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Venezuela’s government has made the radical decision to withdraw the heretofore largest bill from circulation. President Nicolás Maduro made this decision public on Sunday, December 11, indicating that the 100 bolivar note would cease to be valid in 72 hours, after which it could be delivered to the country’s Central Bank.
The alleged reason for this decision is to strike at mafias engaged in illegal money transactions on the border with Colombia. It is also claimed that an NGO, with ties to the U.S. Treasury, aimed to buy up all the circulating currency and thereby destabilize the government. These heterogenous claims – the first tinted with anti-Colombian sentiment – are most likely not the real or at least not the central reasons for this surprising move.
Most likely the main objective in the demonetization of the 100 bolivar bill is to dramatically reduce liquidity and hence stem inflation. That is why the step has not produced significant resistance in the banking sector. The economist Francisco Rodríguez, former executive of Bank of America, sees it as positive.
The problem of illegal money, as Prabhat Patnaik explains reflecting on a similar move by Indian prime minister Modi, is much more complicated than simple stockpiles of cash. Obviously, a radical step like this one, in India or in Venezuela, could constitute a momentary blow to those involved in illegal operations, but it will not affect the essence of their various rackets, which will recover in the short or medium term.
How should a leftist evaluate this recent step? Undoubtedly, it affects the common people in their daily transactions: paying bus fares, buying newspapers, or making purchases in small markets without access to credit-debit card lines. It also touches the informal merchants who represent an important part of the economy. In Venezuela, the informal economy always grows around Christmas, with booming sales of trinkets, holiday foods, and crafts.
In the last instance, one’s evaluation of the step will go hand in hand with how one judges Maduro’s decision to rigorously satisfy the needs of financial capital in the country by paying all key bills and debts on time. These policies have made the Venezuelan president the most recent, if most surprising, poster boy of the Financial Times. The current step, because it tends toward macroeconomic stabilization, is in line with this general attitude.
However, I believe that this overall line is a mistaken one. Global financial capital cannot easily be made into a conjunctural ally. It is rather an inseparable, unshakable secret sharer. The bloc that Maduro may have in mind, composed of global financial capital at one extreme, and public employees and the poor masses on the other, is an unrealistic and unstable one.
It is an unstable alliance precisely because, when push comes to shove, the financial sector, which is supremely agile and well organized, will leave the popular elements by the wayside when it opts for one of the many other possible political alliances that are open to it. Socialism, even as a long-term goal, must step out of the picture.
What is being constructed has the appearance of a chimera in which a belligerent and pro-socialist discourse combines with a silent sell out. The president and other leaders may not be aware of this; they may think that the satisfaction of the financial world’s imperatives is just a short term, necessary concession. But insofar as it leads to demobilization, apathy, and confusion in what were once the pro-socialist bases, it also hamstrings the popular force that could redirect the country on a progressive or socialist path.
Socialism needs socialists, just as anti-imperialism needs antiimperialists. The errors of statist and substitutionist practices, which tempt leaders as the paths of least resistance, are well-known lessons of history. It is not with a public, televised discourse that one constructs socialism but with an organic force diffused among millions of individuals. Here, this is called “popular power,” and it is precisely what is in danger of being lost.