Working-Class Response to Devaluation Measures in Venezuela

[Die Neue Zeit]

http://www.socialistproject.ca/bullet/773.php



By Michael Lebowitz

WWe agree that the government decision to devalue the Bolivar can be an important step toward providing greater funds for social programs and the state budget at all levels, reducing the unacceptable current level of imports, encouraging the development of exports other than oil and helping to create the conditions for new national production. However, by itself the burden of the devaluation measures will fall upon the working-class. Therefore, to break clearly with the neoliberal model, it is essential that the government supplement its devaluation decision by accepting the following proposals.

Our proposals are based on four central principles:

1. The organized working-class must not pay.
2. The people in general must not pay.
3. Capital must pay.
4. We need to take definite steps that move in the direction of socialism.

We understand that these steps necessarily will involve a combination of long-term and immediate measures. We focus below on the first two of these principles, as principles three and four are not separate but must be present everywhere.

Cost-of-Living Adjustment and Transparency

1. The government has recognized the inflationary effect of devaluation by agreeing to increase the minimum wage. However, only on the basis of theoretical assumptions about market processes (assumptions which are not relevant in the Venezuelan economy and which at best are only operative in the long run), would the increase in the minimum wage provide any protection for the organized working-class. Accordingly, we demand a law which ensures that all existing collective contracts must include a cost-of-living adjustment which increases at the same rate as the minimum wage. Such a law would establish through state action what the market will not do; it also would act as an encouragement to workers to form trade unions and achieve collective contracts. Of course, such a law could be an incentive for capitalist employers not to sign collective contracts with trade unions. Therefore the law should include a tax on all companies without collective contracts. That tax would exceed a cost-of-living adjustment, and distribution of part of the proceeds of that tax would go to the trade unions for distribution among their members. The remainder of this tax would be available for a refund to the companies upon the signing of a collective contract. Note that all state companies would need to comply with this law, and that ministers would be required to report on their compliance to the vice president of the country.

Of course, introduction of a tax upon capital is always subject to evasion and the denial on the part of capital of its ability to pay. Therefore, transparency is essential for taxation policy to be effective. This transparency can be achieved in two ways: firstly, by opening the books of the companies to the workers. Secondly, by increasing transparency directly to the government. The easiest way for the second would be to compel all firms which receive dollars through CADIVI (Comisión de Administración de Divisas – Commission for the Administration of Currency Exchange) to maintain their bank accounts in state banks. (At present, they can place this money in any banks that they wish – including foreign banks.)

In addition to providing government with the necessary information, this would be an important step in ending the generation of private profits from the people's money. As part of a general move toward removing state support of private bank profits (including ending state deposits in private banks), it would also reduce both the strength and the market value of the private banks and thus would be an essential step toward bringing the entire financial system under the control of the government. The combination of transparency to the government and the ability to monitor the books by the workers would prevent capitalist blackmail.

Role of Workers Councils

2. The government has taken very important steps toward protecting people in general from inflationary effects of devaluation. We're referring here to restrictions on price increases, the expropriation of the distribution chains which can serve as a government alternative, and the clear announcement by Minister Saman that the government intends to import goods itself to compete with the private monopolies. These are definitely steps in the direction of substituting state control of foreign trade for the current private monopoly and stranglehold. We think that these measures, though, must go beyond announcements and sporadic enforcement; we believe that they can only be effective if combined with the initiative of people in communities who can monitor the prices being charged and the behavior of private distributors. Accordingly, to encourage that initiative from below, we think that there should be legislation which enables local communities through communal councils and communes to confiscate goods which are being sold at excessive prices. The goods would then be sold by the communities at a just price and the proceeds would go to communal banks to finance local improvement and development.

This immediate combination of vigorous action from above and below is necessary to reduce inflationary pressures as a result of devaluation. However, in itself it does nothing to reduce the already elevated prices of capitalist firms. We need to look at the level of profits and their contribution to high prices, and we need to find ways to increase the efficiency and productivity of existing enterprises in order to make possible lower prices. Accordingly we propose opening the books to workers councils and allowing workers councils to introduce measures which can reduce waste and increase efficiency and productivity. Where firms resist making this information available and allowing workers to introduce solutions in the interests of society, they should be taken over so they can act in the interests of society as worker managed state-owned firms.

With these measures, which include cost-of-living adjustments for all organized workers, ending private profits from the people's money, opening the books of the companies, giving communities the right to confiscate goods and to use the proceeds of their sales at just prices, empowering workers councils to reduce inefficiency and increase productivity and nationalizing firms which do not act in the interest of society, we think Venezuela will both protect the working-class from the negative effects of devaluation and also will take clear steps in the direction of building socialism for the 21st century. Not to act on such proposals, on the other hand, will be to reinforce neoliberalism and the capitalist economy.

