Half the Venezuelan economy has disappeared

[Vincoletto]

torok said:
I have the impression that people are mixing up the concepts of Socialism, Capitalism and so on. European economies are capitalist. The welfare state does not make them partially socialist. They follow a Keynesian model, that uses state intervention to stimulate the economy and reduce social inequality. Calling this "socialism" is ridiculous, specially when Keynes itself was not even polite when criticizing Marxism.

Discussing if a Keynesian approach is better or worse than a Liberal, Austrian School, style is a huge debate with important economists on both side having their points. Most likely, both have their best applications and different countries use ideas from both.

Venezuela isn't following a "Nordic model". Maduro is following the Marxist model of early Communist countries, trying to gather all production power in the hands of the state while creating a heavily state-planned economy (Keynesian models are about state guidance, not absolute control). While Keynesian and Liberal models argue about how much the state can try to influence the economy, Venezuela is following a model where the state controls the economy, so its poor decisions destroyed the economy.

The Marxist model is an utopia because it assumes that the only thing that has inherent value is work and that the means of production can be controller by the workers itself. During a transition period, the state assumes all means of production. No Marxist real model was capable of leaving this transition period and the totalitarian government that was supposed to give power to the people becomes the real monster.

My opinion is that Keynesian models won't work as well in countries with high corruption, because the politics will abuse the system for their own benefit. So for Latin America in general, a Liberal model seems more adequate. While I do admire the social security of European Keynesian economies, it has no point if the government simply is too corrupt to be effective. The state will make poor decisions, creating recessions and ruining people's lives.

This guy knows things.

I would just add that I dont know if we can really say that Europe follows the Keynesian model all the time, ar if they accept it as they mantra. I think in a sense they float between Keynes and Freidman, depending on the era, level of debt, crisis etc. Btw I dont believe Keynes model is self sustaining in the long run and it can have several other impacts in the economy, specially for poor countries like in latin america.

I think first you need to get rich, then you can start spreading the wellfare. In Latam we try do distribute the money that we dont even have.