After many years, the adverse economic scenario, both external and internal, is threatening the political and social revolution in Venezuela. The external restriction is an irrefutable fact. What many analysts called a favourable tail wind, due to the high prices of primary commodities, has today become a head wind. The price of petroleum has fallen by some 70%. In addition, the financial strangulation against Venezuela is constant. In spite of the fact that the country has paid around 14 billion dollars last year on the foreign debt, the country risk rating never improved. International banks are asphyxiating it in order to reach their goal: the neoliberal one.

This external front has clear direct consequences internally, basically due to the reduction of available foreign currency. Nevertheless, this does not mean that all the internal economic difficulties are occasioned by restrictions from outside. Oil income, sovereignly appropriated with the Bolivarian Revolution, did not really succeed in becoming a virtuous productive flow. There were successes over these years of Chavism, but not necessarily in the productive employment of foreign income. Chavista economic policy managed to humanize the economy, guaranteeing social rights, and also achieved real improvement in consumption patterns for the majority. Nevertheless, this new social muscle and the booming internal market was unable to consolidate a new productive economic order. Why? The import sector was excessively inflated with satisfying internal demand, and this brought with it a notable structural imbalance in the Venezuelan economy.

This characterization is even more complex if one takes into account the basic principles of political economy. What is euphemistically called the market is composed of private economic actors with a real capacity to influence, way beyond what any manual of neoclassical economy presupposes. In the midst of the Venezuelan economic war, the winners have been those who were able to concentrate even more wealth in their own hands. In 2014, 12% of the business sector was able to accumulate 79% of net economic growth in the country. Would this fact have anything to do with inflation? According to neoliberal orthodoxy, everything is a matter of monetary emission or fiscal deficit. For each example that they find to demonstrate this direct relation, one can find another that says the opposite. Inflation is not the result of any mathematical equation, but is rather the fruit of a complex political-economic algebra, in which the conventional macro-economic variables do play a role, but there is also much influence of those who hold the greater rate of profit at each link of the chain of value. At this point, the inefficient, income-usurping role of the present systems of distribution in the country cannot be overlooked.

The question is then, starting from this complex diagnostic, how to find the way out of this labyrinth? The Venezuelan economy is at a decisive crossroads. It must take one road or the other. One of the victories of this new era is that the former single track of neoliberal thinking now competes with other alternatives, each time a complex economic situation arises. The adjustment recipes were unveiled in the past century but always manage to resuscitate each time difficulties come into sight. The difference with the neoliberal era is that at the present time they are not alone; they rival with other heterodox options.

Here we have a decision concerning a struggle between two completely antagonistic and irreconcilable models. We already know the script of neoliberalism and its consequences. On the other hand, the Bolivarian Revolution to date has never had to confront its own internal economic tensions in the midst of an external tempest. There lies the challenge of these times: how to escape from the neoliberal path and, at the same time, create a new economic route, with a new path of effective economic responses in the framework of the strategic horizon set out by Chavism.

To that end, the recipes that Chavism would have used to escape from the neoliberal labyrinth are no longer useful. This is another world, both inside and outside, which obliges us to launch a battery of economic policies to prevent external restrictions from imposing an internal sacrifice for the majority. Some key points in this new epoch of the Great Economic Policy are the following:

1. The State of the Social Missions calls for an economic mirror; for each social mission, an economic mission that unleashes new productive forces internally. To this end, public purchases must serve as the economic muscle in favour of a new democratizing social metabolism.  This means aiming for an economic multiplying impact derived from the Social Revolution. 

2. It is necessary to put in order what can be produced and what cannot. The Productive Revolution demands putting shoulders to the wheel with new economic motors, considering a) the true added value that can be generated internally, and b) the external limit imposed by the global chains of value. Producing new goods will serve for nothing if it means importing a good part of the value added.

3. Not everything is a question of motors; there is also the question of actors. The democratization of the productive apparatus is the necessary and sufficient condition in the new economic phase, because it is the only way to break with the present oligopolistic dependency. Communal power must be the essential pivot in the new economic order, both in production and in distribution and commercialization. The commune must cease to be marginal in the economy; the non-neoliberal outcome is undoubtedly a communal outcome.

4. It is necessary to avoid falling into the neoliberal trap of dealing with the issue of foreign currency from the exclusive focus of nominal value. Is it important to discuss the exchange rate? Yes, but only once the new matrix of currency assignation has been defined. In times of shortage of foreign currency, it is more important to choose how this currency will be deployed in order for another real economy to flourish in the shortest possible timeframe. A kind of acupuncture is required, in such way as to channel available currency towards anti-inflationary, productive and pro-growth uses.

5 Another imperative is a new matrix of foreign currency revenue to end the dependency on oil exports. This implies awareness of the fact that this task is not instantaneous, but it is necessary to look out for efficacious responses in direct foreign investment, in the mining sector, under majority control of the State. It also means looking for legal ways for the private banks to repatriate their dollars and participate actively in this situation of economic emergency that exists in the country.

6. In the face of restriction from outside, it is necessary to move forwards on the question of tax sovereignty. There is a big enough margin to undertake a tax revolution based on principles of social justice. It is necessary to implement a plan to curtail fiscal fraud and evasion. Also, to raise domestically whatever resources are needed to guarantee social and productive investment, and thus avoid an internal negative impact from the external shock.

7. Another response is to once again take up a regional policy in an effective way. There is surely a margin to activate special plans such as the SUCRE in order to import high priority goods without using the US dollar. It is fundamental to look for new means of importing without the dollar, wihin Mercosur, with some compensatory methods, at the same time as achieving a new investment map from the region.

With these elements we can see that it is possible to build another navigational map to overcome the present storm, inside and out. It is not enough to say no to the neoliberal proposal of regressive measures on the distribution of wealth. It is necessary to implement a Bolivarian economic agenda for this historic moment. The only way to overcome the neoliberal mandate of “there is no alternative” is to find real and sure-footed options for the future, of economic change within a change of era. The economic war can be won with early victories in the terrain of concrete measures, and by building believable expectations in order for economic peace to come sooner rather than later.

(Translated for ALAI by Jordan Bishop)

- Alfredo Serrano Mancilla, Doctor in economics, is the Director of the Centro Estratégico Latinoamericano de Geopolítica (CELAG)

Original source in Spanish: http://www.celag.org/frente-a-la-emergencia-economica-en-venezuela-por-alfredo-serrano-mancilla/