New economies based on greater democratic control, real representation and citizen participation are on the rise. There is much to be learned from countries like Venezuela that break from the Washington Consensus.

If Americans knew the truth about the growth of real democracy in Venezuela and other Latin American countries, we would demand economic democracy and participatory government, which together would threaten the power of concentrated wealth. The seeds of both are beginning to sprout in the US despite efforts to keep Americans ignorant about them. Real democracy creates a huge challenge to the oligarchs and their neoliberal agenda because it is driven by human needs, not corporate greed. That is why major media in the US, which are owned by six corporations, aggressively misinform the public about Chavez and the Bolivarian Revolution.

Mark Weisbrot of the Center for Economic and Policy Research writes, “The Western media reporting has been effective. It has convinced most people outside of Venezuela that the country is run by some kind of dictatorship that has ruined it.” In fact, just the opposite is true. Venezuela, since the election of Chavez, has become one of the most democratic nations on Earth. Its wealth is increasing and being widely shared. But Venezuela has been made so toxic that even the more liberal media outlets propagate distortions to avoid being criticized as too leftist. Venezuela is a front line in the battle between the elites and the people over US-style democracy, as we described in Part I of this series.

We spoke with Mike Fox, who went to Venezuela in 2006 to see for himself what was happening. Fox spent years documenting the rise of participatory democracy in Venezuela and Brazil. He found a grassroots movement creating the economy and government they wanted, often pushing Chavez further than he wanted to go. Venezuelan democracy and economic transformation are bigger than Chavez. Chavez opened a door to achieve the people’s goals: literacy programs in the barrios, more people attending college, universal access to health care, as well as worker-owned businesses and community councils where people make decisions for themselves. Change came through decades of struggle leading to the election of Chavez in 1998, a new constitution and ongoing work to make that constitution a reality.

Challenging American Empire

The subject of Venezuela is taboo because it has been the most successful country to repel the neoliberal assault waged by the US on Latin America. This assault included Operation Condor, launched in 1976, in which the US provided resources and assistance to bring friendly dictators who supported neoliberal policies to power throughout Latin America. These policies involved privatizing national resources and selling them to foreign corporations, de-funding and privatizing public programs such as education and health care, deregulating and reducing trade barriers.

In addition to intense political repression under these dictators between the 1960s and 1980s, which resulted in imprisonment, murder and disappearances of tens of thousands throughout Latin America, neoliberal policies led to increased wealth inequality, greater hardship for the poor and working class, as well as a decline in economic growth.

Neoliberalism in Venezuela arrived through a different path, not through a dictator. Although most of its 20th century was spent under authoritarian rule, Venezuela has had a long history of pro-democracy activism. The last dictator, Marcos Jimenez Perez, was ousted from power in 1958. After that, Venezuelans gained the right to elect their government, but they existed in a state of pseudo-democracy, much like the US currently, in which the wealthy ruled through a managed democracy that ensured the wealthy benefited most from the economy.

As it did in other parts of the world, the US pushed its neoliberal agenda on Venezuela through the International Monetary Fund (IMF) and World Bank. These institutions required Structural Adjustment Programs (SAP) as terms for development loans. As John Perkins wrote in Confessions of an Economic Hit Man, great pressure was placed on governments to take out loans for development projects. The money was loaned by the US, but went directly to US corporations who were responsible for the projects, many of which failed, leaving nations in debt and not better off. Then the debt was used as leverage to control the government’s policies so they further favored US interests. Anun Shah explains the role of the IMF and World Bank in more detail in Structural Adjustment – a Major Cause of Poverty.

A turning point in the Venezuelan struggle for real democracy occurred in 1989. President Carlos Andres Perez ran on a platform opposing neoliberalism and promised to reform the market during his second term. But following his re-election in 1988, he reversed himself and continued to implement the “Washington Consensus” of neoliberal policies – privatization and cuts to social services. The last straw came when he ended subsidies for oil. The price of gasoline doubled and public transportation prices rose steeply. Protests erupted in the towns surrounding the capitol, Caracas, and quickly spread into the city itself. President Perez responded by revoking multiple constitutional rights to protest and sending in security forces who killed an estimated 3,000 people, most of them in the barrios. This became known as the “Caracazo” (“the Caracas smash”) and demonstrated that the president stood with the oligarchs, not with the people.

Under President Perez, conditions continued to deteriorate for all but the wealthy in Venezuela. So people organized in their communities and with Lieutenant Colonel Hugo Chavez attempted a civilian-led coup in 1992. Chavez was jailed, and so the people organized for his release. Perez was impeached for embezzlement of 250 million bolivars and the next president, Rafael Caldera, promised to release Chavez when he was elected. Chavez was freed in 1994. He then traveled throughout the country to meet with people in their communities and organizers turned their attention to building a political movement.

