Venezuela must choose between capitalism and chaos

REUTERS/Marco Bello

The role of the economist—to point out the  unsuitability of central planning as a means to attain the level of welfare all countries seek—Mises characterized as a “thankless task, [as] most people are intolerant of any criticism of their social and economic tenets… [and] do not understand that the objections raised refer only to unsuitable methods and do not dispute the ultimate ends of their efforts” (Mises 1944, i).

But in circumstances such as the ones in Venezuela today, this task is both thankless and utterly disheartening.  A series of recently published photographs and a Reuters inquirypresent a heartbreaking summary of the current situation in the South American country, three years into Nicholas Maduro’s regime that followed and continued the 14 years of Chavez’s socialist welfare programs. Other stories of the struggles of the once-middle class show that Venezuela's future looks grimmer than imagined in 2013, when the current events were just beginning to unfold.

“My brother, a lawyer who once had a fat neck, nodded. “We don’t even have the mangoes to round off dinner,” he said. I looked at the tree. We live on the third floor, so we’ve always been able to grab its highest fruits fairly easily. In season, they usually go to waste. This year, the tree’s already bare. […]

I dream of a supermarket with fully stocked shelves. That usually happens after a long day of standing in line in the sun at a store, hoping for a delivery truck to arrive. Coffee and milk became luxuries for me a few years ago, but the really scary scarcity — of things like bread and chicken — hit my middle-class home at the beginning of this year. There was a week when I had to brush my teeth with salt.”

REUTERS/Marco Bello

There are no further arguments and explanations to be added to what we already knew about Venezuela’s fate three years ago. All that’s left is to issue once more the same warning: Venezuela’s situation only seems far removed from that of advanced economies; but the difference between it and the rest of the world is one of degree, and not kind. In a few decades, any country can spiral out of control if the policy choices it makes lead it closer and closer to socialism. And any country can pull itself into prosperity in an equally short amount of time—just look at what Singapore was able to achieve with fairly free (but far from ideal) markets since 1965.

There is indeed no other option, but a mere back-and-forth between these two possible scenarios. In Mises’s words, “There is no third system between a market economy and socialism. […] The choice for mankind…  is between capitalism and chaos” (Mises 1944, 63; 55). And as Venezuelans are slowly trying to set up a referendumto remove Maduro and his regime, they are indeed facing this very choice. 

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