Right-Wing Populism Did Not Kill Neoliberalism

My new piece is out in Jacobin. I argue that neoliberalism is not dead simply because governments now use tariffs, sanctions, subsidies, or industrial policy more openly. The core of neoliberalism was never only about free trade, but the insulation of markets and capital from democratic control. Right-wing populism has changed the rhetoric, but it has largely preserved the underlying neoliberal order. Contemporary right-wing populism should not be mistaken for a clean break with neoliberalism.

Donald Trump's tariffs, sanctions, and attacks on globalization are often presented as a rejection of the old free-market consensus. But the underlying arguments remain deeply neoliberal. The entrepreneur is still the hero (Tech and crypto-bros). Government is legitimate when it protects national business, punishes foreign competitors, or clears obstacles to private accumulation. Tariffs are sold less as a challenge to markets than as a way of restoring a supposedly fair market order against cheating foreigners, bureaucrats, and global elites.

The same point applies more broadly to the new industrial policy, which was never completely abandoned in the United States or Western Europe, one might add. States may subsidize national champions, direct investment, or protect selected sectors. Yet they can still treat profitability, competitiveness, shareholder value, and private returns as the ultimate criteria of success. Protectionism is not, by itself, an alternative to neoliberalism. Nor is a larger state. States have always intervened in markets. The question is whether intervention changes the social hierarchy of power or merely uses public resources to secure a more competitive capitalism.

Read it here.

The return of populism or Argentina on the verge of collapse

The Argentinean primary elections, which are very peculiar and take place all at once with all parties, were last Sunday. The primaries made some sense when the Peronist party was all divided and that allowed the main candidate to proceed, but with the move of Cristina Kirchner to the vice-presidential spot next to Alberto Fernández, and the unification of a good part of Peronism (in particular Sergio Massa), the primaries become essentially an anticipated election. And Peronism won resoundingly, with 47 percent of the votes, considerably more than the 32 percent the neoliberal Mauricio Macri obtained.

After the election there was a run on the peso, with a depreciation of almost 30 percent, and no significant intervention from the Central Bank. To add to the problems, Macri, the incumbent president, blamed the run on the voters.  In his view, they basically do not know how to vote, and by bringing back the spectrum of populism, and the implication was default, they scared the markets. It's all about confidence.

There are many problems with his arguments, and the policies he proposed the following they, after he apologized (after all he still needs the votes of those that do not know how to vote in October, when the actual election takes place). First and foremost, the fact that the problems faced by this government are the result of their own decisions to increase significantly the amount of debt in foreign currency. As I noted before here, it doubled in this government, after having being significantly reduced in the previous one (and after the renegotiation of debt with 93 percent of bondholders in 2005 and 2010; I must insist that default was in 2002, before Kirchner, in spite of what the Wall Street Journal said recently).

Yes, it is true that by the time Macri was elected in 2015 the country had an external problem. Meaning that the current account was moderately negative, and there were no inflows of capital in a world awash in capital, and reserves were low. But most countries were able to attract flows with moderately higher rates than the international ones. I expected the depreciation and higher inflation in the beginning of Macri's government to bring down real wages. And fiscal adjustment was to be expected too, in order to increase unemployment and reduce the bargaining power of unions.

But he had space, after that, for borrowing in international markets in domestic currency, at higher interest rates, and in domestic markets, and he could have in the process obtained significant amount of dollars (locals buying high paying bonds in domestic currency) to prop up the reserves. That would have led to growth, possible stabilization of prices (with some appreciation of the currency), and accumulation of reserves, reducing the external vulnerability of the economy. The fact that they borrowed in dollars, allowed the depreciation of the currency, losing control of inflation, increased the obligations in foreign currency to a level that an agreement with the IMF was necessary, and that adjustment forced the recession (besides the contractionary effect of the devaluation) was unexpected, to say the least. It is almost impossible to fathom why he would pursue policies that would make his reelection very difficult.

To things should be said in this context. One is that the agreement with the IMF supposedly was in place to allow to maintain the exchange rate in the forty something level, and with that, perhaps, at least not accelerate inflation and help with reelection. A politicization of the IMF that the international organism should have resisted. Also, many people able to buy dollars at forty something (now that they are at around sixty) won significantly. So those that bet on a depreciation (and promoted capital flight) won. And financial markets certainly did. This government has many friends in the markets. The other is that the agreement with the IMF ties the hands of the next government. And in my view that's no accident.