Chavez ran for president in 1998 on a platform that promised to hold a constituent assembly to rewrite the constitution saying, “I swear before my people that upon this moribund constitution I will drive forth the necessary democratic transformations so that the new republic will have a Magna Carta befitting these new times.” Against the odds, Chavez won the election and became president in 1999.

While his first term was cautious and center-left, including a visit by Chavez to the NY Stock Exchange to show support for capitalism and encourage foreign investment, he kept his promise. Many groups participated in the formation of the new constitution, which was gender-neutral and included new rights for women and for the indigenous, and created a government with five branches adding a people’s and electoral branches. The new constitution was voted into place by a 70 percent majority within the year. Chavez also began to increase funding for the poor and expanded and transformed education.

Since then, Chavez has been re-elected twice. He was removed from power briefly in 2002, jailed and replaced by Pedro Carmona, the head of what is equivalent to the Chamber of Commerce. Fox commented that the media was complicit in the coup by blacking it out and putting out false information. Carmona quickly moved to revoke the constitution and disband the legislature. When the people became aware of what was happening, they rapidly mobilized and surrounded the capitol in Caracas. Chavez was reinstated in less than 48 hours.

One reason the Chavez election is called a Bolivarian Revolution is because Simon Bolivar was a military political leader who freed much of Latin America from the Spanish Empire in the early 1800s. The election of Chavez, the new constitution and the people overcoming the coup set Venezuela on the path to free itself from the US empire. These changes emboldened the transformation to sovereignty, economic democracy and participatory government.

In fact, Venezuela paid its debts to the IMF in full five years ahead of schedule and in 2007 separated from the IMF and World Bank, thus severing the tethers of the Washington Consensus. Instead, Venezuela led the way to create the Bank of the South to provide funds for projects throughout Latin America and allow other countries to free themselves from the chains of the IMF and World Bank too.

The Rise of Real Democracy

The struggle for democracy brought an understanding by the people that change only comes if they create it. The people viewed Chavez as a door that was opened for them to create change. He was able to pass laws that aided them in their work for real democracy and better conditions. And Chavez knew that if the people did not stand with him, the oligarchs could remove him from power as they did for two days in 2002.

With this new understanding and the constitution as a tool, Chavez and the people have continued to progress in the work to rebuild Venezuela based on participatory democracy and freedom from US interference. Chavez refers to the new system as “21st century socialism.” It is very much an incomplete work in progress, but already there is a measurable difference.

Mark Weisbrot of CEPR points out that real GDP per capita in Venezuela expanded by 24 percent since 2004. In the 20 years prior to Chávez, real GDP per person actually fell. Venezuela has low foreign public debt, about 28 percent of GDP, and the interest on it is only 2 percent of GDP. Weisbrot writes: “From 2004-2011, extreme poverty was reduced by about two-thirds. Poverty was reduced by about one-half, and this measures only cash income. It does not count the access to health care that millions now have, or the doubling of college enrollment – with free tuition for many. Access to public pensions tripled. Unemployment is half of what it was when Chávez took office.” Venezuela has reduced unemployment from 20 percent to 7 percent.

Venezuela is making rapid progress on other measures too. It has a high human development index and a low and shrinking index of inequality. Wealth inequality in Venezuela is half of what it is in the United States. It is rated “the fifth-happiest nation in the world” by Gallup. And Pepe Escobar writes that,”No less than 22 public universities were built in the past 10 years. The number of teachers went from 65,000 to 350,000. Illiteracy has been eradicated. There is an ongoing agrarian reform.” Venezuela has undertaken significant steps to build food security through land reform and government assistance. New homes are being built, health clinics are opening in underserved areas and cooperatives for agriculture and business are growing.

Venezuelans are very happy with their democracy. On average, they gave their own democracy a score of seven out of ten while the Latin American average was 5.8. Meanwhile, 57 percent of Venezuelans reported being happy with their democracy compared to an average for Latin American countries of 38 percent, according to a poll conducted by Latinobarometro. While 81 percent voted in the last Venezuelan election, only 57.5 percent voted in the recent US election.

This is not to say that the process has been easy or smooth. The new constitution and laws passed by Chavez have provided tools, but the government and media still contain those who are allied with the oligarchy and who resist change. People have had to struggle to see that what is written on paper is made into a reality. For example, Venezuelans now have the right to reclaim urban land that is fallow and use it for food and living. Many attempts have been made to occupy unused land and some have been met by hostility from the community or actual repression from the police. In other cases, attempts to build new universities have been held back by the bureaucratic process.

It takes time to build a new democratic structure from the bottom up. And it takes time to transition from a capitalist culture to one based on solidarity and participation. In “Venezuela Speaks,” one activist, Iraida Morocoima, says “Capitalism left us with so many vices that I think our greatest struggle is against these bad habits that have oppressed us.” She goes on to describe a necessary culture shift as, “We must understand that we are equal, while at the same time we are different, but with the same rights.”

