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Venezuela’s Road to Serfdom Part 1

Posted by Ender on February 20, 2009

Hugo Chavez

Hugo Chavez

Recently in Venezuela, the dictator Hugo Chavez “won” the right to be elected to office indefinitely.  This was a severe blow to the opposition party in Venezuela.  However, this is just the latest example of, as F.A. Hayek called it, The Road to Serfdom.  In short, Hayek’s thesis was that central planning or what you may call socialism, fascism or collectivism always leads to tyranny.  We will cover if Venezuela is socialist, socialism’s effect on the economy and how this turned into a tyranny.

Is Venezuela Socialist?

The first place we will look is at Chavez’s own words.  During his so called “Bolivarian Revolution” of the last 10 years he has said “Those who voted “yes” today voted for socialism, for revolution”, Venezuela will be led to “21st-century socialism”,”Fatherland! Socialism or death, I swear it!”,”Destiny has been written. That new era has begun. We have shown that Venezuela is red! … No one should fear socialism. … Socialism is human. Socialism is love. Down with imperialism! We need a new world!” and he has also called Jesus “the greatest socialist in history.”  So it’s pretty safe to say that the President of Venezuela thinks his country is socialist.

But, quotes alone don’t make a country socialist.  The Heritage Foundation Economic Freedom Index, which is released annually, measure the the various levels of freedom in each country.  It takes into account Business Freedom, Trade Freedom, Fiscal Freedom, Gov’t Size, Monetary Freedom, Investment Freedom, Financial Freedom, Property Rights, Freedom from Corruption and Labor Freedom.  Venezuela ranked 178 out of 183 in overall Economic Freedom (39.9 total).  It was also in a four way tie for last place with Burma, Zimbabwe and North Korea in the measuring of Property Rights.  To give you a reference point the USA is ranked 6th and has a score of 80.7 and is near the top of the list in Property Rights (multi-way tie).  Since Chavez’s rule started in 1999 the Economic Freedom number has dropped from 56.1 to 39.9.  Socialized economies are always less free than their Capitalist counterparts.

Here are few more detailed examples of Venezuelan socialism.  In 1970, Venezuela nationalized the oil industry.  Chavez has nationalized the electrical and telecommunications industries.  “Price freezes on key consumables have driven hundreds of Venezuelan farmers out of business, and forced importation of foodstuffs — which are provided at heavily subsidized prices in the poorest districts. Queues as long as five hours often result, and after waiting, would-be buyers often find rice or sugar or chicken already sold out. Venezuela was once a major producer of beef cattle. No longer: Ranches have been confiscated by the government and overrun by opportunistic campesinos. Mismanagement has decimated the national cattle herd.”  (Thompson) Early in 2008, Chavez nationalized the largest steel maker.  Perhaps one of the more scary nationalizations occurring under Chavez was the the take over of the banks.  In 1848, Karl Marx wrote in The Communist Manifesto “The Proletariat will use its political supremacy, to wrest, by degrees, all capital from the bourgeoisie…Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.”  Price controls and nationalization of industries are right out of the socialist playbook.

The move towards socialism in Venezuela started prior to Chavez’s reign, however, his rhetoric and actions moved the country quickly towards a full scale socialist country.  In part two, we will look at how the move towards socialism has affected the economy.

2 Responses to “Venezuela’s Road to Serfdom Part 1”

  1. Jose Kanucee said

    OH NO!!!! NOT SOCIALISM. You seem to have forgotten to mention that Venezuela is on of the happiest countries in the world and ranks two spots higher that the US is subjective well-being according to

    If socialism is so0o bad, why do the people continually vote Chavez in? Why are the people happy and dare I say unified? If you ask me, it seems that there’s too much white and blue in our flag. Communism is about peace, unity, equality which America has lacked for far too long. If it costs some freedom for some people that’s fine, its not like the urban poor have had much freedom to begin with. We are victims of an environment that doesn’t care about us. Hopefully the “O”ne will be able to deliver us from injustice. It’s time to stop trying to gain favor of America by pretending to care what those rich, white, racist, uncaring, republicans want and lead America on a new Exodus into the Promised Land of social equality.

  2. Ender said

    Well Jose, I hope you stick around for the remaining parts where I will be addressing some of your points. But, it speaks volumes about yourself that you actually believe that he is fairly elected each time. Your deification of Obama will leave you sorely disillusioned.

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