Stuck in the oil slick

In a materialist understanding, the key to the ‘Bolivarian revolution’ cannot be the man Hugo Chavez with his real or alleged staff of advisers. Rather, the historical structures, the concrete economic interests and the social tensions within Venezuela are key to understanding Chavez’s rise to power, his political actions and his particular rhetoric.

Since the 1920s oil has been Venezuela’s most important export good. Ever since, it has been central to all economic, political and social life in Venezuela. Unlike agricultural produce, natural resources were at that time already the property of the state which, hence, as a direct trading partner of the foreign oil companies, had a source of capital at its disposal which is to this day largely independent from the rest of the country’s economic activity. It was only in the 1920s that the state exerted its authority against the local chieftains, the ‘caudillos’, and set an end to the recurring flare-up of bloody civil wars that had shaken the country since its independence in 1821.

Proprietors of natural resources can regulate the access to it, deny it altogether or sell it at a high price. This is the source of the ‘absolute rent’ Marx analyzed. By founding OPEC, the oil exporting countries could raise this absolute rent and snatch it away from the world market. Moreover, oil has an advantage over its main competitor on the energy market, coal, because the extraction of oil is cheaper than that of coal. Therefore, the oil industry gains a so-called differential rent. Particularly in the years after 1958 the Venezuelan state was in a struggle with the oil companies over a share in this differential rent until it eventually nationalized oil production in 1975, in a way though which still involved the oil companies. For almost a century this state has been trying to strengthen its bargaining power against the transnational oil companies without endangering the whole process of extracting and distributing the oil.

This is at the heart of Venezuela’s perpetual anti-imperialism. The character of the negotiations, and which oil concessions are granted, is pivotal for the country’s foreign policy. The struggle for political power, the discussion about the attitude towards the oil companies and the appropriation of the oil rent, dominate the political sphere. Also, socio-economic structures have developed in direct dependence on the almighty state and its seemingly inexhaustible sources of capital. This has led to an historically early process of urbanization in the administrative centres and in the areas where the oil is extracted. Today less than 15 percent of Venezuelans live in the countryside (compared to 25 percent of the French and 10 percent of the Germans).

In the capitalist metropoles, the state is financed mainly from the income of its citizens and the surplus value siphoned off from the wage-dependent workers. As the general capitalist it regulates the national economic process as a whole. In Venezuela, however, where one percent of the population is employed in the oil sector, this very sector is responsible for 85 percent of exports, 60 percent of the state’s earnings, and 25 percent of the gross domestic product. Hence, the income of the majority as well as the profits of the entrepreneurs are largely dependent on the distribution of the oil rent which is a share of the globally produced surplus value.

Against this background it is hardly surprising that the state is the main focus of attention in Venezuela. The better part of economic life consists of holding one’s ground in the scrap for governmental funding. And the state does distribute its wealth through a vast landscape of bureaucratic institutions by placing orders and granting credits and subsidies of various kinds and sometimes even for social spending. When there is a dramatic increase in the price of oil such as in the years between 1973 to1975 and 2003 to 2006 the whole society lapses into a sort of trance. The rich see a chance to gain even further wealth, while the middle classes sense that their time has come to climb up the social ladder, and the majority hopes that the state will redeem them from their daily misery. Through a variety of infrastructure investments and different forms of social spending the state generates channels for distributing wealth which at the same time alleviate poverty and create a new rank of nouveau riche. For instance, industrial developments are not aimed at creating profitable capitalist enterprises. Rather, they serve as a means of providing the entrepreneurs further governmental incentives while at the same time securing jobs for the majority. When oil prices stagnate or drop, the increased appetite of the nouveau riche is still there. They can satisfy it because they have gained the upper hand and are able to boost state expenditure and import numbers while the majority goes away empty-handed. As a consequence, national debt rises and the masses remain marginalized.

Corruption is an integral part of this process of distribution. A wide-spread net which includes anyone from civil servants who look after number one, over intermediaries, subcontractors, protractors, trades-people, to union representatives, envelopes the society as a whole. A further manifestation of corruption is the existence of petty crime that accounts for a share of the distribution of wealth, in particular in the poorer areas, and causes the death of more than 20 people on an average day. When profits are gained mainly by drawing on governmental funds the ordinary preconditions of capitalist exploitation such as investments, production or the structure of the work itself become an issue of minor interest. As long as the state keeps the oil tap open, cashes in and distributes, there are profit margins to gain which German capital, for example, can only dream of. Thus, maintenance tasks are largely unimportant, in the public as well as in the private sector. Large-scale development projects are followed through, if at all, only in a dilettantish manner. More often than not machines, infrastructures and buildings are left to decay. No wonder that two thirds of the country’s food supplies have to be imported and the proportion is increasing

