For the Last Time: Dictatorship Didn't Kill Venezuela's Economy, Socialism Did.

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3 MIN READ - Thoughts from the Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff about dictatorship as an alibi for Venezuela’s socialist failures.

President Donald Trump’s new sanctions against Venezuela have inspired western progressives and socialists to emerge from their recent sheepish silence and resume excusing the bankrupt nation’s collapse as the fault of anything and everything except socialism itself.

For example, there’s the new conspiracy theory that Trump’s sanctions—imposed in 2019—magically went back in time to 1998 and retroactively produced two decades of shortages, declining oil production, hunger, and inflation.

But the most popular recycled apology is now “The problem isn't socialism. It's dictatorship."

Click here to read an example of a typical apologist article from the press.

The excuse here is that it's dictators like Venezuelan President Nicolas Maduro who bring economies to ruin, not socialism which—characterized by nationalization of industries, price controls, and widespread distribution of shrinking wealth—is still inherently superior to capitalism.

The only problem with the "dictators, not socialism” argument is that whenever dictators have shifted gears and tried capitalism instead things have turned out really well.

A few examples:

1) Augusto Pinochet is widely condemned by socialists as a dictator who overthrew the Chilean Marxist Salvador Allende regime and killed thousands of suspected communists in the aftermath. But this dictator also employed a capitalist economic system with the help of Milton Friedman and University of Chicago economists who recommended free market reforms.

The Allende-era hyperinflation and chronic shortages rapidly disappeared and within a decade Chile was the top performing economy in South America. Economists today still refer to the Pinochet economy as the “Miracle of Chile.”

2) After the genuine socialist dictator Mao Zedong died and left 60 million corpses behind, another dictator, Deng Xiaoping, took over and opened the Chinese economy to markets, private property, foreign investment, and legal profit. Nobody has starved since and today China is the world's second largest economy.

3) Chiang Kai-Shek imposed martial law on the island of Taiwan for 26 years and his son for another 13 years after that, but they implemented market-based economic policies. By the time the first public presidential elections took place in 1992 Taiwan was already a wealthy country.

4) Francisco Franco jailed and executed hundreds of thousands of suspected socialists/anarchists but also implemented capitalist market reforms. During the 1960’s and 1970’s he (according to Wikipedia) “converted Spain's economic structure into one more closely resembling a free-market economy, [and] the country entered the greatest cycle of industrialization and prosperity it had ever known” in what’s known to economists as the “Spanish Miracle.”

But since Franco's death Spain’s democracy has drifted back towards socialism with a large welfare state and has been a basketcase for over a decade—its unemployment rate recently “falling” to 14.5%.

5) Lee Kuan Yew was criticized for being a dictator for three decades in Singapore. He adopted free market policies (Singapore has been ranked the #2 freest economy on earth for decades now) and in a little over a generation the island nation with no natural resources has soared from developing nation status to higher GDP-per-capita than the USA in another "economic miracle."

(BTW how often have you heard the phrase “economic miracle” associated with socialist countries?)

6) South Korea was run by a series of postwar dictators including two decades under Park Chung-Hee until his assassination in 1979. All embraced free trade and open markets and under Park the economic “Miracle on the Han River” completely reshaped and modernized the country. South Korea was another "Asian Tiger" even before the first public presidential elections in 1987.

7) And most recently Western left-progressives and liberals have whipped themselves into a feverish hysteria that Donald Trump himself is a dictator who subverts democracy. Yet to their puzzlement that dictator's corporate tax cuts and rollback of strangling regulations has made America the best performing advanced economy in the world.

All these real or alleged dictators rejected socialism, all embraced market capitalism, and all managed to make their citizens rich with no empty shelves, long lines, shortages, power blackouts, eating zoo animals, hyperinflation, or starvation.

Meanwhile the dictators who adopted socialism instead include Fidel Castro, three generations of North Korean Kims, Josef Stalin, Pol Pot, Salvador Allende, Siad Barre (Somalia), Mengistu Haile Mariam (Ethiopia), and of course Hugo Chavez and Nicolas Maduro. They've all consistently produced famines, hyperinflation, shortages, and pre-industrial age living conditions.

So once again the economic problem in Venezuela is NOT lack of democracy. The problem is socialism. Period.

ps. Note that every cited “capitalist dictatorship” has also rapidly adopted democratic political reforms and popular elections (exception: Deng Xiaoping). But no socialist dictators have been willing to give up power without dying in office or being violently deposed—except for Maduro. The verdict is still out whether he’ll walk out of office or be carried out.