In today’s episode of the Telos Press Podcast, David Pan talks with Antonio Lecuna about his article “Populism in Venezuela: The Nature of Chavismo,” from Telos 195 (Summer 2021). An excerpt of the article appears below. If your university has an online subscription to Telos, you can read the full article at the Telos Online website. For non-subscribers, learn how your university can begin a subscription to Telos at our library recommendation page. Print copies of Telos 195 are available for purchase in our online store.
Populism in Venezuela: The Nature of Chavismo
Antonio Lecuna
The situation in Venezuela is spinning out of control. The economy is shriveling at double-digit rates, corruption is generalized, and the nightmare of hyperinflation has returned with a vengeance. What happened? The difficulties suffered during the Chavismo era were predictable consequences of the policy choices of the past six decades. These policy choices led to the populist principles underlying Chavismo, which prioritizes the struggle against individual poverty and social exclusion at the expense of institutionalization and fiscal discipline.
Populist Venezuela
With populism as a common ground, the following two distinctive periods divide the last half-century: Puntofijismo (1959–98) and Chavismo (1999–present). The Punto Fijo Pact, or Puntofijismo, became a powerful subsidized coalition between the two dominant parties, i.e., the Democratic Action Party (AD) and the Social Christian Party (COPEI), which governed without competition through compromise and shared spoils.[1] The AD represented the workers and peasants and advocated for state intervention and land redistribution, whereas the COPEI represented the interests of the church, businesses, and the social elite.[2]
Long before Chávez or Maduro, the presidencies of Rómulo Betancourt (1959–64), Raúl Leoni (1964–69), and Rafael Caldera (1969–74) were considered populist. Betancourt implemented aggressive land reforms aiming to break up large landholdings, Leoni cemented the infamous import substitute industrialization (ISI) policies, while Caldera rendered the Venezuelan economy more inward-looking and required that all private companies have majority ownership by Venezuelans.[3] After the first decade of Puntofijismo, somewhere between President Carlos Andrés Perez (1974–79) and President Luis Herrera Campins (1979–84) with the nationalization process of the oil industry, populism intensified and shifted into second gear when the two parties succumbed to the corrupting powers of petrodollars.[4]
Subsequently, in late 1998, at the epicenter of a complete lack of authority and legitimacy, populism became increasingly more radical when a young Hugo Chávez swept the presidential elections. To some individuals, the divine presence of Chávez represented the only hope for the desperately poor and a shining champion of the radical left, which refuses to die in Latin America. To other individuals, Chávez was a Marxist-Communist totalitarian with no intention of stepping down from power or releasing institutional control over the oil riches.[5] Chávez has been called the new Bolívar, Castro’s successor, an authoritarian dictator, a charismatic leader, a crafty politician, a buffoon, and, above all, a ranting populist.[6]
The Chavismo phenomenon is unquestionably populist because it “relies on a charismatic mode of linkage between voters and politicians, a relationship largely unmediated by any institutionalized party, that bases itself on a powerful, Manichaean discourse of ‘the people versus the elite’ that encourages an ‘anything goes’ attitude among Chávez’s supporters.”[7] Populism has been particularly active in Latin America. The growing list of legendary populist presidents includes Juan Domingo Perón (1946–55, 1973–74) and Néstor Kirchner (2003–7) in Argentina, Getulio Vargas (1951–54), João Goulart (1961–64), and Lula da Silva (2003–10) in Brazil, and Luis Echeverría (1970–76) and Manuel López Obrador (2018–) in Mexico.
Classical Latin American populism undergoes four phases. [8] During the initial phase, e.g., first decade of Puntofijismo, real wages and demand increase, while strict price controls and the prevention of shortages of subsidized imports suffocate inflation. After this phase, real wages continue to rise, but the strong domestic demand and subsidies on wage goods generate a foreign exchange constraint. During the third phase, e.g., Chavismo with Chávez, shortages and strict controls become a real threat to stability, real wages and private investments start to decline, and fiscal indiscipline deteriorates the deficit at an accelerated pace. During the final collapsing phase, e.g., Chavismo with Maduro, corruption becomes generalized, brain drain paves the way to a sudden burst of capital flight, and high inflation escalates into hyperinflation. Although Venezuela has a long history of populism, it has never reached the collapsing fourth phase. The Chavismo phenomenon, currently led by Nicolás Maduro, bears this shameful honor.
