TCS Daily

'Rule By Decree' - One More Step on Chavez's Road to Serfdom

By Marian Tupy - January 31, 2007 12:00 AM

Hugo Chavez came one step closer to becoming a full-fledged dictator on January 17. As the Associated Press reported, "Venezuelan lawmakers gave their initial approval to a bill granting President Hugo Chavez the power to rule by decree for 18 months so that he can impose sweeping economic, social and political change." The vote in the National Assembly was unanimous — as befits a budding communist country. Not that Chavez's powers were much constrained prior to that vote, but his soon-to-be official recognition as Venezuela's dictator serves as an important reminder that state control of the economy and dictatorship go hand in hand.

In 1944, Friedrich Hayek published a popular and influential book "The Road to Serfdom." The Austrian-born economist warned that the crimes of the German National Socialists and Soviet Communists were the inevitable consequence of growing state control over the economy. As he explained, central planning leads to massive inefficiencies and long queues outside empty shops. A state of perpetual economic crisis then leads to calls for more planning. But economic planning is also inimical to political freedom. As there can be no agreement on a single plan in a free society, the centralization of economic decision-making has to be accompanied by centralization of political power in the hands of a small elite. When, in the end, the failure of central planning becomes undeniable, totalitarian regimes tend to silence the dissenters - sometimes through mass murder.

Since the collapse of the Soviet empire, some defenders of socialist economic policies have argued that dictators, including Lenin, Stalin, Mao and Pol Pot, were aberrations; they took Marx's ideas in the wrong direction. They claim that state control of the economy (call it communism, socialism, or Marxism) and democracy can be compatible. In The Road to Serfdom, Hayek showed that it cannot. Some 63 years later, Hayek's argument holds. Every socialist regime tends toward authoritarianism of some sort. Even Salvador Allende, the democratically-elected Marxist President of Chile, whom many on the left continue to lionize as a counter-example to the ruthless leaders of the rest of the communist camp, "pursued a strategy for the seizure of total power," as The Economist put it on September 15, 1973.

To be fair, few of today's left-wing leaders want to emulate the failed socialist policies of the past. Even in Latin America, where left-wing populism is on the rise, only Chavez has so far committed to wholesale nationalization of industry. Other on the left see Scandinavia as an example of a working socialist model. But Scandinavian reality is at odds with the picture of that the proponents of socialism paint. First, over the last two decades, the Scandinavian welfare state has been in gradual decline. Low growth rates and high unemployment have forced the Scandinavian governments to curtail welfare transfers and generous unemployment benefits. Second, the tax revenue is increasingly generated by value added taxes and taxes on individual income, while corporate tax rates have been declining. Those reforms are meant to restore work incentives among the Scandinavian public, and increase job creation and growth. If anything, Scandinavia has become more business-friendly in recent years and continues to rank among the freest economies in the world.

Chavez, on the other hand, wishes to pursue Soviet-style economics. Moreover, his quest for total power reminds us of the anti-democratic nature of socialism. As such, he is turning into a major embarrassment for many on the political left who supported him. What the proponents of socialism repeatedly fail to realize is that it is the message, not just the messenger that is embarrassing.

Marian Tupy is a Policy Analyst at the Cato Institute's Center for Global Liberty and Prosperity.


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