What socialism/communism destroys, capitalism restores. No country which was once capitalistic was improved or made better after experiencing socialism or communism, and countries which have tried socialism and communism but then turned to capitalism were made better for it.
This was the case for Germany post-World War II and for New Zealand over the last few decades.
Will it also be the case for Venezuela? I will soon reveal why I do not think so.
But let’s begin with post-WWII Germany and New Zealand. After World War II, Germany was in shambles not merely because they lost the war. The Nazis, being socialists (as the name “National Socialist” would imply, but if you don’t think that’s enough to tell you they were socialists, consider that they employed pretty much every line item the American Left wants to employ), were in charge of everything regarding how the economy worked. Well, “worked.” Few things were not run by the German government, it applied heavy price controls, rationing, needless bureaucracy, massive inflation, awful cronyism, etc.
It was your typical Marxist dystopia, much like we see with Cuba, Venezuela and saw with the Soviet Union and China (China is still communist, of course, but privatized things enough that famines were not really a thing anymore. It’s still largely a dystopia if you’re not at least fairly wealthy and you can only be fairly wealthy by sucking up to the government).
But Ludwig Erhard, who was West Germany’s Economics Minister in 1948, employed capitalist measures to free the economy from its socialist bonds.
Late economist William H. Peterson said, detailing what happened: “In 1948, on a June Sunday, without the knowledge or approval of the Allied military occupation authorities (who were of course away from their offices), West German Economics Minister Ludwig Erhard unilaterally and bravely issued a decree wiping out rationing and wage-price controls and introducing a new hard currency, the Deutsche-mark. The decree was effective immediately. Said Erhard to the stunned German people: ‘Now your only ration coupon is the mark.’”
“The American, British, and French authorities, who had appointed Erhard to his post, were aghast. Some charged that he had exceeded his defined powers, that he should be removed. But the deed was done. Said U.S. Commanding General Lucius Clay: ‘Herr Erhard, my advisers tell me you’re making a terrible mistake.’ ‘Don’t listen to them, General,’ Erhard replied, ‘my advisers tell me the same thing.’”
So the Allied forces in charge of West Germany, which were Americans, British and French, instituted some of the same socialistic policies that the Nazis put into place. Tells you a little about the kind of socialistic tendencies these “heralds of freedom” possessed, doesn’t it?
At any rate, Erhard abolished the price-control program, slashed tariffs, raised consumption taxes but cut income taxes by 15% and got rid of any disincentive to save money, leading West Germany to see incredible growth while the communist East Germany suffered under its communism.
Robert A. Peterson writes: “Almost immediately, the German economy sprang to life. The unemployed went back to work, food reappeared on store shelves, and the legendary productivity of the German people was unleashed. Within two years, industrial output tripled. By the early 1960s, Germany was the third greatest economic power in the world. And all of this occurred while West Germany was assimilating hundreds of thousands of East German refugees.”
It was regarded as the “German economic miracle”, though Erhard hardly thought of it as a miracle (in some ways, it certainly was, but I understand what Erhard means as it took planning and action and it didn’t come out of nowhere). “What has taken place in Germany… is anything but a miracle. It is the result of the honest efforts of a whole people who, in keeping with the principles of liberty, were given the opportunity of using personal initiative and human energy.”
Capitalism restored the German economy which was rattled and destroyed by the Nazis. Capitalism also restored the New Zealand economy which was overregulated by welfare state socialists.
In the two decades following the 1950s, when New Zealand was a top economy in the world, the large island nation saw welfare state economists and leaders overregulate the markets and cripple the economy.
According to the Foundation for Economic Education: “The next two decades produced a harvest of big government and stagnation. Increasingly, New Zealanders found themselves victims of exorbitant tariffs, torturous regulations, massive farm subsidies, a huge public debt, chronic budget deficits, rising inflation, costly labor strife, a top marginal income tax rate of 66 percent, and a gold-plated, incentive-sapping welfare system.”
“The central government in those years established its own monopolies in the rail, telecommunications, and electric power businesses. About the only things that grew during the period from 1975 to 1983 were unemployment, taxes, and government spending. This was the ‘democratic socialism’ that Bernie Sanders admires, but which New Zealanders eventually realized was a national calamity.”
