The Private Sector in Venezuela – Myth and Reality

By Pasqualina Curcio – Apr 25, 2021

There are many myths about the private sector in Venezuela, the best known referring to its unquestionable efficiency. The following phrases are part of this mythology: “unlike the public sector, which is inefficient and corrupt, the private sector is the only guarantee of development” or “the only one that could get us out of this crisis is the private sector, and if it is foreign, big and transnational, even better” or “the only way to overcome poverty is with foreign private investment”. In Venezuela, the most popular myth of these times is the one summarized in the following phrase, which is tirelessly repeated by neoliberals: “the blame for the current economic crisis lies with the Bolivarian revolution that dismantled the private sector with expropriations and controls”.

The economic history, the facts and above all the numbers alone dismantle these tales. There is no country that has given more incentives, benefits and concessions to private capital than Venezuela, and yet it is the most parasitic that has ever been seen. Let us clarify that when we refer to private capital we are not thinking of the bodeguero, nor of the small businessman, although we are aware that bourgeois is bourgeois and although the labor-capital contradiction is always present we are referring above all to the big companies, the monopolies and the transnationals that have always been and continue to be in our country.

It is not the private sector that generated, with its exports, the foreign currency in Venezuela. Since the nationalization of the oil industry in the 70’s, it has been the public sector that has guaranteed the income of 95% of the foreign currency. The private sector has barely exported 5% of the total, which shows its inefficiency. Not content with this, it has appropriated more than half of said foreign currency from oil exports: since 1976 and up to 2014 (last figure published by the BCV) the private sector has received US$ 695,026 million at a subsidized exchange rate by the State.

Despite all that amount of cheap foreign currency, the private sector, instead of increasing its investments decreased them by 75%: in 1977 private investment represented 24% of GDP and in 2014 it represented 6% (BCV data). Approximately more than half of that money, some US$ 350 billion is in tax havens.

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According to BCV data, between 1976 and 2018 private foreign investments totaled only US$ 57,562 million, that is, not even 5% of oil export revenues during that period. Incidentally, they repatriated profits for US$ 125,103 million, 2.2 times more foreign currency than they brought in for investments. This story that it has been thanks to foreign private investment that our economy has grown 160% since the 70’s is not believed by anyone, on the contrary, what the big capitals have done has been to take away our oil income.

One of the many things that imperialism does not forgive Chávez for is the control of the administration of foreign currency: before 2003, currency that entered, currency that fled, the private sector appropriated 103% of what entered the country (including the money of the foreign debt) and also with a fixed and cheap exchange rate. After 2003, the year in which the control of the administration of foreign currency began, and up to 2018, that 103% was reduced to 40%, still very high considering that it amounted to US$ 426,488 million (BCV data).

With that 60% of the foreign currency that the bourgeoisie did not take after 2003, the State increased public investment and spending 275%: in 2003 it was 12% of the GDP and in 2014 it was 45% which allowed it to cover a large social debt, strengthen public services of health, education, housing, transportation, decrease 57% poverty, free the people from illiteracy, improve nutrition levels, etc.

Another incentive to the private sector has been taxation. Businessmen in Venezuela do not pay taxes. Historically, the income tax burden has not exceeded 2% of the GDP in our country; in other latitudes it is higher than 20%. On the other hand, foreign capital companies do not pay half of it, they are exempted by treaties against double taxation. They are supposed to pay in their own countries.

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As for the myth of expropriations and the dismantling of the private sector, we must say that, according to INE data, for the year 2008 (latest published figures) of the 28,222 economic units corresponding to the industrial activity, only 1.2% were in the hands of the public sector, the remaining 98.71% belonged to the private sector. As for commercial activity and services, 0.12% and 0.88%, respectively, belonged to the public sector. Industry, commerce and services are still mainly in the hands of the private sector.

Furthermore, Chávez is not forgiven for having reverted the privatizations that took place in Venezuela during the neoliberal period, particularly those referred to the strategic sectors for the security and integral defense of the Nation: electricity, telecommunications, water, ports, airports, airlines, oil, gold and steel. Chávez did not expropriate these companies, he reverted the privatizations that took place during neoliberal times. Those companies belonged to the State before the 90’s.

In revolution, and according to Asdrubal Baptista’s data, the profit rate of the private sector in Venezuela increased 144% between 2003 and 2008, going from 5% to 22%, registering the highest historical levels since 1970.

Even during the economic war, in spite of the economic blockade and the attack on the bolivar which has resulted in hyperinflation, the private sector has not stopped earning and taking oil currencies. According to BCV data the private sector has repatriated (taken out of the country) US$ 46,109 million in profits between 2013 and 2018.

It is not true that the private sector in Venezuela was dismantled, on the contrary, it has enjoyed all kinds of incentives to the point that, the only thing missing is to cede to them, on a silver platter, or better said, on a red-painted carpet, part of our territory so that, in a special way, they pass in those areas their own laws, trade with their own currencies, establish their own financial and banking system, have their own legal system and courts while they appropriate our oil, gold, coltan, minerals, fishing resources. All these riches would be exported/extracted directly through a port infrastructure perfectly conditioned by the Venezuelan State for such purposes.

Perhaps having been so condescending with said private sector, accomplice and main actor of the economic war, has prevented not only the fastest advance towards the socialism of the 21st century, but also the fact that Venezuelans cannot dispose of the US$ 350 billion that belong to us, which now rest in the bank accounts of the transnational private sector and which are equivalent to 25 times what was invested to rebuild the whole of Europe after World War II.



Featured image: File Photo

(Internationalist 360°)

Pasqualina Curcio
+ posts

Economist (Central University of Venezuela). PhD in Political Science from Simón Bolívar University (Venezuela). Master in Public Policies of the Institute of Advanced Studies in Administration (Venezuela). She is a Full Professor of the Department of Economic and Administrative Sciences of the Simón Bolívar University. She was Deputy Minister of Collective Health Networks.

Pasqualina Curcio

Economist (Central University of Venezuela). PhD in Political Science from Simón Bolívar University (Venezuela). Master in Public Policies of the Institute of Advanced Studies in Administration (Venezuela). She is a Full Professor of the Department of Economic and Administrative Sciences of the Simón Bolívar University. She was Deputy Minister of Collective Health Networks.