems, the demagogic calls for reconciliation can win huge layers of the middle classes and even some layers of the urban poor who are tired and frustrated at the slow pace of the revolution and desperate to find a way out of the present impasse. But most importantly, the prolongation of the current situation can result in apathy and demoralization among some parts of the masses which can reflect itself in high abstention in the forthcoming elections.

The present stage is characterised by enormous confusion. This is not helped by the small parties and groups on the fringes of the Bolivarian Movement that describe themselves as Marxists and “Trotskyists” but show a complete inability to understand the way in which the masses move. A typical example of this phenomenon is Orlando Chirino, a trade-unionist who used to have a record of militant struggle with the textile workers of Aragua and who was at the forefront of the setting up of the UNT, the National Workers' Union. In 2007 Chirino decided to boycott the PSUV during the constitutional referendum. As we warned at that time, he is now unable to distinguish between revolution and counter-revolution.

This has been strikingly confirmed in the last few months. Chirino has been promoting his candidature for the National Assembly on the list of... the PPT! So Chirino's “Trotskyist” group is entering a Popular Front of bourgeois parties to attack the anti-imperialist government of Hugo Chávez! History does indeed know all kinds of transformations! Not content with being a candidate on a bourgeois list, Chirino is now publicly on record as opposing the nationalization of the Polar food chain as he claims this would be a “bourgeois nationalization”!

By giving the PPT a “left-wing” and “workerist” cover, he is objectively serving the interests of imperialism and the counter-revolution. This should be understood and combated by every militant worker and trade unionist. Those who wish to defeat the counterrevolution will fight within the ranks of the PSUV to win these elections as a matter of life and death for the revolution.

Through what stage are we passing?

For the last eleven years the Bolivarian Revolution has repeatedly been saved by the active intervention of the masses: in 2002, 2003 and later in the Recall Referendum. But already the Constitutional Referendum gave a warning signal. The Opposition did not win that referendum. The chavistas lost it. Three million chavista voters stayed at home.

It is impossible to gauge accurately the real electoral balance of forces. It is not likely that the right wing Opposition will win many votes from the chavistas. But there is a great danger that many Chavez supporters will simply abstain. According to some estimates, the hard core chavista vote could be around one third, with another one third for the Opposition, and another one third – the most decisive element – chavista voters who are disillusioned and may not vote.

This could give a majority of the National Assembly to the Opposition. That would be a disaster for the Revolution. Even if the Opposition fails to get a majority but obtains a sizeable vote, it would be a serious blow. A strong presence of the Opposition in the Assembly would give them a lever with which to undermine and sabotage progressive legislation. They would use it to organize mass demonstrations on the streets, and mobilise the petty bourgeois masses and middle class students as the shock troops of the counterrevolution. The danger is real and present.

The Bolivarian Revolution is passing through a difficult phase – difficult, but absolutely necessary and inevitable. Every Revolution in history passes through different stages. There is always an initial phase – the phase of democratic phrases, as in February 1917 in Russia or April 1931 in Spain – a phase of euphoria in which the masses are convinced that all their problems are solved. Things seem very simple and easy in that phase!

But then comes another phase, when the masses begin to realise that things are neither simple nor easy. They see that things are not right, and experience a feeling of disappointment and disillusionment. A layer falls into inactivity and passivity. The counterrevolution becomes bolder with every step back taken by the Revolution.

It is true that many former activists have become disillusioned and fallen into inactivity. But there is another layer, the most advanced and conscious layers of the workers and youth, who have developed a critical attitude and are open to the most revolutionary conclusions. In recent years we have seen this mood developing rapidly in the chavista rank and file. They hate the bourgeoisie and the reformist bureaucracy. They are very open to the ideas of revolutionary Marxism. This was shown by the excellent reception given to the new Marxist paper Lucha de Clases (Class Struggle), the first issue of which was sold almost immediately.

The supporters of Lucha de Clases will be in the front ranks of those fighting for the victory of the PSUV in the September elections. Our first and most pressing task is to defeat the counterrevolution! But it will be impossible to defeat the counterrevolution without an implacable struggle against the bureaucracy and the bourgeois Fifth Column within the chavista movement. Basing ourselves on the living forces of Venezuelan society, the workers, the peasants and the revolutionary youth, we will carry the fight to the end. One thing is absolutely certain: the Bolivarian Revolution will triumph as a socialist revolution, or it will not triumph at all.

Caracas-London, July 5, 2010

Website of the Venezuelan Marxists: Lucha de Clases (Spanish)