Maduro acknowledges his socialist delusions

Venezuelan leader Nicolas Maduro’s quiet move to restore elements of free enterprise to his nation’s economy should serve as a cautionary tale for anyone listening to Sen. Bernie Sanders’ siren song of socialism in the Democratic primaries or who is still tempted by promises of socialist bliss.

Maduro’s move represents a desperate attempt to dampen public outrage, and thus maintain his grip on power, in the midst of an astonishing economic collapse that economists view as the world’s worst in decades in the absence of war.

Venezuela’s tale is hardly a unique one. In recent decades, socialist nations across the world have scrapped their doctrinaire visions and incorporated elements of free enterprise to rescue their ailing economies. Perhaps most striking, a post-Mao China opted for a more market-based economy as Deng Xiaoping conceded that his nation could not otherwise compete with the United States.

Maduro’s bow to reality is particularly instructive. It comes a decade after the Great Recession and financial collapse of 2008 and 2009 shook confidence in capitalism and emboldened the proponents of socialism and other alternative models. With that crisis long over, however, capitalism has again proved its mettle by nourishing more prosperity and higher living standards while Venezuela’s economy continues shrinking at an alarming rate.

“The fight for survival has forced the [Venezuelan] government to become pragmatic,” Ramiro Molina, an economist at Caracas’ Andres Bello Catholic University, told the New York Times. “Only the narrative is still socialist.”

In grad school, my Comparative Economic Systems prof spent 2 years in the USSR studying their system. Two examples illustrate some of the problems with a planned economy.

1. He became good friends with the person in charge of the Trans Siberian Railway. He was coming to the end of a (at the time) 5 Year Plan time period. He was millions of metric ton miles short of his quota, which means an all-expense paid one-way trip to Siberia. So, he loaded up 80 gondola cars with rocks and ran the trains back-and-forth between Moscow and Vladivostok until he met the quota.

2. Most farmers worked on collective farms, but later in the regime, they allowed the farmers to have about two acres (dacha??) to grow what they wanted and they could sell what they didn’t consume. Those small plots produced about 2/3’s of what the Russian families ate.

The message is clear: Free markets provide what people want, not some bureaucrat. If you like the way your license branch is run, you’re gonna love Socialism.

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