Hugo Chavez Was No Outlier

With the passing of Hugo Chavez, it is important to understand the place of Chavez in the political history of Venezuela and of all Latin America. We should not think that socialist movements in Latin America will die simply because Chavez has died. He often pointed to Simon Bolivar, Venezuela's early visionary and leader (1783-1830), as the model for his political philosophy: Latin America must achieve a united independence from foreign powers. For Chavez, this meant not only political independence but also economic independence. It meant nationalization of foreign-owned corporations and distancing Venezuela from the USA, which in the past had often been involved in the internal politics of Latin American nations. It also meant assisting other Latin American nations financially with the wealth from Venezuela's oil exports. Dramatically, it meant reaching out to nations around the world and establishing new economic relationships, especially with socialist leaders in Cuba and China.

Chavez was not advocating a new and original political agenda. Nationalistic sentiment was strongly rooted in Latin America's past. In the 1940's and 1950's, the economic doctrine of "dependency theory," promulgated by the economist Raul Prebisch, supported autarky or economic independence, placing restrictions on imports and foreign ownership. If economic forces were left to themselves, economic forces would victimize the peripheral nations, while the developed nations at the "center" would gain all the benefits of trade and development. Latin America should be for Latin Americans. This protectionist position allowed the growth of domestic monopolies that became increasingly non-competitive. This position also meant that governments were continually intervening in markets with price-setting and regulations, as well as with government ownership. For example, in 1975, a socialist president of Venezuela, Carlos Perez nationalized the oil industry, and used oil revenues to create more government-owned industries, here again causing inefficiencies. However, for many the costs of government intervention seemed to be worth the price. Today, one can view the widespread nationalization of many activities by Chavez in the same way. One can also see his continual intervention in markets, from banking to retail, as motivated by the same belief that government knows best, and that markets are not to be trusted.

For Venezuela, autarky had long meant creating economic ties with other Latin American nations. The Andean Pact included Bolivia, Colombia, Ecuador and Peru. The trade and investment agreement sought to stimulate the economic development of the region as a whole, using this domestic strength in place of the foreign trade and investment that could lead to both political and economic exploitation. In 2005, Chavez supported an oil pipeline project that would link Venezuela's oil to Brazil, Bolivia, Paraguay, and Argentina. Many questioned the economic viability of this pipeline, but for Chavez the investment had political objectives in terms of the Latin America vision. Chavez contributed 70 per cent of the start-up costs for a new Latin American news channel, Telesur; other investors included Argentina, Cuba and Uruguay. Related to its foreign exchange crisis of 2001, Argentina had borrowed substantially from the IMF and other international lenders. Chavez lent Argentina enough capital to pay off these loans.

Throughout Latin America, the distribution of income and wealth had long been more extreme than in other regions of the world. In elections, it was not surprising that some leaders would advocate policies of income redistribution to gain voter support. People who were not well-off looked to the government to assist them in their daily lives. Most dramatic perhaps was the rise of Juan and Evita Peron in Argentina. Their "Peronist" political platform spread throughout the continent. While the Gini coefficient, which measures inequality, is in the range of .30 to.35 for European nations, the Gini coefficient in Latin American nations still ranges from .45 to far in excess of .50. For Chavez, the deep concern for the needs of the poor was rooted in these realities. Price ceilings for food, medical clinics for the poor, subsidies for gasoline, assistance for housing, and education for the poor all were part of his traditional socialist vision. The rich would have to pay. This belief that the political system had to be changed to achieve social justice for those less fortunate also led to the widespread Catholic movement "liberation theology". Many priests concluded that they had to support political change in order to attain better economic outcomes. It would be foolish to think that this socialist movement will die with Chavez.

Chavez extended his support for a new social and economic order to assist leaders in other nations who shared his vision. He appears to have provided aid to the guerrilla movement in Colombia, to Sandinista Daniel Ortega in Nicaragua, to Ollanta Humela in Peru, and to Evo Morales in Bolivia. His most substantial and long-standing aid relationship was with Raul and Fidel Castro in Cuba. Chavez exported oil to Cuba in return for medical personnel to work in his clinics for the poor. In this context, he was pleased to develop new economic ties with China.

We can expect that in Venezuela a strong movement will continue to support the objectives advocated by Chavez, and so too his policies and programs. The movie of Oliver Stone, "South of the Border" presents the Chavez vision in the context of Latin American socialism. Even if new leadership tried to replace what he has done and tried to shift to market freedom and private property, many years would have to pass before the actions of Chavez could be eliminated. Consider his very many nationalizations and his appointment of government bureaucrats to manage them. The difficulties in reversing these, with privatizations and with a return of foreign investment, would be a slow process.

For all these reasons, change towards free markets and private property and open dissent will not come quickly or easily in Venezuela. We may expect ongoing conflicts. It will be important for those who support free markets and private property and free elections and good relations with the USA to participate in the reconstruction of Venezuela with sensitivity and generosity and commitment.

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