“I naively took as a reference point Tony Blair’s proposal for a ‘third way’ between capitalism and socialism – capitalism with a human face”, Hugo Chavez, told Time magazine in 2006, reflecting on his own views before he was elected Venezuela’s president in 1998. Since then, Chavez’s views have dramatically changed. During a visit to Havana this June, he declared that his country and socialist Cuba were undergoing “one and the same revolution” aimed at replacing capitalism with socialism.
Former British Labour Party leader Blair’s “third way” offered an alternative future for people who were both deeply unhappy with the brutality of neoliberal capitalism (with its unregulated corporate profiteering, and privatisation and plundering of public assets), but who were also opposed to the discredited bureaucratic “socialism” of the recently collapsed Soviet bloc. In Britain, Blair’s promised “third way” turned out to be a lie, as his Labour government continued implementing neoliberal policies and joined the US-led war to plunder Iraq’s oil resources.
When Blair was promoting his promised “third way”, Chavez was not alone in looking for an alternative to neoliberal capitalism. Venezuelan workers and peasants had faced years of being driven deeper into poverty by the neoliberal policies imposed by Venezuela’s ruling capitalist oligarchy in 1989. These policies – savage cutbacks in government spending on health and education accompanied by a doubling of the price of gasoline and other basic commodities –sparked a spontaneous popular rebellion, the “Caracazo”. This was quickly crushed by the government of Carlos Andres Perez who sent the military into the streets, guns blazing, killing thousands of poor and hungry civilians.
Chavez emerged as a leader of the opposition to neoliberal capitalism in 1992 when he led a rebellion of 6000 soldiers against the Perez government. While this rebellion failed to oust the Perez government, it established Chavez as an alternative national leader in the eyes of large numbers of Venezuela’s poor majority. After being released from prison in 1994, Chavez declared himself a supporter of the “third way” as a solution to widespread poverty and the subordination of Venezuela’s economy and politics to the interests of US corporate capitalism.
He travelled the country building up a Movement for a Fifth Republic (MVR) to contest the 1998 presidential election. The reforms Chavez called for to give capitalism a “human face” would be spearheaded by a constitutional assembly (to draft a new constitution for the country enshrining the principles of “economic democracy”), a civil-military movement to make the military an instrument in the service of the popular masses rather than the oligarchy and US imperialism, and for control of the country’s oil resources to be taken out of the hands of the oligarchy so that they could be used to achieve social equality.
Chavez won the 1998 presidential election with 56% of the vote, the highest vote for any Venezuelan presidential candidate in over 40 years. His first act as president in February 1999 was to launch Plan Bolivar 2000, which aimed at creating the civilian-military movement for social change. It united 60,000 military personnel with the civilian poor in an effort to tackle some of the economic and social needs of urban poor neighbourhoods, the barrios, such as building water supply and sewerage systems, and repairing roads. The military barracks, sports grounds and canteens were made available to local communities.
The constitutional reform was also quickly put into action, with a new constitution being widely discussed and then approved by 71% of voters in a referendum in December 1999. The new constitution established the Bolivarian Republic of Venezuela, and as Chavez promised, it called for the “participation of the people in the development, execution and control of the public power”. It banned the privatisation of the state-owned oil company PDVSA, which was being prepared for sale to US corporations and the Venezuelan capitalist elite.
However, the biggest obstacle to implementing Chavez’s “third way” was his government’s lack of control over PDVSA, which in terms of revenues was Latin America’s largest company. While formally state-owned, PDVSA was run by managers drawn from the country’s capitalist oligarchy and was used to enrich themselves and the big US oil corporations.
In 2001, Chavez initiated Plan Colina which aimed to bring PDVSA and the country’s oil resources under his government’s control. A hydrocarbons law was introduced requiring that all foreign oil companies form joint ventures with PDVSA in which PDVSA would have majority control, and for the royalties paid to the government by foreign oil companies to be increased from 1% to 30%.
Immediately the US business elite and Venezuela’s capitalist oligarchy whipped up a chorus of opposition calling these measures a threat to “private property” and an attack on the “free market”. Army General Guaicaipuro Lameda, who had been appointed PDVSA president in 2001 by Chavez joined this chorus, as did Chavez’s interior minister Luis Miquilena and a section of formerly pro-Chavez deputies in the National Assembly. Chavez responded by sacking Lameda and replacing him with Gaston Parra a radical university professor, as PDVSA’s president. Later Chavez also sacked most of the directors of PDVSA, and then more than a dozen top managers.
Over several months the battle over who would control PDVSA continued to rage, pitting those loyal to Chavez and his “Bolivarian Revolution” against those loyal to the interests of US imperialism and Venezuela’s capitalist oligarchy. On April 4, 2002, the capitalist managers and middle-class technicians of PDVSA began a shutdown of the company. This was supported by the Fedecameras employers’ federation and the corrupt leadership of the Confederation of Venezuelan Workers (CTV).
