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by Robin Hahnel
Practically nobody in the United States ever hears anything about truly newsworthy stories in Venezuela. Stories about exciting new political and economic initiatives that are dramatically reducing poverty and challenging popular myths about the abilities of ordinary people to make good political and economic decisions for themselves go virtually uncovered. 
Like most Latin American economies, the Venezuelan economy deteriorated during the 1980s and most of the 1990s. From 1998 to 2003 real per capita GDP continued to stagnate while the Chavez government survived two general strikes by the largest Venezuelan business association, a military coup, and finally a devastating two month strike by the state owned oil company. However, after Chavez survived the opposition-sponsored recall election, annual economic growth was 18.3% in 2004, 10.3% in 2005, and 10.3% in 2006, and the unemployment rate fell from 18.4 % in June 2003 to 8.3% in June 2007. While this impressive growth would not have been possible without the rise in international oil prices, it also would not have been possible had the Chavez government not ignored the warnings of neoliberal critics and pursued aggressive expansionary fiscal and monetary policies.
At the height of the oil strike the poverty rate rose to 55.1% of households. However, by the end of 2006 the poverty rate had declined dramatically to 30.6% of households, which compares favorably with a pre-Chavez rate of poverty in 1997 for households of 55.6%. While much of this decrease in poverty was due to strong economic growth, it was also due to a dramatic increase in social spending by the Chavez government. Social spending per person by the central government and the state-owned oil company, PDVSA, increased by an average of 35% per year since 1998.
The most dramatic increase in social spending was in the area of health care.
The most dramatic increase in social spending was in the area of health care. In 1998 there were over 14,000 Venezuelans for each primary healthcare physician, and few physicians worked in rural or poor urban areas. By 2007 there was one primary healthcare physician for every 1,300 Venezuelans, and many of the new physicians were working in clinics in rural areas and poor barrios that had never had physicians before.  There are also now 16,000 stores in poor areas throughout the country selling staples at a 30% discount on average.
Building the social economy
Reforms first. For eight years the Chavez government went out of its way not to threaten the private sector. Despite relentless hostility and numerous provocations from the Venezuelan business association and the privately owned media, there were few nationalizations and the state sector did not grow appreciably. Instead, Chavez concentrated on redirecting profits from the state-owned oil company to social programs to benefit the poor known as misiones, and financing development of what the government called the "social economy."
Chavez launched a massive program to create worker-owned cooperatives in both rural and urban areas.
In addition to increasing spending dramatically on healthcare and food subsidies, the government launched a massive program of adult education. Millions of poor Venezuelans have now overcome illiteracy, and hundreds of thousands have received primary diplomas and secondary degrees studying in store-front schools named Mision Robinson I (literacy), Mision Robinson II (primary), and Mision Ribas (secondary.) But none of this addressed the high rate of unemployment and the most pressing economic needs of those who had voted Chavez into office. Determined not to renege on electoral promises to better economic conditions for his supporters as many populists in Latin America have in the past, Chavez launched a massive program to create worker-owned cooperatives in both rural and urban areas.
Cooperatives. New worker-owned cooperatives not only provided much needed jobs producing much needed basic goods and services, they also featured what was soon to become a hallmark of Bolivarian socialism - popular participation at the grassroots level. When Chavez was first elected President in 1998 there were fewer than 800 legally registered cooperatives in Venezuela with roughly 20,000 members. In mid-2006 the National Superintendence of Cooperatives (SUNACOOP) reported that it had registered over 100,000 co-ops with over 1.5 million members. 
Generous amounts of oil revenues continue to provide start-up loans for thousands of new cooperatives every month and the Ministry for the Communal Economy continues to spearhead a massive educational program for new cooperative members. However, the ministry provides more than technical assistance regarding technology, accounting, finance, business management and marketing. It also teaches participants about cooperative principles, economic justice, and social responsibility.
Participatory budgeting. Even before the December 2006 referendum provided Chavez with a popular mandate to deepen the social revolution, the government had moved ahead to add participatory budgeting and local economic development initiatives called "nuclei of endogenous development" to the educational Misiones, subsidized food stores, and worker cooperatives comprising the social economy. In Venezuela participatory budgeting is viewed by many not merely as a better way to make decisions about local public goods, but as part of a process to democratize all aspects of economic life. Not surprisingly some local officials have resisted participatory budgeting because it challenges their traditional powers and privileges. Others have embraced the program and turned all municipal revenues over to neighborhood assemblies to use as they see fit.