The measures he announced to counter the crisis (see this FT story), essentially "increases in the minimum wage, loans for small and medium-sized businesses, student grants, subsidies for poor families with children and a floor for income tax, as well as a freeze on petrol prices" (the later freeze was, apparently, now eliminated) will not have an economic, and most likely also not an electoral effect. FT is correct, it's too little too late. Not only the size of the measures is small, but also the inflationary and contractionary effects of this massive depreciation will dwarf any possible benefit of a moderate stimulus.

So Fernández is the virtual new president, and Cristina his vice-president. And the left of center is most likely back in power in Argentina. The notion that the left was done in the region has been exaggerated. As I noted more than three years ago here it was a stretch to think that most people wanted a return of neoliberal policies in the region. I noted that Brazil was divided, and I think still is, with significant resistance to Bolsonaro, and that Macri had only won by a very a narrow margin. Note that the return of the left in Argentina comes with significantly less degrees of freedom than in 2003. Not only there's an IMF agreement that would need to be renegotiated (and they must do it to avoid a default), but also the international scenario is much less favorable. But my take is that the new government will be able to avoid default, and restore some degree of coherence to economic management, allowing for lower inflation, and moderate rates of growth (on the low end, but at least growth) and reduction of unemployment and poverty. More on that in another post the near future.

The Mueller Report

Perhaps worth reposting what I said about Russiagate, now that the Mueller Report led to no additional indictments and validated the No Collusion slogan we're going to hear for the next year and a half.

Just a brief note on the whole firing of Comey scandal that is still unfolding, and the incredible degree of anxiety on the left, which somehow thinks this means that there is a 'pee' tape and that Trump will be eventually impeached (here, for example; too many of these). This is at least the second event compared to Nixon's firing of the Attorney General, the infamous Saturday night massacre. The other being the firing the Acting Attorney General Sally Yates.

All of these is very unproductive and dangerous for progressives in my view. It emphasizes an interpretation of the election that is deeply flawed. That Hilary was a strong candidate, that she was progressive, that she would have won (yeah, I know she did win the popular vote; but that's not the way it works) if Comey didn't discuss the emails days before the election, or the Russians didn't hack her campaign, or if Wikileaks didn't expose them.

It exempts the Dems from being just the other pro-business, slightly less crazy, but pro-business nonetheless, pro-free-trade, pro-Wall-Street party. It reinforces the already strong Neoliberal wing of the Party, that with the help of Obama and the Clintons (all making huge amounts of money in the speaking circuit) elected Perez for the DNC, and might end up with another candidate that will loose the election in the Rust Belt (here and here for my views on the election).

The real danger is eight years of this madness (and my guess, that's much more probable than an impeachment right now), unless progressives within the Democratic Party take over. So sure, investigate, resist, but please, pretty please, let's stop with this notion that all was the result of Russia, and that the Neoliberal wing of the Democratic Party is blameless.

Original post here, from 2 years ago.

The three caballeros: on populism and the economy

 

Cartoonish figures... and Disney toons too

With the incoming inauguration of Jair Bolsonaro in Brazil, the United States and the two largest countries in the Latin American region will have what the press has more or less universally and uncritically referred to as populist leaders in power. It has been very common in the press to compare Trump and Andrés Manuel López Obrador (AMLO) as right and left-wing populists. And although the term has not been applied as often to Bolsonaro, comparisons with Trump abound. Yet, while they do share certain characteristics, I would argue that populism is not one of them. The comparisons that make them all similar are at the end of the day caricatures.

Admittedly populism is a complicated and somewhat fuzzy term. It has a complicated history, and many in the developed world associate it with the old agrarian movements in Russia and the US, and can be seen as somewhat progressive. Alternatively, in Latin America it has been more often than not associated with the rise of Peronism in Argentina, and the affinities with Italian corporatist and fascist ideologies leads many to see it as somewhat reactionary movement.

The economic definition of populism, or what Dornbusch and Edwards called macroeconomic populism, is even more problematic. They basically suggested that running fiscal deficits would fit the bill. That makes the list of possible populist leaders almost all encompassing, and devoid of any relevance. I won't try to solve the question of what a good definition of populism is, but I'll try to explain why to emphasize the similarities between the three might not be completely accurate, and might distort understanding of what to expect ahead. Mind you, on some level, one expects that populism should deliver something for the people and should be the opposite of oligarchic regimes.

