Latin America's Autocrats Fail Marx's Survival Test

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The crumbling of the Berlin Wall and the development of social media have provided a renewed impetus to peoples' aspirations to live under democratic rule. Political movements with dictatorial designs have been obliged to conceal their ulterior objectives and elaborate new tactics aimed at enticing the population and ultimately seizing power.

Nowhere is this opportunistic change of tack more visible than in Latin America. Guerrilla warfare (like Colombia's FARC) and attempts of coup d'état (like Hugo Chavez's in 1992) have gone out of fashion. Far-left parties, which in the past had professed a blatant disdain for the electoral way, now prefer to compete in presidential elections, trumpeting their supposed faith in democracy and extolling their passion for liberty.

This has been the stance taken by the leaders of the so-called 'Bolivarian axis' – namely Hugo Chávez, Daniel Ortega, Rafael Correa, Evo Morales – as well as the Kirchnerists in Argentina.

And yet, as soon as elections are won, a sinister mechanism is put in place; one aimed at progressively corroding freedom of expression and association, the independence of the judiciary and political pluralism.

Independent journalists and opposition leaders are persecuted, subjected to astronomic fines, jailed or forced to exile. Rebellious judges are removed and even sent to prison, at the same time as the judiciary is stuffed with flunkeys ready to execute the government's diktats. And just like in the old banana republics, securing life presidency – through constitutional reform and rigged elections, if need be – becomes the incumbent's overriding goal.

Concomitant with this process of demolition of democratic institutions, the new autocrats adopt a warlike attitude toward private enterprise and the market mechanism. They do so in the name of the alleged need to strip the entrepreneurial class (the "exploiters," or "bourgeoisie," in their jargon) from whatever power remains in the latter's hands.

Profit-seeking is systematically stigmatized; trade becomes a suspect activity and is often criminalized. Restrictions of all kinds (price and exchange controls, import barriers) are imposed. The export revenue derived from the country's natural resources is put at the service of the State to foster political patronage and finance populist subsidies and a bloated bureaucracy. All too naturally, efficiency melts away.

Is this model sustainable? Not quite. The new autocracies are doomed to fail for the same reason that the Soviet bloc fell apart; for the same reason that Cuba (formerly the third largest Latin American economy in terms of per capita GDP) has been living on an IV since Castro seized power in 1959, fed first by the Soviet Union and later by Hugo Chávez; for the same reason, too, that the socialist-leaning governments of Perón in Argentina, Allende in Chile, Velasco Alvarado in Peru, Torrijos in Panama and the Sandinistas in Nicaragua couldn't last long.

It is now the turn of the Bolivarian axis and Argentina's Kirchnerists to discover the havoc that the socialist folly can make in the economic realm.

During the 14 years of Hugo Chávez's reign, despite an increase in the price of oil from $9 a barrel to above $100 at present, Venezuela has recorded growth rates lower than the Latin American average. Oil production has fallen from 3.3 million barrels per day in 1998 (i.e. before Chávez) to around 2.5 million last year. The financial reserves of PDVSA, the state-run oil company, have been depleted through transfers to the central government, thereby annihilating the modernization capacity of the oil sector. Venezuela – the 8th largest oil producer – has even had to import electricity ... from Colombia!

Furthermore, price controls and a bellicose policy toward private enterprise have discouraged domestic production, thus creating shortages of essential goods. It is no wonder that annual inflation revolves around or above 20 percent, the continent's highest along with that of Argentina.

In Bolivia, since the nationalization of the natural gas firm in 2006, investments in this sector have lagged behind the level necessary to increase exploitable reserves. Black-outs have been on the rise, and the country has become a net importer of hydrocarbons.

As regards Argentina, price controls proliferate, depressing local production, pushing up imports as well as the import bill. Export taxes and an overvalued peso applied to export transactions dent the international competitiveness of locally-produced manufactures. Scarcity of foreign exchange prompts the government to impose new import restrictions and foreign exchange controls. Not surprisingly, capital flight is on the rise, nearly doubling to $21.5 billion in 2011, from $11.4 billion the year before.

In the countries ruled by the new Latin American autocracies, economic growth is only secured by the currently high world prices for their countries' main export commodities, while the opportunity to profit from the export bonanza and develop a modern industrial sector is squandered by an anti-market political agenda. This is not the safest way to build a resilient economy, to say the least.

It must be quite disheartening for the new Latin American autocrats – who have been bred in Marxism and have put their faith in the Marxian dogma – to realize that their adventure can only lead to a fiasco according to Marx's own theory. If a system fails to develop the "productive forces" - as Marx's Latin American progenies are failing to do - then it may be consigned for the dustbin of history. Marx himself thought so.

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