As the presidential election campaign kicked off in earnest last year, the question of whether Venezuela’s Sandinista leaders would one day return to power cropped up again. The current president, Nicolas Maduro, was elected in 2013, taking over from Hugo Chávez. But the former guerilla and president vowed to remove his leftist predecessor from office before the end of his second term. While Maduro has met that goal, few Venezuelans believe he could achieve the same feat in a second term. Indeed, there is plenty of evidence to suggest that many Venezuelans are either tired of the socialist project as it has been implemented or would welcome a return to capitalism.
This could prompt this president to soften his anti-capitalist rhetoric.
Ruthless critics of socialism may also enjoy a much better opportunity to see evidence that the Venezuelan economy can recover from the crisis in an orderly manner, once the government has been reined in and the state is eliminated from some sectors. In the past, one benefit that has come out of previous Maduro administrations was the heavy state involvement in the Venezuelan economy — from diesel refineries to sugar plants. As explained here, one commonly heard economic theory is that when it is at its most centralized, economic output can more easily rebound when economic unrest, oil price fluctuations or other circumstances trigger layoffs, a significant devaluation of the currency or a new law causing the price of imported goods to rise.
And Venezuela has even witnessed this sort of thing during times of economic struggles — and financial upheaval — under Chávez. In fact, one of the great failures of his presidency was the 1992 nationalization of the Colombian refineries and the seizure of larger shares of Venezuelan sugar mills during the 1990s. Economists fear, however, that a constitutional amendment that would allow Maduro to run for a third term could set the stage for further anti-market excesses.
Chávez insisted that a socialist economic model could promote greater inclusion and provide more jobs for impoverished Venezuelans. But by the time Chávez was elected in 1998, a cross-section of economists had warned him that his economic policies were unlikely to spur more economic growth, even with a high income distribution because of the government’s inability to control inflation and to restructure the economy.
During the next decade, the economy saw near constant contraction — which has been attributed to statist policies and strong capital flight. As economic instability, the government took hold of many sectors of the Venezuelan economy, for example, the mining sector.
In recent years, however, there are signs that the potential for leftist policies has waned across Latin America. Take the case of Brazil, for example. Many Brazilians recall the unpredictable economic policies of Rousseff’s leftwing administration, which started in 2011.
In 2015, in the midst of a widening corruption scandal, Brazil’s once-popular leftist president found herself in power. Even then, many economists predicted that political instability and a sluggish economy would take their toll on the economy. This is exactly what has happened.
The Brazilian economy has since gone through four years of contraction. As a result, a clutch of economists recently questioned the economic model in the country, which has long promoted statist policies and a strong state. The following economic models are more or less off-the-radar among Brazilians, but are indicative of their pessimistic view of policies promoting left-wing economic policies.
These models suggest that it would take a strong transfer of wealth from the state to the private sector in order to stimulate Brazil’s economy. Furthermore, they suggest that only massive privatization of state-owned companies would maintain government revenue.
Even more distressing, these models highlight the government’s failure to achieve consensus among Brazilians on how to revive the economy.
The survey bears out their findings. Roughly 66 percent of Brazilians believe their country’s economic situation has deteriorated during the last few years of left-wing government. They also think unemployment has increased in the last few years (though the Brazilian unemployment rate still remains below 10 percent). A high degree of polarization in Brazil’s population implies that any attempt to deal with economic difficulties will fail.
Although the results may vary by region and political system, some countries are emerging to recognize that, rather than pushing ideas and institutions based on a purely socialist platform, lawmakers, the public and markets need to find ways to embrace a more market-oriented agenda and reduce an economic crisis caused by the decline of commodities prices.