So, who should the Venezuelan people blame? The people who try to extend their profits within a state-designed system?

Not in Turkey, thank goodness. Not yet. We make do with wheeling out the “banks exploit the people via interest payments” discourse. Nothing new in Turkey. In Venezuela, however, things have completely gone out of control. The country is now paying for the mistakes made yesterday. Yesterday’s mistakes are causing even bigger mistakes today. This is the key lesson I have learned from the Venezuelan experience. The first lesson is that the state’s aversion to market prices augurs ill as it. later evolves to price manipulation and finally to price caps. The second lesson is that the state does what it does with completely good intentions. The road to hell is paved with good intentions, you know. It is for the same reason that I don’t like state officials warning people about corporate exploitation. The story goes out of control when you consider the price setting process exploitation rather than a technical issue. And at the end of the day, the state seized supermarkets! This is the third lesson I see. Let’s take a look at the Venezuelan case today.

Last week, Venezuelan President Nicolas Maduro declared economic war against the bourgeoisie and imperialism. He decreed that retailers who violated the profit caps would be arrested immediately. He in a way seized the supermarkets. I guess state officials will stand at the checkouts and control prices! Recently, the police temporarily occupied a packaging company accused of raising prices swiftly, and this is not the only example. Wondering why? Because of the local elections on 8 December. The Inflation rate swings around 54 percent. The government is committed to solving the problem with detective measures rather than economic policy measures. About a month ago, Maduro announced as his anti-inflationary scheme, a decree to limit company profits at the level of 30 percent. When told by business organizations that capping prices does not count as economy management, he then accused them of being pro-coup. Having seen that the caps did not remedy inflation, he took it one step further and declared an all-out economic war against the bourgeoisie and imperialism. I guess there is no going back once you have derailed.

Venezuela’s former president Hugo Chavez was really something, he was interesting. True, he was a populist who took many senseless steps, but he at least was charismatic and amusing. I liked watching him anyway. The country’s new president, Nicolas Maduro, is not interesting at all. He is only a populist. In a period when oil prices have peaked, oil producer Venezuela’s economy is struggling. They have money, but the retailers’ shelves are empty. Almost all of the food products are imported whereas the foreign exchange circulating within the country is allocated with a non-market mechanism. The state sets the exchange rate by that which it thinks will save people from exploitation.

So, who should the Venezuelan people blame? The people who try to extend their profits within a state-designed system, or the Maduro administration, which designed with good intentions an incentive system that ultimately has left supermarket shelves empty? I believe that the company owners who exploit mistake to increase their profits are not to blame here. Input determines the output, right?  It is always the state per se which influences the private sector behavior negatively and causes risks to accumulate. Wrong policies abet the private sector. I will give some examples from Turkey, too.

This commentary was published in Radikal daily on 03.12.2013