Venezuela is learning the hard lesson Cuba learned decades ago. They could have easily avoided this if they listened to those who warned them, but they refused to believe they could fall into the same trap. “Chamo, we’re not like you Cubans,” one Venezuelan friend told me a decade ago. “If Chavez pushes it too far,” he confidently proclaimed, “we’ll kick his ass out.” Fast forward to today, and here we are.
As it is often said, those who fail to learn from history are doomed to repeat it.
What “Made in Socialism” Means to Venezuelans
The Brand That Marks the Path of Economic Destruction
Socialism is any system that restricts or infringes upon the free exercise of human action or entrepreneurial role, and that is justified in the popular, political, and scientific discourse as a system capable of improving society and accomplishing a set goals and objectives that are considered to be good. — Jesús Huerta de Soto
Socialism is not what it claims to be. It is not the pioneer of a better and more beautiful world, but rather the destroyer of what thousands of years of civilization have painfully created. It builds nothing and demolishes everything. If it were to triumph, it should be named destructionism, because it is, in essence, destruction. —Ludwig von Mises
“Made in Socialism” is a Chavista slogan stamped on Venezuelan products that points to a dysfunctional system: while the company that manufactured the good nominally has a private owner, he has no control over it.
In Venezuela, a company can no longer freely dispose of its own assets when, pursuant to the Organic Labor Law, the government decides to occupy it “temporarily.” Instead, a new Board of Directors composed of government officials runs the firm.
As a result of direct intervention, consumer goods become scarcer, even though they continue to be produced by the same company.
Shortages in Venezuela amplified after last year’s seizures. Even then, many now-occupied companies already suffered from the government’s exchange and price controls. By definition, controls create distortions in the economy, such as scarcity.
Behind the “Made in Socialism” label lies a long list of companies that have fallen under this regime and whose products have become harder and harder to find.
The hostile economic conditions turned them into victims, forcing them to either halt production or reduce them to a pace from over a decade ago.
The socialist regime’s desire to plan and control everything is clear in the countless measures enacted over the years, such as price and foreign-currency controls, increased taxes, restrictions on foreign investment, and labor laws.
As Rey Juan Carlos University professor Jesús Huerta de Soto is fond of stressing, this is a fool’s errand. The day-to-day operation of a company cannot be learned overnight. The entrepreneurial knowledge needed for such a task is practical in nature and dispersed among economic agents. It’s not a form of information that can simply be gathered and transferred to a government entity.
In a free market, entrepreneurial knowledge as well as innovation are constantly evolving. Therefore, it is impossible to seize it, sum it up, and hand it over to some government officials.
As a Venezuelan, I can tell you one does not need a full grasp of leading anarcho-capitalist theories to understand the current state of affairs.
What all Venezuelans witness every day serves to show socialism does not work: long lines outside stores; the shortage of basic consumer goods; spiraling inflation; not being able to shop when one needs to but rather when the government allows you; resorting to barter (for instance, trading shampoo for coffee); having to buy from bachaqueros (middlemen) on the black market, and so on.
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