Chavez passed a law in 2006 that united various committees in poor barrios into community councils that qualify for state funds for local projects. In the city, community councils are composed of 200 to 400 families. The councils elect spokespeople and other positions such as executive, financial and “social control” committees. The councilmembers vote on proposals in a general assembly and work with facilitators in the government to carry through on decisions. In this way, priorities are set by the community and funds go directly to those who can carry out the project such as building a road or school. There are currently more than 20,000 community councils in Venezuela creating a grassroots base for participatory government.

A long-term goal is to form regional councils from the community councils and ultimately create a national council. Some community councils already have joined as communes, a group of several councils, which then have the capacity for greater research and to receive greater funds for large projects.

The movement to place greater decision-making capacity and control of local funds in the hands of communities is happening throughout Latin America and the world. It is called participatory budgeting and it began in Porto Alegre, Brazil in 1989 and has grown so that as many as 50,000 people now participate each year to decide as much as 20 percent of the city budget. There are more than 1,500 participatory budgets around the world in Latin America, North America, Asia, Africa, and Europe. Fox produced a documentary, Beyond Elections: Redefining Democracy in the Americas, which explains participatory budgeting in greater detail.

Democracy Is Coming to the USA

Participatory budgeting is a method of participatory government in which people manage public money. In this democratic process, community members directly decide how to spend part of a public budget. It provides communities with greater control over their economic lives and more input into the investments in their community.

In the US and Canada, participatory budgeting exists primarily at the city level for the municipal budget. It also has been used, however, for counties, states, housing authorities, schools and school systems, universities, coalitions, and other public agencies. The first city to put in place participatory budgeting on a citywide level is Vallejo, CA. Other US cities that have started using it are Chicago and New York.

Chicago was the first city in the US to use this process. Since 2009, residents of Chicago’s diverse 49th Ward have decided how to spend the $1.3 million annual capital budget of Alderman Joe Moore. Capital budgets do not include hiring people, but are for physical improvements to the neighborhood. Residents identify spending ideas and select community representatives in neighborhood assemblies. These representatives develop full project proposals from these ideas, and then residents vote on which projects to fund. The capital spending-budget pie chart has changed dramatically since it went under popular control. It moved from a handful of large projects to four or five times as many small projects, according to Maria Hadden, who was involved in the process and works with the Participatory Budgeting Project. Today, four Chicago aldermen use participatory budgeting.

In New York City in 2011, City Council Members Brad Lander, Melissa Mark-Viverito, Eric Ulrich, and Jumaane D. Williams launched a participatory budgeting process to let residents allocate part of their capital discretionary funds. In 2012, the number of Council Members involved in Participatory Budgeting in New York City doubled to include David Greenfield, Dan Halloran, Stephen Levin, and Mark Weprin, giving the community real decision-making power over approximately $10 million in taxpayer money. The response by participants in the process is very positive. There are many examples of the success of participatory budgeting from around the world.

Here is how the participatory budgeting process works: “Residents brainstorm spending ideas, volunteer budget delegates develop proposals based on these ideas, residents vote on proposals, and the government implements the top projects.” The people are not advisors in this process; they are decision-makers.

Participatory budgeting advocates point to six advantages of the process, which include greater transparency and accountability, greater understanding of both democracy and community needs and stronger connections between members of the community and their city.

Participatory budgeting does not cost the government any extra money. It is a method for deciding how to spend existing funds. To put in place participatory budgeting, political will is required from above, and community support from below. The budget needs to be controlled by someone willing to agree to permit the public to decide how to spend a portion of it. Usually, community organizations are involved to engage people and push the process forward, especially those working with marginalized communities. Participatory budgeting does not usually require any change in law. For more information, see: 72 Frequently Asked Questions about Participatory Budgeting, or attend their May conference, “Building a Democratic City.“

In previous articles, we have written about other aspects of economic democracy including worker-directed businesses and cooperatives and community work. Participatory budgeting is another example of the kind of change that creates economic democracy, which is beginning to take root in the United States. Other changes include building sustainable local living economies, democratizing the money supply through alternative currencies and time banks, creating publicly owned banks, creating land trusts for permanently-affordable housing and establishing a universal, publicly-financed single-payer health care system. There is more information about these on our economic democracy web site, ItsOurEconomy.us.

Lessons for Americans and Others

The 21st century is a time to rethink where we are heading. It is time to form new economies based on greater democratic control and to build new formations of government based on modern constitutions that are more democratic, providing real representation as well as direct and participatory democracy. If the US media would stop demonizing Venezuela and other countries that break from the Washington Consensus and instead tell the truth, we could learn from their successes and failures and could vastly improve our own democracy and economy, both of which are doing poorly.

