In Defense of Guerrilla Capitalism

holdomorRigid price controls, coupled with strict controls over the movement of food from one place to another, can break down society’s ability to feed itself.

It’s a lethal combination. Put them together with enough political repression and the result can be famine.

In Ukraine, in the 1930s, the combination of policies that made it impossible for farmers to produce enough, together with brutal soviet internal controls that choked off the flow of food to famine areas left millions dead.

Two decades later in China, the toll was in the tens of millions.

These kinds of engineered famines can be enormously effective methods of population control. Both the Soviet and the Chinese Communist regimes managed to solidify their grip on power for decades to come via the expedient of starving out foci of opposition. Nobody should take this stuff lightly. And I don’t.

But could Venezuela really be facing this kind of manufactured famine?

Not for now.

And why not?

For one reason only: thousands upon thousands of ordinary Venezuelans are working full time to subvert the authoritarian regime’s insane, possibly famine-inducing control system.

They may not think of themselves in those terms – surely they don’t – but the effect of what they do is to reconstitute, against enormous odds, the only mechanism we know for for fully matching demand to supply.

Taking real risks, day in and day out, they’re fighting the Control Regime with the only weapon likely to defeat it: economic rationality.

Nobody had to give them a university course for them to develop the basic common sense that tells you if you have something people are willing to pay ten for and the government says you can only sell it for one, then the right thing to do is to tell the government to fuck right off.

Bachaqueros make markets because they know what Merentes will not, cannot accept: the thing that brings demand and supply together is price. Nothing else. Mess with the price mechanism and supply will not, cannot match demand.

They know scarcity is to price controls what smoke is to a bonfire: not one possible outcome among many, but an iron-clad certainty, guaranteed by the nature of the thing itself. They know wishing for “price controls” to just work, without any of the noxious shortages, is every bit as fatuous as wishing for a bonfire without smoke.

What black markets do is re-establish (partially, imperfectly, with high risk premiums), the price mechanism: only possible mechanism for fully supplying markets in those rare situations when power has lost its mind and declared, by administrative dictum, that that mechanism is not permissible.

We don’t often think of “Bachaqueros” in these terms. A shocking number of even opposition minded people have bought into the government discourse demonizing them. Few stop to think where Venezuela would really be if the government’s fantasy could be delivered and black-market food sales could be stamped out. Chavismo naively believes that driving bachaqueo out of business would somehow result in fully supplied markets – an economic non-sequitur that could, if pursued with enough vigor, result in a real catastrophe.

The reality, I’m afraid, is different: without guerrilla capitalists, Venezuela wouldn’t be a modern Valhalla. It would be Ukraine in the 1930s.

In fact, to slur the only people now standing between us and total collapse in the distribution system with a term of abuse like “bachaqueros” is to internalize the regime’s twisted ideology. What they are, really, is guerrilla capitalists: and they’re our last line of defense against the complete breakdown of society’s ability to feed itself.

Only in the very rare occassions when the exercise of state brutality has been allowed absolutely free rein, when state violence has been encouraged without any kind of holds, has it been possible eliminate these outbreaks of guerrilla capitalism. In those cases, the outcome has always and uniformly been the one outcome economic theory foresees: mass starvation.

Put that on your goddamn jumpsuit, Mayor Lacava.