Chávez's U-turn on socialism

Venezuela-based economic advisor and analyst, Stephanie Blankenburg, on what could be Chávez's fight

On 2 January, a month on from his defeat in a referendum about a socialist reform of the county’s constitution, President Hugo Chávez Frías of Venezuela performed a stunning political U-turn.

In typically flamboyant style, he made a surprise call to Venezolana de Televisión, the country’s main state-owned TV channel, “to drop a ‘bombita’ (small bomb)” on an unsuspecting public: He had decided to abandon his socialist agenda “for now” in order to form stronger alliances with the country’s middle classes, its private sector and the national bourgeoisie instead.

To dispel any doubts about his seriousness in adopting this new political course, he replaced vice-president, Dr Jorge Rodríguez – the public face of his campaign for “21st century socialism” in Venezuela – with Ramón Carrizales, a military officer and technocrat, known for his good relationships with the country’s business sector.

Perhaps more significantly still, Chávez had already signed an end-of-the year amnesty for imprisoned perpetrators of a right-wing coup attempt against him in 2002.

The President’s version of events

Two days later, on his Sunday TV show “Aló Presidente” (Hallo, President), Chávez presented his fully reshuffled new cabinet and set out to explain the rationale for his action. His socialist project had been defeated, because the country had not been ready for such a radical approach.

The only democratic response was to acknowledge defeat and to adopt a more gradual and inclusive way forward. Apart from broadening alliances to bring private business and the middle classes back into the fold, this would also mean a more careful focus on mass education and communal self-organisation. Socialism had not been abandoned, but postponed, although, by the sound of things, for quite some time to come.

Chávez’ analysis of the current situation certainly has the pleasant ring of reasonableness to it. There also is little doubt, even amongst the most fervent socialists in Venezuela, that the agenda for “21st socialism”, adopted in January 2007 as abruptly as it has now been abandoned, had been rushed in with too much haste, limiting space and time for public consultation and debate of often complex issues.

Yet, the solidity of this analysis stands and falls with the correctness of its main premise – that the failure of voters to approve the constitutional reform project in the referendum of 2 December was a vote against socialism. This is much less clear.

What is clear is that the defeat of Chávez’ reform project at the polls is down to the abstention of roughly three million voters, who only a year earlier had voted for him as their president on the same socialist platform.

Compared to the December 2006 presidential elections, the opposition did not gain any votes. It seems unlikely such a substantial bloc of Chávez supporters should have been deterred merely by deficient campaigning a year after enthusiastically endorsing him.

In fact, a closer look at electoral patterns reveals a clear protest vote, not against a socialist agenda, but against corrupt administrations, at the national and the regional level.

Chavismo and the ‘oil curse’

To understand, where this protest vote came from and why it outweighed the pro-Chavez and pro-socialism vote, it helps to remember that Venezuela is defined by only one thing – oil.

For almost a century, the state has been a gigantic machine to distribute oil rent. In this context, left and right have a rather different meaning from their usual connotations.

On one side of a profound societal divide, there are those who benefit from oil from the very rich elites down to middle-rank state employees with comfortable pension arrangements.

On the other side, there are those who are excluded from a share in this bounty, the poor and the lower middle classes.

Not surprisingly, the main objective of the “insiders” is to defend and expand their share in the country’s oil wealth. Those on the outside divide into the small group with some chance of eventually making it to the inside, and the much larger group of people without any realistic chance of ever getting there.

The latter are, or used to be, core Chávez supporters: Their only hope is structural reform that dismantles the distributive rent state and replaces it by a productive developmental state. Until now, they had set their hopes on Chávez.

That these hopes have been rattled, is only marginally to do with a hasty referendum campaign, or with the people’s ideological immaturity.

On the contrary, one of the most impressive achievements of Chavismo is precisely the very high degree of political awareness and education amongst the poor.

No, the vote outcome has everything to do with the accession of many a Chavista to the rank of “insider” over the past eight years. This process has been gradual, and perhaps inevitable in a society in which institutionalised rentier-mechanisms have been endemic for decades.

But the contradiction between a radical socialist government agenda and the “Chavista elite”, bent on defending its share in the oil rent, effectively came to a head last year.

Far from being a left-wing administration, the bulk of ministerial positions in the old cabinet, as well as many governorships, remained in the hands of the “Chavista right”, or “new insiders”.

For example, the new vice-president, Ramón Carrizales, is also ex-minister of Housing, a core social policy ministry.

All through 2007, the battle between this “Chavista elite” and the “Chavista street” was fought out within government, with the so-called left-wingers, led by Jorge Rodríguez, in the minority.