Trump and Bolsonaro are clearly associated with conservative ideas while AMLO might be seen as a lefty (note, however, that according to Cuauhtémoc Cárdenas, the son of General Cárdenas and an icon of the left in Mexico, that is not correct; see here, in Spanish). While Trump was brought to power by the votes in the Rust Belt (in Michigan, Pennsylvania and Wisconsin) dissatisfied with Free Trade policies that have affected the region, in Brazil and Mexico a fight against corruption (real or perceived) played a more important role (something stimulated by US interests in LA). In Brazil, during the Workers' Party (PT) administration income inequality decreased (and real wages went up). A mediatic-juridical coup brought down the government, and Bolsonaro represents the continuity with the coup. AMLO represents the dissatisfaction not just with the economic woes of Mexicans, but with the failures of democracy (including the return of PRI, Institutional Revolutionary Party, after two governments of PAN, National Action Party).

In the case of Brazil, the formerly nationalist Bolsonaro has actually appointed an openly neoliberal Chicago Boy to the newly enlarged economic ministry. While Trump and AMLO are less keen on Free Trade, it is unclear that this would be central to Bolsonaro and the opposite might be true (Paulo Guedes, his economic minister seems to dislike MERCOSUL, but not free trade). Also, while Trump trade disputes with China can be seen as part of a reaction to the latter's challenge to American Hegemony, and both that and the increase in military spending might extend for a bit the slow recovery and the bubbleized American economy, the tax cuts and the resistance to any kind of expansion of social spending will imply that very little of the growth trickles down to the less privileged in American society. In the two LA giants, austerity will, most likely if they follow through with their fiscal plans, lead to slow growth. Worse, they will be unable to use the US/China conflict to gain advantage for national strategies of development, but for very different reasons. In Brazil because Bolsonaro (and his fanatic foreign affairs minister) suggest direct alignment with American interests. In Mexico, because the new UMSCA ties the hands of the government in many ways (something that AMLO seemed to welcome, or at least did not think he should fight it).

While Trump has at least promised an expansion of infrastructure spending (and the infamous wall of shutdown fame too), making him somewhat populist in Dornbusch's definition, both Bolsonaro and AMLO promise austerity and balanced budgets. While AMLO wants to raise  raised (h/t Guillermo Matamoros) the minimum wage, there is no indication that Trump or Bolsonaro think a minimum wage should even exist.

Trump for all his anti-establishment rhetoric is no threat to the American oligarchy (Pence is in the pocket of the Koch brothers, if anything else needs to be said). I had suggested a while ago that with Bolsonaro Brazil could follow the path of Mexico or of 19th century Brazil, "an oligarchic state... in which the rents of a relatively stagnant... economy were distributed among a few powerful families, while the vast majority was left out." At least AMLO is trying to break with Mexican oligarchic traditions. It might not be enough. Happy old year!

The end of neoliberalism?

A while ago I promised to return to this topic and discuss Mirowski's reply in the INET debate to my comment on his paper. And yes it's been quite a while since that debate. At any rate, I was at the Political Economy of World Systems (PEWS) conference last weekend, and we had some time to discuss Wallerstein (with him, I'm glad to say), his views on the structural crisis of capitalism. And someone (can recall who did) said something to the effect that the collapse of the economy in 2008 and the events after that (particularly the European situation with Brexit and the rise of right wing populism) suggest that the Neoliberal era is over (that was the title of a subsection of a chapter in David Harvey now classic book on Neoliberalism).

So let me tackle that issue, captured beautifully in Blyth's tweet above (mind you mark might have been talking just about Neoliberalism in the US, as Cornel West did here), and in the process make the two brief comments I wanted to add on Mirowski. And to make sure, I don't think the era of Neoliberalism is over, in the US or globally. In fact, in many places Neoliberalism is resurgent (certainly in Latin America; I'll have something to say on Argentina soon).

The first issue, before one can discuss whether it ended or not, is what it was. Mirowski says that neoliberals are not just or fundamentally neoclassical, libertarian, classical liberals, or conservatives, and that they have, to some extent, created the confusion. That is in a sense the negative definition of Neoliberalism.

On a more positive sense, he argues that the role of the market is clearly central for Neoliberalism. Mirowski says:

"... neoliberal doctrine instead set out actively to dismantle those aspects of society which might resist the purported inexorable logic of the catallaxy, and to reshape it in the market’s image. For neoliberals, freedom and the market would be treated as identical. Their rallying cry was to remove the foundation of liberty from natural rights or tradition, and reposition it upon an entirely novel theory concerning what a market was, or should be."