As predicted by the collapsing fourth phase, the institutional deficiencies in Venezuela generalized corruption at all levels of government. According to Transparency International, which is the global organization leading the fight against corruption, Venezuela’s corruption perception index (CPI) has worsened from a very low starting point of 26 in 1999 to 16 in 2019 (the CPI ranges from 0 to 100, with lower scores corresponding to worsening corruption ratings). Venezuela is considered the 173rd (of 180) most corrupt country. The “Control of Corruption” indicator by the World Bank Worldwide Governance Research Dataset, the “Ethics and Corruption” index of the Global Competitiveness Report by the World Economic Forum, and the “Freedom from Corruption” index by the Heritage Foundation corroborate that corruption in Venezuela has severely worsened since the Chavismo populist movement took office two decades ago.
If rampant corruption were not enough, in December 2016, Venezuela became the eighth Latin American economy to meet the criteria required to qualify for hyperinflation (i.e., monthly inflation rate exceeding 50 percent per month for thirty consecutive days), in addition to Chile (1973), Bolivia (1984), Nicaragua (1986), Argentina (1989), Brazil (1989), and Peru (1988 and 1990).[9] How did this happen? Monetarists consider inflation to be a problem caused strictly by a surplus supply of money and excess demand for goods and services,[10] which is a typical trait of Latin American left-leaning expansionary populist administrations. Similarly, Keynesians argue that inflation is the consequence of three pressures in the economy: (1) demand-pull inflation that results from an increase in demand, such as extensive government spending; (2) cost-push inflation that results from a rise in production costs, such as higher minimum wages; and (3) built-in inflation that partly results from the vicious circle that is created by people’s expectations concerning higher prices and by the inertia of high inflation in the recent past.[11] In all three types of Keynesian pressures, inflation is likely to increase with expansionary populist policies.
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* I gratefully acknowledge the critical comments and/or encouragement of Russell A. Berman and Michael C. Munger. Their contributions improved immeasurably this paper.
1. Ronald D. Sylvia and Constantine P. Danopoulos, “The Chávez Phenomenon: Political Change in Venezuela,” Third World Quarterly 24, no. 1 (2003): 64–65.
2. Oliver Heath, “Explaining the Rise of Class Politics in Venezuela,” Bulletin of Latin American Research 28, no. 2 (2009): 188.
3. Hugo J. Faria, “Hugo Chávez against the Backdrop of Venezuelan Economic and Political History,” Independent Review 12, no. 4 (2008): 522–23.
4. Pedro Sanoja, “Ideology, Institutions, and Ideas: Explaining Political Change in Venezuela,” Bulletin of Latin American Research 28, no. 3 (2009): 400.
5. Antonio Lecuna, “Subnational Atomization as a Factor of Increasing Corruption in Venezuela,” Revista Iberoamericana de Estudios Municipales 17 (January–July 2018): 7.
6. Sylvia and Danopoulos, “The Chávez Phenomenon,” p. 63.
7. Kirk Hawkins, “Populism in Venezuela: The Rise of Chavismo,” Third World Quarterly 24, no. 6 (2003): 1137.
8. Rudiger Dornbusch and Sebastian Edwards, “The Macroeconomics of Populism,” in The Macroeconomics of Populism in Latin America (Chicago: Univ. of Chicago Press, 1991), pp. 11–12.
9. Steve H. Hanke and Charles Bushnell, “Venezuela Enters the Record Book: The 57th Entry in the Hanke-Krus World Hyperinflation Table,” Studies in Applied Economics 69 (December 2016): 1–25.
10. Stephan Haggard, “Inflation and Stabilization,” in International Political Economy: Perspectives on Global Power and Wealth, ed. Jeffry A. Frieden, David A. Lake (London: Routledge, 2003), pp. 417–29.
11. Paul A. Samuelson and Robert M. Solow, “Analytical Aspects of Anti-Inflation Policy,” American Economic Review 50, no. 2 (1960): 177–94.