It is an open secret in Venezuela that many governors, while publicly campaigning for a 'yes' vote in the referendum, used their resources to mobilise for the no-vote behind the scenes.

Equally an open secret is the sudden destabilisation of the economy through food shortages and an escalating black market dollar exchange rate which was at least allowed to linger on for longer than necessary.

A ‘soft coup’ or a return to electoral glory?

So the Chávez U-turn looks a lot less radical. For one, the new cabinet resembles its predecessor more than it differs from it. More importantly, it is not at all obvious the strategy of a shift to the “right” will help to pacify the country and stabilize the economy.

Why? Well if it is correct that the result of 2 December was essentially a protest vote by the “Chavista street” against the “Chavista elite”, then giving the latter free range is unlikely to boost Chávez with the popular base.

Yet, this popular base is all that stands between him and a ‘soft coup’ by an emboldened middle class, made up of the “Chavista elite”, the largely a-political state bureaucracy and moderate such as ex-General Raúl Baduel, a former ally and defence minister who joined the opposition ranks in November 2007.

After all, with the control over the country's state apparatus and economic resources firmly in the hands of these groups, and a weakened popular base for Chávez, perhaps unable to deliver election future victories, why would the middle classes and their allies in the new and old elites still need Chávez?

Chávez is too much of a seasoned politician not to know this. If he still has chosen this course, it is not necessarily because it is of his liking or even of his making alone. It simply reflects the real distribution of power on the ground. His most important response is not the much publicized government reshuffle, but his decision to accelerate the organisation of a Chavista mass party, the United Socialist Party of Venezuela (PSUV).

The task of getting this new mass party up to speed is an uphill one, especially with a “Chavista” government in place that has no interest in promoting such a move, and the popular base alienated.

But unless Chávez – and the PSUV – win the regional and municipal elections scheduled for November 2008, Venezuela might well have a new president before the year is out.

In charge of the unenviable task to built a mass party in a few months and to win elections by the end of the year is none other than Jorge Rodríguez.

Dr Stephanie Blankenburg is Lecturer in International Political Economy in the Economics Department at the School of Oriental and Social Studies (SOAS), London. She is currently on secondment to Venezuela as an economic advisor and analyst. This article reflects her personal analysis and is unrelated to any government views or policies.

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Michael Sandel: “The energy of the Brexiteers and Trump is born of the failure of elites”

The political philosopher on markets, morality and globalisation.

Jason Cowley: Shall we begin with Brexit? It’s very close here at the moment: the Remain side had big leads in the polls but it’s narrowed considerably since the conversation moved on to immigration, porous borders and freedom of movement of migrant workers within the EU. What forces are driving the desire for Brexit?

Michael Sandel: As an outside observer, I don’t feel it’s for me to offer a personal view about how Britain should vote. I think there are really two questions. One is whether Brexit would be good for Europe and the other is the question of whether it would be good for Britain. It seems to me that for Britain to remain in the EU would be a good thing for Europe, but whether it’s a good thing for Britain is something that’s for British voters to decide.

A big part of the debate has been about economics – jobs and trade and prosperity – but my hunch is that voters will decide less on economics than on culture and ­questions of identity and belonging.

JC Superficially, the United Kingdom seems a becalmed society, but we’re experiencing eruptions. We had the Scottish referendum in 2014, and we almost saw the break-up of the British state. Now we’re having a referendum on whether we should continue to be a member of the European Union. Why are there so many unsettled questions? Why are the people of the United Kingdom so restive?

MS I think the restiveness that you describe reflects a broader disquiet with democracy that we see in most democracies around the world today. There is a widespread frustration with politics, with politicians and with established political parties. This is for a couple of reasons; one of them is that citizens are rightly frustrated with the empty terms of public discourse in most democracies. Politics for the most part fails to address the big questions that matter most and that citizens care about: what makes for a just society, questions about the common good, questions about the role of markets, and about what it means to be a citizen. A second source of the frustration is the sense that people feel less and less in control of the forces that govern their lives. And the project of democratic self-government seems to be slipping from our grasp. This accounts for the rise of anti-establishment political movements and parties throughout Europe and in the US.

JC One of the key slogans of the Brexiteers is to regain control. Why does this resonate with so many? And are you somewhat sympathetic to that line of argument?
MS Well, I do think it resonates deeply. And I see this not only in Britain, I see this in the American political campaign, and I see it looking at the rise of anti-establishment parties throughout Europe. A theme running through these various political movements is taking back control, restoring control over the forces that govern our lives and giving people a voice.
As to whether I have some sympathy for this sentiment, I do. I don’t have sympathy for many of the actual political forms that it takes.

