Enduring legacy

Print edition : April 19, 2013

President Hugo Chavez with best friend Fidel Castro in Cordoba, Argentina, in July 2006. Photo: Roberto Candia/AP

A Chavez supporter cries on seeing his coffin. Chavez's use of oil revenues to improve the conditions of the entire population is at the heart of Venezuela's economic performance. Photo: Rodrigo Abd/AP

Hugo Chavez’s economic legacy is not confined to Venezuela and seeks to forge new pathways towards the goal of establishing more equitable and just economies and societies the world over.

REACTIONS to the untimely death of Hugo Chavez from all over the world tell us much more than about the man himself. They also indicate how the world is changing. There were spontaneous and deeply felt outpourings of grief and affirmations of respect not just in Venezuela but across the varied spectrum of the global “South” as well as in many developed countries. This was an expression of the extent to which the man and his policies had captured the imagination of people.

But there was also ill-concealed relief at his passing in the corridors of power in some Northern capitals. Those who felt threatened by his policies, his popularity, even his very existence, made a poor show of disguising their feelings—to the point that some expressed the hope or expectation that the model Chavez espoused would not survive the man.

The polarisation evident in such responses is not confined to Venezuela or Latin America. It reflects a broader global divergence that is now becoming untenable, between a shrinking global elite anxious to cling on to its undeserved privileges and the broader masses of society who are not only excluded from most of the benefits of economic expansion but also have to suffer the brunt of the contractions when they occur. Reactions to this process of dramatically increased inequality have found recent expression in the various “Occupy” movements and in social and political unrest in different parts of the world from Thailand to the Arab countries.

But in Latin America there has been a powerful new tendency at work as many governments in the region seek to forge new pathways towards the goal of establishing more equitable and just economies and societies.

This is why the legacy of Hugo Chavez is so important and extends far beyond his own country. The recent evolution of radical discourse as mainstream policy in different countries of Latin America has been enabled greatly by—indeed would not have been possible without—the Presidency of Hugo Chavez in Venezuela. This marked a sea change in the politics of a continent that had previously been the laboratory for neoliberal economic experimentation.

It is important to remember the economic and political context in which Chavez first came to state power because the changes have been so significant and rapid that it has even become easy to forget the ravages of the past.

In Latin America, the right-wing market-oriented and big bourgeoisie-dominated policies began in Chile with the United States-backed military coup that unseated Salvador Allende in 1972, and were then adopted by most of the other governments in the region, both authoritarian military dictatorships and democratically elected governments. This intensified in the wake of the external debt crisis of 1982, which enabled the International Monetary Fund and external creditors to impose the most extreme conditionalities that bled the continent for the next decade, in exchange for some debt restructuring.

The “lost decade”

The “lost decade” of the 1980s in Latin America was not just a period when national incomes and wage levels plummeted: it also led to dramatic shifts in economic power and control over resources. The political defeat of organised labour and destruction of earlier movements of the Left in the region were the preconditions for the imposition of the neoliberal model of widespread privatisation and economic deregulation. The strategy relied on massive increases in open unemployment to ensure the marginalisation of organised labour in almost all forms. This regressive shift in the balance of class forces, in turn, enabled the transfer of natural resources and public utilities into private hands, enriching a few at the expense of the rest of the population. The domination of private corporate capital (both multinational and national) was ensured also by the refusal of the states to engage in the taxation and spending that would ensure social and economic rights of citizens.

In the 1990s, neoliberalism was associated with not only economic volatility in a context of overall material stagnation but also worsening conditions of the mass of people. Economic development was more or less stalled and inequalities grew so extreme as to make the region the most concentrated and unequal in the world. The economies also became vulnerable to external financial forces because of the accumulated debt burden. The repeated and severe economic and financial crises in the region also spawned resistance, though the repression and the intellectual hegemony neoliberalism had achieved over policymakers meant that this took some time to coalesce into viable political alternatives.

The election of Hugo Chavez as President in 1998 was more than a democratic electoral affirmation of the broader social and political tendencies in Venezuela that were associated with the earlier failed coup attempt. It was a watershed. It marked a major shift in terms of domestic economic policies, which, in turn, provided inspiration to newly elected Left leaders in other countries to look for alternative strategies. Also, because Chavez used the oil wealth of the country to promote better conditions for the working people of Venezuela and to assist the people and struggles of other countries, he enabled the survival and advance of other progressive regimes in the region and even elsewhere. The continued survival and progress of Cuba against all odds, the political transformations in Bolivia and Ecuador, the dynamism of more centrist but still egalitarian-minded governments in Brazil, Argentina and Uruguay were all dependent on or affected by the backing of Venezuela led by Chavez.

