Enterprises of Drect and Indirect Social Property in Venezuela

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* Article: A Multiple Socialist Administration Model and Enterprises of Social Property (ESP) in Venezuela - Success, Difficulties, Prospects. By Rafael Enciso Patiño.



"For a transition from capitalism to socialism the multiple socialist administration model is proposed in order to avoid what the author calls the Soviet mode of production, in which, despite the elimination of the private property of the means of production, there still persisted social alienation, a hierarchical social division of labor and thus the exploitation of man by man. Through Direct Social Property Enterprises (the property of popular communities) and Indirect Social Property Enterprises (state property) articulated in hegemonic integral socio-productive chains and networks and with the participation of forms of private property, including cooperatives, it is possible to advance toward integral sustainable human development." (



Rafael Enciso Patiño:

"Based on the analysis of the historic experience of what we call the Soviet mode of production – to differentiate it from the socialist mode of production theoretically formulated by Marx, Engels, and Lenin – we here analyze the experience of Venezuela, its process of recuperation of national sovereignty during the government of President Chávez since 1999 and the road traversed with the construction of the material and cultural bases of socialism since his reelection in December 2006 when the chief of state declared socialism is the way of development and the strategic objective to be obtained.

This historic experience is important for profiting from the right accomplishments and avoiding the mistakes made regarding the construction of socialism in the twenty-first century. Based on that and bearing in mind the characteristics of Venezuelan society, we have elaborated, inspired by workers and spokespersons of organized communities, a proposal for an economic and enterprise administration model called Multiple Socialist Administration Model whose principal characteristic are introduced in this article.

As we shall see, this proposal can be developed only on the basis of the social property of the fundamental means of production juridically and socially incarnated in Social Property Enterprises, which property is both direct (belonging to the communities) and indirect (belonging to the state), articulated in socio-productive chains and networks with socialist orientation which can include diverse forms of property: small and middle sized private property and cooperatives with which it is possible to efficiently and sustainably satisfy the social, material, and cultural needs of the population having as the goal the greatest degree of security, stability and felicity possible. And at the same time the proposal is intended to progressively overcome the main bases of the exploitation and social metabolic reproduction of capital: the hierarchic social division and structure of labor, social alienation, and the private property of the means of production." (

The need for non-hegemonic social property

"Balance and mutual control among different social sectors and interests involved in the economic processes must exist so that none of them individually can exercise hegemonic power so as to have negative effects on the rest. On the contrary the idea is that the different sectors through their participation in property in an organized fashion make decisions which equitably benefit the whole society and control each other mutually so as to prevent bureaucratism or reduce it to a minimum and impede corruption as well as the concentration of power and wealth. But a small enterprise which produces clothes, shoes, furniture, etc. – and there are thousands of them – can be wholly the property of workers organized in cooperatives because the capital required can be furnished by them from their own savings and/or loans granted by the state. In some circumstances when the state doesn’t have money it can give loans emitting cash capital which is not inflationary when contributing to production because an increase of circulating money is compensated by a proportional increase of merchandise and because the prices and quality of the products can in such cases be regulated by the competition in a market with a robust participation and control by the state. Raw materials are bought from other enterprises and of course must pay taxes to the state and conform to legal, environmental and further norms.

Another form of property which we believe to be adequate for companies whose influence includes populations in locales specific for their ecosystems can be what we call communal enterprises of social property (ESP) or socialist community enterprises which legally belong to a population group organized according to place of residence: a community council or an ensemble of them which are associated to advance toward the creation of a communal economy and the construction of a socialist commune. [1] In this modality there could be included an agricultural production unit, an industrial slaughter house with a cold storage packing plant or a small or medium sized agro-industry as raw material is produced within its radius of action and its products are distributed among the population of the locale with participation and control by neighboring communities.

The Soviet model was based on state property of the means of production, which were initially contoled by the workers. But later they got to be controlled totally by the bureaucracy while as time went by the democratic participation of the people and the workers was reduced to its minimum expression; as for the material base the producers of social wealth were marginalized from the real control of the economy. These were the fundamental causes of the phenomena of economic inefficiency, corruption, the existence of privileges for the elites, and the development of processes of alienation and exploitation which determined its incapacity to subsist as a socio-economic system and as a state.

For this reason both forms of social property incarnated in enterprises of social property (ESP) both by the state (indirect social property) and by the communities (direct social property) must be administrated with socialist values and criteria and be combined with each other and other forms of property: cooperative, personal, family, middle and small sized private property for the purpose of conforming efficient socio-productive chains and networks [2] to the hegemony of social property administrated by councils of multiple socialist administration in which the spokespersons of the diverse social groups participate to make the best decisions for the benefit of society as a whole and to manage to have greater security, stability, and happiness."


"Co-management has been applied in the Bolivarian Republic of Venezuela thus far probably moved by the intent to advance toward a society of inclusion and welfare and has responded more to a reformist conception inside capitalism than to a truly socialist conception.

In capitalism the right to take part in decisions (administration) is determined by the property over the means of production – capital – which is expressed by the property of “shares” in the enterprises. These are possessed individually or collectively, in limited or incorporated societies or in cooperatives. According to bourgeois (capitalist) law to participate with a determined quantity of votes in order to make decisions is not a question of whether the shareholder participates or not in the productive processes but rather the quantity of shares he or she possesses. This is what is granted by the “right” to exercise a determined quantity of votes in the assembly of shareholders and on the board of directors.

