I don’t know much about Venezuela, but I do know that the late Hugo Chavez has been pilloried as a source of instability, particularly for his socialist reforms. This is true despite the fact that Chavez’ power has always been acquired through elections as free and fair as any in recent Venezuelan history, while his opponents launched a coup to end his first stint as head-of-state.

So why is that? Could it be that he came to power fairly but implemented such bad, harmful, and/or tyrannical policies that a coup was justified?

Even granting that Hugo Chavez had participated in an unsuccessful 1992 coup intended to instal Rafael Caldera as Venezuelan head-of-state (and the fear of violence that might generate among his opposition after he was elected), Al Jazeera doesn’t think so. While they do blame Chavez for certain decisions, they do not find general blame in a socialist approach to economic policy … nor do they find it in any capitalist approach. What they find instead is both interesting and, for those with a good understanding of economics, fairly predictable.

They new article they have up argues that the economic troubles of Venezuela, which cause so many other troubles, are largely traceable to the perils of an economy thoroughly dominated by a single, valuable export commodity. The phenomenon has been seen in many places, and when a fungible commodity’s price rises and falls on the international market it does have potentially terrible effects on other local markets and even other exports (through effects on the local currency, in this case the Venezuelan Bolivar). There have been some other causes of Venezuela’s woes, but Al Jazeera argues that these are as likely to be the fault of Chavez’ capitalist opposition as it is to be the fault of Chavez:

Long before Chavez took office in 1999, there were two Venezuelas: “the Venezuela that benefits from oil, and the Venezuela that remains in the shadow of the oil industry” as veteran Venezuela analyst Miguel Tinker Salas puts it.

The benefiting elite, from which the core of Venezuela’s opposition emerged, rightly recognised that Chavez’s promise to redistribute the oil wealth to the marginalised majority was sincere. But they also instinctively understood that Chavez wanted to rewrite the national narrative without the rich, white, educated, Western-facing elite as its heroes, thereby also robbing them of the social status that reproduced and ring-fenced their material wealth.

It is this cultural threat that explains the ferocity and durability of elite rage and obstructionism: staging the 2002 coup even though Chavez’s democratic legitimacy was undoubted and then organising a devastating, management-led oil strike at a time when his economic policy remained more reformist than radical.

By his own account, it was the implacability and intransigence of this elite, bequeathed to him by Venezuela’s capitalist history, that drove Chavez towards the idea of a more radical 21st-century socialism in 2005.

…

Companies and wealthy individuals have also always had the clearest means and the most capital to invest in the large-scale currency arbitrage that has been bleeding Venezuela dry for over a decade.

But the effects of oil dependency extend far beyond a particular group or class. As one of the architects of Venezuela’s social-economy drive puts it, the pervasive culture has always favoured “living off government transfers of [oil] rents instead of deservedly enjoying the fruits of productive work.”

It was interesting for me to read that last bit and remind myself of an important truth. Although the largest proponents of capitalism love to rant about how socialism rewards not working, the biggest rewards under capitalism (almost) always go to those who have money already, whether they work or not. Yes, there’s always an Oprah or JayZ in every generation who works relentlessly for decades to join the plutocratic class, and yes there are new-industry booms where families with money but who aren’t at the level of the plutocratic class (the Gates family, for instance) are able to parlay a combination of capitalist connections and hard work for a decade or (at most) two into new plutocratic citizenship, but the entire point of the capitalist dream is to not work, to make one’s millions (or billions) and then let the money replenish itself, almost magically, with no work required.

It seems in Venezuela, there is truth to capitalism’s anti-socialist mythology but just as much to the socialist critique of capitalism. “Living off government transfers of [oil] rents” is a grand capitalist tradition, one Trump is encouraging today. Venezuela’s sin in the eyes of the capitalists is merely that they don’t think that only the plutocrats should benefit from those rents. I find myself on the socialist side in that fight.

But the real solution isn’t that easy. I know almost nothing about monetary policy, but from where I sit the constant swings of the Venezuelan Bolivar are clearly a problem for all its industries, and pegging the Bolivar to the Euro or the USDollar would clearly have some real benefits. Maybe the downside would outweigh those benefits, but the current monetary policy isn’t working.

If this much interests you, go read the entire Al Jazeera piece. There are some important parts in there about the practice, the cycles, and the damage of currency arbitrage plus attention to a few other important factors.

While you’re there, you might also want to read this short piece on the unrest in Nicaragua. It won’t give you anything like the depth of the piece on Venezuela, but it does catch you up on the recent facts on the ground where the government has probably killed 80 or more protestors over the last several weeks.