Rebellion of the Marginalized – The ‘Caracazo,’ 1989

Let us recap our introductory parable: The piñata is continually refilled so that the game never stops and everyone tries to give it a go. When state expenditure, despite the stagnation of the international price of oil, was on the rise again at the end of the ‘70’s, Venezuela went into a debt trap. In the 80s half of the population was excluded from the game and degraded to being mere spectators. Those who had the best state connections on the other hand tried to make as much use of them as possible because they were aware that the game might not run smoothly for much longer. But in 1989 the exploited having lost all trust in state and politicians had enough: for three days the underdogs cashed in and looted the stores and warehouses threatening to smash everything to pieces. Some people tried to break into the houses of the wealthier people. As a consequence police and military searched the poorer quarters and put a bloody end to the rebellion: Official sources reported about 300 dead, but independent estimates amount to ten times that number. For the time being the rebellion of the marginalized had been stopped, but the losers had gained a new sense of power through the experience. Still, both opponents were paralyzed with fear. The ruling classes hesitatingly continued with their political and economical enterprises and tried to reassure the masses with vague promises of social reforms. The impoverished masses mistrusted these announcements, but refrained from taking action and getting to the root of the trouble and challenging the dominance of state and private enterprises over production and distribution.

There have always been left nationalist tendencies among students, intellectuals and the armed forces in Venezuela. They felt that too much money was wasted on a parasitic bourgeoisie and that the oil business would be more profitable if Venezuela aligned with the self-proclaimed socialist block which still existed at that time in order to stand up more firmly against the interests of the United States. Even if they were determined opponents of a bourgeoisie that was dependant on the favours of the Venezuelan state but still claimed power, they certainly did not aim at abolishing state and wage slavery. As long as the oil rent, although unevenly distributed, trickled into the most remote corners of society, the left nationalists were not able to get the support of the majority they would have needed to take power.

The ‘Caracazo’ showed that things had dramatically changed in that respect. The marginalized, those who had no regular income, who muddled through from day to day, who were ignored or treated as potential criminals by the state and its institutions – these marginalized strata were susceptible to a discourse which promised to break away from the abhorred rich, as well as from the bureaucracy, to consider the needs of the majority and reintegrate the poor into society, i.e. to involve them in the distributive system .It is telling that one of the parties which belonged to the electoral alliance Hugo Chavez was involved in had the name “Fatherland for everyone”

Among the population trust in the political system and — after Chavez won the 1998 elections – the institutions of the state was on the rise. Those who hoped that it was now their turn to make the big money gathered around Chavez. They were joined by social technocrats, who had a sincere interest in improving, at least in part, the horrendous living conditions of the population. At first, the new government was supported only by a fraction the armed forces. Hence, it had to rely on the masses in order to hold its ground against the old political and economic establishment. Not without reason a new constitution was passed which demarcated the break from the previous Fourth Republic.

The new constitution and the battle for the oil rent

A feature of this new constitution is the use of the female grammatical form, the emphasis on the “participatory and protagonist” democracy in contrast to representative democracy, and the concession of specific rights to the indigenous population. The first years were spent dispossessing the traditional beneficiaries of their immediate access to the public revenue. In this context members of the former elites attempted a coup d’etat when several crucial public positions were refilled. Moreover there was a bitter struggle over the control of the state-owned oil company, PDVSA. These confrontations between old and new power elites were presented as a battle of the poor against the rich. The marginalized regarded the enemy of their well-known enemy as a friend and saviour and cheered at every rhetorical or real blow the former ruling clique had to take.

The idea that the government was indeed a government of the poor was substantiated by spectacular confiscations of fallow land and the absence of any kind of repression by the military, which was instead employed for public services such as street cleaning and painting schools. This impression was lasting even if the land reform was mainly a propaganda manoeuvre – of the total of 35 million hectares of arable land only 1.5 million hectares are to be redistributed and all big agricultural holdings were spared. The identification of the poor with their head of state, their willingness to go out in the streets for what they felt was their government was key to the failure of the former elites’ attempt to overthrow the regime in 2002. After these events the PDVSA remained a stronghold of the old elites, a state within the state. When the government tried to change the management of PDVSA, that management called a strike within the oil sector which was supported by the old union confederation CTV. Soon, this employer’s strike expanded to the private sector, in particular to trading and transport companies and banks. It was no comprehensive lock-out however: Ironically, the wealthier areas were affected most because in other areas only a few businesses got involved.

