A VERY SOCIALIST PARADISE

Ten years ago this week, the world changed. On August 9, 2007, the French bank, BnP Paribas, froze three investment funds when it became clear that the credit markets were about to have the financial equivalent of a stroke.

Within a month, this loss of circulation became obvious to every Briton when a run started on northern Rock.

But one man in Britain rejoiced. The backbench Labour MP John McDonnell crowed to a gathering of fellow socialists: ‘It’s a classic crisis of capitalism. I’ve been waiting for a moment like this all my life.’

That man is now Labour’s Shadow Chancellor, alarmingly close to running the British economy.

And he appeared as one of the central figures in a vast article in The Guardian last week — ‘How Britain fell out of love with the free market’ — about the political consequences of the credit crunch.

Regime

The author, the socialist historian Andy Beckett, describes catching up with McDonnell at a Labour Party rally in Parliament Square last month: ‘During the [nineties] and [noughties], I had been there repeatedly for slightly sparse anti-capitalist demonstrations.

‘But now the atmosphere was expectant . . . McDonnell made a short, fierce speech attacking “neoliberal trickle-down economics”. He ended with a promise: “Another world is in sight.” ’

That alternative is indeed in sight. It is called Venezuela.

It was in the portentous year of 2007 that McDonnell urged all Labour MPs to declare their ‘solidarity’ with the Venezuelan radical socialist regime of Hugo Chavez. Jeremy Corbyn is also fond of telling his followers in this country that ‘a better way of doing things is possible’. And Corbyn also regards the Venezuelan socialist path as that ‘way’ which is ‘better’ than the market economy.

He wrote an article (now, oddly, wiped from his website) which declared: ‘Venezuela is seriously conquering poverty by emphatically rejecting the neoliberal policies of the world’s financial institutions.’

As recently as 2015, Corbyn phoned in to the weekly TV propaganda programme of Chavez’s successor, President nicolas Maduro, to declare ‘ congratulations, Mr President’. Congratulations, presumably, on the great success of the Venezuelan in adopting socialism in place of ‘neoliberal trickle-down economics’ — capitalism.

The Labour leader should pay a visit to Venezuela to see how that great hope of socialists — depressed by the collapse of the Soviet Union and by China’s successful embrace of mass privatisation — is doing.

Or he could simply read the account filed last week by Hannah Dreier, the departing Associated Press correspondent in Venezuela’s capital Caracas: ‘The first time I saw people line up outside the bakery near my apartment, I stopped to take photos. How crazy: a literal breadline.

Catastrophe

‘Then true hunger crept in. People started digging through the trash at all hours, pulling out vegetable peelings and soggy pizza crusts and eating them on the spot. That seemed like rock bottom. Until my local bakery started organising lines each morning, not to buy bread but to eat trash.’

That is just one account of a financial collapse which leaves economic historians struggling to find the equivalent. The former planning minister of Venezuela, Ricardo Hausmann, notes that his country’s economic catastrophe ‘dwarfs any in the history of the U.S., Western europe, or the rest of Latin America’.

Perhaps the nearest is what took place in the Soviet Union, when that country’s once-eulogised socialist economic system finally — inevitably — imploded. Since 2013, the national income of what was once South America’s richest country has fallen by 51 per cent. Apologists for the regime cite the collapse in the price of oil — Venezuela has vast reserves of the stuff. That’s the excuse, not the reason.

The regime’s economics wrought havoc upon the non- oil economy. Since 2012 Venezuela’s non- oil tax revenues have declined by 70 per cent.

The result, in human terms, is dire. Measured in dollars at the prevailing black market rate, the minimum wage — which in Venezuela covers most earners — has over the past five years collapsed by 88 per cent, from $295 a month to just $36.

Failure

In this situation of near-starvation, those running the system are still living very well, thank you. Mike Gonzalez, a disillusioned former supporter of the regime, notes how they exploited their control of the price system — the defining principle of socialist economics: ‘ The state bureaucrats, the customs service and the national Guard all took their cut. en route, fortunes were made.’

Gonzalez declares himself ‘surprised’ that ‘those who were responsible for transforming the Venezuelan state — for introducing redistribution policies — also took their share’.

That is shockingly naïve. It is what always happens under state socialism — as George Orwell depicted with imperishable clarity in his 1945 allegory Animal Farm.

Meanwhile, what has been the story in the economies of the U.S. and the UK — you know: those said by Corbyn and McDonnell to have demonstrated the historic failure of capitalism?

Since 2007, GDP in the U.S. has risen from $14.5 trillion to $18.6 trillion. In that same ten-year period the UK’s GDP has risen from £1.53 trillion to £1.94 trillion.

Admittedly that British growth owes much to increased population. But even in per capita terms, British GDP has risen by 2 per cent in real terms since the last boom year before ‘the world changed’.

It’s a paltry figure, the cause of much discontent among British families. But compared with the ‘better way’ of Corbyn and McDonnell — socialism Venezuelanstyle — we live in a workers’ paradise.