Background and rise
In the account Fergus Hodgson gives, Venezuela’s troubles are not merely the work of individuals but of a philosophy, an approach to democratic and economic principles. Hodgson agrees with Bob Zadek’s framing that it is a certain portion of people, motivated by a quest for power and by Marxist ideology, who drove the collapse. That ideology, Hodgson says, was not exclusive to Venezuela: Marxist ideologues infiltrated the country for a long time, particularly from Cuba, and there were thousands of Cuban agents in Venezuela advising and supporting the regime. Hodgson notes that Nicolás Maduro’s chief advisor had worked with Che Guevara in Cuba during the Cuban Revolution. Venezuela on the Brink with Fergus Hodgson (2017)
Hodgson describes how oil was discovered and utilized in the early part of the 20th century, leading the country to become one of the wealthiest in the region, to reach first-world levels of development, and to transition to a democracy in the late 1950s. That dependence on a single element of the economy is what Hodgson calls the resource curse, associated with more corruption and greater political instability. Since the 1958 transition to democracy, Hodgson says, there was a growth in a redistributionist or socialist state and a growing class division.
It was against that backdrop, Hodgson explains, that instability culminated in the 1990s with two coup attempts led by Hugo Chávez, who went to prison, was later pardoned, and then ran for president as an anti-establishment candidate. Hodgson describes Chávez as a student of Fidel Castro, the communist dictator of Cuba for more than 50 years, and says Chávez basically imported that ideology and approach to Venezuela. Over the last 17 or 18 years, Hodgson says, Chávez and his successor Maduro converted Venezuela into a socialist basket case. On the Fraser Institute’s ranking of economic freedom, Hodgson reports, Venezuela is 159th and the lowest in the world of those that can be ranked.
Ben Powell gives a compatible but differently weighted account. He says Hugo Chávez came to power in 1998, democratically elected — not through a military coup. Chávez had tried a military coup a few years earlier and ended up in jail, but was then popularly elected, with international observers all saying it was a fair election. He was re-elected, put in a new constitution, and pushed his unique brand of what he called Bolivarian socialism in Venezuela. Socialism… Still Not Cool (2019)
Economic hollowing and the oil cushion
Powell’s account emphasizes that for a while things looked as if they were okay. Bernie Sanders was saying nice things about Venezuela in the 2000s. What was actually happening was that the economy, because of the socialist policies being put in place, was getting hollowed out: food production was dropping and production of lots of things was dropping, while food imports increased to keep the country well-fed.
The cushion, in Powell’s telling, was oil. Venezuela sits on the world’s largest oil reserves, and prices were very high for a while, remaining high right up until Hugo Chávez’s death in 2013. Since then, oil prices started going down, and oil production in Venezuela also went down because the state nationalized oil company did not have the right incentives to maintain production. With production down and prices down, the government could no longer pay for the goodies to import and hand out, and Venezuela collapsed into a mess.
Hodgson’s picture of the present is equally stark: the country has reached hyperinflation, and an average salary there is about $30 per month. He says that when he hears headlines saying Venezuela is on the brink or is going to collapse, he thinks it is already there. Hodgson also states that the Supreme Court of Justice has already annulled the parliament, so that basically it is a dictatorship — though, he adds, it was already a dictatorship before that.
Democracy, coercion and repression
Where Hodgson stresses that dictatorship predated the annulment of the parliament, Powell narrates a sequence in which the democratic phase gave way to repression as economic dysfunction became obvious. Powell recalls that this was democratic socialism — Hollywood celebrities, Oliver Stone and Sean Penn, were praising Hugo Chávez and saying this was democratic socialism in action. But once the economic dysfunction was realized and obvious to everyone, people no longer supported the regime, and they were not allowed to throw it out democratically anymore.
Powell points to Maduro’s re-election a year before the interview, in a year when people lost an average of 24 pounds because the Venezuelan system could not feed them. You do not, he says, win a popular election when your population is starving. What Maduro did, in Powell’s account, was coerce state employees to vote for him, on pain of losing their jobs, and hand out food aid at the polling places to buy off votes. The result was a sham of an election; the parliament declared an interim president in opposition to Maduro, as Powell says they were constitutionally allowed to do, and Maduro did not let him take office and used the military to crack down. What started as democratic socialism, Powell concludes, ends up being merely socialism, because of the necessary connection between economic and political freedoms.
Powell generalizes the mechanism: socialism by its nature — government ownership of the means of production — creates bad incentives and lacks a price system to convey information about how to plan the economy, so the necessary result is economic stagnation and collapse. People do not like stagnation and collapse, so they oppose the regime; but implementing socialism requires centralizing power to plan the economy, and once power is centralized the means for political repression are available. That, he says, is why socializing the means of production always leads to political tyranny.
Zadek draws the broader conclusion from Powell’s account: once a government can control the economy, it has maximum control over the population — the power to determine who eats and who is free — and will never give that power up. On his framing, socialism is a tool, albeit an economic one, for transferring power over us from ourselves to the government, and it has coercion as an essential ingredient: it is never voluntary.
Across episodes: two treatments of Chávez
The two episodes do not so much disagree about Chávez as frame him differently, and the excerpts show a shift in emphasis rather than a developed argument between them. Hodgson treats the Chávez and Maduro years as a continuous ideological project, locating the roots in Marxist infiltration from Cuba and noting that Venezuela was already a dictatorship before the Supreme Court annulled the parliament. Powell, speaking two years later, narrates a sequence — democratic election in 1998, Bolivarian socialism, economic hollowing masked by high oil prices until Chávez’s death in 2013, then collapse, sham election and military crackdown. The question both treat is how a resource-rich democracy reached its present state; Hodgson advances the ideological-infiltration answer, Powell the incentive-and-centralization answer.
What the sources do not cover
The excerpts do not give Chávez’s birth or death dates beyond Powell’s reference to his death in 2013, nor his military rank, the name of his party or movement, or the details of the 1990s coup attempts beyond Hodgson’s statement that there were two and that Chávez went to prison and was pardoned. Neither excerpt states the name of the constitution he introduced, the terms of the 1958 transition, or the specific constitutional provision the parliament invoked in declaring an interim president. The excerpts also do not describe the Fraser Institute’s methodology beyond its ranking of economic freedom, and Hodgson’s final exchange breaks off before he responds.