One of the biggest failures of the last generation of mainstream parties has been the failure to take seriously and to speak directly to people’s aspiration to feel that they have some meaningful say in shaping the forces that govern their lives. And this is partly a question of democracy: what does democracy actually mean in practice? It’s also closely related to a question of culture and identity. Because a sense of disempowerment is partly a sense that the project of self-government has failed. When it’s connected to borders, the desire to reassert control over borders, it also shows the close connection between a sense of disempowerment and a sense that people’s identities are under siege.

A large constituency of working-class voters feel that not only has the economy left them behind, but so has the culture, that the sources of their dignity, the dignity of labour, have been eroded and mocked by developments with globalisation, the rise of finance, the attention that is lavished by parties across the political spectrum on economic and financial elites, the technocratic emphasis of the established political parties. I think we’ve seen this tendency unfold over the last generation. Much of the energy animating the Brexit sentiment is born of this failure of elites, this failure of established political parties.

JC One particularly notable trend is the failure of mainstream social-democratic parties across Europe – the Labour Party included. Many people who might once have been inspired by or supported the centre left are now attracted by populist movements of both left and right. So why is social democracy failing?

MS Social democracy is in desperate need of reinvigoration, because it has over the past several decades lost its moral and civic energy and purpose. It’s become a largely managerial and technocratic orientation to politics. It’s lost its ability to inspire working people, and its vision, its moral and civic vision, has faltered. So for two generations after the Second World War, social democracy did have an animating vision, which was to create and to deepen and to articulate welfare states, and to moderate and provide a counterbalance to the power of unfettered market capitalism.

This was the raison d’être of social democracy, and it was connected to a larger purpose, which was to empower those who were not at the top of the class system, to empower working people and ordinary men and women, and also to nurture a sense of solidarity and an understanding of citizenship that enabled the entire society to say we are all in this together. But over the past, well, three or four decades, this sense of purpose has been lost, and I think it begins with the Ronald Reagan/Margaret Thatcher era.

JC You mean the neoliberal turn at the end of the 1970s – the advent of what you have called “market triumphalism”?
MS Right. It began there. But even when Reagan and Thatcher passed from the political scene, and were succeeded by the centre-left political leaders – Bill Clinton in the US, Tony Blair in Britain, Gerhard Schröder in Germany – these leaders did not challenge the fundamental assumption underlying the market faith of the Reagan/Thatcher years. They moderated, but consolidated the faith, the assumption that markets are the primary instrument for achieving the public good. And as a result, the centre left managed to regain political office but failed to reimagine the mission and purpose of social democracy, which ­became empty and obsolete. This remains an unfinished project.

JC Unfinished even after the financial crisis, when this was considered by many on the left to be a potential 
social-democratic moment?

MS That’s right, and I think many of us expected that the financial crisis would mark the end of an era of unqualified embrace of the market faith and the beginning of new debate about what should be the role and reach of markets in a good society. What happened, sadly, is that the financial crisis came and, although we did have some debate about regulatory reform, it was a rather narrowly cast debate. We have not yet had the more fundamental debate about what should be the role of markets in a good society. As a result, social democracy has not only lost the argument, it has failed to articulate a vision of a just society; it’s failed to articulate a conception of democracy as self-government. And so it is understandable that its traditional constituencies in working-class and middle-class communities lost confidence that social-democratic parties could be the vehicle either for a renewed sense of community and ­mutual responsibility or for collective democratic projects.

JC Is it also because trust has been lost in the state – because of the economic failures of the mid-to-late 1970s, the unravelling of the postwar consensus, stagflation and so on?

MS I think that has contributed to a loss of confidence in the state but I think a further source of lost confidence in the state is that, traditionally the democratic state has as one of its primary purposes to be a vehicle for self-government, to enable citizens to have some meaningful say in how they are governed. Whereas today the state seems more an obstacle to meaningful political participation and self-government than a vehicle for it. Any revival of social democracy would require not only an articulation of a conception of a just society, but also forms of political participation that could renew the democratic promise.

That’s as important as articulating a conception of a just society, working out institutions and civic practices that could revitalise the project of democracy as a vehicle for self-government. The existing state fails to do that and I think when people 
look to the European Union they also feel that it is not a vehicle for democratic self-government. So I think both the nation state and the European Union are seen to have failed in this regard.

JC So where does this leave us? I guess it leaves us in the UK approaching Brexit?
MS Where it leaves us is with a potent backlash. And it’s a backlash that is understandable. I think it’s a mistake to view the backlash – and it finds expression in the ways that we’ve been discussing – simply as people suddenly turning inward and against immigrants as if this were simply a matter of mindless bigotry by people, benighted people, who are ungenerous. It’s important for people who make the case for Remain to be able to offer a conception of Europe that could begin to address this unanswered hunger for meaningful self-government, for having a voice.