April 2002 coup
On April 11 a US-backed military coup was led by army commander-in-chief General Efrain Vasquez. Chavez was taken prisoner, held incommunicado, and an employer-military dictatorship installed. This was headed by Fedecameras chief Pedro Carmona, who immediately abolished the constitution, closed down the National Assembly and the Supreme Court, repealed the hydrocarbon law, and ordered the police to shoot any protesters.
Despite only seeking to reform capitalism, the “third way” had failed dramatically. The capitalist ruling class control of the key instrument of state power, the military, had over powered Chavez’s attempt to use the institutions of parliamentary “democracy” to reform Venezuela’s economy in the interests of the workers and peasants. Prior to this coup however the growing confrontation over who would control PDVSA had began to radicalise the political outlook of the masses, including many in the military. This radicalisation was dramatically accelerated by the coup.
Hundreds of thousands of poor people across Venezuela poured out of the neighbourhoods and surrounded the presidential palace and military barracks. The military split and thousands of soldiers united with the civilian poor in an insurrection that ousted the capitalist-led coup regime on April 13, and brought Chavez back to power. In the months that followed, 70 generals and admirals and 340 other military officers, who had supported the coup, were sacked from the armed forces.
The April 13 workers’ and soldiers’ revolution took real power away from the capitalist class and created a new base of state power for the Chavez government, making his government one that could not just talk, but act, as a working people’s government.
But why did the capitalist class in Venezuela decide to overthrow a government that was only aiming to reform, not abolish, the capitalist system? In an interview given in the months following the failed coup, Chavez explained the connection between his government’s legislative reforms and the coup, saying: “The government, empowered by the National Assembly, wrote, as you know, 49 laws. Among them are: the land law, the bank law, the microfinance law, the fishing law, the hydrocarbon law, laws that affect the historic interests of the oligarchy, of the ruling classes. When these classes saw that we had decided to deepen the process, and that we were about to transform the socioeconomic structure, they began to work toward their failed April 11 coup.”
As the looming conflict of class interests between the capitalist oligarchy and Chavez’s working-class supporters became sharper, clear lines of division emerged within Chavez’s government. In arguing against the advice of his interior minister, Luis Miquiena, in late 2001 to give in to the demands of the oligarchy and eliminate these 49 laws, including the hydrocarbons law, Chavez explained to Miquilena: “You know that I will not do that because those are the laws that enable us to enter into a new phase of developing the application of the constitution” – to pass from words to deeds. In response, according to Chavez, Miquilina said the Chavistas could not make a revolution, the most they could do was “make some reforms”, because of the “force of the opposition”.
In April 2002 the capitalist oligarchy mobilised that force – the military – to overturn Chavez’s “third way” reforms. This confirmed a lesson drawn from many past experiences – that the working classes, as Karl Marx pointed out in the mid-19th century, cannot simply take hold of the capitalist state’s bureaucratic-military machine and use it to advance its class interests, but had to break-up (“smash”) this machine. It also confirmed a lesson drawn by Vladimir Lenin in the early 1920s that the economic reforms required to create optimum conditions for national capitalist development in the capitalistically underdeveloped countries required a revolutionary transfer of state power to the workers and peasants and a course of action toward building socialism.
Parallels with the Cuban revolution
In the programmatic platform adopted by the first congress of the Communist Party of Cuba in 1975, the leaders of the Cuban socialist revolution, drawing on their own experience, summarised these two historical lessons: “The interwoven economic interests of the Yankee monopolies, the bourgeois latifundist oligarchy and the rest of the national bourgeoisie would make any measure affecting any of these sections bring about immediate opposition and resistance of the bourgeoisie as a bloc. In conditions of economic and ideological domination by imperialism, measures that do not even go beyond the bourgeois-democratic framework are generally rejected by the bourgeoisie of dependent countries. In these countries, the bourgeoisie fears that the development of the revolutionary process will inevitably lead to socialism.
“This situation in which the objectives of national liberation and of a democratic nature had to be implemented by the working class at the head of the state power, conditioned the close interrelationship between the measures and tasks of the first and second stages of our revolution and the uninterrupted character of the transformation leading to the transition from one stage to the other in the context of a single revolutionary process.”
As it happened in Cuba so it happened in Venezuela – the “third way” of reforming the oil industry to create a “humane” capitalism was a measure affecting the interwoven interests of the “Yankee monopolies” and the dominant section of the Venezuelan “national bourgeoisie”, and this provoked the resistance of the “bourgeoisie as a bloc”, which could only be overcome by putting the “working class at the head of the state power”.
Furthermore, following coming into power through the April 13 civilian-military revolution of a government resting on armed forces purged of those officers loyal to the capitalist oligarchy, the organisation and class consciousness of Venezuela’s workers and their alliance with the poor peasants has steadily deepened. The revolution has developed as a permanent process, growing over uninterruptedly from national-democratic tasks to the specifically socialist tasks of expropriation of property of the capitalist class and creation of a socially-owed, centrally planned economy oriented to meeting the needs of the working people rather than the accumulation of capitalist profits.
