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The private sector model is a failed model and is being swept away all over the world

Posted in the database on Saturday, February 11th, 2006 @ 16:29:36 MST (1203 views)
by Ramon Gaskin    Stabroek News  

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Dear Editor,

It is a good thing that you have been recently paying serious editorial attention to developments in Latin America and the changes taking place there, particularly since Guyana is part of South America and it maintains economic and other relations especially with Brazil, Venezuela and Suriname.

What is emerging unambiguously is that there is a perceptible leftward shift and more of the ruling parties/governments have opted for new models of development based upon some form of socialism inevitably with a Latin American flavour, adapted to the specific conditions prevailing in these countries in response to the pressing needs of the majority of the people.

Those familiar with socialism and its various forms and faces would know that Bolshevik/Soviet socialism differed profoundly in practice and theory from socialism in China after October '49 and in Tito's Yugoslavia, Ho Chi Min's Vietnam, Fidel's Cuba, Kim Il Sung's North Korea, and so on, confirming your own observation (SS, 29.1.06) that "the revolutionary tide takes vastly different forms in different countries."

Over the years socialism has had its own forms in western Europe, in Africa during Nkrumah's valid experimentation with a non-capitalist model of development, as did Toure and Keita in Guinea and Mali.

All over the world, particularly in the post-colonial world 'socialism' has proven to be an attractive developmental model after the experience with brutal colonial capitalism. Obviously, some of this attraction emanates from the results of socialism in the Soviet Union, China, and Eastern Europe, notwithstanding what Stalin may or may not have done during collectivization in the Ukraine post 1917, or Hungary in 1956 where there was a misguided attempt to overthrow the post-1945 agreed-upon spheres in Europe, or even after the unfortunate events of Prague, August '68.

In Guyana some valid experimentation was also carried out in an attempt to fashion an alternative non-capitalist model based essentially on state control of the economy through nationalization, coupled with a large cooperative sector deliberately fostered by the architects of 'cooperative socialism.'

The experiment did not produce the desired results. A serious economic analysis of that period and the experiment has not yet been done. Suffice it to say, there is a universal search for a model that delivers social justice, equity, economic opportunity, representative governance and which also satisfies basic needs of the population without the exploitation, inequality and abject poverty and alienation that the capitalist model brings. In your editorial of January 29, you discuss "unvarnished neo-liberalism" and "Marxism-Leninism" and conclude that neither works but the former needs a "great deal of tempering" and the latter "does not work at all." What is happening in Venezuela is a clear rejection of the neo-liberal/capitalist model in favour of a type of cooperative socialism. It has nothing to do with Marxism-Leninism which many claim has failed particularly in the Soviet Union. Many others are not so sure where Russia will end up after the dust really settles.

Global experience teaches us that a system based upon the ownership of and access to wealth and capital of a few cannot satisfy the needs of the majority people particularly in the post-colonial world, mainly because that was the essential and dominant system in the first place through stages of slavery, indentureship and colonial capitalism that had failed miserably.

But such a 'private enterprise' model is not intended to do so in the first place, premised as it on the exclusive and reasonable assumption that investors legitimately expect and are entitled to their return on investments. There is nothing inherently wrong with such an idea. The only problem is that where it is dominant far too much is expected of it. Particularly in the post-colonial world, this model in practice has failed, when depended upon alone, to deal with poverty and developmental issues. Therefore, unless it is complemented by other forms of property relationships driven by other motivations besides exclusive profit for the investor, it will necessarily always fail.

As a matter of fact, to ask private investors to deal with the challenges of developing an entire country is probably quite unfair. That is not their business. Their business is operating business for a profit.

Then you would say that the business of government is to collect the taxes and develop the country. That is the idea, theoretically. But it never happens. First of all the private investor, especially the foreign type demands and gets his tax-free, duty-free concessions, etc. Those who don't get them, take them anyway. The experience also shows a pathological aversion to pay taxes and contribute meaningfully to economic development and to the treasury. So the promises of the compact never materialize.

The most one can expect out of this compact is some employment which lasts as long as is needed to produce profits on some raw material like sugar or banana, petty royalties on non-renewable resources or minuscule profits on services monopoly. This is what passes here in Guyana for a developmental model. From time to time investors may make some conscience salving charitable donation or hand out.

But this has been our history since Curtis-Campbell, McKenzie, Reynolds, Barama, Jessop, Rusal, Omai, Aroaima, GT&T, etc.

This brings us to your editorial of Sunday, January 8, '06 where you purported to discuss the merits and demerits of "utopian socialism" and in particular the cooperative sector being fostered in Venezuela by the Chavez government.

You yourself freely draw heavily on the remarks of one 'philosopher' Gomez, who claimed that "Venezuela was headed for 'radical barbarism,' and that the country was not going 'forward but backward.'" There is also some reference to what Marx knew about 'moral values' and what President Chavez 'seemed to think.'

All of this is deliberately confusing, unsupported by evidence and pure conjecture.

Sunday Stabroek then asserts that "the accuracy of Dr Gomez's analysis" is evident not just from President Chavez's own remarks but also from the "government's ideological position" on new cooperatives. Which remarks of Chavez support the so-called accuracy of Dr Gomez's analysis of a future of "radical barbarism"?

