Venezuela is a society in crisis. There is a shortage of electricity, galloping inflation, a shortage of basic goods and medicine and a terrible crime rate. The opposition parties are attempting to remove President Nicolas Maduro. He narrowly won the 2013 presidential election as the chosen successor of Hugo Chávez, the charismatic socialist revolutionary who died in 2013. Since then, the economic and political tide has turned against the revolution.

The opposition is based on the wealthiest classes and is backed by the United States. They have tried all means to overturn the socialist policies since Chávez was first elected in 1998. This included a right-wing coup d'état in 2002, which was thwarted by a mass uprising of the workers and the poor. Chávez formed the United Socialist Party of Venezuela (PSUV) in 2007 as a party to carry through the socialist revolution. However, the party lost its majority in the National Assembly to the opposition in 2015.

Across South America, left-wing governments came to power during the great commodity price boom of the early 2000s, but they lost power as oil and other raw material prices plummeted, and global demand fell during the period after the Great Recession of 2008 and 2009. Severe economic recession affected Argentina, Brazil and Venezuela, regardless of whether their governments pursued neo-liberal or Keynesian policies.

Venezuela's economic fortunes are tied to world oil prices. When petroleum prices began to fall in the mid-1980s, Venezuela's per capita GDP fell from 50 percent to 10 percent above 1950 levels. The collapse of the GDP coincided with a sharp fall in the profitability of Venezuelan capital. In 1989, a new president, Carlos Andrés Pérez, was elected to campaign against the IMF, but he submitted to IMF dictates. He abolished food and fuel subsidies, increased gas prices, privatized state industries, and cut spending on health care and education. A popular uprising erupted which was repressed by force with hundreds of protestors killed. Chávez was then a captain in the army. He was so disgusted by the corrupt nature of the state that he attempted, and failed, to overthrow in 1992, and he was sent to prison. After his release he was elected president in 1998.

President Chávez promised broad reforms, constitutional change and the nationalization of key industries under his so-called Bolivarian Revolution. Chávez's programs transformed the lives of the poor. He introduced free health care and education, provided subsidized food, and carried through land reform. Above all, the revolution offered hope and dignity to the majority. Poverty levels fell by 30 percent between 1995 and 2005, as real per capita income rose. A recent IMF report shows that only one country became more equal in the last 20 years – Venezuela. Under Chávez, the Gini coefficient of inequality fell from 45.4 percent in 2005 to 36.3 percent.

However, Chávez was also lucky. He took power as commodity prices boomed; after this, oil prices rose to a peak. Venezuelan capital gained a significant rise in profitability. The commodity boom continued despite the Great Recession because China kept up demand, so economic growth and profitability stayed up. Oil accounts for more than 30 percent of Venezuela's GDP, approximately 90 percent of exports and 50 percent of fiscal income. With high oil prices, Chávez could pour money into social programs and engage in petro-diplomacy – subsidising like-minded governments not only in Cuba but also in Bolivia and Nicaragua, even providing economic support for the poor in the USA.

Then, the oil price plummeted, along with other commodity prices and the world economy entered a period of low-growth stagnation. Although China is a major consumer of energy and other commodity exports, it too has cut orders dramatically. Brazil, Argentina and Venezuela have taken the biggest hit, and their "leftist" governments can no longer deliver for the majority.

Venezuela's currency, the bolivar, was devalued to sustain its dollar-based oil exports and inflation spiralled out of control. This hit the savings of the middle-class; as a result, opposition to the Bolivarian revolution grew, even among former staunch supporters. As government spending was slashed, living standards fell and social problems grew.

Right-wing "free marketers" tell us that this shows "socialism" does not work and there is no escape from the rigors of the market. As Forbes magazine put it; "The ongoing disaster that is the Venezuelan economy under Bolivarian socialism tells us a number of interesting economic lessons. In part that there's no economic theory so deluded that someone, somewhere, won't believe in it. That we cannot simply ascribe prices randomly to goods: prices are not just an allocation method, they are information too. But the most basic point that needs to be made is that the price of something just is the price of something. We're not going to be able to change that price simply by randomly sticking some other numbers on a piece of paper: the price of dried milk is what the price of dried milk will be, coffee will cost what coffee costs. Government, our plans, even the most deluded of economic policies, are just not going to change this: the price is the price."

In other words, you have to do what the market says and prices can't be messed with. That is true only if the capitalist law of value dominates socio-economic life. And it still does in Venezuela, despite the "revolution." Big parts of industry and finance are still in private hands and foreign capital is also powerful. State ownership of the oil industry and its revenues isn't enough to resist global market pressures. The IMF predicts an 8 percent economic contraction for 2016.

The government attempted to gradually encroach on the dominance of the market and private interests. This antagonized the rich and undermined their status, as their servants and workers asserted their rights. The government also suffered internal corruption as state officials and local communities gained control of huge resources, which were not adequately monitored and checked.

Like many oil-based economies, Venezuela suffers from its lack of economic diversity. Attempts to sustain generous state subsidies for food, health, education and a raft of other benefits, met with bitter resistance from the Venezuelan capitalist elite. They organized a campaign of sabotage and orchestrated shortages. However, government policies to create a dual currency also undermined its own ability to plan the economy. In the last decade China provided much needed skills, technical and economic support, but the dependence on oil has not been overcome. In fact, a South American plan of production would be needed to overcome the distortions inflicted on South American economies by the bond between indigenous elites and their U.S., Italian, Spanish and Portuguese counterparts.

The entrenched power of the PSUV in the state and society makes it difficult for the opposition to legally oust Maduro. So, the most extreme right-wing has embarked on a wave of assassinations of PSUV leaders in the military and politics. But there may be some in the army who will shift sides to support a coup d'état against Maduro. However, Maduro shifted to the left in recent months, advocating widespread nationalization and the repression of economic saboteurs.

We are witnessing a counter-revolutionary wave in South America, which is sharpest in Brazil and Venezuela. To defeat this, President Maduro should act decisively to crush the economic sabotage organized by the richest families and launch a call to arms to reawaken the revolutionary movement throughout the continent.

Heiko Khoo is a columnist with China.org.cn. For more information please visit: http://china.org.cn/opinion/heikokhoo.htm

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