Day 5 – Q 3.Compare and contrast the history of socialism in Sweden with that of Venezuela.
3. Compare and contrast the history of socialism in Sweden with that of Venezuela.
वेनेजुएला और स्वीडन में समाजवाद के इतिहास की तुलना करें।
Introduction:
Socialism is a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole. It could have different effects on a different political and economic system based on its implementation
Body:
Both Sweden and Venezuela have Democratic socialism with major differences in their social, economic and political systems.
| Aspects of Socialism | Sweden | Venezuela |
| Orientation | Democratic Socialism: This means that the production sector remained predominantly (90%) private but the government through regulation, taxes, price controls, and social programs determines what is produced and whom it goes to. | Marxist socialism: Advocates for more nationalization of resources and industries. |
| Historical Influence | More influence of the USA which is evident from a more privatized economy. Marshall plan and sponsorship of USA to Sweden after World War-II is also the reason for the same. | More influence of Russia and Cuba, which focuses more on nationalization of industries. |
| Free Market | Sweden is a comprehensive welfare state and collective bargaining at the national level with a high percentage of the workforce unionized while being based on the economic foundations of free market capitalism | Venezuela when in dictatorship had a free market but curbed the free market once it became democratic. |
| Source of Funding for Social Welfare | The weakness of Sweden’s Social Welfare State is that a large share of people’s income must be taken in taxes to pay for the social services the state provides. | Social services in Venezuela are funded by the revenue generated from the Petroleum industry and natural resources. |
| Area Of Expenditure | Expenditures of Sweden are more on capital investments, i.e. On infrastructures like schools and roads. | Whereas Venezuela’s expenditure is mostly for direct welfare. Ex. PDS system is very strong in Venezuela which gives freebies to the masses. |
| Tax Rate | Tax rates in Sweden were high earlier but later in the 1990s reduced and the country experienced high economic growth. | Contrarily was with Venezuela where the Tax rate was low during the 1920s but then increased gradually. |
The Same socialism which proved to be a tool of tremendous and remarkable growth in Sweden has failed miserably in Venezuela.
The success of Socialism in Sweden Caused:
- High rank on the Inequality-adjusted HDI
- High rank on Global Peace Index
- And placed Sweden in the top 10 on the World Happiness Report.
- Swedish industry has successfully competed despite the rise in wage rates, the shorter workday and increasing vacation time mandated for Swedish labour.
- The unemployment rate has been kept low.
Failure of Socialism in Venezuela:
There was a time when this country was quite prosperous and wealthy, and for a time Venezuela was even referred to as an “economic miracle”. But the present is very different and socialism failed miserably here.
There are three main policies implemented since 1999 that produced the current crisis:
- Widespread nationalization of private industry,
- currency and price controls, and
- The fiscally irresponsible expansion of welfare programs.
Nationalization destroyed production in affected industries because no government has the capacity to run thousands of businesses or the profit motive to run them efficiently. Instead, government officials face incentives to please voters by selling products at low prices and hiring more employees than necessary, even when that’s the wrong industry decision.
In 2003, the country implemented a foreign currency control scheme where the government set an overvalued exchange rate between the Venezuelan currency and the U.S. dollar.
The socialist regime also implemented price ceilings on hundreds of basic products such as beef, milk and toilet paper. Instead of benefiting the poor, price ceilings predictably resulted in shortages.
Welfare programs that were supposed to help the poor actually increased the cost of living. A foreign currency control that aimed to reduce inflation only caused hyperinflation increased and allowed for massive corruption. And nationalizations that should have given “power” to workers only left them unemployed and hungry.
Moreover, Bad and Haphazard implementation of the ideal of socialism and mismanagement are the cause of the resulting crises.
Conclusion:
- The Swedish system might be a suitable model for industrialized countries it is probably not affordable as a system for developing countries.
- Socialism is the cause of the Venezuelan misery and is not the route to paradise for countries like Venezuela.
- There is a lot to learn for India from the success of Sweden and the failure of Venezuela to strengthen its ethos of socialism.
