Real Income for Most Venezuelans Increases 328%

The capitalist press continues to distort the socialist revolution in Venezuela and raise crisis after crisis. Between 2004-2006 the real income (inflation adjusted) of the poorest 58% of Venezuelans increased by 130%, in other words, their incomes more than doubled. At the same time, state run supermarkets (Mercal's) offer basic foodstuffs for an average 39% discount over retail. This means the purchasing power of the average Venezuelan has increased by 328%. An example:

• In 2004 you made $10 per week and milk cost $2 a gallon. You can buy up to 5 gallons of milk per week.
• In 2006 you made $20 per week and milk at the Mercal cost $1.22 a gallon. You can now buy 16.4 gallons of milk per week.

The capitalist market has failed to respond to the increased demand effectively. In fact, there are widespread reports of distributors and speculators actually hoarding foodstuffs in an attempt to raise prices further. This has even been reported on the supply side, for instance, whereby multinational corporations are withholding or under-producing inputs into the local farming economy impacting the ability for farmers to produce the needed foodstuffs.

Problems like these are common in young socialist economies. In Cuba, shortly after the revolution, the government established a fixed low price for milk by subsidizing the stores that sold it. Overnight, milk shortages occurred. Parents who previously couldn't afford milk for their children now found that they could. This option didn't exist under the Batista regime. The U.S. press used this "milk shortage" to show that socialism had failed, when it actually had succeeded, especially for parents who could now afford to buy milk.

Irelan, Patrick. Feburary 15, 2008. CounterPunch.

Corruption is common especially at times of great economic change. This has been shown in the housing bubble in the first world economies. In Venezuela it is no different, a massive and rapid increase in purchasing power has spiked demand and there are those who look only to their personal profit.

The situation also demonstrates how integrated economic systems are and how both internal and external pressures can easily destabilize prices and supplies in the short term. But what is the solution?

First we must identify the problem. Capitalists would identify the problem as a classic case of supply and demand. Their cynical view leads them to the conclusion that the demand is too high, therefore prices should be allowed to rise, thereby curtailing demand and achieving equilibrium. This may be an appropriate "solution" for the iPod market, although I am not convinced even in this case.

But herein lies the problem with reducing all things to commodities. Food is essential for human life, therefore market driven pricing is inappropriate. A society must apply a minimum amount of resources to producing enough food for their own population. This basic subsistence level should be guaranteed for all people and the necessary resources, human and capital, should be applied to ensuring the proper level of production for the given population.

The latifundia model common in Latin America and in other countries with export oriented cash crops is completely the opposite from this. In this model, a nations entire agricultural sector is geared towards production of some export crop, be it tobacco, beef or sugar, and the basic foodstuffs are imported from abroad (usually the United States or EU). All agriculture is commoditized, and nations have no way to ensure food security for their populations.

Food security will likely be the key battleground in the coming century. As oil reserves continue to decline and bio-fuel continues its stellar rise, the ability for the US and the EU to export massive amounts of grain at competitive prices will rapidly decline. At the same time, the wholesale influx of the world peasant class (over 3 billion people) into shantytowns (in the 3rd world) or new factory cities (China, India) and out of self-sufficient food production will continue to decrease variegated national food production. This process has been accelerated by the expropriation of peasant plots by large land holders (primarily ranchers), corporations, and in the case of China, the government.

The upshot will be that nations will have no choice but to focus on food security. The commodity model will fail. The market will fail. People will starve. Production, processing and distribution must be in the control of a local democratic people's government and guaranteed for all citizens. Production, processing and distribution must be organized around rational, scientific principles, and monitored in a humane and moral manner. It is good to see that the government of Venezuela understands this and is taking measures now to ensure a future of food security for all its people.