Flour and Cooking Oil

The NY Times reports the recent defeat of Chavez’s constitutional reforms as if an ordinary socialist or social democratic president has been checked at the polls.

For nine years, a combination of populist politics and rising oil prices have propelled Mr. Chávez’s socialist program for Venezuela with an almost inexorable momentum. On Sunday, his country put on the brakes.

Those results have at once given the opposition a sudden boost and demonstrated the resilience of Venezuela’s institutions. They also showed that many of Mr. Chávez’s once-stalwart backers have grown frustrated with the rising prices and food shortages that have become symptomatic of his revolution, despite his promises to the poor.

Interviews in the barrios where Mr. Chávez’s support has run strong indicated that many of those no votes were as much an expression of frustration with government mismanagement as a warning to Mr. Chávez that he had finally overreached in proposing constitutional changes that would have ended term limits for the president and greatly centralized his power.

In my opinion, what Chavez is doing is not even socialism, it is delusional economics in the name of socialism. I’ve seen it all before – up close and personal in Zimbabwe. I wrote about the remarkable resemblance between Mugabe and Chavez in a post entitled Criminal Economic Negligence back in August. A more critical description of the current economic train wreck in Venezuela can be found in this article from the September 3 International Herald Tribune.

CARACAS: The Venezuelan economy, under the direction of President Hugo Chávez, is starting to unravel in the currency market.

While Venezuela earns record proceeds from oil exports, consumers face shortages of meat, flour and cooking oil. Annual inflation has risen to 16 percent, the highest in Latin America, as Chávez tripled government spending in four years.

Later in the article Venezuela’s Finance Minister Rodrigo Cabezas comes straight out with a statement that reveals the underlying problem:

“We’re not going to devalue, no matter how much they pressure us,” Cabezas said last week. “The so-called parallel market doesn’t dictate our fiscal, exchange or monetary policies.” (my emphais)

There is the ‘smoking’ delusion – the same one Robert Mugabe suffers from. The idea that the government is not subject to economic reality. What Chavez is doing is actually “Big Man” populism using socialism as a cover for delusional economics. Mugabe does the same thing with an African Big Man complex- Shaka Zulu instead of El Padron. An economist friend recently observed of Chavez, “the rest of South America is watching his little experiment and learning that stupid socialism has the same results in the 21st century as it has had in the previous centuries.”

But there is another outside audience Chavez is playing to – those around the world who still earnestly believe uncritically in socialism, despite the experience of the past 150 years. Chavez’s desperate denial of economic reality is a perfect fit for the level of denial required to still believe in socialism as a viable economic and social model. While socialism ostensibly appeals to human reason with its promise of social justice it is in its promise of a naturally arising stateless social order that we can see the origins of its irrational appeal. I believe Marx’s vision of social harmony appeals to human instincts because those instincts evolved under the conditions of strict social equality imposed by the hunter gatherer lifestyle. The giveaway is that the future is envisioned on the basis of a clearly recognizable but unacknowledged past reality. Marx’s stateless paradise is real all right – but it was never a part of the future – it has always been an intrusion from the past. Marx was looking in a mirror when he thought he was having a vision of the future. No wonder he thought it was inevitable. No wonder so many still ‘know’ in their bones that it is right.

The dream has been impossible to achieve because, as we have discovered through bitter experience, human agency in the form of a ruling elite cannot stand in for nature. We can abide an impersonal force imposing equality upon us but not other human beings whom we always suspect of being, as Orwell had it, ‘more equal than others’. But the dream persists because its instinctive appeal remains unconscious. One of the costs is the vulnerability of many to con men like Mugabe or Chavez staging a paradise strangely lacking in flour and cooking oil.

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