On the Recent Crisis in Venezuela: Rejecting the "Naturalist" Fallacy in the Theory of Economic Crisis


Nicholas Partyka I Social Economics I Theory/Analysis I June 4th, 2014



Let us think about hurricanes for a moment. What this has to do with economic theory will become clear as we proceed. For the moment, please bear with me as I elaborate. I want to make a point here about how economic crisis is typically perceived and understood, or rather misperceived and misunderstood. What I will be presenting here is a view of economic crisis as inherent to market activity; this is in contrast to the dominant view of crisis. Many people both within and outside of the economic profession and the business world understand economic crises similarly to how they understand natural disasters, e.g. hurricanes. In both cases, they see the event as coming from outside the system, as sui generis phenomena. Economic hurricanes are understood as forming off the mainland (if one follows the idiom here) of economic activity and then crashing into it. In the eyes of most mainstream commentators and analysts there is often little relation between the activities of agents occurring on the mainland of the economy and the conditions farther out to sea. When this misperception about crises is overcome, I want to make use of this new found clarity to address another important point: namely, the way our view of crisis can lead us, or again mislead us, to view world events. I want to do this with specific reference to the recent bout of economic and social unrest in Venezuela.

Hurricanes are a "natural" phenomenon. They arise due to causes and conditions of which we are aware, and can even predict with a great degree of accuracy. Hurricanes, then, are a phenomenon of the natural world. This is to say that humans do not cause hurricanes, we do not make them; at least not in the same way we make shoes. Global climate change due to the massive scale of human-made carbon emissions may cause changes in the Earth's ecosystems, which makes hurricanes and other extreme weather events more frequent. The results of the best science thus far has certainly suggested that this is the case, or is very likely to be so. Regardless, the way humans "make" hurricanes is in this sense beyond the scope of the point to be made here. So let me reiterate again, this small point; humans do not create hurricanes in the same way we create the goods we use.

Hurricanes then, along with many other phenomena, are 'natural' in this way. They are not the result of conscious human production. They arise, they perform, and they dissipate. This is in very broad brushstrokes how a storm, a hurricane for example, "lives"; if one understands that term here. What a storm is and does is outside of human agency. We predict, prepare for, endure, and clean up after storms. One cannot turn off a storm; one must simply wait for it to be over. Even though one knows how and why and under what typical conditions storms arise, one must simply accept that one must live through it, endure it.

In another colloquial expression, we say hurricanes, earthquakes, comet strikes, avalanches, et cetera are "acts of god." They are phenomena that are exogenous to human daily activity. They come from outside, from beyond the realm of our control, they arise and act against us, and then are gone. For many people (including scholars and economists) economic crises are the same. That is they share a view of economic crises that assimilates them to natural disasters. I hope one can now see the sense of "natural" that is being invoked here. An economic crisis is, in the minds of a majority, a natural disaster. Even though, just as with hurricanes, we have a great deal of insight into the causes of economic crises and the conditions which often contribute to their occurrence, most still see economic crisis as an exogenous phenomenon, as an economic "act of god."

The truth is that economic crises are artificial; that is they are produced, and not natural. Economic crises are not like hurricanes, they are not "acts of god." Imagine if you will a stream of water running down a hill. Now imagine you drop a large rock in the middle of that stream. The water effortlessly and immediately parts as if to get out of the way of the rock, so as to not have its downward flow impeded. The water, "acting of its own volition," parts itself at the leading edge of the rock, and then rejoins itself on the back edge, and all without any consciousness, and intentionally directed activity. This is also how the "invisible hand of the market" is alleged to work. Impersonal forces act and react to what humans do without the need for anyone to be directly orchestrating the changes. Demand increases, thus supply increases. Wages go up, prices follow suit. These are a couple examples of the so-called "laws" of the economy. These are laws that are supposed to operate independently of conscious human choice. Just like the laws of gravity and electro-magnetism, the laws of the economy are made out to us as immutable and "natural."


