Socialist Factories

Last week, Venezuela's president Chavez announced the inception of several new factories that would expand Venezuela's industrial capacity and diversify its economy. These are intended to be 'Socialist Factories'. It's not entirely clear what this indicates but it certainly implies that the factories will embody the socialist values that Chavez has been talking about for the last several years. Namely, they will be publicly owned, either by the federal government or by the communal councils of local communities; they will produce with an eye to meeting the national needs rather than solely trying to maximize profit; they will try to exemplify the values of hard work and contributing to the good of the nation; and they will most likely be run along fairly egalitarian lines with a large role for their workers in management. 

An important criticism of the Chavez regime has been that it has focused too much on consumption and producing consumer goods at the expense of producer goods. (This is the opposite criticism of that which was made against Soviet Russia.) Too many houses and cars, not enough steel and cement; too many subsidized supermarkets, not enough investment in farms. This represents a major correction to that trend. While some of these Socialist Factories are going to produce consumer gods, many are going to be dedicated to producer goods that will fuel the development of Venezuela's industrial and agricultural capacity. For example, the state-owned petrochemical company, PEQUIVEN, will be using byproducts from Venezuela's booming oil industry to produce urea polymer-based building materials like PVC and synthetic wood, and using the cheap energy to produce fertilizers (urea and phoshorus fertilizers).  In keeping with the Bolivarian Socialist goal of Latin American solidarity, such products will be sold to other Latin American countries at a 15% discount relative to prices offered by private companies.

The state-owned industrial supplies company, SUVINCA, also signed contracts to set up factories building industrial painting equipment and medium sized water pumps, as well as $50 million worth of investment in refrigeration facilities and grain and meat processing plants.  The water pumps, in particular, are an important producer good that will contribute to further industrial development, and all of these industries will complement the investment earlier this year in agricultural production (and help to satisfy the increased food demand that resulted from the increased wages and subsidized food markets of the last few years.) These are also, of course, labor intensive industries that demand a lot of workers and that will provide many jobs. Venezuela's employment situation is prety good- unemployment is down from 8.8% last year to 7.2% this year- the same as the state of Michigan, and very low for a Latin American country. Still, it can and must improve further; far too many Venezuelans are still in the informal sector. 

The investment in socialist factories is an important reminder that socialism is ultimately about government control of the means of production, not the means of consumption. For Venezuela to advance towards a more equal, fair and just society, and towards a society where economic morality is governed by an ethic of sufficiency, hard work and self-sacrifice rather than greed and self-interest, it is necessary that the major industries, especially those which produce critical goods like food, housing, cement, steel, water pumps, fertilizer, etc., be under popular control. This doesn't necessarily mean centralized state control, and it shouldn't. Yugoslavia had tremendous success with an economy mostly based on worker ownership (it boasted the fastest economic growth in the world for 15 years) and China in its market-socialist phase had impressive success with 'Township and Village Enterprises', i.e. enterprises owned by local governments. Indeed, one of the things we should learn from the sad experiences of many of the socialist countries is that ownership by a centralized State can be just as inefficient, unjust and alienating as ownership by a monopolistic capitalist.

While it is as yet unclear what kind of socialist ownership Chavez has in mind for these factories, we should remember, and rejoice, that he isn't one of those on the left who believes only in ownership by a centralized State. Venezuela's efforts to socialize the economy have as yet involved all three types of ownership. There are of course many enterprises owned by the national government, but there are also examples of worker ownership (the aluminum company Alcasa, the paper company Venepal which was renamed Invepal after it was placed under worker ownership) and of local government ownership (e.g. the PDVSA gas statons which are in the process of being turned over to communal councils.) "He who is not against us is for us", and socialist Venezuela can afford to tolerate many different types of ownership, enterprise and working philosophy as long as they are not explicitly based on oligarchic capitalism. Obviously each of these types of enterprise has its advantage and disadvantages. A healthy socialist Venezuela will be one that has an economy combining state owned enterprises with those owned by local governments, workers' cooperatives, collectives, smallholder peasants and artisans, and perhaps other forms of ownership yet to be devised. 

One thing that is important is that Venezuela doesn't go overboard by being too nice. Subsidizing fertilizer sales to other countries in the region is all very well but it shuld not interfere with Venezuelan industries staying profitable and solvent. Ultimately socialism needs to be built at a national level, not an international one.