Socialism Worked in Venezuela

Political conservatives often deride socialism because, in their words, “it doesn’t work.” By this, they mean socialism doesn’t deliver liberty, prosperity, or peace but, instead, tyranny, poverty, and war. Although the facts certainly support this critique, the logical premise underlying the critique does not. To declare that something works (or not) implicitly assumes a standard of measurement. Which one do conservatives use?

Conservatives seem to blithely presume that socialists intend to deliver liberty, prosperity, and peace. But where’s the evidence for that claim, beyond mere self-serving socialist rhetoric and demagoguery? Why assume that socialists seek progress when their many “experiments” over the past century make clear, to anyone aware of the history, that socialist systems repeatedly, ineluctably, and inherently inflict human harm?

Even socialist despots now concur with conservatives that socialism doesn’t work. A recent headline reads “Venezuela's President Admits Economy Has Failed.” The despot is Nicolás Maduro, who last month told the Venezuelan congress that “the production models we’ve tried so far have failed, and the responsibility is ours, mine and yours.” Maduro is an avowed socialist in the United Socialist Party of Venezuela.

No mystery there. Since his election in 2013, Maduro has accelerated the socialization of that once-rich nation, causing a severe economic contraction, capital flight, refugees, worsening poverty, hyperinflation, shortages, rising mortality rates, malnutrition, and starvation. For many years prior, Maduro was a minister in the socialist regime of his predecessor and hero, the late Hugo Chávez, who initiated the latest socialization without apology. Venezuelans elected Chávez four times between 1999 and 2012.

Neither Chávez nor Maduro presented himself as anything other than socialist. They knew what they were aiming at, and voters knew what they were getting. The ultimate details may have differed, but the basic results were generally expected. Why should they regret the results? Did someone expect instead to get liberty, prosperity, and peace?  Did some prefer capitalism but could find no political party to represent their wish? Perhaps the voters were duped because Chávez and Maduro promised public ownership of the means of production and a redistribution of wealth. The first occurred; the second didn’t. But isn’t that always the way with socialism?  As Jack Nicholson put it to his evading, lying client in the movie Chinatown (1974), “There’s no time to be shocked by the truth.”

“Redistribution” is but a euphemism for legalized grand larceny; you don’t create wealth by stealing it, any more than you multiply it by dividing it. Moreover, don’t the means of production include not only machines but people — that is, laborers? When human capital is publicly owned, it’s akin to slavery. Why today would it remain a mystery, to any people anywhere, that government ownership of people is inhumane?  

As mentioned, the historical facts support the conservative critique of socialism. That socialist systems have impoverished and killed more than 100 million people over the past 100 years is a matter of established historical record. The gruesome evidence through the end of the 20th century, which is indisputable, is compiled in R.J. Rummel’s Death by Government (1994) and in The Black Book of Communism (1999).

Socialists are anxious to insist, of course, that none of the horrors of socialism have been due to socialism, that true socialism has yet to be tried, and that it’s only coincidental that “socialist” appears as part of the names United Socialist Party (PSUV) in Venezuela, Union of Soviet Socialist Republics (USSR) in Russia, National Socialist (Nazi) Workers’ Party in Germany, and Democratic Socialists of America (DSA), the latest fad group for some of the young. These were irrelevant cases of mistaken identity, claim socialists, who add that real socialism now exists in the Nordic countries, even though those countries have no significant public ownership of the means of production. Socialists are unashamedly contradictory when claiming that the USSR wasn’t socialist, but Denmark is.

In addition to implicitly complimenting socialists by assuming they want liberty, prosperity, and peace, conservatives also try to educate socialists about the principles of sound economics to show how private property, sound money, a free price system, and the profit motive ensure economic success, while communal ownership, fiat money, price controls, and punitive taxation necessarily bring economic ruin. It’s all quite true, of course. But what if socialists already know this stuff and don’t care? What if they recognize sound economics but evade it because they have other priorities? Suppose they agree with their hero Karl Marx, who wrote in the Manifesto of the Communist Party (1848) that capitalism is a vital, energetic, productive engine, yet morally evil because it is so egoistic, individualist, and rights-obsessed?  Perhaps demagogues and despots keep promising socialism, and victims keep accepting it, because both consider it to be moral, even though destructive.

In their critiques of socialism and interventionism, conservatives also like to cite the law of unintended consequences, which says the well-laid plans and policies of political-economic leaders often yield the precise opposite results of what’s intended. Likewise, the common cliché says that the road to hell is paved with good intentions. Again, notice the underlying (but unproven) premise: the intentions are good.

Is this always true? When Maduro concedes that his models have failed, in the sense that they’ve destroyed Venezuela’s economy, does it make him less socialist? Might his constituents now become pro-capitalist? Does he consider the possibility that capitalism’s underlying ethic is moral after all, while that of socialism is larcenous, unjust, and punitive? Unlikely. Somebody once defined “insanity” as doing the same thing repeatedly while expecting a different result. It isn’t necessary to accuse socialists of being insane; more likely, they’re “crazy like a fox.” That is, they know their intended prey (capital) and they’ll do whatever it takes to seek it out, take it, kill it, and eat it, with nary a thought about the future.

Of course, one should never argue by impugning, without evidence, an opponent’s inner motives or intentions. But sometimes aims and goals are named explicitly. Even when not, it seems perfectly fair to conclude that whenever certain ideologues keep pushing for a social-political-economic system that invariably proves disastrous, they probably prefer disaster. Nihilists exist, after all. Many conservatives simply assume that they know the socialists’ motives, and without much evidence, presume that they’re benevolent.

Conservatives seem unaware that socialists don’t expect their system to work in the sense of creating liberty, prosperity, and peace. First and foremost, they expect it to work to seize the means of production, human capital included. Then they expect it to entail, in their own words, a “dictatorship of the proletariat.” They expect it’ll destroy liberty and prosperity.  In this sense, history demonstrates unequivocally that socialism works wonderfully.

That destruction was Marx’s main aim is clear from his Manifesto of the Communist Party. The hoped-for anti-capitalist revolution, he wrote, would be a “radical rupture of traditional property relations,” for it first would “raise the proletariat to the position of ruling class to win the battle of democracy,” and then, with its “political supremacy,” the rulers would “wrest, by degree, all capital from the bourgeoisie,” an act that “cannot be effected except by means of despotic inroads on the rights of property.” That was “unavoidable.” The takeover would occur “by means of measures which appear economically insufficient and untenable.”

Marx was right to concede that socialism is “economically untenable.” It’s only the flip-side to his equally true concession that capitalism is productive. What he knew, socialists have known for years. In fact, socialism is worse than untenable. It’s destructive and inhumane. Conservatives should know that socialists know of their own destructive intent and should oppose them, instead of implicitly praising them.

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Richard M. Salsman

AIER Senior Fellow Richard M. Salsman is president of InterMarket Forecasting, Inc. and a visiting assistant professor of political economy at Duke University. Previously he was an economist at Wainwright Economics, Inc. and a banker at the Bank of New York and Citibank. Dr. Salsman has authored the books Gold and Liberty (1995), The Collapse of Deposit Insurance and the Case for Abolition (1993) and Breaking the Banks: Central Banking Problems and Free Banking Solutions (1990), all published by AIER, and, most recently, The Political Economy of Public Debt: Three Centuries of Theory and Evidence (2017).

Dr. Salsman earned a B.A. in economics from Bowdoin College (1981), an M.A. in economics from New York University (1988), and a PhD in political economy from Duke University (2012).