Communal councils. After the referendum in December 2006, a major campaign to organize and empower communal councils was launched as a new step toward building the social economy. The Ministry of Participation and Social Development, MINPADES, worked to establish the initial components of the social economy. In 2004 the Ministry for the Popular Economy, MINEP, was created to help build new components of the social economy. When the government decided to create communal councils in every neighborhood, MINEP was strengthened and renamed the Ministry for the Communal Economy, MINEC. After lengthy debate it was decided that communal councils should be comprised of 20 to 50 households in rural areas and 200 to 400 households in urban areas.
All the rural communal councils I visited in the state of Lara had decided that housing was a high priority. Each went through the difficult process of deciding which families would get new houses since there was not enough to provide new houses for all. I asked the members what criteria they used. I asked about nepotism. I asked what happened to families who were disappointed and disagreed with the decisions. While answers varied, the major criterion taken into consideration was need - the state of a family's existing housing and the number of children. While all tried to reach consensus, in some of the communal councils votes were taken, and in some cases those who were disappointed threatened to leave.
A major difference between councils was how far they stretched their housing budget by providing materials locally, reducing the number of rooms, or providing labor. In one case a council member was a builder himself who was able to oversee much of the building by community members, thereby stretching the housing budget the farthest. The builder did not receive one of the new houses because, we were told, his house was predictably in decent repair. He said he was not disappointed because he was confident he would receive a new house next year, or the following, after others whose houses were in worse repair got theirs. In another council the disappointed family who had threatened to leave was talked out of it, in part because they thought they had a good chance of getting a house the following year.
The meetings of communal councils I attended were well attended - with representation from over half of the households. That was frequently not the case initially, as facilitators - often municipal employees who had previously worked in educational Misiones - had to help communities organize a second meeting after attendance was poor at the first. Choosing more convenient meeting times, passing out more flyers, and knocking on more doors was often necessary, but making clear residents would forego significant funds unless they created a communal council eventually led to functioning communal councils in every community in the municipality.
Of the roughly two hundred spokespersons I met in rural communal councils and urban communal councils in the town of Carora, a disproportionate number were poor women of color with several children. Most of them had only recently become politically active. Almost all of them were strongly Chavista. A disproportionate number of facilitators in the municipality were younger women from working class families who had some college education, who were also strongly pro Chavez.
Activists, politicos, and experts. While it is important to focus on what is happening on the ground, and what activists in different parts of the social economy are thinking, one should not ignore the influence of politicians and ministries that affect the social economy. What we might call the "Chavista camp" is an amalgam of small left parties and groups that initially included some small centrist and center-left parties as well - all predating his election - and a much larger diverse group of activists politicized by different campaigns and programs launched by his government. Although there is now an attempt underway to create a unified Venezuelan socialist party comprised of all who typically refer to themselves simply as "Chavistas," one of the defining features of the last nine years has been the absence of a unified socialist political party driving the political process - for better or worse. 
While somewhat arbitrary and imprecise, it is useful to distinguish between two different tendencies within this diverse and loosely knit "Chavista" camp. The vision of the more moderate tendency includes left Keynesian policies combined with further welfare reforms, but does not extend beyond a market system with a "mixture" of private and public enterprise. Since one of the two opposition parties representing the oligarchy, Accion Democratica, is officially a social democratic party and member of the Socialist (formerly Second) International, one has to be careful when using the term "social democrat" in Venezuela.
But elsewhere this moderate tendency within the Chavista camp would be described as solidly social democratic, and mostly unmarred - at least so far - by retrogressive "third wave," or "New Democrat" tendencies. These moderates within the Chavista camp are generally less optimistic than those in the more radical tendency about the ability of ordinary Venezuelans to make good decisions for themselves, and therefore tend to be more skeptical about how well what we might call "power to the people" as opposed to "serve the people" initiatives will work.
