Liberation should be coming soon for Venezuela. After liberation will come celebration. Almost immediately should come justice. Punishing the culprits will be difficult, but it will be easier than making restitution to all the victims.
Problems of justice fall under (a) commutative justice (justice in transactions and contracts) and (b) distributive justice (what every participant should contribute to decisions that have a “common” cost, and how much each should receive from the “common pool”).
The usual topic of justice in post-socialist transitions is the restitution of private property to its legitimate owners. Such restitution, though, seems a topic for commutative justice. If the confiscated property came under state control, however, part of the restitution should also be guided by principles of distributive justice.
As St. Thomas Aquinas—in line with Aristotle’s thought—clarified, the role of this justice is to distribute “common goods proportionately.” This is totally different than taking from the rich and giving to the poor, a perverted concept of distributive justice. The late-scholastics, Aquinas followers who focused more on economics, argued that profit, salaries and rents were topics of contract law, a part of commutative justice, it is not the government’s task to determine them.
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Under the horrors of 21st-century socialism, Venezuela has suffered many common violations of distributive justice. Favoritism is a typical one of these. Some concrete manifestations of favoritism are nepotism and cronyism. It is an injustice in the distribution of common goods when one party is preferred to another not by reason of merit but for another undue cause, such as family relationships. Multiple accusations have surfaced against family members of government officials, and these will have to be investigated.
Corruption, which often goes hand in hand with favoritism, is another violation of distributive justice. High inflation, overregulation, high taxes and confusing tax structures are powerful corrupting incentives, especially in countries with high inequality. Such cases have always led to widespread tax evasion, justifying a large informal economy and undermining respect for the rule of law. Sadly, giving restitution to all victims of inflation and unjust regulations is impossible and would create further victims and distributive injustices. Venezuela has high rankings of corruption, inflation and overregulation. In the rule of law index compiled by the World Justice Project it ranks last in the world. In economic freedom, only North Korea rans worse.
Another strong incentive to corruption is differential exchange rates and official exchange rates that diverge from free-market rates. These are easy to evade, can enrich bureaucrats and their associates, and – from the standpoint of natural law – appear so artificial that those who violate their regulations feel justified in their attempts. A merchant who declares that he is exporting less than he really is could be violating rules and lying, but the foreigners who buy from him see nothing wrong when asked to pay the total value to a foreign account or a subsidiary owned by the merchant. I believe that this factor was a primary contributor to the corrupt practices of Venezuelan socialists and their allies.
Some damages—such as confiscation of property with insufficient compensation—can be calculated more or less justly. It will not be simple, though. Someone from whom a piece of land was unjustly confiscated, for example, may receive it back with its productive capacity almost intact; while, on the other hand, someone who lost an industrial enterprise or a factory that was then allowed to fall into ruin, or was not maintained or kept up to date, might likely receive an industry that can only generate losses. Only exception is when it owned valuable brands and other intellectual property. I found cases such as these during transitions away from communism in Central and Eastern Europe. Justice was never served.
We then have cases where some received payments for their expropriated assets while others did not. Take the case of steel companies, such as Sivensa and Sidetur, confiscated by the Chávez regime with no compensation to their owners. It is difficult to calculate the value of these businesses before the socialist debacle, but some place it at almost $1 billion. On the other hand, Sidor, the steel company created by the Venezuelan state, was later privatized by President Caldera in 1997 and then renationalized by the Chávez regime in 2008. Compensation of nearly $2 billion was paid. The owners of the Ternium company (which received the compensation), have been accused of paying bribes to the Venezuelan government during these transactions.
I know of another case in Venezuela in which the dictatorial regime tried to resort to legal finagling to confiscate a large rural estate. Government agents tried to go back to property titles from the colonial period (back to 1493!) to argue that the land should belong to the state. The family fought in court, and, as happens in such cases, the government offered to back down in exchange for an under-the-table payment. The family members got together and honorably decided that they would prefer to lose everything rather than become accomplices of evil.
A useful guide for those who advocating for restitution is the website Un País de Propietarios (A Country of Property Owners), a project of the leading free-society think tank in Venezuela, CEDICE. It has a list of many of the regime’s violations of justice and offers a place for citizens to file their complaints. There are many, however, that we will not be able to calculate and restore adequately. The damage caused by shattered dreams, professional careers cut short, deteriorated health and families torn apart is impossible to calculate. In Latin American countries that fought against communist guerrillas and in which socialists or their sympathizers then came to power, “justice” granted large compensation to former subversives. In the same fashion, countless Venezuelans should receive recompense from the state for harm to civilians caused by the Chávez and Maduro governments. Once socialism falls, the new Venezuelan government will have resources coming from the restoration of government, as well as the resources it can recover from the guilty. But these will never be enough, and unequal treatment of victims is something that can affect the post-transition period. Three decades have passed since the fall of the Berlin Wall, and these debates continue today in post-communist countries.
Those making transition plans urgently need to carry out comparative analyses of similar experiences in order to identify which victims should be favored. Some of the more realistic transition plans envision the privatization of much of Venezuela’s petroleum production. A portion of these resources, like others that liberation could produce, should be structured so as to benefit the most easily identifiable victims. But given the need to achieve economic growth fairly quickly, it is certain that only part of the victims will be able to receive what is owed them.
Regarding the guilty who profited from the 21st-century socialist regime, again it will be difficult to punish everyone. A distinction will have to be made between those who established relationships with the regime in order to continue operating their companies and those who, at the other extreme, created fictitious companies or used their own companies for unjust and corrupt profit. Some businessmen received privileges such as monopolies in certain places, or special permits in the exchange and financial markets. If these businessmen are not punished, they should at the very least bear disproportionate moral responsibility for helping during the transition.
One possibility is to focus the corrective work of distributive justice on the most serious cases. A typical remedy in post-communist countries was that of prohibiting those most at fault from occupying public posts and certain business posts for a period of time. A case that Venezuelans ought to study is how the Brazilian justice system took up the theme of corruption in Odebrecht and Petrobras.
My recommendation to those responsible for justice during the transition is (1) not to neglect themes of distributive justice; (2) to work immediately to create an assessment committee made up of people who are beyond reproach and who have successful experience in these cases; and (3) to lend support to institutions with credibility in topics of justice and morality. For this assessment committee, from the Americas I would invite experts from Brazil and Chile. From the rest of the world I would include Central and Eastern European policy actors.
To create support for decisions regarding distributive justice, it will be imperative to gain the support of the Catholic episcopate. They have played an exemplary role during these troubling times. Before being clouded by the populist and statist view of social justice, the non-socialist tradition of distributive justice took shape in the Catholic Church. Bishops and committed laypeople from this tradition must be the ones who bring back true distributive justice and help to rebuild Venezuela, aiding those who need forgiveness and those who build a healthy consensus.
St. Thomas Aquinas, Summa theologiae, II-II, q. 61, a. 1.
Alejandro Chafuen is trustee of CEDICE foundation in the United States of America. A longer analysis of this topic will appear in the forthcoming book “Prosperity & Liberty: what Venezuela needs” by Econintech think tank
Alejandro Chafuen, Managing Director, Acton Institute, International