Venezuelan President Nicolás Maduro, whose country has the world’s highest inflation and Latin America’s lowest economic growth, has just convened a “World Conference on the Crisis of Capitalism” for early 2015. He should invite Chinese leader Xi Jinping as the keynote speaker.
Leaving aside the fact that the United States, the premier symbol of capitalism, is doing better than any other major world economy these days, and that New York’s stock exchange reached its all-time record last week, China’s Communist leader could help Venezuela’s confused president understand which ideology is really in crisis these days.
Only last week, in the latest move of its three-decade-long march to capitalism, China opened its Shanghai Stock Market to foreign investors, allowing more foreigners to invest in mainland China’s companies. Last year’s Chinese Communist Party’s 18th Congress gave Xi broad powers to give market forces a much greater role in the economy, at the expense of government central planners.
Since he took office, Xi has vowed to step up China’s road to capitalism by moving the country from a state-investment-based economy to a consumption-led economy. This means encouraging Chinese consumers to buy everything from luxury cars to washing machines and allowing greater competition from private companies.
In my last trip to China two years ago, I was surprised to see the proliferation of Ferrari, Lamborghini, Mercedes-Benz and BMW agencies across the country. Many of these agencies cater to the super-rich who in many cases are a by-product of the rampant corruption that the Xi regime is now vowing to combat.
But regardless of what we think of China’s dictatorship, there is one thing that nobody disputes: China has grown meteorically — and reduced poverty like no other country in the world — since former premier Deng Xiao Ping began his capitalist reforms in 1978.
Today, China is in some ways more capitalist than the United States. In China, employers can set up factories without having to bother about pesky workers’ unions, or powerful non-government environmental groups. It’s the greediest capitalists’ dream: capitalism with neither the right to strike nor stringent environmental standards.
With all its shortcomings, China’s savage brand of capitalism has helped pull nearly 700 million of its 1.3 billion people out of poverty over the past three decades and has reduced extreme poverty from 84 percent of its population to 10 percent over the same period, according to World Bank figures.
By comparison, oil-rich Venezuela has gone in the opposite direction since late president Hugo Chavez started his so-called “Socialist Revolution” in 1999. Chavez and successor Maduro have nationalized foreign and domestic companies and scared away investors, turning Venezuela into an economic disaster.
This year, Venezuela will have the world’s highest inflation rate — 70 percent — and Latin America’s worst economic growth rate — minus 3 percent — according to the International Monetary Fund. There are shortages of milk, meat, sugar and toilet paper across the country, forcing people to make long lines in front of supermarkets to get essential goods.
What’s just as amazing, Venezuela — which as a result of the demise of its private sector now relies on state-produced oil for 95 percent of its foreign income — has started importing oil this year. Its oil refineries have crumbled for lack of investment, and the country needs to import light crudes to blend its heavy crudes for export.
Not surprisingly, after a temporary drop in poverty rates during the world oil boom of the mid-2000s, poverty in Venezuela is rising. The number of people living in extreme poverty — the poorest of the poor — increased by 737,000 last year, to a total of nearly 2.8 million, according to Venezuelan government figures.
My opinion: Granted, capitalism is a work in progress, and it can certainly be improved by, among other things, finding new ways to reduce inequality. But for Venezuela, the basket case of the world’s economy, to convene a “World Conference on the Crisis of Capitalism” while the Dow Jones Industrial Average is breaking all-time records is a monumental joke.
P.S.: If for any reason Chinese president Xi can’t attend Maduro’s conference, I suggest Russian President Vladimir Putin as a substitute. According to a Bloomberg news agency report just in as I’m writing these lines, Putin — whose regime has a lot in common with Maduro’s authoritarian kleptocracy — plans to announce a policy of “economic liberalization,” which in plain English means greater capitalism.