Declining oil prices and US sanctions.
How Venezuela went from a rich democracy to a collapsing dictatorship
21–30 of 71 posts
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#22Earlier quoted context omitted.
>Markets are necessary for successful diversification - avoiding shortages and economic collapses when key industries suffer downturns. Out of interest, why do you think this is true? (Edit: Why does this comment have a score of -2? What can I do to improve the quality or relevance of my comments? Will the downvoters explain, please?)
Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it. Historically I think it's true because broad central planning has generally led to unstable economies. I think the Nordic states best figured out how to provide widespread social programs funded by taxation of market economies - with national programs w…
> Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it.
This has been a common complaint, though it's not without response. As to what variables need to be taken into account, there's been discussion that not every product made would have to be. Here's a comment by "Keshav"[0] on Cockshott's input-output tables idea of economic planning, which came about in 1995:
"On a related note, Cockshott and Cottrell have a number of papers arguing that central planning is feasible with modern computer technology. As I understand it, the algorithm they present (e.g. in “Towards a New Socialism”) does not consider a linear programming problem; rather, it takes as given a target for final goods production (determined elsewhere in their model, which includes some markets for consumer goods) and solve for the gross output levels required to meet this target. They exploit the fact that the input-output structure of the economy is sparse (only a small fraction of the goods in the economy are directly used to produce any single good). Their algorithm’s complexity increases with n*m, where m is the number of direct inputs for each product, which seems manageable even with n=12 billion."
Cockshott talks at length about "The problem of scale" (the one which is your theoretical agrument) in his book in the chapter of the same name, which is downloadable for free as a PDF in its LaTeX glory here[1]. I last read it many years ago and refutations of it exist, though it's worth a read in my opinion.
[0] http://crookedtimber.org/2012/05/30/in-soviet-union-optimiza...
[1] https://www.researchgate.net/publication/299519892_Towards_a...
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#23I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…
>Markets are necessary for successful diversification - avoiding shortages and economic collapses when key industries suffer downturns. Out of interest, why do you think this is true? (Edit: Why does this comment have a score of -2? What can I do to improve the quality or relevance of my comments? Will the downvoters explain, please?)
There has never been a successful centrally planned economy. Perhaps with the assistance of massive computation and information spread via the Internet it could be conceivable. But without that it seems like every toy model a central planner uses is going to fail miserably.
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#24Earlier quoted context omitted.
This same thing happened under a more liberal capitalist government before. That's literally how Chavez got into power. The biggest difference between then and now is the severity of the oil price drop. An exacerbating factor is that the same forces that tried to coup Chavez in 2002 are of course still politically active and, rationally given their interests, using their economic connections to exacerbate the economi…
>>This same thing happened under a more liberal capitalist government before. That's literally how Chavez got into power. The biggest difference between then and now is the severity of the oil price drop. There were plenty of petro-states which didn't see the kind of economic devastation Venezuela did when oil prices plummeted. The key difference was that other petro-states had a robust private sector, which not only…
In my view it is a sign more of the fact that Venezuela thought it could depend so much on oil that it failed to diversify rather than a failure of its mode of planning, though that's not without criticism, one would have hoped they learned from the disaster of the USSR's Five Year Plan.
Price controls aren't really a Socialist policy - the Socialist policy in this case would be the gradual change from the production of commodities to the production only of use-values, lacking their exchange value dimension. If price controls are a Socialist policy, then it doesn't take much for Socialism to come about - but that's clearly not what Socialists are talking about when they talk about Socialist policy. Marx, for one, wasn't in favour of price controls to my knowledge. Nor were the other Socialist economists and theorists. I'm not sure where you're getting the idea from other than the oft-repeated myth that Socialism is merely when the government "does stuff".
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#25Earlier quoted context omitted.
It is funny that people accuse the Venezuelan regime of being socialist, but then claim that the problem is that they didn't reshape the economy enough. In other words, their failure was in not planning the economy as much as their critics want! No standard capitalist regime would be able to do that anyway so you have here a clearly bogus criticism.
No standard capitalist regime would be able to do that anyway I'm not entirely sure what you're saying. If you're saying that no pro-capitalist government could have diversified Venezuela's economy, then I completely agree with you. If you're saying that nurturing a market economy in Venezuela would have failed to diversify it's economy, then I have to disagree. Markets tend to diversify on their own as entrepreneurs…
This is unsupported by facts. China has a very tight control on areas that they want to develop or open to outside capital, and their growth has been stunning. On the other hand, undeveloped countries that have open their markets with little oversight have suffered tremendous economic problems, Mexico is a case in point. There is no correlation whatsoever between lax oversight of markets and robust economic growth, as most people tend to believe.
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#26I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…
> Let a healthy private sector self-organize the production of the economy, and let taxes pay for social programs.
The problem occurs when the private sector is so overwhelmed by greed (always) that decides to make social programs part of their market, as can be seen in real time as they try to privatize NHS in the UK.
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#27I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…
And America is showing that if you don't tax wealth enough the inequality causes instability.
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#28I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…
And America is showing that if you don't tax wealth enough the inequality causes instability.
Not disagreeing, just curious. How much taxation is appropriate for the wealthy? When explicitly does the label of wealthy apply?
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#29Taking the long view, the US and its interventionism is to blame for a lot.
https://venezuelanalysis.com/analysis/10112
ps. Here is decent doc by John Pilger synopsising the US's history of interventionism. (Starts at about 38 mins, before that is some stuff from Venezeula from 2007)
Re: How Venezuela went from a rich democracy to a collapsing dictatorship
#30Earlier quoted context omitted.
Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it. Historically I think it's true because broad central planning has generally led to unstable economies. I think the Nordic states best figured out how to provide widespread social programs funded by taxation of market economies - with national programs w…
> Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it. This has been a common complaint, though it's not without response. As to what variables need to be taken into account, there's been discussion that not every product made would have to be. Here's a comment by "Keshav"[0] on Cockshott's input-output t…
I suppose it's reasonable to suggest that if all of the variables in an economy could be identified and quantified, then it could be fed into central planning software.
But that's a very big if.
Furthermore, I'd suggest "If it ain't broke, don't fix it" applies here. We already know markets are good at organizing production, we should use them to do that.
Any social ills that result because or alongside of markets should be addressed directly.