A variety of occurrences in the Venezuelan reality compel us to consider what is happening to private property in the country. My desire is to highlight the differences between the concept of private property and what is really going on in Venezuela.
Private Property at Formal Level
On paper alone, free enterprise and private property exist in this country. Article 112 of the Constitution of the Bolivarian Republic of Venezuela (Constitución de la República Bolivariana de Venezuela, CRBV) — adopted by popular vote on December 15, 1999 — states that “all persons may freely engage in an economic activity of their choice . . .” Article 115 states: “the right of ownership is guaranteed. Everyone has the right to use, occupy, enjoy, and dispose of their private property.”
The same article, however, provides exceptions, when supported by a court judgement. Those who have committed crimes against public property, enriched themselves illicitly, or engaged in drug trafficking are still subject to confiscation.
In short, the CRBV clearly establishes the principle of private property and defines the cases in which the government can ignore it and dispossess an individual or a company of their assets. For this dispossession to take place, a felony is essential. The Civil Code and the Code of Commerce also reinforce these principles.
Chávez and Private Property
In actual reality, something significantly different from what the Constitution states occurs in Venezuela. Since 2001, and particularly since Chávez’s re-election in December 2006, private ownership of the means of production and private assets, such as real estate, has been constantly under harassment by the regime.
Once re-elected, the deceased commander began to openly raise the need to end capitalist production relationships, destroy trade relationships, and replace exchange value with labor value — all to replace capitalism with twenty-first century socialism. The core of this movement resided in reducing property to a minimum, both ownership of the means of production and real estate.
The constitutional reform that Hugo Chávez submitted for the consideration of voters on December 2, 2007, had public property and communal property as two of its key pillars. Although most voters rejected the referendum and withheld approval, the president ignored that opinion and ordered the ruling majority of the National Assembly to approve a set of laws which enshrined collective property.
The shift towards socialization was twofold: on the one hand, it aimed at the nationalization of key private companies; on the other, it was also oriented towards the collectivization of those areas considered non-strategic by the government.
In order to make progress in the first line, Chávez nationalized companies such as Siderúrgica del Orinoco (Sidor), to control the production of steel and steel bars; Cementos Mexicanos (CEMEX) to dominate the area of cement; and Electricidad de Caracas, to administer electricity in the center area of the country. He also expropriated Agroisleña, a leading national company from the west which provided advice on and supplies of manure and fertilizers to farmers — along with Lácteos Los Andes, Aceites Diana, and Café Fama de America, each of them of importance in their relevant areas.
These expropriations and confiscations, as well as others carried out in rural areas, were made even when the owners were innocent of any crime, nor had they been sentenced by any court of the Republic by means of a definitive judgment. Only the arbitrariness and whim of the autocrat served to justify such abuses of private property rights.
In terms of the creation of communal property, despite the “Popular Economy” laws passed by Parliament, very little progress has been made. The Fundos Zamoranos, agricultural communes, socialist cooperatives, and Social Responsibility Companies have not had popular support, despite the propaganda and verbal effort devoted to them by the leader.
The Current Situation
Chávez could not see his collectivist utopia completed. Against all odds, capitalist production relationships still prevail in the country. Private property, however, is subject to numerous and severe restrictions that have reduced its efficiency and importance. According to the 2013 Index of Economic Freedom, prepared by the Heritage Foundation, of the 177 countries analyzed, Venezuela is ranked 174.
This institutional weakness has generated a great deal of legal uncertainty, and nationalization is out of control. Food companies, for example, can be declared “strategic” and of public interest at any time, and therefore confiscated without meeting the applicable legal requirements. These companies and large supermarket chains cannot produce or distribute their products according to their own operative plans, but according to the orders dictated unilaterally by the central government.
Similarly, through foreign exchange controls, the government retains control over foreign currencies handled by companies, forcing them into a relationship of submission and absolute dependence of the executive branch. The Integrated National Service of Customs and Tax Administration can also impose arbitrary and million-dollar fines on companies in the absence of an independent tribunal to which to appeal.
In the case of real estate owners, those with rented properties are subject to abuse by the tenants without the law protecting them. It also becomes increasingly troublesome to sell a dwelling.
A shred of private property may still exist in Venezuela, but it is waning.