The US Constitution is treated by many with unquestioned reverence. But, in truth, it is a document that needs to be updated. Even a member of the US Supreme Court has made this point. Justice Ruth Ginsburg, when speaking to Egyptians who were considering their new constitution, urged Egyptians to look to other countries’ newer constitutions for guidance saying, “[I] would not look to the United States Constitution if I were drafting a constitution in the year 2012.” She noted several other models that have emerged and offer more specific and contemporary guarantees of rights and liberties, pointing to South Africa’s constitution, which she called a “really great piece of work” for its embrace of basic human rights and guarantee of an independent judiciary. She also noted Canada’s charter of rights and freedoms and the European Convention of Human Rights.

Thurgood Marshall, before he became a Supreme Court justice, assisted Kenya in writing its constitution, which he modeled after the European Convention on Human Rights. Unlike the US Constitution, the Kenyan document guarantees rights to education, health, welfare and a right to work. Other models of advanced constitutions are the Universal Declaration of Human Rights, the recent Iceland Constitution written by crowd sourcing of their population and the Venezuelan Constitution. While the US Constitution was the model for the world in the 20th century, today constitutions of the world’s democracies are, on average, less similar to the US Constitution than they were at the end of World War II. Of course, there are excellent parts of the US Constitution, but surely we can learn from others.

The economic transformation of Venezuela is also a learning opportunity for the US, Europe and others. Venezuela is not moving toward Soviet or Chinese communism or centralized socialism, nor is it embracing US big finance-dominated capitalism. It is charting a new course – Chavez’ “21st Century Socialism” that is being built from the bottom up. Richard Gott writes in the Guardian:

The changes in Venezuela have had an effect beyond Venezuela. They have encouraged Argentina to default on its debt; to reorganize its economy thereafter and to renationalize its oil industry. Chávez has helped Evo Morales of Bolivia to run its oil and gas industry for the benefit of the country rather than its foreign shareholders, and more recently to halt the robbery by Spain of the profits of its electricity company. Above all, he has shown the countries of Latin America that there is an alternative to the single neoliberal message that has been endlessly broadcast for decades, by governments and the media in hock to an outdated ideology.

The essential lesson is a rejection of neoliberal policies of privatization, lack of investment in social services and placing the market in charge of the economy. Unfortunately, in the United States the Washington Consensus that destroyed Latin American economies is being applied at home creating a record wealth divide, widespread unemployment and underemployment, inadequate social programs and lack of investment in a new economy. President Obama and Congress continue to move toward austerity and threaten a deeper recession or worse.

One country that has embraced similar reforms as Venezuela is Ecuador. The Center for Economic and Policy Research issued a report last week that found in Ecuador “possibly the most comprehensive financial reform of any country in the 21st century.” Ecuador’s “New Deal” nationalized the central bank, used the money to invest in infrastructure, housing and co-ops, enacted progressive taxes and capital controls, bargained hard on foreign loans and oil concessions, enforced anti-trust laws to break up the financier-owned media oligopoly, made a counter-cyclical fiscal stimulus of sufficient size, increased spending on health and education and is doing far better than it was before the Great Recession.

Like the Venezuelan experience, the experience in Ecuador should give Americans hope. Ecuadorians went against powerful forces – the US empire and its oligarchy. As the report notes, “A government committed to reform of the financial system, can – with popular support – confront an alliance of powerful, entrenched financial, political, and media interests and win.”

Predictably, the US corporate media, as it has done to Chavez and Venezuela, is attacking Ecuador and its popular president Rafael Correa. President Correa recently experienced a landslide re-election, yet The New York Times published what can only be described as a “hit piece” on him beforehand, headlined “Ecuador’s President Shows Confidence About Re-election, Too Much for Some” describing this populist democrat as authoritarian. Like Venezuela, Ecuador has a new constitution, challenged the oligarchic media and is in the midst of a “citizens’ revolution” that has included throwing the US out of a military base, for a time ending diplomatic relations with the US empire and providing diplomatic protection to Julian Assange.

There are lots of lessons for Americans: Build from the grassroots, keep building no matter who is elected, push your political friends farther than they want to go, don’t trust the corporate media and do question the official consensus of the political and economic class that rules us. In the end, we need to build the two pillars of economic democracy and participatory government to overcome the concentrated wealth and corrupt government that rules through a mirage of managed democracy. That is our task. It is a path of proven success.

You can hear our interview with Mike Fox and Maria Hadden on Participatory Democracy in Venezuela and the US on Clearing the FOG Radio (podcast) or view it on UStream/ItsOurEconomy.

This is Part II in a series on democracy in the United States. Last week we examined “Lifting the Veil of Mirage Democracy in the United States.”

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