There is no more propitious moment for the exercise of reinterpreting the past with a projection of the future as when nations enter great historical crossroads in which their political-social existence is threatened. Paradoxically, the moments of existential breakdown of nations are also the moments of collapse of the material and spiritual living conditions of their inhabitants, which causes the great national issues to be buried in the heroic daily struggle for subsistence. However, the great crossroads seem only to be passable with the correct dialectical mediation between the heroism of daily life and the vindication of the great topics of the national-popular will. Faced with the apparent all-encompassing dominance of the tiring sequence of tensions and slackness between the active counterrevolution and the passive counterrevolution in current Venezuelan political life, it is necessary to vindicate two questions with disruptive power: What have been the great national issues throughout our history? What have been the major concerns about the government of the homeland and our place in the interstate system?

At the dawn of the XXI century, Domingo Alberto Rangel (DAR) carried out in his Venezuela in three centuries a penetrating interpretative analysis on the legacy of the XX century and the dilemmas that the XXI century brought for Venezuela, which stands out for its crystal clearness, admirable parrhesia and pressing news. In the twilight of the Venezuelan oil century, when the “tragic parable” of the mené has loomed over the country, a dialogue with several of the motives discussed by Rangel is a conspiracy against the misery of reality.


One of the great constitutive myths of modern nation-states is the alleged right to sovereignty. The idea that supreme political power is framed within the State on the one hand and that it resides in the people on the other can be classified as the greatest normative naivety of the social sciences and the most sublime political ideal to which the human genre has aspired, respectively. However, nation-states claim their sovereignty in the midst of a broader political system, the modern European interstate system turned global, under the world-historical hegemony of a leading capitalist state. The essence of this historical social system is the incessant accumulation of surplus value between regions, countries, and classes on the world market stage. As far as Realpolitik is concerned, sovereignty is decided on the ability of States to organize the accumulation of capital and the exercise of violence within their borders, but to a great extent, in relation to other States.

Domingo Alberto Rangel incorporated these realistic principles to point out precisely how Venezuela cannot understand its sovereignty without oil. But not in the way of the unhappy formula of “oil sovereignty” which hides the desire of the rentier reason to increase the income it extracts from the world market by way of ownership of oil as the ultimate goal. What DAR indicates is a type of incorporation into the dynamics of the global political economy that radically transformed the pattern of power relations between the Venezuelan State and the other States of the interstate system. In his words:

“Oil is blunt, (…). Divide the history of Venezuela into two segments. It makes us more dependent, places us at the epicenter of international surveillance, limits our sovereignty to the point of precariousness but everything we have in the material, which is not little and it would be better if we had been more sensible, is a product of that substance “[1 ]

What does this forceful idea of ​​”living with limited sovereignty” imply for the economic and political dynamics of the country when the Venezuelan economy transits from crisis to collapse and from collapse to extinction?

Thus, the insertion of Venezuela as a rentier country in the midst of the dynamics of the capitalist world-economy made it possible to gain a portion of the surplus that circulates in the global economy due to the ownership of a key natural resource given the specific difference of the US systemic cycle of accumulation intensive in energy and means of production. In spite of chauvinist victimisms, it is worth saying that this surplus is the product of a high rate of exploitation elsewhere in the international division of labor. The surplus captured from the world market, that is, oil income, stimulated the accumulation of internal capital as the State promoted a “Say’s Law in reverse” where consumption was able to transfer millions of people who were in the rural economy governed by simple reproduction towards an economy of expanded reproduction in which income levels were not governed by the leonine dialectic between real wages and productivity thanks to the fact that the international oil rent made it possible to cover the gap between one and another either with high salaries in the public sector or with imports of means of consumption or means of production under exchange rate overvaluation.

The difficulty in recognizing “that this type of unearned wealth, because it was not generated by activities proper, mostly consisted of the liquidation of a pre-existing asset, it had to be injected into the economy as a dangerous medicine” as Pérez Alfonzo [2] masterfully pointed out became the epitaph of the Venezuelan oil century. Even so, despite the fact that it is common to associate the country’s economic collapse with oil -usually without any rigor or underlying theory and with Cainism on the surface – it is much less common to associate the political economy of oil and the risks indicated by Pérez Alfonzo to the question of sovereignty and national security.

