Maduro’s Neoliberal Turn?

William Serafino, Orinoco Tribune, February 17, 2023 — The narrative about the Venezuelan government’s shift towards a neoliberal economic policy has been going on for some time now and has been promoted by the mainstream media. Presented as a bombastic slogan, as a general and extravagant yet blurry statement, this narrative is based on unconnected fragments of reality that lead to an incongruous and unreadable mosaic.

For those who propagate this narrative, the supposed neoliberalism of President Nicolás Maduro is defined by so many things at once that it is difficult to see where the central point that verifies his supposed ideological conversion really lies.

According to BBC, the turbo-capitalism of Las Mercedes, an upper class area of Caracas, with its luxury stores, high class restaurants, and casinos, confirms this shift. However, for Al Navío, the conversion is proven by the lifting of price and exchange regulations.

According to El País, the offer of jobs on platforms like Yummy or the circulation of dollars in the economy and their establishment as a massive means of payment reflect the shift towards liberalization. For Alberto Barrera Tyszka, according to an article published in The New York Times some years ago, neoliberalism would be the economic leg of Maduro’s “dictatorship.”

Meanwhile, for sectors of the left whose reference is the Communist Party of Venezuela, the low salaries, reduction of public spending, and alleged privatization attempts through the Anti-Blockade Law are expressions of neoliberalism that confirm Maduro’s distancing from Chavismo.

This small chronicle of how the issue has been presented helps visualize one of the central problematic aspects of this narrative: its all-encompassing, diluted, and sometimes abstract character. To characterize regular issues of economic activity such as the commercial boom or the circulation of money in the everyday economy as “neoliberal” implies a crude reductionism that relies on the abusive use of generalization to manipulate the audience.

The conceptual ambiguity, premeditated to a certain extent, also plays a role in propagating this narrative. The word “neoliberalism” in relation to Maduro has been used to describe many different phenomena, mostly independent of the decisions he has adopted, to such an extent that any aspect of his economic strategy enters, apparently without contradictions, that register.

Thus, such a category is conclusively assumed without an initial definition to establish the limits of the concept itself and its relationship with a Venezuelan political and economic context marked by very unique elements. Only by starting from the beginning of that context is it possible to shed light on the Venezuelan president’s strategy and how its application differs from the much-vaunted neoliberalism.

In general, regarding the historical experience of the policies implemented by the Reagan-Thatcher duo in the early 1980s, as well as a few years earlier by the Augusto Pinochet dictatorship in Chile, when we speak of neoliberalism, we refer to a policy of structural adjustment marked by privatizations in strategic sectors, financialization of the economic fabric, deregulation of essential public services, and an increase in the decision-making power of multinational corporations to the detriment of the authority of the State.

Moreover, neoliberalism is a current of thought developed in the Chicago school of economics, whose visible figures include economists Milton Friedman and George Stigler. After 1989, neoliberalism became hegemonic on a world scale following the collapse of the Soviet Union, establishing the dominant ideological framework of a new globalizing motive centered in the United States, its transnational corporations, and Wall Street.

For an economic policy to be “neoliberal” in the strict sense of the word, certain conditions must be met. One of them is the deregulation of everything possible in terms of economic activity. This means, in a nutshell, the elimination of all state control, supervision, or management of strategic sectors and financial and essential services.

As a recent and handy example of neoliberal shock therapy, we can look at the government of Mauricio Macri in Argentina (2015-2019). On the political side, the “neoliberal laboratory” he headed involved the promotion of bankers and technocrats to high positions of power, thus creating a corporate government full of CEOs.

On the economic and financial side, his government launched itself into unprecedented levels of debt with the International Monetary Fund (IMF) and private creditors, taking the country’s external debt to more than $250 billion. The financial speculations on the debt, together with the deregulation of public services, causing explosive rises in tariffs and prices, constituted the main facets of the neoliberal manual characterized by loss of sovereignty and mutilation of the State that the Macri government applied.

In view of these theoretical and political indications, if Maduro were a full-fledged neoliberal, the Petróleos de Venezuela SA (PDVSA), the basic enterprises, the Caracas Metro, the electricity, telecommunications, and water supply companies—just to mention a few cases—would already be in the hands of the private sector.

Public banks, for example, would represent a small fraction of the national banking sector, which would be dominated almost entirely by private bankers. At the regulatory level, there would be no restrictions such as reserve requirements or public orientation of credit portfolios.

Likewise, tax collection policies would be reduced to a minimum. This pattern would be reproduced in every sector of the economy.

