It’s the Oil, Stupid!!!

An Overview

by | Sep 17, 2008

A car-filled street in Caracas at night.

Nightly traffic jams in Caracas are fueled by inexpensive oil. Photo by Sandro Oramas

This apparent truism of “It’s the oil, stupid!” makes sense without being really true. Certainly, as the embodiment of immense wealth and energy, oil appears to be a force capable of defining the destiny of modern nations. Yet this appearance is deceptive. Oil does condition but does not determine the social life of these nations.  To understand this, it is enough to observe that oil has radically different effects in different oil producing societies—for instance, the United States and Canada, on the one hand, and Nigeria and Venezuela, on the other. Given its exceptional power, it is necessary to remind ourselves of a true truism: oil does not do anything by itself, but as it is transformed and used by people under given cultural frameworks, specific historical situations and global economic contexts. For this reason, it would be truer to say, “It’s the society, stupid!”

If one focuses on the relation between oil and society rather than on oil as an independent factor, one can acknowledge the centrality of oil in the making of the modern world and understand why it seems to act as an independent force.  As an extraordinarily valuable commodity, it is hard for people to control it, particularly when it undergoes its most dramatic metamorphosis: when it becomes money. As money, oil tends to have similar effects in societies where it is in fact the main source of money. In effect, as the major source of foreign exchange of many oil exporting countries, oil money typically brings about an erosion of their industrial and agricultural production, the generalization of various forms of “corruption,” and the concentration of political power in their states.

The erosion of productive activities as a result of the massive inflow of oil money has been commonly called the “Dutch disease,” a syndrome baptized as such to refer to the negative effects of  windfall profits coming from North Sea gas exploitation on manufacturing activities in the Netherlands.  I have preferred to call it the “neocolonial disease” not only because these consequences  are far more pervasive and pernicious in the narrowly diversified economies of postcolonial nations, but because they include the reproduction of relations of colonial dependence between these formally independent nations and metropolitan centers (as I argued  in The Magical State: Nature, Money and Modernity in Venezuela, p. 7). In these nations, these effects also involve the proliferation of different forms of corruption, ranging from the imaginative creation of  myriad paths for privately appropriating public wealth, to the less visible and more pernicious consolidation of political and economic relations that trap these nations as mono-exporters; despite projects that claim to diversify their economies, these countries typically remain, as in colonial times,  primary commodity producers for the international market. In Venezuela, this has happened under very different political administrations.

Clearly, maintaining this skewed international division of labor requires the collusion of politics and business, and thus the formation of a social system and political culture deeply implicated in legitimating and consolidating the vast set of formal and informal mechanisms through which oil is produced and oil money is appropriated. If in capitalist nations based on the generation of value through human labor the business of politics is business, in oil exporting societies based on the extraction of rents through the capture of natural riches, the business of business is politics.  This explains why in Venezuelan public life politics occupies such a central space. Of course, politics everywhere entangles vital collective issues with private interests, but in Venezuela the state has become a particularly privileged path to status, power, and riches.

The effects of oil money on the polity of these nations have been less studied. Yet, as I have tried to show in detail for Venezuela, the states of petro-nations tend to be formed by the fusion of the power of political office with that of money. Business comes to depend on state connections and support. State leaders often incarnate state powers in their own personas. This personification of social and natural powers makes these leaders appear as superior beings capable of extraordinary deeds—as charismatic leaders or, as playwright Jose Ignacio Cabrujas suggested for Venezuela, as magicians. But as a close analysis of these situations reveal, the state of grace uniting leader and people–what Max Weber called “charisma”–can be better understood if one takes into account the cultural and material conditions that enable and sustain this mystical union and the suspension of disbelief that makes magical acts believable.

Oil fortune has unfortunately helped make Venezuela a typical exemplar—or patient– of this “neocolonial disease. ” This fortune has also turned its state into an incarnation of charismatic powers that appear to be providential—a “magical state.”  These processes have affected Venezuela continuously albeit in different form since the times of Juan Vicente Gómez, (1908-1935), when Venezuela became the world’s major oil exporting nation, to the current epoch of Hugo Chávez, when massive oil income has become the foundation of an evolving project of domestic and international change whose most radical form was identified by Chávez since 2005 as the construction of “socialism of the 21th.century.”

As this issue of  ReVista seeks to show, Venezuela produces more than oil—or its other major export product, beauty queens (this year Venezuela won its fifth Miss Universe).  In fact, as I have argued elsewhere, in Venezuela oil has fueled various dreams of progress;  Venezuela produces “politics.” Yet, it would be impossible to understand the Chávez effect–his coming to power and the project he is advancing–without understanding the political economy and culture of oil in Venezuela. Without oil, no Chávez and no “socialism of the 21th century,” at least as they have appeared so far.  In order to make sense of  Chávez’s Venezuela, we must  thus seek to understand the exchange between the people who inhabit Venezuelan soil and the oil that lies in its subsoil. But since oil always has connected market, peoples and states worldwide, this exchange must be seen in a global context. It would be impossible, for instance, to understand the April 11 coup against Chávez or the two months managerial lock-out of the oil industry that started in December 2002  as strictly domestic affairs.

For this reason, we have given central importance to oil in this issue of ReVista.  In order to provide readers with an opportunity to explore oil policies under Chávez, I’ve asked six experts to answer 12 key questions. Hopefully, their answers would help you understand not just what has happened to oil in Venezuela  under his rule,  but to Venezuela under this new oil bonanza. And as one reads these answers, one can also begin to become familiar with the cultural categories in terms of which oil  has been understood in Venezuela.

I won’t comment on the responses to these questions, except to note how exceptional it is to have in one place answers to the same questions by a group of Venezuelans who hold different ideas about oil.  Jorge Luis Borges famously remarked that the authenticity of the Qu’ram was proven by the fact that camels are not mentioned in this sacred book that codifies Islamic culture; their existence was assumed as a matter of fact among Muslims. Unfortunately, in the case of Venezuela, where politics is the major national spectacle, the absence of oil from public debate results not from the internalization of the habitual, but from the repression of the conflictual. This exchange in ReVista seeks to bring oil from the dark  background where it has been kept to  center stage, where it can visibly take the place it should have always occupied as a fundamental factor of public debate and main actor of our national drama.

Fall 2008Volume VIII, Number 1
Fernando Coronil was a 2004-05 DRCLAS Visiting Scholar and a Visiting Professor in Harvard’s History Department.

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