JC What about the EU as a social market with its own social standards and rules? Is that potentially progressive? It can impose certain transnational legislation on sovereign governments from outside that benefits workers.

MS It’s potentially progressive in the policy outcomes but that is not enough. A regulatory state, however effective and desirable its social regulations may be, is insufficient to win people’s allegiance unless the regulatory process is connected to a democratic process with which people identify as citizens who have a voice, who have a say.

It’s desirable to have the EU promulgate social regulations that moderate market forces and protect workers and protect the environment, protect health and safety. All of that’s good but it’s insufficient and I don’t think it can be supported politically unless it makes people feel they’re not being dictated to by faceless bureaucrats from Brussels. Even if those faceless bureaucrats promulgate very good social legislation, people want a voice, people want a say, people want a more robust democratic system. It’s a mistake to neglect that.

JC More generally, can free-market globalisation be tamed? And could we be entering an era of more protectionist economics? Consider the rhetoric of Trump.

MS I have no sympathy for Trump’s politics but I do think that his success reflects the failure of established parties and the elites in both parties to speak to the sense of disempowerment that we see in much of the middle class. The major parties have failed to speak to these questions. What Trump really appeals to is the sense of much of the working class that not only has the economy left them behind, but the culture no longer respects work and labour.

This is connected to the enormous rewards that in recent decades have been lavished on Wall Street and those who work in the financial industry, the growing financialisation of the American economy, and the decline of manufacturing and of work in the traditional sense. There is also the sense that not only have jobs been lost through various trade agreements and technological developments, but the economic benefits associated with those agreements and those technologies have not gone to the middle class or to the working class but to those at the very top. That’s the sense of injustice; but more than that, the fact that the nature of political parties – I’m speaking about those in the US – have become, since the time of the Clinton years, heavily dependent on both sides, Democrats and Repub­licans, on the financial industry for campaign contributions.

JC One thinks of the Clinton family’s relationship with Goldman Sachs, for instance.

MS Well, there you have an example of how the Democratic Party has become so Wall Street-friendly that it has largely ceased to be an effective counterweight to the power of big money in politics or to the financial industry and its influence in politics. And this is why Bernie Sanders was able, though he will not win the nomination, to have far more success than anyone imagined. He was originally thought to be a fringe candidate who would maybe get 5, 10 per cent of the vote. And yet he fought Hillary Clinton almost to a draw in many of the Democratic primaries. No one would have imagined that.

The mainstream of the Democratic Party had so embraced the financial industry that it was unable to provide an effective counterweight when it came to the financial crisis or to the aftermath, the regulatory debate. And oddly enough, Trump from the right and Bernie Sanders from the left have a good deal of overlap. They’ve both been critical of free-trade agreements that benefit multinational corporations and the financial industry but haven’t in practice helped workers.

Bernie Sanders has been a big critic of the role of money in politics, and Trump, though he’s a billionaire, also appeals to the anger about money in politics, when, at least during the primaries, he was able to claim that he was paying his own campaign costs and not depending on Wall Street. Despite their different ideological direction, they are both tapping in to the frustration that we’ve seen reflecting the failure of the mainstream parties.

JC What are the limits to markets? And what is the alternative to market triumphalism, especially when moderate social democracy is in crisis?

MS The only way of reining in the uncritical embrace of markets is to revitalise public discourse by engaging in questions of values more directly. Social democracy has to become less managerial and technocratic and has to return to its roots in a kind of moral and civic critique of the excesses of capitalism. At the level of public philosophy or ideology it has to work out a conception of a just society, it has to work out a conception of the common good, it has to work out a conception of moral and civic education as it relates to democracy and ­empowerment. That’s a big project and it hasn’t yet been realised by any contemporary social-democratic party.

A revitalised social-democratic response to the power of markets would also try to come up with institutions for meaningful self-government – forms of participatory democracy in an age of globalisation, where power seems to flow to transnational institutions and forms of association. It’s important also to find ways to promote participatory democracy. This requires political imagination and political courage. It’s a long-term project that remains as a challenge, but until we make some progress in that bigger challenge, I think that democratic politics will still be vulnerable to the backlash that we’re witnessing, with Brexit in Britain, some of the populist political movements in Europe, and Trump in the United States.

There is an alternative – but the alternative is to go beyond the managerial, technocratic approach to politics that has characterised the established parties and the elites, to reconnect with big questions that people care about.

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.

This article first appeared in the 09 June 2016 issue of the New Statesman, A special issue on Britain in Europe