On the same day Venezuela’s charismatic president, Hugo Chávez, died, the Dow Jones and Financial Times indices broke records, wiping out the losses of the last five years. As capitalism appeared to recover its old swagger, a hero of the Left passed from the scene.
The significance of Chávez’ experiment in “21st century socialism” (as he described it) goes beyond Venezuela. His attempt to harness the market to the needs of the poor emerged from a long and well established tradition in the Spanish-speaking world. The shortcomings of his 14 years in power, however, may have had as much to do with oil as with ideology.
Chávez’ achievements -and more schools, more clinics, more amenities for poor neighbourhoods are an indisputable measure of success- were the result of a dynamic and sustained commitment to social justice.
Chávez’ failures -and rising inflation, rising crime, and endemic corruption and poverty are just as indisputably a measure of failure- were partly and paradoxically the consequence of oil and the wealth it produces.
Over the last hundred years an alarming preponderance of oil-rich countries have been unable to translate mineral wealth into sustainable prosperity and social cohesion – petrodollars have typically encouraged government corruption, economic dysfunction and a widening gap between rich and poor. Venezuela has not escaped this curse (though Chávez did manage to reduce the disparity in income distribution).
When Spain’s King Juan Carlos famously told Chávez to “shut up” at the 2007 Ibero-American Summit in Chile he gave voice to a widely-felt irritation over the Venezuelan leader’s tendency to turn practical discussion into ideological polemic.
Yet Chávez’ ideology was -and is- pertinent. His death removes a major, if mercurial, champion of the poor. His voice will be missed in the Spanish-speaking world and beyond.
Poor boy makes good
As one colourful character departs the socialist end of the global political spectrum, a Spanish citizen attains new prominence at the capitalist end.
This week Forbes Magazine announced that Amancio Ortega has moved past US investor Warren Buffet and Bernard Arnault (French luxury goods magnate and aspirant to tax-efficient Belgian citizenship) to become the world’s third richest man, behind Mexico’s Carlos Slim and Microsoft’s Bill Gates.
Mr Ortega became Spain’s wealthiest individual more than a decade ago when his company Inditex (owner of the Zara fashion brand) went public. However, it is the recent spike in his already prodigious income that is particularly noteworthy.
His fortune is reckoned by Forbes to have increased by around 15 billion euros in 2012, as the value of Inditex’s shares bucked the Spanish and global trend and rose by more than 50 per cent. Mr Ortega also appears to have made money in Spanish real estate, suggesting that alchemy really is possible even in the middle of a property slump.
The fashion mogul started his business from scratch, making women’s apparel, at first by himself and then through a cooperative network of seamstresses. His business model is based on delivering up-to-the-minute designs to the mass market at affordable prices. He lives in a modest (by billionaire standards) apartment, and is reported to dine with the rest of the workforce at Zara’s La Coruña manufacturing plant. Not the Chávez model of wealth creation but nonetheless a notable story of poor boy makes good.
Still won’t lend
Zara is a remarkable Spanish success. The banking sector, as we know, not so much. Still, even here there appears to be a tiny glimmer of light at the end of a very long tunnel. The European Commission indicated this week that the terms of the EU bailout of Spanish banks have, so far, been met. The Commission also noted that financial markets and public finances in Spain show continuing signs of stabilisation.
One black spot identified by Brussels, however, concerns the unwillingness of Spanish banks to start lending again. In 2012, bank loans to households fell by four per cent, while loans to companies fell by 15.8 per cent. That amounts to a drastic cut in the funding that small and medium-sized enterprises need in order to start creating jobs.
In a week when the world has lost a charismatic exponent of revolutionary socialism, capitalism’s capacity to serve the interests of the general public appears to have been conspicuous in its lack of imagination – at least where Spanish banks are concerned.