"Physics Envy" and Modern Economic Orthodoxy

This false perception of economic "laws" is aided and abetted by the increasing degree of scientism in modern society. Economists, quite intentionally, as they pretend to be a value-neutral discipline, wrap themselves in the garb of the more objective sciences, the so-called 'hard' sciences. This is all so that their pronouncements can carry the same weight as those advanced by physicists and chemists. This trend of scientism is at least a few decades old now. It amounts to this idea or belief that all scientific or scholarly inquiry should involve the researcher emulating those 'hard' science practitioners, who are the paragons of objectivity and value-neutrality. Thus even the social sciences have been infected with "physics envy"; the desire for a discipline to be as "objective" and unbiased as physics is thought to be.

This objectivity thought to belong to hard sciences is also to be found in medicine. It is not a secret that medical doctors in our society are invested with a lot of authority. That is when doctors speak, people believe they speak from great authority, and are thus likely to defer to the judgment of the doctor. Economists, in idolizing the 'hard' sciences, wish to take on this sense of speaking from authority as well. In the case of economists, their "obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in."[1]

Contributing to this perception of economists as being more like doctors and physicists than psychologists is the sense that just as with doctors, the training of the economist is in arcane knowledge that most could not come to possess. Thus, a special authority has been extended to economists because they are, in a sense, the weathermen of the economy. They are the ones with special knowledge of the natural forces, and scientific principles to be able to divine with future contours of the economy. And just like weathermen, the fact that they are often terribly wrong does not put them 'out of business,' let alone diminish the perception of their authority. In the eyes of the un-tutored masses, the economist knows how to predict and plan for economic crises in the same way the weatherman does for storms. Unlike the weatherman, and more akin to a doctor, the economist not only diagnoses problems, but is also in a position to offer remedies.

The main difference, however, is that while the weatherman can take no credit for creating what we have already described as an "act of god," the economist (those professional non-academic economists; especially bankers) can take credit for an economic crises. Deliberate human activity is capable of and usually does form the basis for economic storms. Scientists, when possessed of enough control over environmental conditions, can reproduce natural phenomena like tornados in miniature in laboratories. Economists, and their counterparts in the business world, are far more often than scientists in a position of control of one or more of the variables that lead to the formation of the conditions required for economic crises.

All the decisions about production volume, price levels, investment rate, et cetera are under the control of business owners and their hired managers. All the choices that lead to economic crisis are made by individual economic agents in specific circumstances, and usually because they're seen as logical choices in those circumstances. Whether we're talking about factories, banks, or producers of other services, economic agents try to maximize their welfare, usually measured through the proxy of income, and in so doing are led to individually rational choices that contribute to collectively irrational outcomes. This is only to point out what many economists have denied or tried to deny before and even after Marx; namely that the business cycle exists. The famous boom and bust pattern is the result of dynamics that arise out of the structural position of market actors vis-à-vis each other, and their market-imposed conception of rationality, i.e. profit maximization. This historically observed tendency toward over-production is just one example of the market's inherent tendency toward crisis.[2]

The sad, and usually intentionally obscured, truth about economic crises is that they are not exogenous in that they arise beyond the ability of humans to predict and to prevent them. The reality is that economic crises are endogenous to "free market" activity. As we just saw, crises can arise systemically through perverse alignment of various actors' incentives. However, crises can also be intentionally created, and utilized as a mechanism for the spectacular enrichment of the already grotesquely wealthy. This can certainly be said of the most recent US financial crisis. What is also largely hidden about economic crises, and this one in particular, is that they are very often deliberately created so as to provide the opportunity for exactly the kind of outrageous profiteering we just mentioned. There is a great deal of money to be made in creating speculative financial bubbles and then pricking them as one is the first one to sell his or her stock. And moreover, that activity structure more or less as we just described is in the main how the financial industry operates, and always has. Bankers and other economists toe a similar line on the utility of the financial sector. The reality is that their business is, and has been for centuries, predatory in nature.[3]

In the interest of clarity, it is necessary to make a qualification to the discussion above. We have been talking of economists broadly speaking, but we should indeed refine this. As I alluded to earlier, when talking of economists here, I aim to lump together both professional economics professors in universities, as well as those who are in the business world, regardless of whether they have formal academic training in the discipline of economics. Indeed, it is the latter who I am pointing to as most directly responsible for creating the necessary conditions for economic storms. Those who have direct and personal control of the productive decisions of economic units, and the resources they possess are the "economists" that play the most important role in creating or sustaining economic crises.