Clearly, none of this has happened or is close to happening in Venezuela, so the narrative that Maduro is neoliberal is flawed in its general premise.

Another, more specific aspect of this narrative is contingent on the notable presence that the US dollar has acquired in recent years as a means of payment and savings for the people, as a consequence of adjustments to the exchange market that began in 2018.

The decision to lift the restrictions that linked the exchange rate to petrodollars received by the State from oil exports, which reached historic lows that year due to the US blockade, was an exceptional, urgent measure to mitigate inflation and restore family consumption, generating incentives for an increase in commercial and productive activity.

The agonizing situation of uncontrolled inflation, stimulated by an unprecedented economic and financial siege on the flow of oil revenues, was the origin of this change in the government’s economic policy.

The depletion of fiscal reserves due to the blockade, the abrupt interruption of the circulation of national income, the isolation from international credit markets, and the confiscation of large amounts of foreign assets made President Maduro face an unprecedented situation of chaos, the palliative measures for which depended on a sophisticated calculation of balance to manage such a situation while at the same time preserving the parameters of the government’s redistributive welfare policies.

To consider the rearrangement of the exchange market to facilitate foreign currency transactions and encourage capital investment as “neoliberal” would be fallacious, in both orthodox and practical terms, since the decision was made for the purpose of reviving economic activity, creating sources of income independent from oil, and configuring general conditions of economic growth aimed at recovering salaries and hence public consumption.

In a planned way, President Maduro made a tactical change, of a reactive and pragmatic nature, to economic policies with the objective that private savings, in the hands of various segments of the capitalist class, would be injected into the economy, thus financing his strategy of political and institutional stability.

Thus, the Venezuelan State, with no resources of its own available due to the blockade and the abrupt fall in oil income, created incentives for profit and investment that in the medium term would translate into greater revenue and, consequently, into gaining freedom of movement outside the economic suffocation zone of previous years.

Encouraging trade, production, and investment by adjusting the parameters of control over these activities cannot be described as neoliberalism. The government took these measures to be able to contain inflation and stimulate economic growth in response to a high-pressure situation that left no alternative.

On the contrary, to implement neoliberal measures would be, for example, to promote growth while eliminating any revenue collection policy aimed at redirecting resources for the welfare of the people, something that has not happened and is not about to happen in Venezuela.

It is an absurd contradiction to qualify a government as neoliberal if it has a wide range of taxes to strengthen its revenue collection, sustain subsidies to public services, and a massive food program: the CLAP, whose acquisition cost for the population is far below market prices. It is simply nonsense to call this neoliberalism. In fact, it is the opposite of neoliberalism.

In addition to the implicit technical and economic developments, correspondence with a worldview of social life centered on the accumulation of profits, extreme individualism, and obsession toward efficiency and opportunism are also important factors that make up the definition of neoliberalism.

If Maduro embodied this worldview and applied it to his country and society, we would not see a president focused on strengthening public welfare policies, the delivery of public housing, and other measures aimed at social protection in terms of food, health, and education.

If he were a neoliberal, these issues would simply not appear among his concerns, and they would gradually lose vigor and presence in the purview of the State until they disappeared.

It is precisely a result of his adherence to these social programs that Maduro has maintained, and even updated, the Chavista policy of preservation of sovereignty, the steering role of the State over economic development, and the instruments of redistribution of wealth as mechanisms of social and economic balance. He has adjusted these broad programmatic lines to fit a new context without losing the strategic focus of Chavismo’s orientation.

Perhaps the most fragile aspect of the narrative describing Maduro as neoliberal is that it assumes that everything that involves reordering finances, seeking a more rational management of resources (scarce, due to the blockade), and stimulating economic growth conditions by means other than the traditional ones defines a “neoliberal” turn.

This is not only theoretically incorrect, it also demonstrates how President Maduro’s government is taking many people out of the comfort zones to which they were accustomed, introducing them to a new way of seeing and understanding the country, the economy, and the State.

In any case, those who promote the Maduro neoliberal narrative would have to answer the question of why it is that a neoliberal president, so prone to “betraying the legacy of Chávez” to enrich private businesses, continues to be persecuted by the United States, a country which took the neoliberal experiment to a global scale.

If he is neoliberal, there is no reason for the harassment against him to continue, is there?

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William Serafino is a Venezuelan political scientist who graduated from the Central University of Venezuela. He is a researcher and political analyst focused on Venezuelan history, geopolitics and the new forms of war in the 21st century. His works have been published in numerous Venezuelan, Latin American and European media.