Which position exactly in the document on cooperatives agreed that the country was not "going forward but backward."

There is absolutely no evidence of any confirmation of and agreement with Gomez on any of his 'conclusions.' Gomez is an academic charlatan, part of the political counter-revolution in Venezuela. It is entirely preposterous to assume that such intemperate, malicious, unscientific and subjective analysis would find support from Chavez and his government.

Venezuela through its agency SUMACOOP is embarked on an aggressive policy and programme of promoting and funding cooperatives.

You complain about the form of the coop - i.e. state owned companies designed to create jobs as opposed to "compete in a free market." What is wrong with using the quintessential capitalist form of the 'company' to achieve objectives of generating jobs and engaging in economic activity? The fact that the state is purchasing the output and there is no free market competition, as you call it, seems to affect your obsession with the free market.

It is the failure of the so-called free market competition which existed unchallenged for so long in Venezuela that produced massive poverty and created untold exploitation that is the direct root cause of what is happening today in Venezuela and many other parts of Latin America.

The so called free market is freedom to exploit and free lunches for the 'haves' while most of the people remain unemployed, hungry, homeless, sick, uneducated and despairing.

The misguided neo-liberal, private sector model that promotes wrenching poverty and inequality is a failed model and is being swept away all over the world, especially in Latin America where it was accompanied by unconscionable foreign exploitation of national resources by local oligarchs, by brutal dictatorship, repression and torture, pauperization of entire nations while a few generals, politicians, local oligarchies and their foreign masters rule over the people like modern slavemasters. No one who refuses to acknowledge this and its root cause has any credibility and moral authority to pronounce on the changes now taking place. The revolution jolts open the long silent and self muzzled mouth to now spew venom on the revolution.

As for the document on coops itself, although the goals are very high sounding and idealistic, there is nothing essentially wrong with placing those ideals as goals for future. During slavery and feudalism many dreamed of a future of social justice and equity.

They too were dismissed. At that particular historical juncture, ordinary people imbued with the dominant ideological positions of the principal economic/political forces just could not have envisaged anything other than that system to which they had become so accustomed and were thus incapable of contemplating change. But change did take place under the pressure of class formation, class struggle and technology. The great utopian socialists Fourier and Owen especially since 1802 outlined ideas for a world based on fairness. Engels explained all of this in his seminal work Socialism: Utopian and Scientific and in it he especially differentiated between the two since many still erroneously believe that one is a very "special brand" of the other. No such thing.

So it is today. Two hundred years after Owen, many naively reject the notion of the inevitability of radical social change, and supercession of one economic system by another. They cling falsely to the idea of the permanence of the global capitalist order and its subsidiary domestic free market system, all of it based on greed and plunder producing inequality and poverty.

No one expects that radical transformation such as that being attempted in Venezuela is a simple task. Far from it. Revolution even peaceful revolution as the one unflolding in Venezuela has many challenges. Years ago that prompted Mao Tse Tung to remark that "Revolution is not a dinner party, it is not doing embroidery, it is not magnanimous." It is often violent because it involves major changes in class relations.

A genuine revolution peaceful or not involves a new class taking over the reins in politics and in the economy, in culture in everything. Guevara's ideas therefore about creating a 'new man' in a new revolutionary order is quite understandable. Guevara did not mean this to take place overnight. These things take a lot of time.

As for the reference in your editorial to Burnham and his experiment with cooperative socialism, it is not true to say that Burnham's ideas were not founded on any form of ideology. They were definitely founded on the notion of the cooperative as the engine of growth rather than private enterprise, as we know it.

And so too is Chavez's policy of fostering cooperatives in Venezuela. It is properly founded. It is the framework within which the problems of poverty and unemployment are being addressed. Without a strong cooperative sector, the revolution will not be able to deliver and address the needs of the poor and unemployed. The need for a supportive state sector becomes also a prerequisite for economic transformation. No wonder the appeal of the tri-sectoral, mixed economy is so strong. It is a rejection of the all-embracing capitalist model whereby the state sector and coop sectors are relegated to the dustbin.

We have seen that the capitalist model with the hegemony of a few, particularly the rapacious foreign few, cannot develop a country and deal with the myriad needs of its people, particularly the question of democracy, poverty and corruption. In Venezuela, special laws have been passed to deal with corruption - a legacy of pre-Chavez and contrary to unsupported conjecture, the cooperatives are making a serious impact.

According to Camila Harnecker, writing on the situation in Venezuela, the number of coops increased from 762 in 1998 to 83,769 by August 2005 and, "it wouldn't be totally misguided to assert that coops have contributed to the increase in formal employment."

Official statistics show unemployment decreasing from 16.8% in 2003 to 13.7% in 2004.

On the question of democracy, you state that democratic freedoms "might" be under threat, that Chavez "might" be leaning towards autocracy. Chavez in November 2004 articulated his commitment to "establish a new democratic model of popular participation," to replace the pre-Chavez democracy when 80% of the population lived in poverty and squalor amidst plenty. And so he should.

Yours faithfully,

Ramon Gaskin

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