Capitalist Hypocrisy and the Case of Venezuela

If one takes up this orthodox position, it makes economic and social events much more difficult to analyze, explain, and understand. One place where we can see this problem in action today is in Venezuela. If one attempts to understand the current events unfolding in Venezuela from the point of view of economic orthodoxy, one will not be able to come to a full understanding of these events, their causes, their potential solutions, and the portents for the future direction of Venezuelan society they are pregnant with. If one listens only to the reporting of the dominant media (that is the capitalist media) within the US and around the world, then one will develop a rather skewed perspective on the events taking place in Venezuela over the last few months. [4]

The first thing to point out about the case of Venezuela is that capitalist economists, in explaining the events there, deny the very idea we just explained is central to their discipline. This is an interesting piece of hypocrisy on their part. Many commentators on the recent unrest in Venezuela, contrary to the main current of economic theory, blame the government for the economic storms buffeting the country. [5] In the eyes of capitalist economists, it would seem that it is only when left-leaning governments act to curb some of the abuses of the market that economic crises are endogenously created.[6] When markets are "free," storms can only come from "the outside," but when even the slightest regulation is introduced that impinges on capitalists' profits, then they arise from "the inside" and are based on conscious human choice (i.e. government intervention).

Again, the contrast with the 2008 US financial crisis is instructive. The dominant media narrative about that event is that it was a "perfect storm" caused by the confluence of economic forces not within the control of the banks against whom this storm raged. Even though some do blame the banks for their own malfeasance, they typically see a large role for outside factors in explaining the banks' collapses. A couple of these banks even sank, so to speak, under the pressure of the storm. A sober-minded analysis of this financial crisis shows it to be the direct result of conscious activity on the part of the bankers. They, in fact, intentionally created the conditions for a storm, and then profited immensely from the damage it wrought.

In Venezuela, among other places, for example, it is said to be the unwise economic and social policies of the Bolivarian government that is causing the storm. By "unwise" polices here one must read 'socially conscious, participatory, and egalitarian.' The kinds of unwise policies being utilized by the Bolivarian government include subsidies for food, gasoline, capital controls, and nationalizations all aimed to maintain access to essential goods and services for the poorest Venezuelans. Why cannot the Venezuelan government claim they too are simply the victims of an economic storm beyond their control? It would appear from the standpoint of classical economic theory that only the choice to consciously invest money in the economic and social development of the poorest persons in society causes endogenous economic storms. The choice of some to securitize risky mortgage-backed debts and then sell these to institutional investors, and the choice of others to then sell insurance against the value of these investments, and the choice of yet others to create debts to be securitized that are intended to fail (this is in fact what 'sub-prime' really means) does not apparently result in endogenous crisis, at least not as capitalist economists interpret the situation.

This is an obvious piece of hypocrisy. When crises occur in capitalist countries, every excuse in the book can be found and employed to prevent economists or lay-persons from coming to see the capitalist system as culpable. According to some fundamentalist schools of economic thought, crises are not technically possible in a free market.[7] On these types of views it is government interference in natural market dynamics and processes which creates crises. Other, more moderate, schools of thought do on occasion place blame, sometimes even criminal responsibility, on individual market actors.[8] However, even these more responsible scholars fall short of critiquing economic crisis as an endemic feature of free market activity. Capitalist economists then, even when they acknowledge wrongdoing in the market, rarely if ever admit to wrongdoing by the market. While, in their eyes, the market may on occasion be manipulated by malfeasant individual agents, or on other occasions by corrupted institutional actors, none see the market itself as guilty. Some thinkers even take crisis as a positive feature of capitalist economies.