On December 2, 2002, PDVSA’s capitalist managers locked out the company’s “blue-collar” production workers in an attempt to starve the Chavez government of revenue and throw the country into a politically destabilising economic crisis. Oil production crashed from 3 million barrels a day to 150,000. But this only further deepened the anti-capitalist outlook of the workers and peasants. On December 7, some two million workers and peasants from across the country rallied in Caracas to protest against the bosses’ shutdown of PDVSA. Over the next two months, and despite 18,000 managers and highly paid technicians refusing to work, production workers and students, with the help of the reformed armed forces, took control of and got PDVSA’s facilities operating.
Placed under a management loyal to Chavez’s working people’s government, PDVSA was turned into an organisation providing funds and administrative expertise for the government’s social programs aimed at eliminating poverty. This marked the first real expropriation of capitalist property in Venezuela, and the turning of the revolution toward the socialist tasks of creating a nationalised, planned economy. As Chavez put it in a televised address to the nation from San Carlos in the state of Cojedes on January 10, 2003: “Only now can we say the PDVSA has begun to be the property of Venezuelans, the property of the Venezuelan people.”
With PDVSA in the hands of the revolution, its revenues were directed toward meeting the social needs of the working people through the now famous “social missions” that have bought free education and health care to millions of people, affordable food, clean water, cleaner streets, and also aim to create ecological sustainability. Funding from PDVSA to social programs was just US$40 million in 1998 but following its socialisation in early 2003 this rose to $13.3 billion in 2006. When, that same year, the capitalist media denounced Venezuela’s energy minister and head of PDVSA, Rafael Ramirez, for telling its workers that “PDVSA is red, red from top to bottom”, Chavez responded: “PDVSA’s workers are with this revolution, and those who aren’t should go somewhere else. Go to Miami.”
Control of PDVSA has also provided the logistical resources needed by the Chavez government to bypass the old and uncooperative civil bureaucracy in many of the government departments, and set up new, parallel, state structures to implement its social and economic policies. Many more expropriations of capitalist property have since taken place. The aluminium industry, the steel industry, telecommunications, electricity companies, cement companies, and a major bank have been expropriated, allowing the Chavez government to further plan the development of the economy.
Missing the revolution
Unfortunately, many on the socialist left in rich countries of the First World have missed the workers’ revolution that has actually taken place in Venezuela. Fixated on a dogmatic schema of socialist revolution in which state power is seized by “workers’ militias” or a previously created revolutionary army, they falsely conclude that the Chavez government still rests on and administers through the (remnants) of the old capitalist state machinery and thus all the achievements of, and his, government are inherently unstable, or that he is still trying to implement the chimera of a social-democratic “third way”.
One such example of deriding the political character of the Chavez government was the interview with Stalin Peres Borges, a national coordinator of the Venezuelan National Union of Workers and a leader of the Trotskyist Party of Revolution and Socialism printed in the August issue of the Paris-based Trotskyist International Viewpoint (IV) magazine. In the interview Borges commented on a meeting Chavez held with 500 national employers on June 11 where he invited them to be part of a national plan to re-launch production.
IV’s introduction to Borges’ interview stated that at the meeting with the employers Chavez had announced “a series of measures which favour the financial sector and the big employers who are linked to the multinationals”. The thrust of Borges’ comments was captured in the headline on the article: “The alliance with the employers is putting brakes on the march towards socialism”. But even Lenin advocated forming practical alliances with sections of the capitalist class in the early stage of building socialism in Soviet Russia. In his May 1918 article “Left-Wing Childishness” Lenin argued that the Russian workers and peasants’ government had to “use the method of compromise, or of buying off the cultured capitalists who agree to ‘state capitalism’”, i.e., to form joint ventures with the Soviet republic.
That Chavez has no intention of putting any “brakes on the march to socialism” was revealed the very day after Borges gave his interview. On July 31, Chavez announced the nationalisation of Banco de Venezuela, the third largest bank in Venezuela, declaring it would be turned into a socialist bank. Two weeks later, as part of Chavez’s plan, announced in April, to nationalise Venezuela’s cement industry, energy minister Ramirez led red-shirted Chavez supporters and National Guard troops to seize control of the Mexican-owned Cemex, the largest cement producer in Venezuela. Then, on August 28, Chavez announced that his government would eliminate capitalist involvement in the distribution of petrol to Venezuela’s 1854 petrol stations by placing distribution exclusively in PDVSA’s hands.
According to Borges, Venezuela still has “a bourgeois state with all its structures intact”. In his view, nothing fundamental was changed by the April 2002 events: Chavez still leads a state that is acting to defend the profit-making interests of the imperialist corporations and the Venezuelan bourgeoisie – by expropriating more and more capitalist-owned businesses and orienting them to meet the needs of Venezuela’s working people!