After that period of the socialist experiment in New Zealand, the country began to turn things around when all farm subsidies were ended, tariffs were slashed by two-thirds, as were taxes slashed with the top rate being cut to 33 percent. During the mid-1980s and 1990s, the government sold its state enterprises, allowing them to be privatized. Starting a business was also made quite easy with severe deregulation and, for regulations which were not abolished, they were finally equally and consistently enforced. Compulsory union membership was abolished and union monopolies holding various labor markets were outlawed as well.
This led to New Zealand seeing 4 to 6 percent annual growth for years. Their housing market is still a mess and overregulated to Hell, but if the government of New Zealand recognizes that it also needs to be freed like the rest of the economy was, then things will get even better for them. It would also help to not institute anti-free speech and anti-gun regulations, which began to be implemented following the 2019 Christchurch mosque shooting.
Regardless, capitalism freed and restored an economy which was wrecked by overregulation and nationalization of industries aka socialism.
Now, finally, let’s turn towards Venezuela. What, exactly, is prompting me to even suggest they might be turning away from socialism? Well, it’s a Bloomberg News article reporting that the Venezuelan government “is abandoning socialist doctrine by offloading key enterprises to private investors, offering profit in exchange for a share of revenue or products.”
“Dozens of chemical plants, coffee processors, grain silos and hotels confiscated over the past two decades have been transferred – but not sold – to private operations in so-called strategic alliances, nine people with knowledge of the matter said.”
Ramon Lobo, a legislator from the socialist party and former finance minister said: “We believe this is positive because it is the synchronization of the public with the private sector. The state acts as a supervisor and receives compensation.”
So is Venezuela turning away from socialism? Like the title says, yes and no. Notice that I’m not asking if they are turning towards capitalism. They are just turning away from socialism, at least in some ways. If anything, this just sounds like what Russia did following the collapse of the Soviet Union and what China has been doing for the past couple of decades: privatizing a little bit, but only transferring the regulatory power to businesses and corporations which are allied to the government.
This isn’t capitalism, it’s oligarchy. It’s only marginally better to socialism, and better than to allow the entire country to collapse under the weight of socialism, but it’s nowhere near enough for the people of Venezuela.
The Latin American country was once one of the wealthiest in the world, was ranked among the top 10 in GDP per capita and once had a labor force with higher productivity than even the United States. This was in the 1950s. In the 1970s, Venezuela began to flirt with socialism by nationalizing the petroleum sector, and the economy began to stall out at best. In 1998, Hugo Chavez was elected and in 2007, following his second re-election in 2006, he would nationalize Venezuela’s largest telecommunications company, CANTV, and announced “All that was privatized, let it be nationalized,” hinting at further nationalization of industries.
Of course, we know what followed this full embrace of socialism: hunger, destitution, pain, suffering, and attempts by Venezuelans to flee for freer countries.
Now, Venezuela seems to be only slightly moving away from socialism, but not fully letting go of the failed economic system which brought ruin to the once prosperous nation. Even a little bit of privatization helps to an extent, as even despite the oligarchical monopolies present in China, Russia, and the U.S., these countries are still doing fairly well, with varying levels of prosperity (the U.S. being the freest, but not exactly because it’s trying to be).
So further privatization will certainly help Venezuelans, but it’s not worth it to replace a centralized government tyranny with an amalgamation of corporate cronies and oligarchs with similar power and philosophies to Maduro. Though unofficially, it’s replacing one dictator for another, to some extent.
What Venezuela needs to do, as do China, Russia and the United States, is move away from socialism and government regulation of industries as much as possible. Germany tried that for a time, and it was very prosperous. New Zealand has been trying it, for the most part, and was prosperous as well. The United States was founded upon these virtues and long was prosperous because of them, even despite the attempts by globalists and communists to tear it down little by little.
French Enlightenment thinker Montesquieu said in 1748: “Countries are well cultivated, not as they are fertile, but as they are free.” The freer the people, the better off the country will be.
I hope and pray that people will open their eyes and see what destruction socialism and communism bring, and realize that unrestrained capitalism is the only way for the largest number of people to live the best lives they can.
Socialism is marketed as seeking equality for all people. It achieves that only in the worst of ways by making people equally miserable and destitute. Even then, not all people are faced with this, as those in the government are made wealthier for it off the backs of the people.
To contrast Hugo Chavez: All that was nationalized, let it be privatized.
1 Peter 2:16
“Live as people who are free, not using your freedom as a cover-up for evil, but living as servants of God.”
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