On these latter kinds of views, just as in every life a little rain must fall, so too in capitalist economies must occasional storms happen. And, so the capitalist line goes, this is ok. Just as a spot of rain can be borne without too much grief, so too economic storms will pass, and when they do we will all just get back to life as normal. This is indeed the main outline of Schumpeter's argument for creative destruction. [9] The problem here is that the storms, as history shows, are more than just "occasional"; in fact, they have become both more frequent and more severe over time (just as Marx predicted). Neither are these storms a simple inconvenience like getting soaked in the rain. Some can weather an economic storm better than others. What to some on the higher ground of the income spectrum is a light sprinkle is enough to drown others lower down. Moreover, as we've seen, these storms are not beyond our control, they are not "acts of god."

When, however, crises occur in countries that do not adhere to the capitalist orthodoxy, the chorus of economists discovers within its ranks a rather convenient consensus. This is the view that in these non-conformist countries, the economic storm is suddenly the result of the bad choices of those managing the economy.[10] I suppose it is only fitting that the capitalist economist gets to both have their cake and eat it too. Only they get to have it both ways. For them, crises not only do not prove the capitalist system is flawed, but they also 'conclusively' prove that non-capitalist, or even some kinds of mixed, economies are doomed; and were hopelessly so from the very start. What a masterful stroke of luck then for the capitalist economist! What an unassailable position they have made for themselves. Were it only the case that their position was logically consistent, they might have won the day.

What we are now in a much better position to see is that the economic storms that have been blowing in Venezuela, some for the better part of a year and a half, have not arrived from the sea, so to speak. The economic troubles being experienced in Venezuela are the result of deliberate choices on the part of those who control the Venezuelan economy. Contrary to the erroneous public perception in the US, and other places in the world, it is not the Bolivarian government that is in control of the economy. The fact is that the majority, two thirds is a reasonable estimate of proportion, is in what we would call 'private' hands; that is, it is owned by profit-minded capitalist elites. The Venezuelan government does own businesses (and it certainly owns the most important firm in Venezuela, namely PDVSA), and employ people, but it is not in control of the entire economy, or even most of it.


Corporate Sabotage and Hoarding Goods

The economic problems being experienced in Venezuela are the result of actions taken by capitalist owners in response to the activity of the Bolivarian government as it tries to improve the lives of the poorest citizens, who make up the majority of Venezuelans. [11] Whether we talk about the high inflation rate, the shortages of basic goods, capital controls and exchange rate distortions, high crime rates, or other economic and social ills in Venezuela at present, the explanatory trail leads almost ineluctably back to the private decisions of the owners of private businesses to pursue their personal economic advantage against that of the poor, or their choice to commit intentional economic sabotage. This trail is of course hardly pursued, or even gestured toward by the dominant capitalist media in the US. In the US and around the west, we treat shortages, or high inflation rates, like hurricanes, and then blame the Venezuelan government's economic policies for creating the conditions that lead to outbursts of protest and unrest like that in February. Shortages just occur, according to the dominant way of thinking about economic crisis. Of course nobody likes shortages, and so people are understandably aggravated by this, which of course helps contribute to the feeling that protest is needed. The trouble, of course, is that the convenient economic narrative being told in the US and the west is based on a selective interpretation of economic theory and the willful ignoring of facts on the ground.

To take only one oft reported example - toilet paper. Shortages of this were mentioned as a prime example in numerous articles on the economic situation Venezuela.[12] What is almost universally neglected in these articles is that while these shortages have existed, more than one large cache of hoarded toilet paper has been uncovered in Venezuela.[13] And, it is not the government that is keeping this toilet paper, or ordering it to be kept, locked in warehouses. It is the producers, and more prominently, importers who deliberately hold back from distribution this toilet paper; in fact just the opposite.[14] All in an effort to drive up prices, and therewith create shortages and economic crisis, and therewith the kind of social unrest that can utilized for counter-revolutionary political purposes. What is true of toilet paper is true of many other kinds of essential goods, including basic food stuffs like rice, cooking oil, and wheat to name only a few.[15]

