Lessons from Venezuela: Implosion started with land grabs

Despite the Caribbean flavour and tales of our so-called macondian way of life, as described in the novel One Hundred Years of Solitude written by Colombian author Gabriel García Márquez, the miseries of Venezuela could be ascribed to a lack of property rights and a constitution based on the notion of "Patrimonialism". The term was coined by German sociologist Max Weber and refers to a form of governance where all power flows directly from the leader and there is no distinction between the public and private domains.

The news about Venezuela contains stories regarding the scarcity of toilet paper, food, and basic first-hand domestic goods, hundreds of cars lining up to obtain petrol in a country that was one of the biggest oil producers of the world, the thousands of Venezuelans fleeing on foot to neighbouring countries to escape such socialist miseries, and more. All of this results from the absence of property rights for each Venezuelan and State interference that affects almost every aspect of our existence.

Reducing Venezuelans to the condition of servants, however, did not happen by a miraculous vision overnight. On the contrary, the erosion of property rights was conducted gradually, often supposedly to serve the highest causes: decent wages, the restitution of lands for the deprived and forgotten people, the expropriation of powerful corporations so exploited workers could take control, and the provision of homes to the poorest households.

The list of causes could be endless. Chavismo has been more than twenty years in power, promoting socialism as a form of government. To be just, however, the notion of citizenship in Venezuela did started to weaken before the administrations of the late Hugo Chávez (1999-2013) and now with Nicolás Maduro (2013- present). Yes, their decisions led to mass destruction of the country, but the roots of the problems can be traced through Venezuelan history. A history filled with weak respect for the enforcement of property rights.

According to professor Allan Brewer Carias, a well-known Venezuelan academic in the field of Law, the existence of property rights and the principle of economic freedom in Venezuelan laws can be summarized in four stages. The first period ranging from 1811 to 1864; the second period from 1864 to 1914; the third stage from 1914 to 1947; and finally, from 1947 to the present. Following the criteria set by Brewer Carias, the first two periods were characterized by a respect for property rights within the frame of classic liberal ideas. As of 1914 and, more precisely, 1947, the notion of property rights shifted to a new "social function" that limits property to the so-called benefits for the society, the common good. Thus, despite Venezuelan Constitutions formally recognizing the right to property, from a practical standpoint, this right is limited to the convenience and discretion of the officials in charge of government, with there being no existing provision to guarantee the Rule of Law.

If we examine the modernizing project promoted by the Venezuelan elite, intellectuals, politicians and entrepreneurs during the second half of the twentieth century, it is possible to conclude that policy makers and leaders of society believed that the path of Venezuelan development should be paved with significant government intervention framed in Patrimonialism. Thus, as CEDICE-Libertad researcher Isabel Pereira states, during the 1958-1999 period, prior to the arrival of chavismo, Venezuela witnessed the biggest change regarding infrastructure: like never before, new highways, airports, ports, hospitals, schools, universities, houses, aqueducts, electrical power lines, among others came into being.

However, such material improvement was made under the assumption that the private sector was unable to fulfil its role in the economy, and, therefore, to amend this lack effectiveness, the State should supply the necessary tools. With time, the mistrust of the private sector eventually lead to the fall of Venezuelan democratic institutions. The government became so big that nobody could restrain its expansion into a totalitarian system.

To judge the main elements that caused the meltdown of Venezuelan property rights, two elements must be highlighted: land grabs and State ownership of the Venezuelan principal oil company Petróleos de Venezuela, S.A., (PDVSA), and the main mineral resources available in our territory.

Land grabs are perfectly compatible with the roots of chavismo, since such action depicts the essence of the agricultural militarism, a practice common in the history of Latin America. The argument is fairly well known: abusive landlords should be eliminated and the peasants and farmers must grab what belongs to them to compensate for decades of injustice. In practice, during the last twenty years, an estimated 5 million hectares were expropriated by the Venezuelan government during chavismo, according to Fedeagro, a local association that gathers agricultural producers. Most of this land remains unproductive and the title deeds for the lands are not in hands of oppressed farmers. Instead, the government grew bigger and Patrimonialism heightened.

The case of PDVSA is even more delicate. Venezuela is essentially an oil producer country. Most of the wealth created in the nation results from the oil and gas industry, which is monopolized by the State-run company, PDVSA. Culturally speaking, PDVSA is regarded by most Venezuelans "as their own" despite all the shares of the company and the equity structure of the corporation being held within the State structure. Needless to say, when the property of the main source of wealth belongs to a State founded in Patrimonialism and ruled by a government disrespectful of democracy, human rights, and above all, not concerned on the promotion of human dignity and freedom, failure and chaos are guaranteed.

If the Venezuelan citizens were able to exercise their property rights over the main resources of wealth in the country, it is almost certain that the arbitrariness of the government would disappear, or at least be significantly reduced. Nonetheless, insofar as Venezuelans lack significant property rights, the struggle to return to democracy is harder and complex due to the state of helplessness caused by such circumstances. 

Present times demand an awareness for inclusion and respect for human rights, especially in societies filled with mass poverty, as well as the aspiration to dignity and access to better life conditions. The Venezuelan experience tells us it is not through the violation and limitation of private property that such goals can be achieved. Rather, it is through the enforcement, respect and promotion of property rights. We hope, dearest people of South Africa, that you use this as friendly advice on how to avoid undesirable miseries.

Andrés F. Guevara B. is Lawyer and Journalist (UCAB, Caracas) and Master of Science (MSc) in Finance (IESA, Caracas). Member and researcher at the Center for the Disclosure of the Economic Knowledge for Freedom (Centro de Divulgación del Conocimiento Económico para la Libertad, CEDICE), specialized in monetary policy and capital market issues.

This article was first published on BizNews on 05 May 2020
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