Foreign Dollars Tightly Controlled in Venezuela

In the wake of the death of Hugo Chavez many predicted a sharp return to capitalist policies. Much to their dismay (and my delight) this is not the case. The government of Nicolas Maduro is solidly keeping the victories of Venezuela in sight as he and the Bolivarians begin a new monetary policy. The goal of socialism/communism is to undermine and destroy capitalism and its effects. The most obvious and damaging forms of this appear in two primary ways. First the generation of profit from owning the means of production and rent. Second, the generation of money for simply owning money.

It’s this second one that is being tackled with the new policy. The government of Maduro is aiming to “overcome the parallel market”. The policy is to control what foreign money is purchased in the country. It’s called the Complimentary System of Foreign Currency Acquirement (Sicad). This new system will operate alongside the Foreign Exchange Administration Commission (Cadivi) system which obtains dollars at the official exchange rate.

Finance Minister Jorge Giodorani said the Sicad will operate like a ‘”bidding” system for private companies who need to import. A Superior Organ for the Optimisation of the Exchange System will decide which companies are authorized to buy dollars and announce how much money is available.’ Working in conjunction with the Central Bank all companies will submit receipts showing the cost of machinery and materials they wish to purchase. They will make the request through regular private financial institutions and then it gets filed off to the Central Bank.

The Central Bank would then provide the funds to the overseas providers directly meaning the companies who have been authorized to receive foreign dollars will never actually hold them.

So what is the purpose of this? It prevents corporations from buying foreign dollars with the purpose of betting against the economy, that it will destabilize. it also forces companies to only be able to obtain the dollars for production, eliminating the possibility of buying dollars for non-productive purposes. This prevents the bourgeois from making money simply by owning money. To obtain these dollars you have to be entering into production that generates value.

No longer can the rich simply use owning money as a means of generating profits. They have to actually contribute something to the economy in order to get it. Of course there are other ways of doing the same thing. This is just one less avenue they have to achieve it.