The strike caused a nationwide shortage of fuel and hit oil exports. Some of the oil workers kept up production and transport, which provided them with a sense of power. The clampdown of the government to maintain the supply, the indecisiveness of the bosses and the unbowed support of the majority for Chavez eventually sealed the failure of the employer’s strike and the old management of PDVSA. In the end, the management as well as more than 18,000 workers were sacked. Some members of the middle management felt it would be unwise to resume production after they had fallen out with the government because of the strike. Even more so, because they had forfeited their own workers’ sympathies when they announced that the shop floor wouldn’t receive any payment for the strike days. As a result workers and employees demanded guarantees for the preservation of their jobs, and the government responded by introducing the concept of co-management, which will be discussed in greater detail later on in this article.

‘21st-Century Socialism’

The right-wing opposition had been defeated politically, but this didn’t mean that the accumulated riches of the old elite had been seriously called into question. But they could no longer help themselves to state funds at will. Large-scale private capital started to look for a compromise. But the social base of the opposition, which started to yearn for the ancien régime, consisted (and still consists) primarily of medium-and small-scale employers, the self-employed and the broad middle class. This opposition sees its living standards and the continuity of its enterprises threatened by the government which excludes them decision-making. Up until now it is principally this social class that has persisted in a rejection of the new government that is as acerbic as it is helpless. Then came the moment when the government consolidated its power and had to satisfy the hunger of the new social climbers, particularly the military. It was also necessary to fulfill the expectations of the excluded, who wanted to reap the rewards of their active participation in the collapse of the abortive putsch. At the same time, the workers wanted their contribution to the failure of the employers’ strike to be recognized. At the same time, the existing managers had shown that they were no longer necessary for the continuation of production. Neither excluded nor worker were prepared any longer to show patience because of the pressing struggle with the bourgeois opposition. Attention was drawn to the measures that were supposed to improve material living conditions and represent the power of the people. In 2003 the year of ‘misiones’ was heralded, presented under the motto ‘21st-century socialism’. It is often ignored, or presented just as a transitional phenomenon, that these measures, always implemented from above, mostly personally by the president himself, served in the first instance to exclude from the state apparatus the bureaucrats associated with the old elite, to create opportunities for new more or less corrupt businesses, and socially and politically to control the socially excluded by integrating them into a new network of state organizations. It is a characteristic of this new ‘socialism’ that traditional wage earners are treated in a step-motherly manner. They are seen as a privileged class whose needs are already looked after. In both the private and the public sector, most existing pay settlements have expired, which affects about three million workers. Negotiations between unions and the health ministry and are now four years overdue. Since 1998, the purchasing power of those employed in the private sector has fallen by about 25%. The fact that the state and its enterprises are not keeping their promises, particularly to former employees, regularly leads to protests. The minimum wage is directly determined by the president – he usually announces it in his speech on May 1, which is broadcast live on TV – and affects principally those employed by micro-enterprises (including co-operatives) in or at the edge of the casual sector, where there are no pay-negotiations. The minimum wage also serves as a means of determining the pensions in the private sector as well as wages and stipends in the ‘misiones’.

These social measures are aimed in the first instance at the margins of the population, still 50% of the entire population, who live in self-built slums and attempt to survive on completely irregular incomes. This necessitates considerable ingenuity, as evidenced for example by the fact that mobile telephones can be hired for a single conversation at almost every street-corner within the inner city. It is significant that most of the best-known measures run under the auspices of the concept of the ‘missions’. A mission can be understood both in the sense of a military assignment, with a clear chain of command that separates those who give the orders and those who receive them, and in the Christian sense, with a separation between active missionaries who already know the way, and passive recipients of the gospel, to whom the benefits of the fruits of the mission are promised, if they follow the prescribed way. At the ideological level, capitalism is condemned for using profit for selfish ends, whereas ‘socialism’ is characterized by the use of profit for the interests of the people. Poverty is supposed to be fought through the transfer of money, without seriously calling private property into question. These could only be overthrown, if at all, by the proletarianised masses and not by the state. The discussion, taking place more and more in Venezuela in the last few years, as to whether Jesus was the first socialist, stems from the unhistorical and moral dimension of the whole talk of ‘socialism’, in which the poor expect to be saved by Jesus and his miraculous feeding of the five thousand.