[ckaihatsu]

Sounds like a liberal's wet dream -- they should be crashing down the doors of Washington, waving this around as a blueprint...(!)

[Raúl Duke]

A socialist in Canada wrote that and it was presented it seems to a socialist conference that perhaps was in Venezuela. But my question is, are there movements in Venezuela taking actions in regards to this devaluation?

[tuwix]

If they are, they are right-wing ones. The left is bought by Chavez. Maybe their Zeitgeist Movement is against but they don't consider themselves as leftists although are adcocating classless society without property.

[sixdollarchampagne]

A socialist in Canada wrote that and it was presented it seems to a socialist conference that perhaps was in Venezuela. But my question is, are there movements in Venezuela taking actions in regards to this devaluation?

There are revolutionaries in Venezuela that are not chavistas, but I think their groups must be quite small and without much influence. I am currently translating a statement about the devaluation by a Trotskyist group in Venezuela; the beginning of their statement is on my blog.

It would be interesting to hear what the Chávez-worshippers think about this measure, which was reportedly signed by Chávez himself and has been endorsed by the chavista Vice President, Nicolás Maduro. Leftist critics of Chávez describe the devaluation as a typically capitalist, anti-worker, anti-popular measure.

I would be willing to bet that the devaluation of the bolívar, particularly in a country that imports a lot of its food, IIRC, is going to hurt workers and the poor, which would suggest that the devaluation strikes at the claim that the chavista government is "revolutionary."

EDIT: According to the internet, Venezuela imports "two thirds" or "70%" of its food, so the effect of the devaluation could certainly be described as "anti-popular," I believe.

[Clarion]

It's a stealth tax on the poor.

The idea that capital can be made to pay while the working class escape is fantasy. Capitalists pay tax towards collective class interests but for capital the paying of tax is largely optional and no amount of transparency can change that. Any attempt to actually force the issue would just lead to capital flight, which helps no one.

Corporations don't pay tax, people do. By adding to the cost of doing business, taxes on corporations are paid by the workers as workers (as it effects the demand for labour and hence wages), by the workers as consumers (prices) and, yes, occaisionally to some extent by the capitalists.

[Sinister Cultural Marxist]

Aren't devaluations going to be inevitable since it's still at heart a market economy? That's one of the whole contradictions of social democracy & radical reformism - you're pushing for socialist change, but you need to implement policies that ensure the efficiency of the market and the wellbeing of capital since the distribution of goods in the economy is still grounded in the capitalist system.

Its impact on workers depends on what happens with their wages and with consumer prices after the devaluation. Will state employees get an equivalent raise? Will the minimum wage go up? Will the prices of goods skyrocket? I seem to remember a minimum wage increase following the last one.

[--Navarro--]

Aren't devaluations going to be inevitable since it's still at heart a market economy? That's one of the whole contradictions of social democracy & radical reformism - you're pushing for socialist change, but you need to implement policies that ensure the efficiency of the market and the wellbeing of capital since the distribution of goods in the economy is still grounded in the capitalist system.

Its impact on workers depends on what happens with their wages and with consumer prices after the devaluation. Will state employees get an equivalent raise? Will the minimum wage go up? Will the prices of goods skyrocket? I seem to remember a minimum wage increase following the last one.

Agreed, same goes for Argentina to an extent, and, in the future, for Ecuador (possibly).

[tuwix]

It's a stealth tax on the poor.

I think it is just a neoliberal myth. The most damaged by infalation or devaluation are the richest ones. The one who has more is damaged by it. The one who has nothing, he has naothing to lose. This is why the richest like austerities so much, and the austerities are exactly against inflation, and the poorest ones pay the greatest price for austerities.

[Clarion]

Who is more sensitive to the price of food and cheap consumer imports, the rich or the poor?

[Die Neue Zeit]

Corporations don't pay tax, people do.

Now that I've thought about it, though this notion of having special taxes on non-unionized companies might sound good on the surface, I recall agreeing with a leftist outside this board who actually advocated scrapping corporate income tax, and shifting all progressive income taxation to individual persons. This tax proposal by Lebowitz would not be consistent with that prior agreement.

[tuwix]

Who is more sensitive to the price of food and cheap consumer imports, the rich or the poor?

It is not the case of Venezuela. Besides food can and is subsidised. The price of food can be lowered by subsidies. But caring only about inflation is one of main causes of unemployment.