The government introduced price control as part of an effort to make sure that the prices of basic goods do not become beyond the reach of the poorest Venezuelans. This policy as aimed directly at improving the welfare of the poorest. However, in response to this dastardly attempt to make life easier for the poorest and most disadvantaged the rich have decided to pursue their own interests above those of the majority of Venezuelans. As the price controls came into effect they created a situation in which the rich, those who own business, especially import business, decided to hold back stock. Why? Because price controls mean selling products for a lower rate of profit than if one were to sell at market prices. The refusal to accept lower profits so that the poorest can have access to basic goods at prices that do not help serve to keep them in poverty and destitution has led to businesses hoarding goods. This is effective since hoarding reduces supply, thus increasing prices. With higher prices firms can sell less, and make the same profit as before. One need only look, which of course most in the US are not interested in doing, at the many confirmed reports of businesses hoarding goods to see why there are shortages in basic goods in Venezuela, and why this has nothing to do with the inherent worthiness of the government's policies.


The Market's "Automatic Punishing Recoil" Mechanism

The economic troubles in Venezuela are the result of both deliberate economic sabotage and what Charles Lindblom has called the market's "automatic punishing recoil" mechanism.[16] The idea is very simple. When laws are enacted that run contrary to the interests of profit-minded capitalists, those capitalist react by doing what is in their best interests. Let's take an example. If a democratic government wants to raise taxes, say to provide free healthcare to all citizens, firms will respond by slowing their economic activity. As firms try to retain the size of their profit margins, they will naturally do things that slow down the macro-economy and thus in effect punish those people who enacted the law. If firms perceive, as a result of the passing of the new law, fewer opportunities for profit, they will scale back investment; both in capital goods and labor. As less money is spent by some, others (who supply these people) will also cut back. The ripple effects of this economic contraction will run through the whole economy if unchecked. The increase in unemployment, and the resulting loss of purchasing power, leads to less aggregate demand, which again lowers production.

This process of contraction is automatic in that no one has to tell business owners to do this. They do this because it is directly in their pecuniary interests to do so. They want to preserve their profits, and so the 'logical' choice for many will be shedding workers and the costs that they entail. Fewer people working means less money being paid in wages, which means a diminishing of purchasing power and thus aggregate demand. This latter entails a slowing of investment and spending by both firms and consumers. When consumers reduce spending, firms are likely only to continue cutting back as decreased consumer purchasing power further diminishes the prospects of making profits. When consumers are unhappy and suffering, they are likely to make their elected representatives aware of this. Representatives themselves are also consumers, and likely to feel the pinch. This is the automatic punishing recoil Lindblom describes. This mechanism basically ensures that democratic policy making is beholden to, or more accurately imprisoned by, the profiteering of capitalists. Any time government activity limits the ability of capitalists to profit (by creating programs that assist the majority in need), the economy responds "automatically" by slowing down, thus imposing large costs on society. This is, in effect, a kind of extortion. Capitalists say to society basically, "either maintain policies that serve our best interests or we will make you all suffer." Since capitalists are typically very wealthy, they have a greater ability to weather economic storms and slowdowns with little to no effect on their ability to live their accustomed lifestyles, let alone any effect on their ability to access the means of subsistence. The same cannot be said about the working class, or the poor. This asymmetry then is what marks out this dynamic as extortionary and exploitative.


Counterrevolution against the Bolivarian "Threat"

For more than a decade now, the Bolivarian government of Venezuela has actively tried to lift up out of poverty and neglect the vast majority of Venezuelans through various kinds of social programs. These programs, like any other good or service, of course cost money. One must pay the doctors that go into the most underserved areas of the country; though, in Venezuela, the doctors that go to these areas are mostly Cubans. To pay for these programs, the government has utilized funds from the state-owned oil company PDVSA. Under the late Hugo Chavez, the Venezuelan government took greater control of PDVSA and began to use portions of its revenue to fund these programs, most famously the social missions, e.g. Mision Mercal, Mision Ribas, Mision Robinson, et cetera. Unbeknownst to many in the US, and the west generally, these programs have been a huge success. The direction of change and the scale of change in some of the main social indicators for Venezuela since Chavez was elected are striking. [17]