In his view, Neoliberalism is a movement, and not simply a set of ideas (like for example, Keynesian macroeconomics or classical political economics). And again, I must emphasize that I do agree with him, that it is a movement that revolves around the Mont Pèlerin Society (MPS). He refers to the group as the Neoliberal Thought Collective (NTC). A scientific community in the same mold of Thomas Kuhn's normal scientists. Harvey, in the above mentioned book, argues that it is a movement whose goal is to reestablish the power of capital, and disembed capital from the welfare costs imposed during the Keynesian consensus era. And certainly that seems to be the glue of the group.

However, in his response to my comment, Mirowski suggests that I commit a mistake in suggesting that Neoliberalism is subsumed in (a subset of neoclassical economics). And of course, in a certain way, if you think of a movement, it would seem that I had it indeed incorrectly and that neoclassical might be part of the Neoliberal group, but many Neoliberals are not.

However, while it is true that in that sense Neoliberalism is broader than neoclassical economics, since its scope is wider, and less of school of thought than an ideological movement, it is also true that as a movement Neoliberalism must substantiate its arguments on the basis of a set of ideas (as Keynes dixit, ideas govern the world, not vested interests).

Neoliberalism could be seen as an ideological movement to promote the vested interested of capital, after the significant reforms of the Keynesian consensus, a Polanyian counter veiling movement created by the success of the expansion of the welfare state in advanced western economies. But it was an ideology built on the notion that markets provide the only organizing principle in society, an idea that is probably associated to Hayek and his Austrian School. Note that while Hayek, in particular after the intellectual defeat in the 1930s in his debates with the Cambridge Keynesians, turned to political philosophy as his main preoccupation, his economic views remained essentially unreconstructed.

Even though there are methodological differences between the Austrian version of marginalism and the Chicago School, to suggest as Mirowski does, that Hayek, and other Austrian scholars were not neoclassical is difficult since both are founded on the idea that relative prices depend on supply and demand.  All Neoliberals fall back into some form the mainstream marginalist story in which equilibrium prices are determined by supply and demand, including the prices of labor and capital, and that includes Hayek and Austrians. The market is the totemic myth that provides overall coherence to the movement, and an aura of scientific rigor to the policy proposals. Each clan would have their own version of the myth, so to speak, with the more common being the Arrow-Debreu General Equilibrium (GE) model, and the Austrians emphasizing the self-organizing principles of the market. In that sense, neoclassical economics is the theoretical foundation for all versions of Neoliberalism, whether Neoliberals understand it or not (some Austrians believe they are not neoclassical, but their confusion should not cloud our understanding of facts).

The second issue has to do with Mirowski's argument that “the real key to understanding modern economics is the absorption of the central tenet of markets as superior information processors within the heartland of cutting-edge microeconomics.” In fact, neither Hayek’s argument for the spontaneous, self-organizing nature of the market, nor the retreat to the validity and generality of the Arrow-Debreu GE model, both providing a flimsy response to the internal critiques of the marginalist model, were able to provide a simple policy relevant model. It was only the policy relevance of the Friedmanite simple macroeconomic model that created the conditions for the NTC to promote the economic policies that reversed the Keynesian consensus, not just theoretically, but in the real world of economic policy. That is, the return of the idea of the natural rate, even after being discredited by the capital debates (something I referred to as the return of vulgar economics).

Back to the end of Neoliberalism, now that one may understand my argument of why neoclassical economics is at the core of the movement. Almost a year and a half into the Trump experiment, what we got is a lot of rhetoric on protection, immigration and so on, but the only concrete thing is a tax cut for the wealthy. That Trump would not really be a populist was evident by his choice of Pence, a Koch financed career politician, as vice-president. Neoliberalism has survived the greatest financial crisis since the Depression, and is doing fine in both the GOP and the Democratic Party. The notion that it is dying because there is some push back and it is contested in some quarters is wishful thinking. Trump just provides a different flavor of the same.

Note that there is no serious change in the profession about the way we think, and neoclassical economics is doing just fine. I have been skeptical about the notion of changes in the profession after the crisis (and of the IMF policies too). The reason, the underlying theoretical reason, for the persistence of Neoliberalism in economic policy can be seen in the reluctance to abandon Milton Friedman's natural rate of unemployment concept by self-depicted (New) Keynesian authors.

On Venezuela, Democracy, Violence and Neoliberalism

Many pieces have been written recently on the situation in Venezuela, including some on the left, that are very critical of the Maduro government (see for example this Jacobin piece that has been widely cited). Interestingly, during the sleepy months of the summer in which I almost didn’t write anything here, this old post on Venezuela has become the most read on the blog (as we approach almost 3 million hits).

