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posted 26 Nov 2015, 14:17 by Gerry Kangalee

The failure of the state intervention formulas in the 1970s, which had projected an extraordinary second economic boom in the post-war period, unleashed an economic model defined as neoliberalism posed by the opening up of economies, the removal of state regulations and even the dismantling of the national state, the liberalization of markets, especially, the  financial markets.

Economic globalization is dominated by the funding process anticipated by Lenin in the characterization of imperialism in the early twentieth century, where finance capital is the spearhead of neoliberal reforms. From these policies arose unequivocally essential elements of capitalism; this system is incompatible with democracy.

The power of capital is imposed on political systems; national economies become hostages to speculative finance capital calculations; a true plutocracy that revolves around transnational financial capital is activated.

What happened in Greece is the latest evidence of these claims. National interests are brutally trampled and the popular will expressed democratically is scorned. The vast majority of the Greek people rejected the economic policies promoted by the troika.

But that was not an obstacle to the imposition of destructive policies by European Union powers. This clearly expresses the ethical content of capitalism, where the brutal deterioration of the living conditions of the population is subordinated to international financial calculations.

Economy war and dollar today:

In the Venezuelan case it also manifests in a dramatic war the open contradictions between financial capital and the people's interests. Our economy has been subjected to a relentless attack for more than two years directed, among others, against the national currency. Exchange speculation has led to the so-called “black" dollar to absolutely irrational levels.

From the logic of capitalism, the grotesque profit margins of this criminal business are absolutely justified. Moreover, any action is doomed to waste this opportunity to accumulate profit and power. Exchange speculation is the biggest promoter of destabilization in the country. It is intended to subdue a people, stop the revolutionary transformations.

It is one of the most visible faces of economic war. With the "black" dollar inflation is accelerated tremendously and the massive shortages are strongly promoted through smuggling. Its disturbing capacity is dramatic. The black dollar is part of a terrorist policy aimed at the destabilization of Venezuelan society and the Bolivarian revolution, behind which are powerful economic, media groups and national and transnational politicians.

Exchange control versus exchange speculation:

Serious exchange distortions of today, expressed in an unusual deviation of more than 90% between preferential exchange rate and the black market, has opened again the debate about exchange rate policy.

Some propose the exchange unification under the liberation of change; others demand the exchange unification with maintaining control, others in turn, advocate for the exchange simplification. In most cases, a need to increase the price of the dollar is proposed to overcome the strong real appreciation of the exchange rate.

In general, the controls are applied to overcome conjunctural contingencies, to intervene on structural distortions or to fight both simultaneous situations. In the particular case of exchange control, its justification was based on the need to stop capital flight occurring in the course of growing political contradictions that led to the coup against Commander Chavez and oil sabotage. A parasitic, rentier economy, and with a very high dependence on foreign trade, like ours, reinforced the need for such controls. In the current conjuncture, exchange control is the answer to an economic and political, internal and external adverse scenario, characterized by the collapse of oil prices, sharpening of political contradictions, significant macroeconomic imbalances, depletion of rents. It is impractical for economic recovery without such control.

Efficient and coherent policies:

However, the need for exchange control also implies efficiency in its application. This must be adapted to the prevailing conditions. If its design leads to lags of the exchange rate, serious problems are generated. On the other hand, if controls promote corruption, by its design and/or distortions, they become incompatible with an economic development plan.

Finally, controls should ensure access of business to foreign exchange; otherwise, they become an obstacle to the economy. An essential rule of controls consists in its permanent review to ensure its efficiency. Institutional strength is vital for it, especially in the midst of a parasitic mentality on which is based the performance of the business sector and the corrupt bureaucracy of the old bourgeois state.

The economic war and its external effects is expressed in the collapse of oil prices as a geopolitical weapon of imperialism against Russia, Iran and Venezuela, It is the result of a deliberate strategy of the enemies of the revolution, which is enhanced as part of an ailing economy and it is further exacerbated by the presence of misguided economic policies. Out of the variable exchange depends largely the solvency of the economic policy applied in the country, and therefore the re-launch of economic growth. It is obvious that controls and punitive measures will be insufficient. We would have to work on the efficiency and coherence of economic policies, as well as the increase in production.