A Review of Venezuela’s Collapse – The Long Story of How Things Fell Apart

On July 28, the Venezuelans will hopefully have the opportunity to elect a new president. Twenty-five years after President Hugo Chávez came to power, very few of them are said to freely support his successor Nicolas Maduro and their movement, as the state of the economy and the political system has so severely undermined the people’s ability to live dignified lives. 

Venezuela’s Collapse – The Long Story of How Things Fell Apart by Carlos Lizarralde (Codex Novellus 2024)

Since 2015, seven million Venezuelans have left the country, according to The International Organisation of Migration. The human rights organization Foro Penal recently reported that the military and police have made 15,848 arbitrary arrests since 2014, and that 287 remain as political prisoners.   

An important question is then why did Hugo Chavez and his followers implement policies that led to the current situation. Carlos Lizarralde’s recent book, Venezuela’s Collapse: The Long Story of How Things Fell Apart explores the question in a very well written and engaging manner.  

Lizarralde, a Venezuela-born literary scholar, begins the book by asking, “Why would a group of individuals, or a social class, or even a single leader, destroy a state and an entire economy right after taking control of both?”  

His question opens a discussion beyond the usual explanations to the collapse such as socialism, Cuban influence, corruption, U.S. sanctions or a fumbling political opposition. His answer lies in a much deeper social conflict, almost ethnic in nature, with roots tracing back to the independence wars in the early 1800s.  

Today’s Venezuela had long been one of Spain’s poorest and most violent colonies. The Creoles in today’s Venezuela treated the enslaved people harsher than others and fought bitterly to maintain the caste system. When Napoleon occupied Spain in 1808 and the independence movement in Spanish America sparked, the poor, local soldiers in the crown’s armies saw no freedom in independence from Spain. “They flew the King’s standards, but they were fighting against Creole rule,” Lizarralde writes. 

The Creoles eventually won, and poverty and conflict persisted until the demand for Venezuela’s vast oil reserves soared in the 1920s, and a welfare state was built in the 1940s, he recounts.  

His presentation of how the ethnic conflict and poverty were structured during the first decades of the 20th century is perhaps the weakest part of the book. Lizarralde devotes much of the book to the independence wars and their key protagonists, and what he sees as the roots of the core of the movement Hugo Chávez built. But he does not really dig deep into what the economy, demography and politics looked like just before the oil boom changed everything, the Venezuelan’s most recent memories of poverty. 

However, Lizarralde clearly describes how the root economic problem of the welfare state and the oil economy stems from the centuries before oil was found, even from the Spanish colony; that “welfare was found, never created.” Private businesses during the oil boom therefore never targeted Venezuelans as consumers but only produced for the state, he explains. What people consumed was imported.  

At the same time, immigrants from southern Europe, the Middle East, and the rest of Latin America with better education than the Venezuelans arrived in droves to work in the oil-financed economy, and to join the traditional upper classes. 

When the oil boom of the 1970s ended, Venezuelans had not invested in a functioning economy but used the profits to import consumer goods and transfer savings to foreign banks. The crisis came quickly. Poverty returned, and only those close to the oil revenues remained prosperous.  

Hugo Chávez attempted a coup in 1992 but failed, and the rest of the 1990s was a calm before the storm. “Oligarchs!” became Chávez’s rallying cry. After winning the presidential election in 1998 amidst economic collapse and discontent with the failings of the petro state, the ethnic conflict from the independence wars “returned like a ghost,” the book observes. 

Lizarralde’s answer to “why?” is that the oil-financed welfare state guaranteed the white upper class its privileges even in crisis, while the poor suffered. The elite-run state was Chávez’s nemesis. Chavez then “sought to destroy what came before him,” Lizarralde writes. Misguided currency policies and a political takeover of the oil company ruined the economy. Welfare systems were replaced by parallel structures—misiones—staffed by Cubans; local power structures were supplanted by neighborhood committees; and the monopoly on violence was handed out to criminal gangs loyal to Chávez as long as they had free rein. The military, the only part of the state that survived, remains loyal to the government after two decades of purges to align it with “the ethno-nationalist revolution,” Lizarralde recounts. Understanding a possibly new democratic government’s political challenges from this perspective, as standing in front of a state run over by a lawn mower, offers other conclusions than those that imply that market reforms and political freedoms are enough to create lasting positive change: There is no democracy and prosperity without a state. Lizarralde’s essay is therefore an important counterargument to idealogues on all sides.  

For Venezuelans longing for freedom, winning the elections is the only strategy that might work. The crucial lesson for a new government is however that any future functioning Venezuela must rest on two premises: that all Venezuelans feel the state is theirs, and that the welfare is financed by citizens’ work, not oil. 

Erik Jennische is Department Director for Latin America at Civil Rights Defenders, and author of  Hay que quitarse la policia de la cabeza – Un reportaje sobre Cuba (Ertigo 2015).