Let me first say that I am for democracy and against violence, irrespective of who is behind it. Calls to reduce violence on both sides should be at the top of the international agenda. So, any government constraints on the ability of the people to participate in its own government (some form of democracy) and government repression of manifestations (violence) is wrong. As far as I can tell, the current claims about the lack of democracy in Venezuela are not associated, for the most part, to the election of the president (even though right-wing activists insist, without proof, that Maduro and Chávez have rigged past elections; truth is that they won every time, including the last, even if by a smaller margin), but rather to the Supreme Court reduction of legislative power, and to the new constitutional convention. One could also point out the imprisonment of some opposition leaders, like Leopoldo López, who is under house arrest now. All legitimate concerns, no doubt.

The question then is how much of the push to limits to the power of the legislative assembly dominated by the opposition, and how much of the political repression (including the treatment of opposition leaders, but also the police violence) results from the very violent and anti-democratic push from the opposition itself, that has tried to bring down the government since the very beginning (including a failed coup attempt in 2002). And this is also a valid concern that many (almost all the mainstream media) on the left seem to forget. I can’t honestly respond. But I can provide a perspective, based on my understanding of the Argentine and Brazilian cases that are closer to my experience.

In Argentina, the right-wing neoliberal agenda eventually dislocated the Kirchner governments in the ballot (when Cristina was not a candidate I should add), but it basically needed to lie about its intentions. Macri said he would not devalue the currency (and reduce real wages), that he would not cut the tax on exports, that he would not promote austerity, he also said he would end corruption, and he lied on every single element of his platform. Certainly that undermines democracy in my view. A demagogue that on top has been connected to corruption (for example, his name is in the Panama papers) is not necessarily good for democracy (many on the left here in the US are afraid of what another demagogue with corrupt practices may do to democracy). And there are now at least one ‘desaparecido’ (missing, presumably killed like during the last dictatorship) and at least one famous political prisoner (Milagro Sala). These are significant restrictions on democratic values and certainly indicate some connivance (if not direct participation) with violence. But yet I don’t think Macri is a dictator (and certainly the international media doesn’t think that either).

In Brazil, unlike Argentina, the left won the elections (like in Ecuador, btw). Dilma got a second mandate in 2014, and a fourth electoral victory for the Workers’ Party. The solution there for the right-wingers and their neoliberal agenda was a mediatic-judicial coup (and yes Dilma had accepted some of the economic agenda before the impeachment, in particular austerity; but note that Chávez too tried some neoliberal things before too; see my old piece in Dollars & Sense back in 2005 criticizing the left of center governments in the region). In this case, there have been several people imprisoned as a result of corruption charges, in many cases without other proof than the accusation of self-confessed criminals after plea bargains. Also, there has been a lot of abuse of power, including violence against protestors, and they almost certainly will try to preclude Lula from being a candidate in the next election (he too was condemned because somebody says he owns an apartment, without any formal proof). And yes, I would suggest that the current Brazilian government is not democratic.

So why is this relevant to understand Venezuela you ask. Part of the story is that the opposition in Venezuela says that they need to push the boundaries of the democratic system, because the Chavistas are anti-democratic and would not leave power. The US provides full support to that narrative, suggesting that the Venezuelan government is a threat, and that was true of the Bush, Obama and Trump administrations (there is State policy when it comes to the left in Latin America). That’s why Maduro needs to be recalled, in their view, even though he won the election. At any cost. A coup is acceptable and changing the rules too. That was also repeated ad nauseam in Argentina, and it wasn’t true as it is clear now, since Cristina stepped down and followed democratic principles (also that was kind of the argument used against Allende and many other left of center governments in the region before). In addition, the Brazilian case is important because, when the right-wingers loose, as they did in Brazil, they do push and try to promote a coup (if anything Dilma and the left in Brazil were outmaneuvered, but I don’t think they should not have tried to remain in power, since they did win the election, as did Maduro). In my view what we are seeing is a long slow coup in motion, with the US support (and now Argentina and Brazil too), and the Maduro administration is trying to survive.

