So far we haven’t commented much on chavismo’s batty new Law on Fair Costs and Prices – mostly because it’s too depressing. Criticizing the economics behind it in detail would be farcical, like a point-by-point scientific refutation of the idea that a cow can jump over the moon.
Suffice it to say that the law is medieval, and not in some overheated, rhetorical sense, but as a straightforward matter of intellectual history.
Flipping through the advice Caracas lawyers are having to issue to their clients about it, it’s hard not to fall into a complete morass of despair. The new law regulates all prices. Not just of products for sale to final consumers, but of intermediate goods too. In all markets. For all producers. And this is presented as a means of…fighting monopolies!
The net effect here is to erase what was left of the difference between a state owned and a privately owned firm, to dissolve the distinction between them. Chavismo has been walking down this road for a long time, weaving a regulatory straightjacket so tight around the private sector that virtually no decision of any importance is left to nominal owners. This law closes the circle, hollowing out the concept of property to a point where to own a business becomes indistinguishable from working as a compliance agent for a state regulatory agency.
At this point, what’s sad isn’t just that chavismo never really grasped why the “real socialism” of the 20th century could never compete with the dynamism of the capitalist west. It’s that they don’t have the tools in their intellectual toolbox to understood why Feudal Societies couldn’t hold off the capitalist order that replaced them.