Economic Theory

Are capitalists afraid of socialist success?

Venezuelamania is well and truly over. Like so many other examples before it, the country has entered the unthankful not-REAL-socialism stage.

And yet, Britain’s remaining Chavistas, such as Chris Williamson, Ken Livingstone and George Galloway, are doubling down. They have convinced themselves that Venezuela’s crisis has nothing to do with socialism, and everything to do with foreign – especially US – aggression. This claim has turned into a self-perpetuating meme, trotted out routinely on socialist Twitter. It never becomes clear which specific actions of the US or other countries the Chavistas are objecting to. Surely, it can’t be the ban on the purchase of Venezuelan government bonds, a largely symbolic measure, which, in any case, was only brought in very recently?

But despite its vagueness, the idea that “the capitalist elites” of the West are sabotaging the economies of socialist countries, because they are afraid of them succeeding, has a long history. The narrative goes something like this:

if there were a successful socialist country somewhere in the world, it would become an inspiration to the oppressed, exploited workers of the West. Those workers currently accept their lot, because they have been tricked into believing that there is no alternative to capitalism. But if they could see an alternative with their own eyes, it would inspire them to – finally! – rise up, overthrow the system, seize the means of production, and establish a proper Workers’ State. Thus, attempts to destabilise Venezuela (or whatever the socialist utopia du jour is) are not really about Venezuela. They are about keeping the workers of the Western world in the dark. As Jeremy Corbyn put it three years ago:

“The success in Venezuela has inspired others so that there is a tangible shift across the whole continent […] As with Cuba the threat to the USA by Venezuela is not military or economic. It is far more insidious, a threat by example of what social justice can achieve.”

Let’s forget the specifics of Venezuela or Cuba for a moment. What would happen if there really were a successful socialist model somewhere – a role model that Western socialists could proudly point to? How would such a socialist showcase affect political discourse in the West? How much of a threat to capitalism would it be?

I’m fairly certain that the answer is “not all that much.” I think that socialists hugely overestimate of power of successful real-world showcases.

This is probably due to a lack of experience. If you are a socialist, you are not used to promoting your ideas by highlighting positive real-world examples, because, well, there aren’t any. You spend much of your time distancing yourself from off-putting real-world examples, and explaining why those were not “really” socialist.

So, dear socialists, if you’re reading this – here are a few observations from someone who has more experience in this than you.

I usually try to point to real-world approximations of the ideas I’m advocating as often as I can. Market-based healthcare? Look at the Netherlands and Switzerland. Market based pension systems? Look at Chile and Australia. Decentralisation and devolution? Look at Switzerland and Canada. Liberal land-use planning? Look at Tokyo and Houston. And so on. My experience is that “They’re already doing something quite like this over there, and here are the outcomes” inspires a lot more confidence than “Trust me, I’ve worked this all out in my office in SW1, it’s going to be fabulous. Because I say so.”

So yes, real-world showcases are definitely useful in policy debates. But they are also very, very far from being a magic bullet. If you champion a real-world showcase of something, your opponents will raise objections along the following lines (and note that these can all be perfectly reasonable points):

-“Yes, that model works alright. But it is not nearly as great as you make it out to be. It’s not like everything’s rosy over there. They have their issues too, for example, they’re struggling with X and Y.”

-“Yes, that model works. But that country is a special case. It works there, but it would not work here. They have completely different conditions.”

-“In that country, things were already improving before they adopted that model. Yes, they’re doing well. But it’s not because of that model.”

-“If we could start all over again, there would be something to be said for the model you’re advocating. But we would be crazy to dismantle our system now, and build a completely different one from scratch. It would be far too disruptive and risky. It makes much more sense to focus on improving the system we already have.”

Yes, sometimes, you have two easily comparable models side by side, where one is obviously and unequivocally superior to the other. North and South Korea is such an example, and previously, so were East and West Germany, or Maoist China and Taiwan. (Although, strangely, these are not examples that socialists are keen to talk about.)

But such quasi-natural experiments aside, most of the time, these things are equivocal. There is usually room for different interpretations. Showcase examples help, but they are by no means trump cards that settle an argument. Why should this be different for a hypothetical socialist showcase?

In fact, never mind hypothetical cases: we already had those arguments during of years of Venezuelamania, when Venezuela’s economy was still booming, and Chavismo was still all the rage in the West. For socialists, it was “just obvious” that Venezuela was a great success story, which proved the superiority of socialism. But not everyone bought into the hype. Sceptics pointed out that Venezuela’s outcomes were very much a mixed bag, that some things had already been improving before the adoption of socialist policies, and that some of the neighbour countries did just as well without socialist policies. Above all, of course, they pointed out that this was a time of exceptionally high oil prices, so a country with more oil than Saudi Arabia was bound to do alright.

And let’s not forget that even at its peak, Venezuelamania was always very much confined to Guardian-reading types. Venezuela was never a topic of pub conversations (unless you count the university’s in-house student bar as one). So the idea that factory workers in Sunderland would down their tools and start a revolt, because some place in Latin America (or wherever) has some success in some areas, is, to put it mildly, fanciful.

In short – no, supporters of capitalism are not afraid of a socialist success story. We would be quite able to cope with an exception that proves the rule.

It’s just that there is no such exception. And there never will be one.

Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

2 thoughts on “Are capitalists afraid of socialist success?”

  1. Posted 18/12/2018 at 23:30 | Permalink

    Don’t know how truly socialist Bolivia is but it seems to be going along okay. Until the Left get hold of it of course and start promoting it as a success story.

  2. Posted 10/11/2019 at 08:51 | Permalink

    Nicaragua 5% growth 2010-2018 (A US capitalist coup attempt interrupted it)
    Bolivia highly successful socialist country (A US backed coup attempt is now ongoing).

    Capitalists are not scared. They sponsor pro fascist coups and brutal regimes when things look bad for them.
    Then there are sanctions, or genocide by sanctions campaign. Your ignorance is striking.

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