[NYTr] Workers Cooperatives and 21st Century Socialism in Venezuela

[All the News That Doesn't Fit]

excerpted from VIO Venezuela Daily News Roundup - August 6, 2007.

[The birth of workers' cooperatives in Venezuela demonstrates the
successes and the complexities of "21st Century Socialism," a
Washington Post article informs readers today.  Collectives empower
laborers, we read, such that "like the Venezuelan economy itself, the
assembly line here is designed to put workers ahead of the bottom
line."  Venezuelan socialism neither mimics Cuban Communism nor copies
U.S. Capitalism, but rather combines export-led growth based on the oil
economy with a strong focus on state-led domestic development.
Minister of Planning Jorge Giordiani is interviewed by the Washington
Post, and explains that "Socialism is founded on the logic of work, and
not on the exploitation of work," a fact which involves the more
equitable distribution of resources.  He also explains that foreign
investment remains an important part of the Venezuelan economy, but is
no longer its centerpoint. -VIO]


The Washington Post - August 6, 2007
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/05/AR2007080501483.html

Venezuela Tries To Create Its Own Kind of Socialism

By Juan Forero

CARACAS, Venezuela -- At a sleek, airy factory built by Venezuela's
populist government, 80 workers churn out shoes -- basic and black and
all of them to be shipped to Fidel Castro's Cuba, a leading economic
partner.

With no manager or owner, the workers have an equal stake in a business
celebrated as a shining alternative to the "savage capitalism"
President Hugo Chávez constantly disparages.

"Here there are no chiefs, no managers," said Gustavo Zuñiga, one of
the workers, explaining that a workers' assembly makes the big
decisions.

There's also no need to compete -- production is wholly sustained by
government orders.

Like the Venezuelan economy itself, the assembly line here is designed
to put workers ahead of the bottom line and, in the process, serve as a
building block in Chávez's dream of constructing what he calls
21st-century socialism. According to a 59-page economic blueprint for
the next six years, free-market capitalism's influence will wane with
the proliferation of state enterprises and mixed public-private firms
called social production companies, the objective being to generate
funding for community programs.

"The productive model will principally respond to human necessities and
be less subordinate to the production of capital," the report says.
"The creation of wealth will be destined to satisfy the basic
necessities of all the population."

In year nine of Chávez's presidency, Venezuela's economy is undergoing
a sweeping, if improvised, facelift as a president with powers to pass
economic laws by decree enacts wholesale changes.

The transformation includes thousands of new state-run cooperatives,
the government takeover of companies and new trade ties to distant
countries such as Iran and Belarus, which the United States has dubbed
"Europe's last dictatorship." The Chávez administration has recently
announced plans to build factories to produce agricultural goods,
cellular telephones, bicycles and a variety of other items.

Venezuela's state oil company, the engine for what Chávez calls a
peaceful revolution, will have an even bigger role: The president has
approved the creation of seven subsidiaries of Petroleos de Venezuela
to grow soybeans, build ships and produce clothing and appliances.

Venezuela has also taken majority control of the oil sector, driving
out Exxon Mobil and ConocoPhillips. Venezuelan officials hint that the
government might nationalize production of natural gas by the end of
the year. Chávez and other officials have also raised the possibility
that the government will inject itself in banks, steel production and
private hospitals.

The big question -- still not spelled out in detail by government
officials -- is what exactly is 21st-century socialism?

"Chávez is, of course, radicalizing his model, but not in the Cuban
way," said Luis Vicente León, a pollster and political analyst. "This
is not communist. This is not capitalist. What is it? It's a mix."

Economic advisers and strategists, including Haiman El Troudi, who
helps develop economic policy at the state's International Miranda
Center in Caracas, say Venezuela is learning from failed economic
models.

"We're distancing ourselves from the errors committed in the socialism
of the past century," El Troudi said. Though El Troudi asserts that
capitalism has failed, he said private capital is needed here -- as
long as it is employed in "a new kind of company that dignifies the
human condition."

In a country that was once as Americanized as any in Latin America, the
economic alterations have resulted in a strange blend.

Workers are tutored on socialist values, and officials frequently call
for the creation of a selfless and patriotic "New Man." The one
prevailing feature of economic policy here is high government spending,
particularly on popular social programs. The budget has gone from $20
billion in 1999, Chávez's first year in office, to $59 billion last
year.

The excess liquidity, ironically, has helped generate unbridled
capitalism, as construction, banking and other sectors are flooded with
government spending. In a money-fueled, go-go consumer culture,
inflation is elevated, cars sell for $100,000, elegant shopping malls
thrive, a black market for American greenbacks is growing and
fashionable art galleries sell paintings for tens of thousands of
dollars.

The contradictions have not escaped the attention of economic
policymakers, who say Venezuela needs to distance itself from the
American-style capitalism Chávez frequently derides.

"That's not the society we want to build," Jorge Giordani, minister of
planning and development and one of Chávez's oldest associates, said in
an interview. "The Venezuelan economy is not just capitalist, but the
wealth is concentrated, and it's dependent and underdeveloped. There's
enough qualifiers for us to be worried and try to change it."

