Venezuela Is Real Socialism or Real Fascism
“It’s corruption, not socialism, that brought down Venezuela,” claims an article in PSMAG (March 14, 2019, by Thor Benson). More worrisome is that some economists—but probably just a small number of them—seem to agree, or have been tricked to agree, ignoring a structural component of economics.
It is not false but misleading to write:
Corruption, not socialism, is the malignant tumor on democracy worldwide—in Venezuela, yes, but also here at home.
The author forgets that corruption is a matter of degree and of individual incentives, and ignores what comes first. The more collectivist—socialist or fascist—is a society or, more precisely, the government that rules over it, the more incentives individuals will have to engage in proactive or defensive corruption. The common denominator of socialism and fascism is that they are founded on the supremacy of collective choices over individual choices and thus favor state power. They ignore the individual incentives of a large part of the citizenry. (The courtiers’, soldiers’, and policemen’s individual incentives are not ignored, though.)
The more powerful the state is, the more individuals will be incited to ask favors to this tutelary power. They will work and expend resources to grab these favors or to avoid being on the wrong side of redistribution. In other words, the more rent-seeking (as economists would say) there will be.
The mirror image of rent-seeking is the diminished incentives to productive exchange. The more individual destinies depend on the state, the fewer incentives individuals have to engage in mutually beneficial exchange instead of trying to cheat others.
Note that the democratic mantra does not abolish incentives. Democratic socialism or democratic fascism generates perverse incentives. To Noam Chomsky’s rhetorical question “What socialist policy failed in Venezuela?”, the answer is: increasing the power of the democratic state.
Perverse incentives for legal or illegal corruption is what’s happening on a large scale in Venezuela. It is happening but on a much lower scale under Western countries’ crony capitalism. As the saying goes, “Venezuela is real socialism”; or, what amounts more or less to the same, real fascism.