Why Socialism Isn’t to Blame for Venezuela’s Collapse

A March 2019 protest of continuous U.S. sanctions on Venezuela in Washington D.C. Photo by Susan Melkisethaian.

In 1950, oil-rich Venezuela was the fourth-wealthiest country in the world, boasting the highest GDP per capita of any South American nation. By 2018, the country had over a 80,000% increase in inflation from the previous year, deemed an economic crisis. As the value of the Bolivar plummets, a humanitarian catastrophe has ensued: with nine out of ten citizens not earning enough money to buy food, many have been forced to flee the country. With such a drastic fall-off from the era of prosperity, economists, politicians, and academics alike have attempted to diagnose the issues, attributing the cause to socialism, economic mismanagement, corruption, foreign intervention, or a combination of all four. However, despite the complexity of the country’s collapse, many Americans—especially conservatives—have reduced Venezuela’s current disaster to simply an example of why socialism does not work. It is undeniable that Venezuela’s political system embraces socialist policies: in 1998, Venezuela democratically elected military officer Hugo Chávez, ushering in a regime of socialism. Throughout his thirteen-year tenure, Chávez reoriented the country’s political direction by rewriting the constitution, altering the court system, and nationalizing thousands of private businesses and industries. However, claims from the American political right that exclusively hold the economic theory at fault fail to acknowledge the nuances behind the South American country’s collapse. More specifically, American political discourse often ignores the repeated actions of the U.S. government that have directly and massively catalyzed Venezuela’s economic downfall. 

For the past 15 years, United States policy has targeted the economic vulnerability of Venezuela by imposing many retributive sanctions, wreaking havoc on the Venezuelan people. The first U.S. sanctions against Venezuela came in 2006 under former President George Bush. Bush exclusively banned arms sales to the country as a response to a developing relationship between Venezuela and American adversary nations of Cuba and Iraq, which the White House claimed demonstrated a lack of participation in international counterterrorism efforts. The Obama Administration continued the pattern in 2015, citing a decline of human rights protections due to the Venezuelan government becoming increasingly hostile toward political protests, as some protesters were even killed as the result of violent escalation. The Obama-era sanctions, which froze visas and personal bank accounts, exclusively targeted seven government officials and specific bureaucratic agencies that they found had acted corruptly. In the following presidential administration, former President Trump greatly expanded sanctions in an effort that he called “maximum pressure” against current Venezuelan president Nicolás Maduro, Hugo Chávez’s successor. Like Obama, Trump was also concerned with a democratic backslide and his administration cited actions like the imprisonment of political rivals and the suppression of free speech as an indication of dictatorship. In an attempt to oust the Venezuelan president, Trump first prohibited the South American nation from accessing the U.S. financial system in 2017. Trump then doubled down in 2019 by prohibiting all U.S. entities from transactions with Maduro’s administration without prior authorization and freezing the Venezuelan government’s bank accounts. In addition to the government-wide punishments, Trump and the U.S. Treasury Department attacked specific industries, most notably the backbone of the Venezuelan economy, the national oil company, Petróleos de Venezuela (PDVSA). Oil exports are a vital component of the Venezuelan economy, as the industry is responsible for over 90% of exports and represents more than half of the country’s yearly revenue. Consequently, rapid rises and falls in inflation and economic output directly correlate with changes in the country’s oil prices. Trump’s Treasury Department ultimately blocked all access to American land and partnered refineries and forbade all American entities from engaging in business with PDVSA. As a result, crude oil exports in Venezuela dropped drastically, which caused the economy to plummet. According to an economic study by the Washington Office on Latin America (WOLA), U.S. imposed sanctions from 2017 to 2020 caused the loss of between $17 billion and $31 billion dollars of revenue. 

Despite the diminishing socioeconomic conditions of Venezuela being, at least in part, a direct consequence of U.S. foreign policy, prominent spokespeople of the right-wing community have shifted all the blame to socialism. Ben Shapiro, who has amassed over 2.5 billion total views on his YouTube channel, has written essays and published videos that frame Venezuela as not an isolated political failure but an indication of the pitfalls of all Marxist ideology and its derivatives. The narrative in online political spaces increasingly gained legitimacy when the country’s most powerful politicians, like former president Donald Trump, harnessed their voter base by promising to save Venezuelans by defeating socialism. The irony of the savior rhetoric used by the Trump administration, which claimed to align with the common Venezuelan people, is that the subsequent humanitarian fallout is undoubtedly catalyzed by U.S. action. Since 2014, the Venezuelan refugee and humanitarian crisis has escalated to one of the largest in the world. Over 7.3 million people have fled the country, access to medicine and food has dwindled, and the poverty rate has reached over 95%, with over 3 quarters of the remaining population living in extreme poverty. 

Not only does the scapegoating of socialism represent a lack of American accountability, but it is also reductive and factually misleading. Though Chávez and Maduro ran as members of the Socialist party, and have made public spending a top priority, there are external political catastrophes that have contributed to the downfall. The first of many is economic mismanagement. While the price of oil peaked in 2008, Chávez spent excessively, relying on the profits from the booming industry to subsidize the provision of basic necessities. However, when oil prices began to decline, Chávez could no longer rely on oil exports to fund the country’s imports of necessities, leading to mass shortages of food, healthcare, and industry items. A second major external factor of the Venezuelan crisis is the rise of dictatorship, particularly during Maduro’s regime. As opposed to respecting democratic processes, Maduro’s administration has jailed political opponents, suppressed voters and protestors, used police force to kill and oppress low-income communities, and even denied humanitarian aid at the border. While these actions are reprehensible, they are undeniably not the result of socialist policies, but rather, a desperate and powerful statehead. 

Given the intricacy of the situation, the idea propagated by Trump and the American right that socialism is solely to blame, and that conservatives will save the Venezuelan people, is factually narrow. Straw-manning socialism is an attempt to weaponize the collapse of Venezuela for votes while simultaneously shifting responsibility away from American intervention. What must be remembered in discussions regarding Venezuela is that there are millions of people who must bear the impacts of the humanitarian crisis, who are starving and living in absolute poverty. To reduce these issues ignores the complex history of how we got here, and continual blame and punishment by the U.S. has massively escalated the problem. 

Lukas Roybal (CC ’27) is a staff writer at CPR planning to study political science and philosophy. He is from Los Angeles, California. He would like to credit Logan Penn (Wesleyan University ’27)  for inspiring some of the ideas in this article.