Although Giordani said foreign companies continue to be welcome in
Venezuela, he criticized their quest for big profits. "We have to
condemn it because, in the end, it leads you to misery," he said.

With oil income rising fourfold during Chávez's presidency, the economy
has registered double-digit growth the past three years. Gross domestic
output has gone from $103 billion in 1999 to $174 billion last year,
according to recent testimony on Capitol Hill. Increased royalties and
taxes leveled on private oil companies since 2004 have generated nearly
$6 billion for government coffers, Chávez said last month, and
authorities are cracking down relentlessly on tax evaders.

But in frequent speeches, Chávez has also lauded the bounties of
Marxism, praised Castro's economic management and threatened private
businesses with takeovers. That has helped unsettle markets. Foreign
investment has screeched to a halt, registering an outflow of $543
million last year. The Caracas stock exchange has lost much of its
volume after the government nationalized CANTV, the telecommunications
company, and the Caracas electric utility. Perhaps most significant,
Venezuela's state oil company has seen production decline over the past
decade.

Though a solid majority of Venezuelans approved of Chávez's influence
on national events, according to a recent poll by the Pew Research
Center, an even higher majority, 72 percent, agreed that people are
better off in a free-market economy.

For business leaders here, the big concern is that the economy is
structured more on ideology and the whims of one man than on sound
policy.

"Venezuela is on a path where politics and ideology appear to be a
priority for those who have power," said José Luis Betancourt, a
cattleman and leader in Fedecamaras, the country's most influential
business federation. "The reality is there's a hegemony in terms of
control of the economy and political power, and that leads to a
situation where the development of private business is seriously
affected."

Rigoberto Lanz, a senior adviser in the Ministry of Science and
Technology, acknowledged that Venezuela is going through "a very risky
time," as businesses wait to see exactly what kind of economic model
the country will develop.

"In the short term, Venezuela will not be an attractive market for
foreign investment, because this search to define an economic model,
21st-century socialism if you will, is a bit complicated," he said,
explaining that officials are still working on that model. "They're
trying to develop something to fit Venezuela, and that's not done in
one day."

Some respected Latin American economists say the growing state role,
coupled with the improvisation, could unravel the economy.

"It might look great for a while, but we know these are formulas that
don't work," said Hernando de Soto, a Peruvian economist who has
written extensively about how to legitimize informal economies.

In co-ops and state companies, Chávez's policies have generated legions
of devoted followers like Iris Pinto, 31, who said her life had been
dull, mostly cleaning homes. Now she's at the shoe factory.

"He's a wonderful president, really socialist," she said. "President
Hugo Chávez Frías gave us this opportunity, and it's been completely
successful."

                               ***


The Washington Post = August 6, 2007
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/06/AR2007080600018.html

Interview With Minister of Planning and Development Jorge Giordani

By Juan Forero

Venezuela's economy is undergoing a sweeping transformation under
President Hugo Chávez, as the state establishes thousands of new
cooperatives and takes over companies. The Washington Post discussed
the changes with the minister of planning and development, Jorge
Giordani.

Q: Is there concern in Venezuela over the lack of foreign investment?

A: That's the story we've had here the last 8 years. It's not designed
like that . . . The question now is how to construct a new society,
that's the challenge we Venezuelans now have.

Q: But does Venezuela want foreign investment?

A: Let them come and they'll find things. What is a normal profit in a
developing country, 7 or 8 percent, here they want to earn that in a
year, in six months. We cannot permit capital that's not regulated.

Q: Why have foreign companies stopped investing?

A: You'll have ask them.

Q: Can the economy be sustained without foreign investment?

A: That question carries an implicit hypothesis that you will have to
negate yourself. It's an affirmation that's charged. Analyze it
yourself. . . . We've already seen that failure at the end of the
1980s, when following those rules (meaning free market reforms) look
what happened. The logic of the mechanisms of capitalism are
monopolistic, concentrating wealth.

Q: What do you mean by concentrating?

A: The concentration of a few companies that dominate the world market.

Q: That concentrating goes how far?

A: It's everywhere. The worst of it is it's a destructive logic, my
friend. That's the most dangerous thing we face. They're not the ones
that are going to be destroyed. The 6 billion inhabitants of this land
are going to be destroyed. It's an inherently destructive logic.

Q: What is the role of cooperatives in the economy?

A: It's to create a social economy made dynamic by oil revenues and
that can create spaces where that production is distributed in a much
more fair way. And that we leave behind what we had for the last 40
years. That the riches now stay here.

Q: Will foreign companies remain welcome in the country?

A: As long as they respect, as all Venezuelans have to respect, the
nation's laws and our Constitution. . . . If they're committed to
overthrowing the state, we will not permit them to be here.

Q: What is this economic system in Venezuela?

A: Socialism is founded on the logic of work, and not on the
exploitation of work. That comes from classic economics. When workers
work extra hours in the capitalist system that work is distributed
based on an economic rationale. What has to be overcome is for that
work to be distributed to found a new type of society that's more just,
more equal, more free and more democratic.

Q: Has capitalism failed?

A: Of course. Not only has it failed but the danger is that perhaps we
won't have time to move to other planets and that we'll destroy the 6
billion people who live over this earth.