The guiding vision of the more radical tendency in the Chavista camp reaches far beyond a mixed economy guided by left Keynesian policies and humanized by a substantial welfare state. Most in the radical tendency describe what they are part of as the "Bolivarian Revolution," and call their guiding vision "twenty-first century socialism." Because these terms are unique to Venezuela they offer little help to those of us outside trying to understand what they mean.  Those in the radical tendency see what is happening as a revolution because they see it as a profound social transformation and dramatic change in power relations among social groups.
These "Bolivarian revolutionaries" . do not see Cuba, much less any other "socialist" country, as the model of socialism they aspire to.
They also believe this revolutionary transformation should continue until popular self-rule has been achieved in every area of social life. These "Bolivarian revolutionaries" call their vision "socialist" but they do not emulate any models of socialism developed by those who called their societies socialist in the twentieth century. For example, while they see Cuba as their closest ally, pay homage to Cuba for its lonely but steadfast opposition to US imperialism for half a century, and admire all that Cuban socialism has achieved for the Cuban people, they do not see Cuba, much less any other "socialist" country, as the model of socialism they aspire to. Instead, Bolivarian revolutionaries are socialist in the sense that they are committed to achieving what they believe those who have called themselves socialist dating back to the nineteenth century have all aspired to - an economy qualitatively distinct from capitalism where production is for use not profit, and where workers and consumers plan their own activities democratically and equitably.
My ability to gauge the thinking of "experts" working in ministries involved with the social economy is limited to conversations I had with officials in the planning ministry and the ministry for the communal economy, on reactions to presentations I made at both ministries, and on my review of the curriculum students are studying at the planning ministry school. I was constantly surprised and invariably pleased by what these "experts" were thinking.
At the beginning of my first visit, at the risk of never being invited back, I decided to take advantage of my opportunity to address the vice ministers, faculty, and first class of students at the planning ministry school to challenge the traditional conception of socialist planning. I began my talk by saying that if they thought their job was to make better and better plans, I thought they were wasting their time at best, and having a negative effect at worst. After an embarrassed silence I went on to say that instead I thought the job of people working in the Venezuelan planning ministry was to help workers in cooperatives and consumers in communal councils and assemblies plan how to cooperate more effectively among themselves.
"Do not plan for others, facilitate planning by others."
To my surprise my audience agreed. Moreover, they said they understood this meant they rejected the foundation underlying previous conceptions of socialist planning, and had, in effect, accepted a new prime directive: "Do not plan for others, facilitate planning by others." Since I was invited back I have had several opportunities to confirm that people at the planning ministry were not merely humoring a rude foreigner during my first visit. I have also studied the curriculum and read the texts being used to train those who will soon be key personnel in the planning ministry. It is completely different from standard curricula on national planning, and reflects the perspective of "facilitator" rather than "plan maker."
At the new Ministry for the Communal Economy the people I met seemed equally clear about what their job was. They are busy creating the basic elements of a social economy - self-managed worker cooperatives, communal councils, and communal assemblies. They are busy teaching the elected leaders of these cooperatives, councils, and assemblies that they must work with one another on the basis of mutual respect and solidarity rather than treat one another as antagonists in commercial exchanges. And finally, they are trying to help cooperatives, councils, and assemblies find practical ways to plan their interrelated activities fairly and efficiently among themselves so the market system can be replaced within the social economy. The fact that nobody before has ever succeeded in helping large numbers of autonomous groups of workers and consumers plan their joint activities democratically, equitably, and efficiently themselves does not seem to daunt those I met at MINEC. They are sceptical of formulaic proposals and believe answers for how best to do this will emerge from trial and error over time.
A sum bigger than its parts. They have correctly identified the Achilles heel of centralized planning - failure to allow for self-management. Every component of the new social economy is self-consciously designed to give "direct producers" and consumers control over the economic decisions that affect them. There are no bureaucrats to tell workers in their cooperatives what to produce and how to produce it. There are no politicians to tell residents of barrios what local public goods to prioritize in the participatory budgeting process. The families in the new communal councils discuss and decide on their own spending priorities in open meetings, and spokespeople from communal councils decide on municipal spending priorities in communal assemblies.
Communal banks, whose officers are members of the communal councils the bank serves, allow communities to make their own decisions about who among them most deserve loans and can best make use of available funds. And nuclei of endogenous development are designed to organize local resources to meet local needs through local initiatives in ways that devotees of community-based economics in the developed capitalist world can only fantasize about.
