Saturday, January 15, 2005

Class and History, 7

Convergence and Conjunction, House Mix

Sowing the oil, Oiling the sow

Windfall profits for the 1973-74 OPEC price increases put President Carlos Andres Perez in an expansive mood. Reconstituting the 1930s, 40s, 50s, 60s, house party theme of sowing the oil, Perez's administration spent more money in the 1974-1979 period than all the Venezuelan governments in the 1830-1973 years. During the 1970s, and continuing into the 80s, state ownership of manufacturing enterprises increased from 4 to 42 percent of the total. Direct investment, nationalization, subsidized credit, propelled the value added in manufacturing to a 33 percent increase in the 74-79 period. But the unevenness, the deformity, of the Venezuelan economy was not alleviated as the expenditures in capital intensive industries drew masses into the cities and production centers far in excess of employment requirements. The petroleum industry, for example, despite or rather because of massive expenditures, accounting for one-third of GDP, has never employed more than 1 percent of the labor force. In this, Venezuela gave the truth and proof of capitalist reproduction, the expropriation of labor, its transformation into wealth only through its expulsion , the most acute, painful, expression. Income distribution was more inequitable in the 1970s than in the 1960s. Almost half the population was undernourished.

"Sowing the oil" in the 1970s was more than a simple domestic policy. It was Venezuela's national manifestation of the international recycling of petro-dollars. This recycling financed a global expansion in fixed assets of production in industry and agriculture, a global over-expansion which precipitated economic contractions in the 1980s.

In its conjunction and convergence, Venezuela assumed more than the characteristics of advanced capitalism. It assumed those characteristics with a vengeance. In 1970, Venezuela recorded external debt equivalent to $1.4 billion, approximately 3 percent of GDP. By 1979, that amount had grown to $24 billion, approximately 32 percent of GDP. The debt was secured, of course, by oil revenues. Much of this debt was owed to international commercial, private lenders rather than to official institutions of finance like the World Bank.

Expansion of the manufacturing sector resulted in large enterprises accounting for 2/3 of manufacturing employment and 3/4 of manufacturing output. Traditional, consumer-directed, manufacturing was dominated by thousands of small, family-owned enterprises, surviving through the low wage-rates paid to "over-supply" of workers in the urban ranchos.

The undeveloped relations between city and countryside predetermined the inadequacy of domestic markets. Manufacturing did not produced the capital inputs for increasing agricultural productivity. Agricultural production could not reproduce that capital input in expanded food production for the urban population. During the 1975-79 period, value-added in agricultural production increased 11 percent, below the rate of population growth. Agricultural imports increased from $536 million to $1.3 billion. Concentration of land in large private estates was unaffected by the announced, but unexecuted, programs of land reform. The largest 3% of the farms accounted for 77% of the total land employed in agriculture.

In its assumption of debt, in its over-investment, its overproduction of capital, in the deterioration of agricultural production, in all its distress and deformity, the Venezuelan economy presented itself in the image of modern advanced capitalism, just as the criollos had presented themselves in the image of the peninsulares.

This was a costly non-makeover and the bill would come due with the decline, and the dramatic break in oil prices in the mid 1980s.

S. Artesian 011505

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