The remuneration bonus for employees and workers, announced by Nicolás Maduro on May Day, puts a few more nails into the ballot box of what remains of the social contract in Venezuela. By freezing salary remuneration, it also freezes social benefits, bonuses and vacation payments that are based on it. Meanwhile, inflation continues to be the highest in the world. The consequent rise in the exchange rate has meant that the minimum wage, which a year ago was equivalent to 30 dollars a month, is now barely 5 dollars and a bit, also reducing, in this proportion, the aforementioned benefits. Now the food and “war” bonuses (?) come to constitute the bulk of the remuneration. Their amounts are subject, as a gift, to the discretion of the National Executive, not to the effort of the work. In addition, retirees are excluded from the food voucher.
A social contract is understood as the set of rights and duties between the rulers and the ruled of a nation, embodied in norms, traditions and values that make up the institutional framework that unites them around the pursuit of a shared project of society. The expectations regarding its fulfillment are a central element of cohesion and social coexistence in peace, as well as the achievement of its objectives. Governance revolves around the ability to meet those expectations.
In Venezuela, the consolidation of democracy was associated with a social contract based on a semi-liberal Rule of Law, since it was mediated by strong state tutelage, especially in the economic sphere. It was possible to invest in areas that were not already served (“market corner” policy), following established guidelines. In return, they enjoyed tax incentives, customs protection, financing and preferences in State purchases. The democratic parties, committed to proper government conduct since the “Puntofijo Pact”, kept an eye on each other, avoiding, especially at the beginning, that such incentives were granted at discretion, based on favoritism, political preferences or corruption. The workers, for their part, enjoyed the right to strike, free contracting and unionization, as well as other demands obtained, more than through their own struggles, thanks to concessions from a generation of socially committed politicians. The circle was closed by a Venezuelan consumer who obtained, within the options offered by the protectionist policy of import substitution industrialization, products at affordable prices.
A significant oil income was central to this social contract. Its administration was reserved for the State, becoming the preponderant economic agent of the country. With a prudent management of fiscal and monetary policies, it guaranteed, until the mid-1970s, price stability and, until 1983 —except for the exchange control between 1960 and 1963—, one bolivar freely convertible into foreign currency at a fixed price. Likewise, it managed to finance an impressive expansion of public education and health, in addition to providing various services to the population. A context of growing prosperity, after the defeat of the left-wing armed insurrection in the sixties, strengthened the social contract. The expectations of sustained improvement in the living conditions of Venezuelans sustained the power, in exchange, of the two main political parties, Acción Democrática and Copei, preferential in popular suffrage.
The multiplication of State income with the tripling of oil prices, after the Yom Kippur war of 1973, upset the balances that sustained this “illusion of harmony”, as Moisés Naím and Ramón Piñango called it in a book with that title of 1984. The plethora of resources translated into a greater state role, associated with ambitious government plans (CAP I), and a growing discretion to allocate them. He had optimistic expectations. But the limitations that this bonanza ran into in the 1980s, the so-called “lost decade”, would seriously affect the foundations of the social contract. The rulers had failed to fulfill their part.
The response was more state intervention in the form of price and exchange rate controls, and extended regulation. The reduction in oil income and the burden of a high public debt accumulated until then limited the financial possibilities of the State. The discretion with which resources were rationed stimulated rent hunting, causing a situation of privileges and growing injustice for those who were left out. The attempts of the second CAP government to replace the rentier foundation of the social contract with one based on institutions —duties and rights— of a competitive economy, collided with the interests created under the previous scheme.
The “Chávez phenomenon” is explained, in large part, by his ability, at the right moment, to reap the expectations of a “fair” distribution of the nation’s resources, fueled by the social contract that was forged during democracy. Projecting himself as the second Liberator, and clothed in jingoistic symbolism and anti-imperialist rhetoric, he cut the Gordian knot of the counterweights and safeguards of the liberal democratic State, to assume the role of Great Redeemer. Majorities bought it. The social contract was reformulated on strictly populist grounds. Chávez, the Savior of the Homeland, would ensure the usufruct of national wealth in exchange for unconditional loyalty to him and to his political project. Why maintain duties and rights that did not fall within this scheme. Fidel Castro had already pointed it out “within the revolution, everything; outside of the revolution, nothing”.
But it was a fragmented, weakened social contract, with a society divided by hate speech, with which Chávez justified the destruction of the counterweights to his “redemptive” power. Its bases were very vulnerable, moreover, since they depended on Chávez’s charisma and the existence of significant resources to distribute to please the people. Likewise, he was increasingly pierced by his “friends” who, under cover of institutional destruction and the impunity associated with his loyalty, sacked the nation’s money. But the gods smiled on Chávez. He was lucky to have unusual oil income, especially during his second government, to support his impostures.
With the disappearance of the bases of what still existed as a social contract —charisma and high income—, Maduro set up a parallel institutionality, openly violating the constitutional order, to endorse his only “governance” tools: open repression and the criminalization of any protest or dissidence, with the consent of abject courts. The “contract” was no longer with society, but with a narrow circle of complicity of treasonous soldiers, corrupt judges, plugged in and “revolutionary” mafias, together with the outlaw states that support them. But it’s blowing up in his face. The excessive guts of some —the PDVSA case and related cases—, in a country so impoverished by the chavo-madurismo, has unleashed a war between factions to preserve preserves for plunder.
In a scenario that is increasingly unfavorable for him, it would be assumed that Maduro would be interested in expanding his support bases beyond the sect of fanatics and the complicities that maintain him. But, trapped in an exclusive and destructive anti-inflationary policy, of such extreme monetarism that it would make the neoliberals appear like leftist revolutionaries, he appeals to the bonus of the remuneration of workers and employees so as not to burden the budget for the payment of benefits that were not so miserable. The union leadership harassed and deaf to the demands of the population for their rights to be respected, the ridiculously self-proclaimed “labor president” (!) decides to put an end to one of the last vestiges of the social contract of democracy: wages as the basis of a social security system that, in a healthy economy, would provide them with decent living conditions.
The possibilities of getting out of the abyss based on a sustained and daring process of growth, involves building the foundations of a new social contract that is credible, inspires confidence and is capable of uniting wills around a democratic project that ensures freedoms and ensure the core elements of a transparent and inclusive social State based on the rule of law. It is also a condition to attract international contributions and those of Venezuelans in the diaspora, which are so needed.
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