Against all odds, Maduro is advancing a liberalization with inequalities that increasingly seizes new spaces in the economy and society. In his mind, there is an idea that would mean a 180° change in the relations between the state and society: Let the latter fund the former through taxes and utility fees. If this happens, there will be a new social contract between the two. Will it be one of authoritarian vassalage, will the authoritarian state democratize, or will we have the Venezuelan version of the Chinese doctrine of “one country, two systems”?
Few predicted that Maduro would turn to liberalization. A poorly planned, disorderly, and bureaucratic opening-up; incomplete and plagued with inequalities, but an opening-up at the end. Many with a reputation for political wisdom predicted that he would go “straight into communism.” In the light of the prophecies, many people made a decision. Some sold their properties, others left the country. Several saw their best years go by. Today, those who predicted a dive into “communism” resort to damage control to affirm that the opening-up is the result of sanctions. The fact is that it is going on, and covers new areas each day.
On February 19, Maduro held an event with oil workers. The novelty was the signing of the collective contract. Although it has been done every two years since 2013, the latest one was signed in 2021, instead of 2020. It may have been due to the pandemic, but also because the government was in no capacity to celebrate an oil contract due to the scarcity of resources. Signing the contract now could mean that the administration has more money, or that it prioritizes certain workers that it considers essential at the moment. Oil workers among them. What we mean is that in some way, Maduro is taking the traditional signing of collective contracts back to normal at the very same time when his Chavista base of support complains about low wages. It is a message to the state workers who have recently staged protests like the ones in the national steel corporation, Sidor. The news could be that their claims will be heard and formalized in a collective contract.
The economic benefits of this contract are yet to be known. In October 2017, the base salary -without benefits- was $13 per month. If our thesis has any grounds, the 2021 contract should substantially improve the benefits for oil workers.
This signing of the collective contract with oil workers may be in line with the rumors about the sale of the national mobile phone company, Movilnet; the conversion of the national landline phone company, CANTV, into a joint venture, or the rebranding of some gas stations in Caracas. The logic here may be that if you want to attract investors, or if there are candidates already willing to invest, a condition of the future owners or partners is to “get your act together”. And that takes not only improving the service and infrastructure -not to hand over “junk” or “almost junk” companies- but to regularize the situation of the workers so that the new owners can have a starting point after the State cedes its role as employer. Something like “We give you a point of reference. From now on, workers negotiate the conditions with the new owners”. Perhaps this was the reason for the meeting between Fedecámaras (Venezuela’s main business union) and the members of the National Assembly. Now that the State seeks to lower its participation in the economy and aspires to give access to private economic actors, thus making a negotiation between workers and entrepreneurs necessary, will the actors establish a tripartite commission?
During an event with the workers of the Caracas Metro on February 21, Maduro received the proposal for the negotiation of a collective contract with the members of the transportation company. Maduro’s tone showed that the culture of collective contracts in public companies in Venezuela, characterized by an abundance of clauses and a very generous State, will not be so. As soon as Maduro received the proposal, he stated that “one thing to ask for water, and another to hand out water”. He later added that the company must generate its own income for a collective contract to make sense. He said that the “State will contribute, but it needs to rely on a good income, the fare must be collected, so that we have financial support and can honor a collective contract.”
Maduro’s logic seems to be a kind of tit for tat between the State and the workers, and he affirmed that the fares should be “properly” set, which is a way of saying at market prices or near market prices.
Maduro suggests something along the lines of “partially self-financed” collective contracts that could encourage companies to generate their own income. This seems to be Maduro’s logic on the matter, and perhaps that is why he is moving forward with collective contracts. Not only as a political move to respond to the Chavista support base and lower the pressure but because there is already an agreement on the logic of the contracts, according to which they are tied to the economic capacity of the company. And this, by the way, could be the prelude to the adjustment of fares of services provided by public and private companies, whether under concession or privatized in the Maduro style. If this happens, we could be talking of liberalization of employment contracts in the Maduro style: For state companies, tied to their financial performance; For the private sector, tied to a negotiation with the workers with less influence from the State.
Of course, the benefits of a contract can become a dead letter. What our analysis wants to highlight is the sign sent from the State to regularize the relation with workers in the public sector and somehow liberalize it, as a political response to demands over wages and as part of a government strategy to go on with the adjustment in Maduro style, including an agreement on agreeing on the costs of public services at market prices -as already happens in some cases- and, possibly, a change of hands of some public companies.
This liberalization in the Maduro style involves other areas. During an event on February 24, Maduro offered the formula for state revenues: taxes, charges on public services, and, finally, exports. He mentioned something important: that city mayors will have a sort of tax freedom.
Of course, Maduro analyzes every step. The motivation behind the idea of tax freedom for cities may be an electoral move to stir the interest in regional and municipal elections by showing the carrot of resources, and a clever strategy to lower pressure on the central government with another “buffer”. It already has the United Socialist Party, the social movements of Chavismo, the National Assembly, and now aims at the states and municipalities.
Maduro shows that the State assumes that its income will be less abundant than in former times – so much that he recently signed a decree to recycle and export scrap metal – and adopts a drip liberalization we can see today: prices, exchange rate, tariffs, imports; Now it seems that progress is being made towards liberalization of employment contracts and municipal taxes because the State cannot do everything. It will keep food, health, education, science and technology, community government, and defense. The rest is directed to the states and municipalities.
The message is that the State will no longer be able to contribute to everything, and the municipalities must generate their resources to pay for the programs and investments that are not within national policies. The vision of Maduro’s income points to society funding the State through taxes and service fees – exports are last because they will be modest due to the conditions of the public companies, rampant corruption, and the sanctions on oil exports. The engine of the State in Maduro’s vision will be society, and if his vision is realized, there will be a 180° change in the Venezuelan political economy.
If such a thing happens, it will be the most important change experienced by Venezuelan society, perhaps along with the discovery of oil in our territory. For several scholars, Venezuela was always classified as a “petrostate”, where the national state made civil society. That was, in part, the Venezuelan project for modernization from the 1920s on. The above explained why society did not counterbalance the power State, and why it was present in almost all fields of national life. In the end, public money had no mourners. But if this change occurs, the relationship will shift: civil society will be the one shaping the state. The interesting thing is that the Chavista state is deeply authoritarian and does not even comply with the counterweights provided for in the 1999 Constitution.
We will have to find out whether the State-society relationship will be that of a feudal lord who extracts resources from his subjects under a “vassalage contract” that they “negotiate”, or the society will seek parity with the State in the same way that the American colonies did under the principle of “no taxation without representation” of 1765-1766, in an antagonistic relation which will make it reassert itself, moderate, and change the Maduro government.
But since anything can happen in Venezuela, one of our odd paradoxes can occur: while society funds the Chavista state so that it supports a part of the country, the former will be able to lead a relatively autonomous life that the State will respect because it does not threaten the Chavista political system. Something similar to a homegrown version of the Chinese doctrine of “one country, two systems”, which could well be in the future of Venezuela.
Translated by José Rafael Medina