The overriding reality of the modern interstate system is economic. The relative success of states in agro-industrial production, trade, and finance determines the relative strength of states. Macroeconomic imbalances are the precursors to the domination of one country by another, and imperial policy in the era of informal US imperialism is to open up any region of the planet to accumulation by dispossession [3]. Put the figures to these indicators: uncontrollable fiscal deficit, crisis in the balance of payments, accelerated depreciation of the currency, unstable valuation of domestic assets (financial and real estate) and inflation, increase in unemployment and fall in real wages, flight of capitals. The thesis that I bring up is that each one of these macroeconomic imbalances has its breeding ground in the dynamics of the rentier insertion of Venezuela in the capitalist world-economy, first; that its exponential increase originates in the decline phase of the Venezuelan oil century in the 1970s, second; Finally, that the economic and foreign policy of the government of Nicolás Maduro has led to their fatal outcome, putting the country’s national security in suspense. The bad government of the passive counterrevolution has led to the worst possible outcome of the Venezuelan oil century.


It is in the insertion of the country in the world market and its internal metabolic effects that Domingo Alberto Rangel masterfully captured the main dilemma that was presented to the country at the fin de siècle:

The tragedy of Venezuela, since the beginning of this century when Cabimas was enthroned, is that every initiative, even the most generous or promising, is conceived as an oil parasite without whose protection and vigor it would perish or wither. Nothing more deplorable, from this point of view than the so-called oil seeding.

(p. 244)

However, this crossroads has always had a way out that is not without risk. “Like any model based on extractive wealth,” Rangel argues, “the oil model will one day mark the tragic parable. Venezuela must transform itself, without delay, into an industrial nation”(p. 177). The exchange policy was the crux of the dialectic on industrialization, since paraphrasing Schumpeter’s formula according to which monetary policy is the headquarters of capitalist accumulation, in a State that administers a portion of the global surplus value enjoying wide liquidity unrelated to (national) labor productivity exchange rate policy becomes the headquarters for the accumulation of wealth and power.

The rentier economy did not emerge from the universal flood, but its dynamics dealt with the crisis of the dual agricultural economy (export and small markets). So, the oil industry repeated at a much higher level the gap between two productivities and their impact on the exchange rate. The technical inability of national capital (public and private) to exploit oil gave way to Anglo-Saxon transnational companies. The rentier claim forced companies to exchange dollars for bolivars at a fixed exchange rate, preventing the flood of foreign currency from revaluing the bolivar and reducing the amount of dollars needed for companies to operate ergo the amount of dollars that the country received. Very quickly one of the key trends of the Venezuelan oil century was installed: abundance of foreign currency with exchange overvaluation. The exchange rate overvaluation liquidated agriculture for export, forcing the de-ruralization of a large part of the peasant labor force. The other side of the overvaluation was the cheapening of the means of production and consumption. In both cases, there were two strong tendencies to increase the import coefficient in the secondary and tertiary sectors of the economy that undermined the increase in the organic composition of capital.

In the ascent phase of the Venezuelan oil century (1917-1973 / 1983), the dialectical legacy of overvaluation was positive. “The overvalued bolivar gives Venezuela the most technically modern economy that Latin America can exhibit (…) The overvalued bolivar allowed the importation of trinkets or to be made nonsense (…) but it also facilitated the acquisition of very modern and sophisticated machinery without much effort or with very little effort ”(p. 139) maintains DAR. In the decline phase of the Venezuelan oil century (1973 / 1983-2022) the consequences of overvaluation brought down the country’s economic dynamics.

As Clement Juglar’s maxim puts it, “The only cause of depression is prosperity.” The decline phase of the Venezuelan oil century was accompanied by the beginning of the financial phase of the systemic cycle of US accumulation. The OPEC embargo for the Yom Kippur War led to an unusual increase in oil prices and the overabundance of capital absorbed from the world market did not find profitable investment in the usual mechanisms of trade and production (DMD ”) leading to an artificial growth of industrial productivity, public employment, and the service sector together with a harmful growth of external indebtedness, the informal economy, and urban unemployment. Thus, since the 1970s, Venezuela has been experiencing what Marx called an over-accumulation crisis (or what is the same: an investment strike). The overproduction crisis is the breeding ground for the Venezuelan Mega Depression that began in 2013, of which the existential crisis of national security is one of its key components.


From the inability to reproduce on an enlarged scale the accumulation of capital that originated in the 1980s (verified in the investment strike and the growing and unmanageable disproportionality between Sector I and Sector II), Venezuela entered the 21st century with the only certain that the oil-powered economy had reached its decline. Writing at the end of the century, DAR captured the existential dilemma facing the country:

The 21st century poses a dilemma for us that we could neither avoid nor put off. Are we still a rentier country with all the mentality that this creates, or do we decide to be a producing country? Are we living another century of oil or are we building an economy with productive roots? It is the most important dilemma posed by the new century.

(pp. 229-230).

