Prison for profiteers as prices plummet

Editorial note: If you have not yet read our mission statement above, please do so in order that you can put our blogs in context. 

20 November 2013

Exemplary news from Bolivarian socialist Venezuela.

The government has just jailed 100 businessmen for profiteering.

What a contrast with the limp-wristed response of capitalist Angl0-Saxon governments to the profiteering which triggered the international economic slump and banking meltdown from 2007 to 2011.

At the core of the crisis in the north was the fraudulent repackaging by banksters of dodgy non-performing mortgages so that they could be sold as bona-fide blue-chip securities on the financial markets.

How many banksters have gone to jail following the resultant near-collapse of the world economy?

To our knowledge, none. Least of all those bank kahunas who were each paid a king’s ransom in bonuses and salaries to ensure that their businesses stayed shipshape.

In Venezula, however, they do things differently.

President Nicolás Maduro is taking a leaf out of Lenin’s book. After the overthrow of the Romanovs in 1917, the Communist leader launched a campaign to dispossess the rich farmers, the kulaks, who for decades had grown fat on the backs of the serfs.

“We can’t just close businesses,” Maduro said in a televised speech on 10 November. “The owners have to go to jail.”

He has described businessmen who exploited Venezuelans with unjustified price hikes as “unscrupulous criminals”.

Maduro first cracked down by arresting the managers of an electronics chain that was charging 54 000 bolivars (around $ 8 636 or £ 5 350) for a washing machine. Soldiers from the national guard then occupied the stores and forced a dramatic markdown in prices. A fridge that the chain had been selling for 50 000 bolivars was reduced to 16 000.

Maduro has warned that his crackdown on electronics stores is just the “tip of the iceberg” in a nationwide drive against speculators. Shoes and clothes shops are apparently next in the firing line.


Hats off to Nicolás Maduro, who is proving a worthy successor to the late Hugo Chávez, president of Venezuela from 1999 until his death last March. Maduro took over in April.

According to press reports, with the annual rate of inflation at over 50 %, Maduro’s decision to send in the troops to force price-cuts has proved popular, at least for the time being.

A report in the London Guardian on 16 November 2013 says: “For many people, buying a refrigerator or a wide-screen TV was a distant dream that Maduro has now made possible.”

However, there are clouds on the horizon.

First, there is the distinct possibility that businesses, fearing that they will have to sell at sacrificial prices, may decide not to replenish inventories in the short-term with a resultant drying-up in the supply of goods.

Secondly, while stocks of imported goods have so far been plentiful, sucked in by the lure of high profit margins, there are widespread shortages of locally produced staples, such as sugar, milk and flour, where suppliers lack the same opportunity to make a fast buck. Unless dealt with urgently, this could easily led to serious social unrest.

Thirdly, there is a flourishing illegal currency market outside government control which exploits the difference between the low official rate of exchange for the bolivar and the rate at which the currency changes hands on the black market, which is ten times higher than the official rate. Maduro needs to stamp out the black market if his currency controls are to work.

Fourthly, the government faces a blizzard of non-stop political criticism from rightwing political circles aided and abetted by Washington, which was involved in an ultimately unsuccessful coup to unseat Chávez in 2002.

Venezuela has one major asset, however. It is one of the world’s biggest oil exporters at a time when the price of oil is riding high.


 You might perhaps care to view some of our earlier posts.  For instance:

1. Why? or How? That is the question (3 Jan 2012)

2. Partitocracy v. Democracy (20 July 2012)

3. The shoddiest possible goods at the highest possible prices (2 Feb 2012)

4. Capitalism in practice  (4 July 2012) 

5.Ladder  (21 June 2012)

 6. A tale of two cities (1)  (6 June 2012)

 7. A tale of two cities (2)  (7 June 2012)

 8. Where’s the beef? Ontology and tinned meat (31 Jan 2012)

Every so often we shall change this sample of previously published posts.


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