How Socialism Devolves to Dictatorship

Venezuela is the latest example of socialism's failure.

By Mark Strand

Ronald Reagan once said, “The only places where socialism works is in heaven where they don’t need it, and hell, where they already have it.” That gives some perspective to the “warmth of collectivism” longed for by New York Mayor Mamdani. Why the largest city in the world decided to try a mayor who espouses a philosophy with a zero percent success rate is bewildering, but hey, it’s New York.

The current example of failed socialism belongs to Venezuela, where hopefully, it will soon be replaced by a working democracy and a vibrant economy. Like Cuba, socialism starts with nice rhetoric but always devolves into totalitarianism.

When Hugo Chavez seized power in a coup, he sounded a lot like a Democratic Socialist, which turns out to be an oxymoron since the logical conclusion of socialism is the death of democracy. Raising taxes on the wealthy and middle class, redistributing income, taking over nationally important industries, including health care, food distribution, and energy, sounds pretty good to some people. The poor rallied to Chavez, and for a time, his government was popular.

The United States’ arrest of Nicholas Maduro may finally allow Venezuela to escape socialism

For a while, things seemed good, especially for the poor. But soon, the government began to run through the newfound money generated by higher taxes and the nationalization of industry. The people whose income was being confiscated either stopped earning wealth or hid it overseas, forcing the socialist government to manage huge enterprises on a tightening budget while further raising taxes on the middle class.

Even assuming good intentions and a lack of corruption, the conflict between political popularity and hard business decisions exacerbates the financial difficulty.

Energy is an excellent example. The government can never run energy production as efficiently as the private sector and soon finds itself either unable to generate sufficient supplies or unable to turn a profit (which is collected as government revenue). As a result, energy supply decreases. Recalling elementary economics and the law of supply and demand, when the supply of oil decreases, energy prices naturally go up. But since the energy companies are now government-owned, increasing pump prices undermines the regime’s popularity. Raising gas prices is the same thing as raising taxes. So, as supply tightens while prices remain artificially low, the government creates shortages. Now the poor have low prices, but no gasoline. The same thing happens with food.

In health care, the government must make decisions that are increasingly difficult or create shortages there too – fewer doctors as medical professionals flee the country, long lines and waits for critical health care needs, fewer available hospital beds, and a rising cost (and inevitable shortages) of medicine.

And then one day, the poor realize that not only are they no better off under socialism, but maybe things are worse. At the same time, the redistributionist policies of the government have hurt the ability of the middle class to make independent decisions - they have less money. They face the same shortages, and middle-income citizens become lower-income citizens.

And so, the people become restless. When this happens, the government can back down and begin to re-privatize, as democratic socialist countries in Europe did. If not, the government must crack down on political dissent, restrict freedom of the press and freedom of religion, and suppress the political opposition. And this is precisely what Venezuela did under Hugo Chávez and then Nicolás Maduro. It is exactly what Cuba did under Castro.

Since it is a fool’s proposition to assume politicians are all well-intentioned and resistant to corruption (there is money to be made when you control a scarce resource), it is always the case that socialism and its economic pathologies go hand in hand with corruption and political oppression. In today’s Venezuela, the poor and middle-income are oppressed and suffer from shortages in essential goods and services. At the same time, those loyal to the regime become an elite that becomes wealthy at the expense of, to use a Marxian term, the masses.

This, historically, has always been the case - Venezuela is an egregious example because first Chavez justified his oppression in the name of ideology and revolution, making his opponents anti-revolutionary enemies of the state. And by state, he meant himself. Maduro was not even ideological; he was just a bastard holding on to power who sold out his own country to the Cubans, and increasingly, the Russians, Chinese, and the Iranians.

Our American “democratic socialists” like Mayor Mamdani and Senator Bernie Sanders like to cite small, white, homogeneous countries with populations under six million as their model. Still, even these perfect laboratories for socialist experimentation have dramatically retreated from the peak of state control in the 60s and 70s. They are now highly taxed democratic capitalist countries that are still reforming - look at their competitive corporate tax rates. Denmark, Finland, Sweden, and Norway have corporate tax rates equal to or lower than those of the United States.

There is no example of socialism ever working - it either admits the folly and changes or ends up oppressing its own people for the sole purpose of maintaining power. Mamdani’s idea that an American experiment would be different is a denial of history, economic reality, and, ultimately, democracy. Venezuela is just the latest example of the failure of the “warmth of collectivism.” It is not that no country has really tried pure socialism. It is that every time it does, the people suffer and the “democratic” part of democratic socialism disappears into the blood-soaked hands of a socialist totalitarian state.