The Bolivarian government of Venezuela has overseen one the fastest and most dramatic reductions in poverty, especially in extreme poverty, anywhere on the planet in the last decade. Without wading through statistics here, what we can say is that poverty and extreme poverty in Venezuela has been cut in half; and this is a slightly conservative estimate. This does not mean Venezuela does not have poverty anymore, or the economic and social challenges that come with a large part of society in poverty. Before Chavez, more than 40% of Venezuelans lived in poverty, whereas today that number is closer to 20%. [18] Extreme poverty was reduced from the neighborhood of 15% to around 5%. Moreover, due to the policies and programs of the Bolivarian government the caloric intake of the average Venezuelan rose a full 50% in its first dozen years of being in power. [19] These are indeed incredible accomplishments, not just in the eyes of marginalized Venezuelans, and should not be overlooked. However, it is still correct to say that a nation in which about one fifth of the population lives in poverty will still have the kinds of social ills that typically accompany such levels of poverty and misery.

It is against this egalitarian social project of the Bolivarian government that the capitalist class of Venezuela is reacting. They do not want to spend time and money uplifting the poorest members of Venezuelan society, at least not if that means redistributing their wealth and privilege. These are people who have been against Chavez since day one, who have never wanted to do anything to bring the poor out of poverty, let alone encourage them to engage in politics and organize themselves to do so effectively. It is to prevent both of these things that the Venezuelan capitalist class is creating economic crisis inside the country. They think that if they can cause enough economic turmoil and chaos, they can derail the Bolivarian revolutionary project in Venezuela. Their idea is to utilize the automatic punishing recoil mechanism to retard to advance of the Bolivarian project. Ideally, they would use the turmoil, as they have tried before and again this year, to oust the Bolivarian government, returning themselves and their cronies to power, and then begin to dismantle the entire apparatus of the Bolivarian revolutionary project.

Why should one think this? Precisely because this is what the Venezuelan opposition has done before. In the period from early 2002 to 2004 the Venezuelan opposition was very active and forcefully attempted to remove Chavez from power, and thereby to stop the Bolivarian revolution dead in its tracks. The was of course the now famous, or infamous, attempted coup in April 2002 in which members of the old political and social elite from the Punto Fijo period actively and openly not only participated but lead. When the coup failed after only two days it stunned the opposition. In response the opposition began to utilize other tactics, like general strikes. Then, towards the end of 2002, they began a strike in the crucial oil sector. The intention in all these tactics was very transparently to cripple the economy in order to starve the government of revenue. If this could be done, then the government would lose the support of the barrios and he could then be ousted, or so the opposition reasoned. This is very obviously an attempt at an economic coup d'etat. Not long after the strike failed the opposition initiated a referendum on Chavez's Presidency. The Bolivarian constitution of 2009 allows for a recall referendum to be held half way through a Presidential term if enough signatures can be gathered. [20] [21]


Conclusion

We should be able to see now is that the economic and political crisis currently unfolding in Venezuela is an engineered crisis. Economic crises in general are not like natural disasters, they are not exogenous. The current economic and social crisis in Venezuela is the same. It is an engineered economic crisis with clear political motives. What we're seeing in Venezuela today is not an economic hurricane, but rather an attempt at an economic coup d'etat. This recent bout of social unrest and political protest in Venezuela is a page taken out of the same playbook used against Chavez in 2002, against Allende in 1973, and against Arbenz in 1954 to name only a few examples.[22]

The untimely death of Hugo Chavez last year presented the Venezuelan opposition with the chance they had been waiting for. [23] Many in the Venezuelan opposition and in the US foreign policy establishment as well, thought that the Bolivarian revolution would fade away without Chavez. Hugo's almost two-year battle with cancer gave the opposition plenty of advance warning, and thus time to prepare. The opposition seemed to unite behind Henrique Capriles Radonski in the 2013 elections, but Nicolas Maduro won regardless. Mr. Maduro is Hugo Chavez's hand-picked successor. Despite losing yet another election, and this one without Hugo Chavez on the scene, the opposition continued to perceive the government as weak or unstable. They continue to think that without Chavez the Bolivarian movement can be broken, and that this is their best chance since 2002. This is the real explanation of the economic and social crisis unfolding in Venezuela over the last few months. This is, of course, not the explanation being propagated in the dominant media in the United States.



