Venezuela’s Law of Fair Prices Goes into Effect [View All]

[Peace Patriot]

Venezuela’s Law of Fair Prices Goes into Effect

By TAMARA PEARSON - VENEZUELANALYSIS.COM

Mérida, November 22nd 2011 (Venezuelanalysis.com) – The Law for Fair Costs and Prices, which aims to stabilise prices, guarantee access to goods, and to attack inflation, currently at near 26% per year, came into effect today.

The law allows the government to limit the prices charged for goods and services across broad sectors of the economy. Chavez passed the law by decree in July using an authority that the National Assembly granted him last year for 18 months under an Enabling Law.

Representatives of the ministries of food, commerce, basic industries and mining, planning and financing, and the Venezuelan Central Bank (BCV) were involved in the elaboration of the law, which creates a National Superintendency of Fair Costs and Prices. The new institution will regulate, administer, supervise, inspect, and control prices charged to consumers. It will also be responsible for sanctioning those in violation of the law when necessary.

Legislator Ramon Lobo, speaking on VTV today, said the national executive decided to implement the law because of “certain practices, such as monopolies, where in the process of buying and selling products and services... certain economic groups dictate the standard prices in the market”.

Today the government will begin the first phase of implementing the law, which involves inter-institutional auditing of companies’ internal pricing structures of personal hygiene, food, and household products. It will set a maximum selling price for those products on 15 December, and companies will have one month to print the price on the products.

The government is freezing prices- that is, prohibiting increases on a list of eighteen bathroom and cleaning products, such as toothpaste, toilet paper, and dish detergent, while they are being audited.

President Hugo Chavez called on the lawyers and public servants doing the auditing to not let themselves be "bribed" by the companies. "Be careful of corruption," he said.

The second phase of applying the law will begin in January next year, and will involve the revision of pricing structures for a list of medical products, according to Minister for Science, Technology, and Intermediate Industries, Ricardo Menendez.

As stated in the law, companies can be punished for charging more than the designated prices, including a prohibition to sell the product, or inspectors can stamp or confiscate products.

Lobo responded to the criticisms of some business people that the law will generate more inflation and scarcity, saying that the law will be applied “at all stages of the chain, that is, in production, distribution, and marketing”.

Private companies in Venezuela continue to hoard certain regulated basic food goods such as milk and oil, which are now impossible to find at the regulated price, and are sold on the black market at higher prices. The companies do this not only to obtain greater profits, but also to put pressure on the government. However, in some cases, there is also corruption within the state production and distribution sector.

Lobo said that the National Superintendency of Fair Costs and Prices would set prices according to the characteristics of the goods. Companies are obliged to present their financial records, which will then be used to calculate costs and price ranges for individual products.

“It’s a flexible mechanism which will adapt to the specific circumstances in the national economy. We request that the population trusts in the social and economic policies that the national government is implementing, as they are in favour of the vast majority,” Lobo concluded.

http://venezuelanalysis.com/news/6649
(Creative Commons License)
(my emphases)

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Interesting conundrum. Does the government allow "free market" savagery, whereby the poor majority is looted every which way--as here--not only with senseless steep rises in gas and food costs, but with all other costs (medical costs, tuition, debit card fees, usurious credit rates and so on), as the profiteers clean up...or...

Does the government step in and try to regulate prices on behalf of the poor majority--at the risk of additional kinds of corruption and too much government power or bureaucracy?

It is a difficult problem. I'm reminded of the strict regulation of prices and commodities, here, during WW II. Venezuela, as the pioneer of the leftist democracy movement in Latin America, is not exactly at war, but under siege in many ways, starting with the U.S.-backed fascist coup attempt in 2002 and continuing to this day with numerous other destabilization tactics and dirty ops, including multi-millions of our tax dollars going to rightwing groups in Venezuela. U.S. policy has not changed since the days of Kissinger wanting to "make the economy scream" to topple Chile's leftist government. The same M.O.'s. The same purposes.

So these government actions--to control prices, for instance--are defensive, in many important respects. If rightwing entities were not hoarding goods and committing other acts to destabilize the country's economy, these strong measures might not be needed. There will always be tensions between the have's and the have-not's but U.S. policy and USAID-tutored rightwing elements in Venezuela add significantly to those tensions, with the government then having to act to prevent destabilization.