‘Participatory democracy’ is indeed being implemented – but the population must first be made ready for it. Until then, the disciples and prophets of Jesus, Bolivar and Castro rule, who spread their lessons for several hours a day and several days a week over public radio and TV broadcasts, even if the best known educational broadcast ‘Aló Presidente’, in which Chávez for several hours every Sunday showed how close he was to the people and announced important decisions, was recently effectively put on ice by order from on-high. An alternative is provided by the private broadcasters, inspired by the neo-liberals and Walt Disney, who spew out their own rubbish. Why the license of one of them, the TV-channel RCTV, wasn’t renewed at the end of May, remains a secret … Some suggest that it was a matter of state favouritism of another private media concern, which as a multinational concern employs 35,000 people in the USA, by shutting out an inconvenient competitor from competition for advertising revenue.

The missions

There are countless missions nowadays which cover a large variety of social services such as health, education, food supply, housing, energy etc. What they all have in common is that they were set up without consulting the respective governmental departments. A new way to bypass red tape has developed alongside the old one, so that the traditional connections between governmental bureaucracy and economic oligarchy have gradually been severed. In this way the missions also serve as a tool to control the functionaries left over from the old days and dash their connections. Moreover, the funding of the missions is not passed by the parliament, but is financed from hidden sources within PDVSA, which in the meantime has been brought to heel.

As there are no accountability measures for these sources or the missions themselves, doors are wide open for new forms of connivance, corruption and nepotism. There is also a high degree of work turnover within governmental institutions, which might be due to a fear of a new accumulation of power beyond Chavez’ control. As a result, old resolutions are constantly ignored or replaced by new ones so that this system of governance might be called a form of systematic improvisation. In this respect, the constantly rising proportion of former members of the armed forces in the administration could be explained as an attempt to gain at least a certain degree of control over this situation.

One of the most successful missions is ‘Barrio Adentro’, which is active in the health care sector. It provides a network of preventive healthcare across the whole country and medical care for those who in former times had to leave their quarters and bring material and medicine along in order to receive treatment from public institutions after waiting for days.

The logistics are mostly provided by Cuba which has sent 20,000 doctors and health personnel as well as medical supplies to Venezuela. In return, Cuba receives Venezuelan oil. The so-called módulos in which the doctors live and have their practices are located in the living quarters of their patients. These facilities have considerably improved the standard of health care, in particular in the countryside and remote areas. The ubiquitous posters that celebrate the Cuban revolution in the módulos show however, that the Cuban doctors do not only provide health care but also ideological reinforcement. In the light of the notoriously well-organized network of police and police spies in Cuba there may be a grain of truth to the suspicion that some of the doctors also perform ‘special services’. Some see the house calls as a way of screening public opinion, so that the expansion of the system of health care goes hand in hand with a certain degree of intimidation.

Only half of the 5,000 módulos that had been scheduled have been built so far. The pressing construction contracts were usually given to building companies in which higher ranks of the armed forces had a hand and which merely subcontracted to other firms. The estimated cost of 250.000 Euros per módulo was about five times as much as the sum for other buildings of this size and not every módulo that has been built was put to use. Due to a lack of maintenance more and more módulos have to be closed. After four years, euphoria is dwindling.

The new system also clashes with the procedures of the official health sector: The Cuban pharmaceuticals which are often used to treat a whole variety of different ailments are not subject to any kind of control by the Health Department. If patients are referred from a mission to a hospital for further treatment — and alongside private clinics, hospitals are still the main branch of health care in Venezuela – there is usually an abrupt change in medical strategy that rarely has positive consequences for the patients. Thus, a whole branch of Cuban medicine has been established, which includes diagnostic centres, special clinics and even further treatments in Cuba. As a result there are two parallel self-contained systems of health care. But still, the general state of health in the country is in critical condition: while there is hype about plastic surgery among the women of the old and new upper classes, the number of cases of measles, malaria and dengue fever infections has risen by 30 percent. This is not least due to the disastrous state of waste management: Cooperatives equipped only with brush and scoop compete with private sector firms which are incapable of getting the problem under control, but are favoured by the mayors and pocket considerable amounts for their services. The best health care system is doomed to fail when the mountains of waste in the poorer quarters are home to rats, roaches and other vermin.

Another important tool of social integration is education. The first measures in this sector were aimed at public schools. The about 30 000 schools which had existed up to then were converted into 5 000 so-called ‘Bolivarian’ schools. This implied an extension of the school days from 5 to 8 hours, which included lunch as well as an enlarged variety of cultural activities. Also, the ‘Bolivarian’ system of schooling aims at adapting the curricula to local circumstances and emphasizing the values of ‘national identity’. In this way, material improvements are mixed up with ideological indoctrination. What also contributed to the overall popularity of the programme was the fact that the extension of school days also brought about a pay rise for teachers and other employees in the schools. Cooperatives comprised of parents compete with private sector firms over the provision of school lunches. But no matter who is awarded the contract – continuous and punctual delivery is not guaranteed so that students sometimes are sent home without a meal at short notice.

