Petroleum and Democracy in Venezuela

Abstract

Why has Venezuelan society not followed the same pattern as the rest of the Latin American countries? While the rest of the countries had military governments and economic crises, Venezuela had a stable democracy and economic prosperity. But now the situation has been reversed. Between 1926 and 1980 oil profits permitted a sustained, broad social and economic improvement, with increases in real wages for workers and increasing profits for businesses, all of which strengthened democracy. Starting in 1980, the situation changed and produced a collapse of the oil model, the ramifications of which are shown by the economic crisis of 1983, the popular revolt of 1989, and the coups d'etat of 1992, resulting in the election of presidents Caldera and Chavez. The traditional political parties lost power and new social actors appeared: the radical left, the unorganized civil society, the political right, and the military that controlled the state apparatus. This paper explains these changes by arguing that the oil profits have played a role in the formation of society: creation of social classes by the government, economic autonomy of the state, dependence on imported products, exaggerated growth of public employment, state domination in all areas of the economy, and the overall subsidizing of society. The Chavez government continues to adhere to the same profit-oriented, static, populist model that has made Venezuela more dependent on oil and less sustainable. Thus, the oil revenue that made democracy possible can also be seen as the basis for the installation of an authoritarian and military government in Venezuela.