A major element of the strategy—and one of the most potent sources of the discomfort Chavez generated among those who held power—was the willingness and determination to confront global capital and U.S. imperialism. Venezuela had large oil reserves, but its benefits were being appropriated by a small local elite along with large multinational companies. Chavez changed that by renegotiating royalty payments, changing tax rates on profits of oil companies and ensuring greater public control over the major oil companies and their revenues.

The significance of this cannot be underestimated. Oil exports alone do not guarantee much economic progress. In fact, the presence of natural resources can generate opposite outcomes associated with the “resource curse”, as high export prices generate effects that discourage diversification of production and the economic rents from these resources are appropriated by a small minority of the population. (The example of Nigeria, another oil-rich country, springs to mind.)

So, it is not the presence of oil resources per se, but the government’s ability to transform the nature of control over oil and use the rents to improve the material conditions of the population as a whole that is at the heart of the change in economic performance. Venezuela proved to be the trendsetter in this respect, providing an example for countries such as Ecuador and Bolivia. The massive increases in public spending on health, education and basic infrastructure such as roads, electricity and water supply and sanitation, which benefited the poor and people in hitherto undeveloped regions, were certainly enabled by the deployment of oil revenues in a context of rising global oil prices. But this was also critical in showing that the natural resources of a country belong to all its people and, therefore, the exploitation of such resources should be directed not towards enriching a privileged few but towards benefiting the people in general. Significant reductions in poverty and increases in minimum wages and regular employment opportunities were among the positive outcomes of this strategy.

Agrarian reform

The notion that economic policies cannot shy away from the issue of property rights and their distribution was reaffirmed in another major intervention related to land. Venezuela’s agrarian reform began in November 2001 when Chavez signed by decree the Land Law, which mandated the break up of large fallow landed estates, part of the “latifundia” that had dominated agriculture in the country throughout most of its history. The law gave the state the legal authority to expropriate any land that is underutilised or has been illegally acquired and redistribute it to farming collectives of previously landless wage workers. Since then the state land reform agency has taken over some 7.7 million hectares of land and redistributed around 1.1 million hectares of that to rural labourers and small farmers. Much of the rest was used for state farms and research laboratories, which are important to serve another purpose of the land reform: improve food security and reduce the country’s dependence on imported food by turning the once underutilised lands into productive tracts.

In 2010, an amendment to the land law increased the ability of landless tenant farmers to obtain land and strengthened the state’s power to convert large, idle estates into food producers. The reform changed the definition of a latifundio, from any estate larger than 5,000 hectares to any piece of land that is larger than the average in its region or is not producing at 80 per cent of its productive capacity. Communal councils, peasant councils and “any other type of collective organisation” were included among the groups of people recognised as legitimate occupants of privately owned land. Farmers occupying land or working as tenants were protected from eviction, except when their occupation was determined to be illegitimate or unjustified. Assistance to small farmers—or indeed any farmer willing to dedicate their land to domestic production—was provided through access to low-interest state-financed credit, technical aid, supplies and farming machinery as well as knowledge of organic farming techniques.

Promoting regionalism

In other ways, Venezuela under Chavez contributed to changing global power relationships and the undermining of imperialist hegemony. It directly offered bilateral assistance to many developing countries and also made use of it, such as through the innovative scheme with Cuba exchanging oil for doctors. It was keen to promote regionalism, South-South cooperation and interaction with friendly countries that could support it in the ongoing confrontation with imperialism and global capital. It attempted to build Latin American unity in various ways, ranging from ALBA (Bolivarian Alliance for the Americas) to the planned Banco del Sur (Bank of the South), a regional bank for development, to UNASUR (Union of South American Nations), which integrates the two trade treaty groupings of Mercosur and the Andean Group.

Precisely because of its radical nature, the government of Venezuela under Chavez generated extreme political reactions and faced threats from internal and external destabilising influences. The U.S. administration under both Republicans and Democrats has been open in its support for the opposition, even funding dissident groups, although to some extent it has been distracted by events in other parts of the world. It is also true that policy mistakes were made from time to time because of centralising tendencies, the ignoring of required productive investment in the oil sector, and so on. There are continuing social problems too: the crime rate in Caracas is exceptionally high.

This remains a cause for concern because elites and ruling classes do not give up their privileges without a fight and because imperialism is also unlikely to be looking in the other direction for too long. But it is also true that the groundwork laid in these past years cannot be undone easily even by different political forces once the people have become more conscious of their rights and more aware of their own role in ensuring them.

It is significant that even in the recent elections that swept Chavez to power again just a few months before his untimely death, his main opponent did not dare to suggest very different economic policies, indicating just how much domestic backing such policies have. Thereafter, the groundswell of grief and public support for Chavez’s political party give rise to the hope that Venezuela will continue to remain a leader in the broader human quest for truly democratic, egalitarian and just ways of organising economies and societies.

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