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Venezuela tests Chavez socialism at barter market

URACHICHE, Venezuela (Reuters) - Neris Pineda will never make a cent from selling bananas at her local Venezuelan market, but she likes it that way.

Venezuelan President Hugo Chavez attends a campaign rally in the Andean state of Tachira November 28, 2007. REUTERS/Ho-Miraflores Palace

The community market is an experiment in bartering promoted by President Hugo Chavez as he seeks to enshrine socialism as a state priority in a new constitution that goes to a referendum on Sunday.

Pineda swaps her produce for anything from haircuts to cellphone cases, using a currency named after an indigenous cult goddess that only circulates in this poor farming town at the foot of lush mountains near the Caribbean coast.

“Barter is not just the exchange of merchandise, it’s an exchange of values, of solidarity, of love,” said Pineda, 52, plying her wares on a recent Sunday morning. “The idea is to become integrated with the community.”

Barter exchange is the latest weapon in the anti-U.S. president’s ideological crusade to turn the consumer-driven oil republic into a Cuba-inspired socialist state and wipe out capitalist values he says are destroying the planet.

Economists have largely dismissed his experimental economics as a quirky sideshow while consumerism booms on record oil revenues and Wall St. banks lap up Venezuelan debt issues.

Aged whisky at parties and out-sized sport utility vehicles on the roads are common even as Chavez’s price controls prompt periodic shortages of milk and eggs on supermarket shelves.

But the alternative economics of a man who calls capitalism evil are central to his vision of a revolutionary society.

Chavez vows to accelerate his revolution through a referendum on Sunday, when Venezuelans vote on constitutional changes that create new forms of “collective” and “social” property and formalize the economy as socialist.

The reforms would also allow Chavez to stay in power for as long as he keeps winning elections, and increase state powers to expropriate private property.

Venezuela’s military already uses Chavez’s slogan of “Homeland, socialism or death” as its salute and the state oil company spends more on social programs such as school-building than on exploration.

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After remolding state institutions, Chavez has focused on remaking the OPEC nation’s economy to match his promised “21st Century socialism.”

He has proposed solving economic imbalances by passing aggressive anti-hoarding laws, empowering community councils to scrutinize businesses, and creating barter markets with “alternative currencies” to eliminate financial speculation.


In Urachiche, Chavez has true believers.

Rather than pure barter exchange, shoppers at the market in the town of 23,000 residents use a currency named after the Venezuelan goddess Maria Lionza who devotees pay homage to at a nearby mountain.

The market has about 100 members and opens once every two weeks with more and more people coming to spend their laminated cardboard “Lionzas.”

Its leaders say the money is a socialist currency because it cannot be used for accumulation or speculation.

“We call ourselves ‘pro-sumers’ because it unites consumer and producer in the same word. The capitalist system divides us: producers on one side, consumers on another,” said Pablo Mayayo, who helped create the market.

Chavez will have to rely on a massive state-backed get-out-the-vote machine to win the referendum on Sunday.

While he is popular with the majority poor, many moderate supporters are alarmed his redrafting of the constitution could water down private property rights and give too much power to the president. Critics say he is establishing a dictatorship.

Polls say the “Yes” and “No” camps are neck-and-neck, making turnout crucial. That may give the advantage to Chavez against an underfunded opposition, political analysts say.

It is the toughest campaign of Chavez’s career. Since taking power in 1999, he has handily swept to victory at the ballot box about once a year, thanks largely to his spending of oil income on health and education services for the poor.

Venezuelans in 2003 spontaneously created barter systems to swap services like dentistry and auto repair after a failed opposition strike nearly shuttered the oil industry and left millions without jobs or much income.

But this is precisely the opposite of Venezuela’s current situation in which record oil revenues, heavy government spending, and burgeoning monetary liquidity have left the country with more money than it knows what to do with.

With Venezuelans enjoying unprecedented consumption growth, critics say bartering makes little sense.

Opposition councilman Biagio Pilieri from the municipality around Urachiche said Chavez wants to return Venezuela to the era of Spanish colonial rule.

“Barter exchange is long on rhetoric and short on logic,” he said.