So the question about "free market" vs government regulation is not occurring--and almost never occurs--in a pristine situation, wherein different principles of the "marketplace" and government policy can be tested out--as to short and long term benefits to society.

Should the "free market" determine prices or should society, collectively, determine prices? Should the U.S. government subsidize Big Agriculture, as it does, or let it fall by the wayside, the victim of "market forces"? --to mention one example of how the U.S. manipulates markets to benefit the rich and the corporate. The "free market" doesn't really exist. But say that it did--a truly free, fair marketplace. Should society intervene--in the form of government regulation--when the marketplace does NOT benefit society and/or produces harm?

I approve of "the marketplace" because I think it's in human DNA to love a "marketplace." If fulfills a human need for variety, color, cultural mingling, excitement, and the fun of new and wondrous products. But I also approve of society acting with strength to curtail monopolies, profiteering, powermongering and other abuses of the greedy and of acting, collectively, on behalf of the poor--to ensure food/nutrition, shelter, employment, education and other human and civil rights.

There is a delicate balance between unleashing human creativity (which the "marketplace" tends to do, or rather which a "fair market" tends to do--"free markets" tend to do the opposite; they are actually exclusionary) and ensuring that all human beings have access to that opportunity. If the poor do not have access to education and credit, cannot afford a decent home, get stuck in slave labor status, etc., then society MUST intervene and balance things out.

Exclusion and abuse of the poor has been endemic in Latin America. Its "marketplace" has been severely distorted by U.S. policy. The Chavez government's socialism is an anti-dote to decades and centuries of oppression. Will that balancing go awry, as "Wall Street" propagandists are forever predicting? Thus far, it hasn't. Venezuelans are doing very well, not only on objective indicators but in their own estimation (in numerous polls). They have "THE most equal society in Latin America" according to the recent report of the UN Commission on Latin America and the Caribbean. Venezuelans routinely rate their own democracy and society, and personal well-being, very high, indeed (some of the highest such ratings in the world). And they furthermore have honest, transparent elections (unlike here) and that is the best guarantee that the government is acting on their behalf with their consent.

Since the corporate-run U.S. government is against it, and most Venezuelans are for it, I tend to view the Chavez government as doing the will of the people, when the National Assembly, for instance, passed this Enabling Law (a rather common practice in Latin America--Brazil, for instance, has had several Enabling Laws) and when Chavez takes the initiative on something like prices. Whether it suits any theoretical model of social balance, or whether i'm comfortable with it, or whether "Wall Street"'s smartasses are comfortable with it, is largely irrelevant. These polices are not being imposed on the Venezuelan people; they are a product OF the Venezuelan people. It is THEIR reaction to relentless historical exploitation. THEY are creating a "New Deal" for themselves. They have a right to do that, and the U.S. government's efforts to stop them are wrong, as is the non-stop slander against the Chavez government that we see in the Corporate Press.

We could use such "balancing" here, I'd say. How about the government taking on the oil corporations (as Chavez did) and demanding a better deal for the people of the U.S.? Or the insurance corporations? Or the banksters? Or the food giants? Or--for heavens' sake--the war profiteers?

We are way, way too far tilted in the other direction--toward "free market" savagery. We DON'T have a problem of strong government. We have the problem of very WEAK government, which has acquiesced to the most mind-boggling theft of public resources in human history. Venezuelans are experimenting with the opposite kind of government--one that has aimed quite successfully at reducing the rich/poor income discrepancy and at improving society with free education and health care. It has also aimed at recreating the notion of "the commons"--lands, infrastructure and wealth that is owned by everyone and maintained in the public interest. And it is now trying to preserve these gains, with policies such as price controls and nationalization of strategic industries and of companies that defy the law. We should be studying the Venezuelan model--to get inspiration from their goals and successes and to learn from their mistakes. If we ever restore democracy here, we shall need such models to guide us.

And we could start restoring democracy here by adopting Venezuela's vote counting system, which is electronic but run on OPEN SOURCE code--anyone may review the code by which the votes are tabulated--and has real audits, as opposed to our closed system of corporate-run 'TRADE SECRET' code with virtually no audit controls. Our corporate-run vote counting system is our most serious obstacle to reform.