Friday, November 17, 2006

The barter economy: Chavez ain't no Milton Friedman

I have just received the link for a video that I was tracking down. And it coincides with the passing of Milton Friedman. There are some times karmic coincidences that send shivers through one's spine. Not that I am any devout of Mr. Friedman, but his ideas have helped the West prosperity, be it in Wall Street or Santiago, whereas the ideas of Chavez are definitely a one way ticket to pauperization and abject state dependence.

The video next comes from a previous Alo Presidente show where Chavez exposed his economic ideas to bring Venezuela country side to prosperity. If you cannot understand or read Spanish read the rest of this post before watching the video. I understand that the show has been made into an “instructional DVD” by some ministry, and that whomever posted it added its comments. But the Chavez part is authentic and has been extensively shown on TV.

The summary of the video. Chavez proposals are such:

1) Part of the production of anyone should be given to a community center. That is right, given, so as to satisfy the needs of others. How those need are evaluated and met is of course not explained (Milton et al. call this “taxes” and others even called this “taxation without representation”)

2) The rest of the production must be bartered [Trueque]. That is, you go to your local market and you do not get money but coupons that are worth only in your area. Chavez is very explicit here, he even describes the area where he is when he says that the coupons will be only valid “in this mountain, up to such river”.

3) These coupons not only are only valid in your area, but they lose their value over time, with what he calls “oxidation” which is nothing less than negative interest. That is, if you decided to accumulate your coupons (Milton et al. call this savings) they would lose their value and you would lose everything. In other words you are forced to consume on the spot: when you reach the local market with your crop of XYZ you MUST go back home with a load of UVW.

In other words, we are seeing a president of a XXI century country propose to go back to an economical system which had been even overcome long ago, even by the Incas: they might not have had real currency or writing but they had the quipus and efficient central planning with extensive intra regional trading.

The astounding words of Chavez, negating trade between even valleys (each valley has its own coupon only valid in the given valley), negating savings, negating even private property of the labor of you hands are simply astounding. And they astounded the normally devout audience who was looking at Chavez with a total bemused expression that even the VTV cameras could not hide!

The editor of the video is dead on when s/he remarks that it is exactly the same system as the colonial plantation system: workers were paid with tokens that were only valid at the central store of the plantation. Is Chavez trying to tell us that he will eventually become the owner of “Venezuela’s plantation” and Mercal the plantation store where we will go with out tokens? Is he getting people used to a ration card system like in Cuba? You draw your own conclusion.

(hat tip to Pedro, again)

1 comment:

  1. Anonymous2:15 AM

    Chavez is attempting to smash usury which is labor free income parasitic off the labor of honest working people. I wish him the best of luck in that project. Certainly the recent U.S. economic collapse has showed scantily regulated finance capitalism to be an epic fail!


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