Notes



[1] Piketty, Thomas. Capital in the Twenty First Century. Belknap Press of Harvard University; 2014.

[2] For an excellent history of economic crises see Charles Kindleberger's Manias, Panics, and Crashes. Palgrave Macmillan; 1978.

[3] For greater insight into the financial industry see David Graeber's excellent book Debt: The First 5,000 Years. Melville House Publishing; 2011. Also see Arrighi, Giovanni. The Long Twentieth Century. Verso Press; (1994) 2006.

[4] It must be remembered, despite all the propaganda, that in Venezuela the media, especially the largest media organizations, is almost entirely privately owned. 70-80% or so is a common estimate of the extent of private ownership of the Venezuelan media. The largest TV stations, newspapers, and radio stations are all what we in the US would understand as for-profit 'independent' journalism operations, basically identical to the ones that provide most of the news here at home. According to one recent report the government claims a mere 5% of media outlets are state owned; (http://www.newrepublic.com/article/116731/how-nicolas-maduro-controls-venezuelan-media)

[5] http://finance.fortune.cnn.com/2014/03/14/venezuela-protests-inflation/

[6] http://www.forbes.com/sites/timworstall/2014/04/28/venezuelas-problem-isnt-with-the-aim-of-helping-the-poor-its-with-the-methods-theyre-using/

[7] See the work of Ludwig von Mises and Friedrich Hayek. Both are prominent members of the Austrian School. It is among this group that the belief in the impossibility of markets being out of equilibrium is strongest.

[8] Paul Krugman for example would fall into this category.

[9] Schumpeter, Joseph. Capitalism, Socialism, & Democracy. Harper and Row; 1942.

[10] http://www.cnbc.com/id/101219760

[11] http://creativetimereports.org/2014/04/28/venezuela-where-the-wealthy-stir-violence-while-the-poor-build-a-new-society-dario-azzellini-protests-in-venezuela/

[12] The following is simply one example from a mainstream US publication:

http://business.financialpost.com/2013/05/16/venezuela-toilet-paper/

[14] See, http://www.sibci.gob.ve/2013/09/venezuelan-government-occupies-toilet-paper-factory-to-fight-economic-war/

[15] See, http://www.iht.com/2014/03/10/hunger-for-breakfast-venezuela-facing-chronic-food-shortages/ , & http://www.eluniversal.com/economia/140426/imported-food-worth-usd-166-million-found-spoiled-in-venezuela

[16] Lindblom, Charles. "The Market as Prison". Philosophy & Democracy. Ed. Thomas Christiano. Oxford University Press; 2003. Also see Lindblom, Charles. The Market System. Yale University Press; 2002.

[17] For more information on these programs, how they work, and their main effects see Venezuela's Bolivarian Democracy. Ed. David Smilde & Daniel Hellinger. Duke University Press; 2011.

[18] The World Bank for one example uses the following benchmarks for measuring and assessing poverty in a country. Persons who live in "poverty" have an average income that has the purchasing power equivalent of $2 a day in 2005 dollars. Persons living on an average daily income of $1.25 are considered to be in "extreme poverty". As the World Bank acknowledges the poverty line will be different in each country, and will be a function of the purchasing power of an income level at current prices compared against the cost of a typical basket of essential goods.

[19] See, http://www.aljazeera.com/indepth/features/2014/03/hoarding-causing-venezuela-food-shortages-20143210236836920.html

[20] For further information on these events, their details causes, and effects see Jones, Bart. Hugo!. Steerforth; 2009. Or Gott, Richard. Hugo Chavez and the Bolivarian Revolution 2nd Ed. Verso Press; 2011.

[21] http://www.thenation.com/article/178496/lasalida-venezuela-crossroads#

[22] One can confirm this with a rather quick Google search, or even Wikipedia. One can also see Kinzer, Stephen. Overthrow. Times Books; 2006.

[23] http://www.telegraph.co.uk/news/worldnews/southamerica/venezuela/10359267/As-socialist-dream-crumbles-Venezuelans-find-Nicolas-Maduro-a-bad-copy-of-Chavez.html