There is no guarantee that all of this positive momentum will succeed ...
But those building the social economy in Venezuela also reject the anti-social effects of commercial relations inherent in the market system. From the very beginning those working with the new cooperatives worried that market forces lead worker cooperatives to prioritize their narrow self-interest at the expense of community and social interests. MINEP training programs for new members emphasized that cooperative values include serving the social interest. The decision to encourage cooperatives to join nuclei of endogenous development was intended to build community ties, involve cooperatives in local planning initiatives, and help cooperatives see themselves as part of a larger community. The vision for the social economy is clearly one where producers in worker councils, and consumers in communal councils, and communal assemblies, plan their own activities and coordinate their interrelations among themselves equitably.
Socialism for the twenty-first century
There is no guarantee that all of this positive momentum will succeed - as the recent vote to reject proposed changes to the Constitution made clear. The decision to propose a second major overhaul of the Constitution in less than ten years was ill-advised in the first place, as were some of the proposed changes, which not only played into the hands of the opposition but also alienated segments within the Chavista camp. The result was a very narrow electoral defeat which has temporarily emboldened the opposition.
There are other reasons to be concerned as well. In the US the foreign policy establishment, which includes the leadership of the Democratic Party, remains adamantly opposed to the Venezuelan alternative to neoliberalism. Prior to the rise of Chavez, socialist political parties were not as strong in Venezuela as in some other Latin American countries, and therefore socialist ideology is still quite new to most Venezuelans. The hostility of the oligarchy and opposition parties has not diminished, and thanks to the bungled constitutional referendum they have now tasted a victory over their nemesis.
It is also possible that disagreements between the moderate and radical wings of the Chavista movement will create dangerous political moments in the next few years. And finally, while much of what I saw and described above is extremely encouraging, the process of building the social economy has been very uneven. While millions of Venezuelans have been deeply affected and undergone a profound political transformation, there are still millions who remain passive even if they have benefited materially from a government sponsored program. Socialism is by no means yet secured in Venezuela. But what is happening in Venezuela should make us all more confident than ever that "a better world is possible," and millions of people in Venezuela are busy building it now.
Robin Hahnel is professor of economics at American University and visiting professor of economics at Lewis and Clark College for the academic year 2007-08. His most recent book is Economic Justice and Democracy: From Competition to Cooperation (Routledge, 2005). This article is based on two working visits by the author to Venezuela in October 2005 and July 2006. On both occasions the author was the guest of the Centro Internacional Miranda and consulted with the Ministry of Planning and Development and the Ministry for the Communal Economy. In July 2007 he visited communal councils in the state of Lara.
1. I intend no criticism of alternative media coverage of Venezuela. For the most part the alternative media do the best they can given the restrictive conditions under which they operate. In particular www.venezuelanalysis.com provides high quality, professional coverage of Venezuela on a regular basis.
2. For an informative report on the new neighborhood clinics where healthcare and medicines are free and the emphasis is on preventative medicine, see a three part series by Rebecca Trotzky Sirr on the Upside Down World web site: http://upsidedownworld.org/main/content/view/852/1/.
3. For a description of the cooperative sector in Venezuela see Betsy Bowman and Rob Stone, Venezuela's cooperative revolution, Dollars & Sense, No. 266, July/August 2006; Camila Pineiro-Harnecker in MRZine, http://mrzine.monthlyreview.org/harnecker051205.html; and articles by C. Pineiro-Harnecker, S. Wagner, and F. Perez-Marti at www.Venezuelanalysis.com. For an excellent account of the role the "social sector" played prior to 2005 see Michael Lebowitz, Build It Now: Socialism for the Twenty-First Century (Monthly Review, 2006), chapters 5, 6, and 7.
4. A discussion of the pros and cons of attempting to organize a unified socialist party is beyond the scope of this essay. The initial local meetings of the five million Venezuelans who signed up to join the new party were beginning during my visit in July.
5. On the other hand, because the terms are new and unique to Venezuela they do help us avoid the mistake of thinking the process and associated vision can be neatly pigeon-holed into familiar leftist categories from the past - which they cannot.
[13 dec 08]