Chavez is on his deathbed. (But, of course, the state is in denial.)
Latin America has indeed witnessed a turn to this postmodern left in some countries… Venezuela is not a model for the region; rather, its path is unique, the product of a natural resource curse that makes it more comparable to Iran or Russia than any of its Latin American neighbors. Chavismo is not Latin America’s future — if anything, it is its past.
How did Venezuela end up at such a pass? The answer is oil, oil, oil.
The country’s modern political order was negotiated in a Miami hotel room in 1958 by leaders of its two traditional political parties; the resulting pact created a viable democracy that provided stability for four decades. But stable politics did not make for sound economics. With the growth of oil revenue through the 1970s, Venezuela was relieved of the need to create a modern non-oil economy. Commodities that the country once exported — such as coffee and sugar — soon withered. And rather than foster social mobility or strong public institutions, the two political parties bought social peace by distributing oil rents through subsidies, government jobs and patronage.
Venezuela did not suffer the Latin American debt crisis of the 1980s, a trauma that in many ways inoculated countries such as Brazil, Mexico and Peru from relapsing into the worst forms of economic populism. Instead, Venezuela experienced a disastrous decline in living standards as oil prices fell during the 1980s. The country had never been part of the global economy — aside from the energy sector — and had no competitive industries to fall back on. Chávez and others on the left blame Venezuela’s problems on globalization and “neoliberal” economic policies, but with the brief exception of the opening attempted by President Carlos Andrés Pérez in the late 1980s and early 1990s, the country never truly sought to globalize its economy.
There is more continuity between the pre-Chávez and Chávez eras than proponents of either would like to admit. The recent rise in oil prices has again exempted Venezuela from the laws of economics. The Chávez government has imposed a blizzard of regulations controlling the exchange of currency, setting prices, limiting the ability of employers to hire and fire, and mandating trade and investment deals based on political considerations — all of which further undermine Venezuela’s weak private sector. Yet, because of its hefty oil revenue, Venezuela’s economy has grown sharply over the past two years. The irrationality of Chavistanomics will not be felt until oil prices fall.