Caracas Chronicles on the business climate under Chavez:
You could be forgiven for thinking this is it, the start of a drive towards mass nationalization of basically everything. You’d be wrong. Food Minister Felix Osorio stresses that the government has no intention to do away with the private sector, explaining they don’t mean to take over every company, just the bad companies.
Which, in many ways, is worse. Because, how are you to tell whether the government will one day decide your company is bad? You can’t. And given that you can’t, why would you devote scarce resources to investing in a business that could be taken from you at any time? You wouldn’t.
Instead of Socialism, what Venezuela is getting is a kind of Zombie Capitalism: a capitalism of the damned, run by firms that can’t invest, can’t grow, and can’t decide. A schizophrenic capitalism where the state blames the profit motive for all of society’s problems in one breath and gives assurances that it has no intention of doing away with private enterprise in the next. A panicky, insecure capitalism where firms get to remain private “por ahora” but managers are keenly aware that they’re deeply reviled, endlessly scapegoated, and that they could be expropriated at any time, for basically any reason, and with no prospect of a fair appeal.
Venezuela’s private sector isn’t dying; it’s undead. Firms aren’t free to do any of the normal things firms do that generate social welfare. They can’t strategize, or innovate, or invest, or create jobs and economic dynamism. But they can’t just out-and-out die either, because if they stop operations then they certainly will be expropriated. In fact, all they can really do is keep on lumbering onward like the hyper-controlled, totally emasculated zombies they’ve become.
In many ways, proper socialism would be far preferable…
Well, it’s just a matter of time, isn’t it?