On this statement, we must stop ad infinitum to convince locals and strangers about the reason for exhaustion, which is neither Cassandrism nor caprice. It is analytical of the dynamics of capital accumulation. The oil rent is not a tax, that is, it is not a portion of the national surplus that the State collects from civil society to carry out its functions. Oil has a productive component that originates from the industry that extracts it. But it also has a rentier component, which is the surplus that is captured from the difference between its price of production and its price on the world market. What is behind this surplus is the ability of oil as an energy source to increase labor productivity. Therefore, what is absorbed from the world market is value created by labor elsewhere in the international division of labor. The ability to import that oil currencies give is the ability to exchange an absorbed value, that is, not generated, for multiple commodities. Hence, if economic policy does not take special care in how to insert the “dangerous medicine” (as metaphorized by Pérez Alfonzo) it becomes a lethal weapon in the creation of macroeconomic imbalances and institutional obstacles in the best of cases and crises of accumulation, crisis of overproduction (or crisis of demand) and crisis of proportionality at worst.

Here the key to everything is the dynamics of the capitalist world-economy which combines a system of supposedly sovereign States with an axial division of labor where production is worldwide but the distribution of the surplus is governed by the unequal exchange between States with productivities various. The exchange rate is the mechanism of making two commodities that are qualitatively produced by different organic compositions of capital quantitatively interchangeable. It is there that Domingo Alberto Rangel makes a punctilious criticism of how oil affairs have been handled in the country:

From Alberto Adriani to Juan Pablo Pérez Alfonzo (…) it has been considered that oil should be the engine that imparts the dynamic impulse of the economy (…) As much oil will be extracted as we need the goods that it allows us to acquire outside the country. The volume of oil production would always be determined by the magnitude of our development or conservation requirements (…) for the system thus envisioned or postulated to work, Venezuela will need to have greater influence in the world oil business (…) Oil can fulfill the providential mission of rational and balanced regulator of our life if its production has as its supreme goal the satisfaction of our demands and nothing else. But this is not the case, and it cannot be.

(p. 230).

However, there is no end of a long economic cycle without a Belle Époque that comes to propitiate the onslaught of depression with prosperity. Instead of realizing that the crux of the national dilemma was not between the production and distribution of wealth, the Bolivarian Revolution insisted on putting the artificial cancellation of the “social debt” before seeking a revolution in the type of insertion of the country in the capitalist world economy. Hic Rhodus, hic salta: in the 2000s imports as a percentage of GDP averaged 29.38% above the 21.05% of the previous decade; gross fixed capital formation as a percentage of GDP despite the oil price boom only grew on average 1.69% in the 2000s compared to the 1990s; the final consumption expenditure of the general government as a percentage of GDP increased only 0.39% on average between the two decades; Household consumption as a percentage of GDP went from averaging 62.4% in the 1990s to 52.3% in the 2000s. The figures seem to paint a very clear picture. The economic legacy of the country’s drivers during the 2000s was the import festival, the festival of the commercial bourgeoisie. The surprising increase in Venezuela’s share in total world imports is evidence of this.

Elaboración propia/ datos del Banco Mundial

When reading Rangel, the result of the socialization of consumption carried out during the Belle Époque of the Venezuelan oil century was foreseeable. Ex antes, he wrote: “no society in history, of the many that enjoyed an income or lived a rent system, transformed its nature to avoid eventual stagnation.” As a coda, he indicated that “societies like people are amended when the catastrophe they despised falls on them until they are crushed” (p.232). After a cumulative fall in GDP since 2013 that will be around 100% at the end of this year. After the migration of more than 5 million nationals. After a squandering of the real wage hardly seen in history. After a political crisis that wiped out the most basic republican substance, Rangel’s words today sound clairvoyant. They are superlatively acute insofar as, in addition to anticipating the catastrophe, they expressed the inability of the rentier society to face it, to act as a living organism in the face of the onslaught of existential tragedy. For Rangel “the twentieth century has been that, the empire of the muddy, the dictatorship of oil” (p.237). Perhaps the main act of constriction that remains to be done on this soil is precisely to denounce those two signifiers, empire and dictatorship, which represent so well the wishes of the passive counterrevolution and the active counterrevolution.

[1] D. A. Rangel, Venezuela en tres siglos, Caracas, Mérida editores, 2004, p. 51. Las citas que salgan a continuación donde sólo se otorgue el número de página pertenecen a este libro.

[2] J. P. Pérez Alfonzo, Hundiéndonos en el excremento del diablo, Banco Central de Venezuela, Caracas, 2011, p 40.         

[3]  Véanse D. Harvey, Breve historia del neoliberalismo, Madrid, Akal, 2007, p. 208; L. Panitch y S. Gindin, La construcción del capitalismo global: la economía política del imperio estadounidense, Akal, Madrid, 2015.

Malfred Gerig

Sociologist from the Central University of Venezuela (UCV) and candidate for Master in Political Science from the Simón Bolívar University (USB). Researcher with an interest in global political economy and political economy of oil.

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