Fracas in Caracas

Yesterday, Venezuela picked an heir to Hugo Chavez, who was president of Venezuela from 1999 until his death this March.

Nicolás Maduro, a Chávista in orientation, won a very thin—now contested—victory, underscoring how divided Venezuela remains on the record of the late Chavez. Chavez has been controversial outside of Venezuela, too.  Some argue that his socialist policies worked better than expected for Venezuela; others, that they didn’t work at all.

Writing in the GuardianMark Weisbrot, co-director of the Center for Economic and Policy Research, argues that “there were major improvements in Venezuelans’ living standards during the Chávez years,” with poverty “reduced by half and extreme poverty by about 70%.” A more common view is that of the Associated Press, which points out, “Venezuelans are afflicted by chronic power outages, crumbling infrastructure, unfinished public works projects, double-digit inflation, food and medicine shortages and rampant crime—one of the world’s highest homicide and kidnapping rates.”

Peter Drucker would have been among the doubters of Chávismo.  As he succinctly put it in Managing in the Next Society, “Historically, state socialism has failed to produce wealth or efficiently provide social services.”

In this case, he may have expected Venezuela to be regretting its expropriations of oil company assets, since what Drucker had seen of government expropriations of private enterprises in years past had produced regrettable results. “Every one of these moves was wildly popular among the workers of these enterprises,” Drucker observed in Management: Tasks, Responsibilities, Practices. “Every one released a flood tide of enthusiasm. But as soon as the managers, professionals, and technicians departed or were thrown out, productivity collapsed and was not restored until managers and professionals returned.” Venezuela, by contrast, still seems to be making plenty of money off of its expropriated oil assets.

Late Venezuelan President Hugo Chavez
Venezuela’s late president Hugo Chavez

Drucker also may have been surprised to see such a forceful return to policies once considered obsolete. When Drucker was writing a preface to a new edition of The Age of Discontinuity in 1978, the developing world had gone from hostility to friendliness toward the multinational corporation. “Laws passed with great fanfare a decade ago to exclude, or at least to limit, the multinational—for instance the Andean Pact legislation of the countries on the west coast of South America, from Venezuela to Chile—have either been repealed or are being quietly shelved,” he noted. Now they are being taken off the shelf once again.

In any case, Drucker would not have expected the United States to intervene much in Venezuela’s affairs, no matter how much Caracas proceeds down a socialist path. “Expropriation and default have become infinitely more common in developing countires than they were in the late 19th and early 20th centuries,” Drucker wrote in The New Realities. “But there is no more ‘gunboat diplomacy.’”

What do you think we should make of the continuation of Chavez’s policies in Venezuela?