Even more spectacular are the “misiones” for adults without education. They range from literacy programs – even though illiteracy is very rare amongst adults, affecting mostly elder people – through high school programs to vocational training. A Bolivarian university for those who could not find a place at one of the public universities or were expelled completes this parallel education system. People’s hopes to increase their income by getting a professional qualification initially caused a massive rush into these programs. Grants for some of the participants – amounting to roughly half of the minimum wage – further contributed to this boom. Of course, some participants – especially those who don’t get a grant – drop out. But what is more significant, being also absorbed by their everyday lives, those who do participate hardly find the time to go through the subjects at home, let alone to actually deepen their knowledge. Thus, a certificate testifies not so much to a real qualification, but rather to loyalty to the government. In Venezuela, this can certainly be beneficial.

The educational concept is quite problematic: all of the instructional material is from Cuba and classes consist mainly of watching videos. The teaching staff is mostly made up of assistants who get the minimum wage and whose knowledge rarely exceeds the content of the videos. Instead of engaging in a dialogue, participants are expected to behave as passive consumers, staring at a screen that undeniably knows what’s right and what’s important. Far from initiating self-empowerment, this kind of education merely reinforces obedience. Prior to the elections in December 2006 participants of some classes were even given forms to fill in the names, addresses, phone and ID numbers as well as the presumable electoral behavior of ten of their neighbors. This was sold as a contribution to better relations amongst neighbors and no one raised any objections.

Almost all participants in the mission for vocational training receive a grant, though this is being questioned at the moment. For this reason it is extremely popular: many want to enroll, but not everyone is admitted; the attitude towards the government sometimes plays a role in the selection procedure. In any case, more than 500 000 people could obtain a certificate so far. Graduates are expected to form cooperatives, being promised credit, state contracts and sometimes land. Initially, this worked out quite well and the government set itself the goal to create almost 100,000 cooperatives. By now, however, the market is already overcrowded with cooperatives; since the government cannot award contracts to all of them, just 5, 000 still have a real existence.

Food supply constitutes another field of action for the state; a new ministry headed by a general was created solely for this purpose. The task of “Misión Mercal” is to procure food and distribute it at subsidized prices 30 percent below market prices. The distribution chain consists of more than 10, 000 sales outlets, complemented in urban areas by occasional central markets. About half of the population makes use of this network. While in theory the mission should distribute goods from small producers and agricultural cooperatives, what can be found on the shelves is rather reminiscent of the food stores in the old German Democratic Republic: storable food like rice, noodles, flour, canned food and bottles of oil or beverages. Fresh food like fruit, vegetables or meat can only be obtained at the occasional central markets, so that people still have to buy essential groceries at regular stores or from street vendors – and after all, in statistical terms “Misión Mercal” provides merely 150 g of food per person and day. Contrary to the official discourse on “food sovereignty,” Venezuela has to import 50 percent of its food, mostly from Colombia and Brazil. Apart from that, this mission provides also “mental food” – cartoons on the packaging help to spread the ideology of Bolivarianism. The military is in charge of logistics and the whole chain of procurement, storage, distribution and selling opens up new opportunities for corruption.

Thus, also in this sector the initial enthusiasm is dwindling. While the provision of free meals for the absolute have-nots and the homeless has somewhat improved the lot of the poorest part of the population, food supply remains a precarious issue. People have to be on the go all day long just to get the necessary groceries. About 10 percent of the population live in extreme poverty, another 30 percent of the families do not have sufficient income to cover basic needs like food, housing, clothing and transport. According to official statistics, families do not have more money to spend than in 1998.

The demand for proper housing with road and water connections is as huge as Venezuela’s slums: it is estimated at 1.8 million units. In addition, 60 percent of existing habitations are in need of restoration, while thousands of people lose their homes every year, or need to be relocated, due to landslides. So another mission was set up to improve housing. The issue is ubiquitous and the expectations of people are high. Depending on the social situation of the applicants, housing is sometimes provided for free. However, the normal case is that people get a cheap credit and have to buy their own places.

How building contracts are awarded by the state is again a not very transparent matter, and many of the hurriedly built houses are not really habitable. Even official statistics document that this mission is the least successful of the major ones. Of the 120,000 units planned per year, not more than 70,000 are actually built. Thus, it is not surprising that the allocation of apartments is also to a considerable degree ruled by bureaucratic arbitrariness and political considerations.