In a pre-emptive strike, let me state what Venezuela's 'socialism' is not: it is not a state-run economy like, say, Cuba: the public sector is less than 30% of the economy, the oil sector reform still foresees joint ventures, land reform mostly goes with compensation (all of these earn criticism for Chávez from the local hard left).

Now first let's have a look at GDP growth during the Chávez years, including this year's until the third quarter compared to Q1-Q3 last year:

The 1999 recession corresponds to the oil price crash, the 2002-3 one to the coup and opposition strikes. Last year and this year, that's quite some rebound, ain't it? And that's with a budget surplus¹, and foreign debt reduced (from 46% to 38% of GDP)! Next year may make the Chávez presidency the first longer period in 30 years with per capita growth².

No wonder Chávez's approval rating climbed to 77%, and that members of the opposition became critical of their own (a good starting point is this assessment of "Ni-Nis", then further posts on that blog).

Two criticisms have usually been levelled at this growth: (a) it is based on increased government spending, (b) it is based on windfall from rising oil prices.

However, on the spending front, government expenditure is still below 40% of GDP; while on the production front, for example in the third quarter this year, the whole of the public sector only grew 5.4% overall, but the private sector soared 11.1%. We get the same picture when comparing the oil and non-oil sectors: +4.2% vs. +10.4%. The current rebound is also very different from what happened in Venezuela during previous oil price hikes.

On the low side, while the new JODI data [Read Jérôme's discussion] show that the post-strike 2004 oil production was much closer to Chávez's claims than sceptical analysts' estimates (see f.e. MEES's), in the first half of this year the surmised maintenance problems seem to have had their effect (more here). Also, with oil income giving some 50% of the government budget, those social programs seem in danger if oil prices fall.

However, even disregarding that many of us here at ET doubt that oil prices will fall that much, production problems may be solved next year or after, and some of the social programs are one-off things that'll run out. And another thing critics fail to note is that non-oil tax receipts increased too, in fact more than government oil income (see discussion of next year's plan).

Meanwhile, even without taking social benefits into account³, the poverty rate (more here) is now 38.5% and falling (see chart below), while other human development figures like literacy and health also improved. Tough more slowly, unemployment (11.4% in October), informal employment (c. 47%), and percentage of homes without basic services are also falling.

I am not interested in the record and quality of Chávez personally. I won't even posit Venezuela as a coherent model - for example, it had so far no solution to the problems with police and military⁴, and only little effect on corruption (for the latter see point 2 in Gregory Wilpert's part in this web-based debate), and there is the controversy of authoritarian laws. But some aspects of this class war⁵ may be contemplated even here in Europe.

In Europe, any left-wing government is under the threat of "capital flights" and "capital strikes", when in effect business "votes" on the markets instead of the people. (We often discussed at ET how this is not even questioned any more in much of our media.) And the standard response has indeed been appeasement or complete submission. But what Venezuela shows to me is that by reliance on the people, and steadfastness to ride it out over years, such a conflict can be won.