Such may be the case of many workers organized in cooperatives and of capitalists, in the enterprises recuperated with state resources.

Thus it is recognized – wrongly – that it is the property over the means of production – capital – which generates the right to participate in the making of decisions whereas in the socialist conception it is labor in any of its forms – material or intellectual, simple or complex – and recognized as the source of social wealth which grants the right to participate in the administration of the enterprises.

Despite the good intentions the granting of state credits to the workers so they can get shares in the enterprises so that they can participate in its management has generated in them ideological confusion and many frustrations. With the pressure from an individualistic and selfish mentality which has been generated in our society for the last 500 years of colonialist and capitalist alienation, in general workers, when they become shareholders tend to feel more like private “entrepreneurs” than like workers or proletarians because their new condition as private proprietors of part of the capital in enterprises separates them objectively from the rest of the people.

There is produced in the workers a declassification, a sociopatía, a loss of identity, a schizophrenia. If shares are the private property of some workers and/or capitalists, they cannot themselves be the property of other workers, nor of the communities, nor of the whole people. And consequently the surpluses generated during the production process cannot be either since they must be appropriated by the owners of the shares. That is, when they own shares, the workers wind up objectively being converted into new capitalists.

The historical experience on self-management [as it occurred in former Yugolsavia] doesn’t present a positive picture. Its application in the extinct Fedrative Republic of Yugoslavia meant: alienation of the workers, capitalist anarchy, competition among workers of different enterprises. And finally it wound up reproducing capitalism once again."

Social Property

"The community projects should be performed by enterprises of social property (ESP), direct social property from the whole community, fundamentally by workers from the same neighborhoods.

State policy should be orientated toward the planned and progressive building of integral systems which include: financing and self-financing, the production of machinery and equipments, raw materials, inputs, industrial processing, distribution and commercialization till reaching the final consumers, all of which is to promote socialist relations of equity and cooperation among different sectors participating in the economic processes. There must always be participation from the workers and the people through the socialist community councils and communes (the people’s power) – in the property and the strategic decisions of the socio-productive chain and in the key and most influential enterprises of the same.

This will allow the people’s power under its various forms of organization – workers’ councils, community councils, councils for the producers of raw materials – to participate in the planning of the economy and to plan collectively with the state on a national, regional, and local scale, as the case may be, what to produce, in what quantities and qualities to produce it, what prices to sell it at, and so on and what should be an adequate distribution of the companies’ income: how much of it will be used to increase and improve production, how much will be for the workers, how much will be for improving community life and in general how surpluses will be distributed.

We insist: it is a question of building from the local and the regional levels the bases so that there may be balance and mutual control among the different (healthful and not parasitical) social sectors and interests involved in the economic processes and thus none may exercise a hegemonic power which will negatively affect the rest, bearing in mind that objectively there are interests which are complementary and at the same time contradictory as may be the case between producers and consumers since the producers may be interested in acquiring greater incomes while the consumers have their interest fixed on the good quality, sufficient quantities and fair prices of products, etc.

With an economy of social property and multiple socialist administration which we propose on the contrary there is the intention that the different complementary sectors, through their really democratic participation in labor and property in a combined manner make decisions which benefit equitably all society and are mutually controlled, with the purpose of resisting the mechanisms which incessantly generate bureaucratism, corruption and the concentration of power and wealth.

In order to obtain this purpose it is necessary to develop a socialist consciousness, adequate technical productive training, the organization and action of workers and communities, and their efficient articulation with the different ministries, institutions and social organizations dedicated to the creation of spaces for reflection, study, research, and planning of the construction of the economy and socialist culture which will allow the collective design of integral systems and their practical execution. This will allow society to advance with the creation of better economic, social, political and cultural conditions so as to convert to reality the great desire of The Liberator Simón Bolívar: the greatest amount of security, stability and happiness possible for the whole population." (


Communal Economy

"A communal economy is the ensemble of the social relations of production, distribution, and consumption of goods, services and knowledge developed by communities under forms of direct social property at the service of their needs in a sustainable way in accordance with what has been established in the Centralized System of Planning and in the Plan of Economic and Social Development of the Nation (Bolivarian Republic of Venezuela, Ley Orgánica de los Consejos Comunales, 26 November 2009 available on Internet). In quite succinct terms we shall say that each community council is created in a vicinity which in urban areas includes 200 families, in rural areas 20 families, and in aborigine areas 10. A community council elects its spokespersons at a general assembly. Legislation establishes one financial unit for each council. Questions dealt with by a council may be various ones like, for example, land committees, health committees, technical teams studying questions on water, communal economy, cultural groups, sport clubs, locales for meetings and organizations of women, labor unions, youth and student organizations, civil associations, cooperatives – all in accordance with the desires and spirit of organization of their members. Politically a commune is a form of local self-government for the population which includes various community councils and other social organizations which are to make decisions in a territorially defined area, always in accordance with the laws and the Constitution of the Republic."

Socio-productive network

"The articulation and integration of the production processes of the community socio-productive organizations for the exchange of knowledge, goods and services based on the principles of cooperation and solidarity; its activities are developed through new relations of sustainable production , distribution, exchange and consumption which contribute to the strengthening of the People’s Power (Ley Orgánica de los Consejos Comunales, 26 November 2009).


"Understood as the minority management (and even property of some shares) by the workers in a capitalist enterprise. In Venezuela on the other hand the term is used referring to management by workers in enterprises where the greater part of the capital is state capital." (