So, the stakes are high, and the fall of Maduro may come electorally, later (as in Argentina), or by a coup (as in Brazil, but perhaps more violently), maybe sooner, and should not be a surprise. Note that the constitutional crisis to deal with the contested recall of Maduro, and the taking over of legislative powers by the supreme court do restrict some forms of self-government and are problematic and should be criticized. But I hardly think this means that the government is not democratic. For example, in the US the candidate that won the majority of the vote didn’t win the popular vote, and some may think this is not democratic (and that was the original intent of the electoral college, btw). And yes, the rules were in place already you may suggest. But rules are changed all the time, like the rules for financing of campaigns, or gerrymandering, or the rules for who is eligible to vote. It is quite legitimate to argue that the supreme court has restricted democracy in the US with Citizen United. And several states are trying to restrict the ability of minorities to vote, let alone that voting is done on Tuesdays when a significant number of workers cannot vote. And I could go on.

The point is that the US (which until very recently, 1964 in fact, did not allow a vast majority of the African-American population to vote) is a democracy (some may actually disagree with this), a very imperfect one (and Churchill was right, if he said it, that democracy is the worst form of government, except for all the others), but one none the less, like Argentina, and in my view Venezuela. Reasonable people may disagree, as much as some people may think that the US is not a democracy too.

Violence is a more complicated issue. There has been violence on both sides of the dispute, even though you would think it's all the government's fault if you only get the mainstream media. A lot of the discussion is related to the fact that young, middle class, university students are on the receiving end of some of the violence which is not common in Latin America. There has been less coverage or preoccupation with the regular violence against working class people in Venezuela. But as I said, I think here the government should err on the side of extreme caution and avoid all confrontation.

Note that in the Argentina, Brazil and the US (and in Venezuela too; the recent burning alive of a lower-class man because he was a Chavista is an example of that) there is a lot of violence against minorities and working-class people. More often than not it goes undiscussed in the media. In the US, only recently as a result of the widespread use of smart phones with cameras the systematic killings of black people have shocked the nation. For violence to be controlled institutions have to be strong and capable of punishing the culprits. In the US, clearly institutions still fail, as the many policemen that shot African-American kids go free. Again, I do think the US is democratic, but for many black folks that couldn’t vote until a generation ago, and/or have been imprisoned and deprived of their political rights the idea of American democracy probably rings hollow. In other words, restrictions on democratic processes, which exist in both Argentina and Brazil (and in the US too), and the existence of violence (always condemnable) per se does not necessarily mean that the government is a dictatorship. Anti-democratic tendencies like those of Macri, Trump and Maduro (Temer in Brazil is the representative of a coup and beyond just having anti-democratic tendencies) should be discussed and condemned, as much as of the opposition to their governments when they exist (if you think Dems in the US have no anti-democratic tendencies, check the primaries, the super delegates and so on). And the opposition in Venezuela is also accountable for a fair share of violence and undemocratic practices.

Don’t get me wrong, there were lots of problems with Chávez (and still true with Maduro) and with the left of center governments in the region. The inability to break with the dependence on exports of commodities (and the price being paid now that prices have fallen), the lack of counter cyclical policies at crucial times, the absence of a coherent industrial policy, the integration with China on subordinate way and so on (read my post on Venezuela linked above). In the case of Venezuela, it’s worth quoting at some length this excerpt from Tarver and Fredrick’s history of the country:

the Chávez-Maduro tenure has also been termed a ‘petroleum dictatorship’… The enormous increase in national revenue allowed Chávez and Maduro to pay off Venezuela’s foreign debt and undertake a massive social works program… For most Venezuelans, the petroleum era did not bring with it additional jobs, increased wages, or an improvement in the standard of living. Instead, the oil boom brought about a decline in domestic industry, and increase in imports and inflation.

Seems like a familiar critique of Chavismo, doesn’t it? As it turns out, this is a misquote (oops, my bad). The book actually says the Gómez tenure (president in the first decades of the 20th century), public works instead of social works program, and agriculture instead of industry. The point is (as noted in my post linked above) that these problems are not new. In the case of Venezuela there are two excellent papers (in Portuguese) written by Celso Furtado, in 1957 (a report for ECLAC) and in 1974, showing the problems of development with abundance of foreign reserves (should be a paradox since the normal problem, the constraint, is lack of dollars), which are a must read for those interested in the problems of development.

As I said in my previous post too, this is a tragedy, and there are no good solutions. I would prefer the continuation of the democratic institutions, meaning Maduro’s government with an opposition with a significant role in parliament, and without violence of course. And it would be even better if it could be achieved without a return to neoliberal policies. But this seems increasingly unlikely. The fall of the Maduro government will not end violence, and will not bring back democracy. Unless you have a very Manichean view of the meaning of violence and democracy. But hey, Hayek thought that Pinochet was a paragon of democracy, so who knows what neoliberals think.