Marxist waste in Venezuela, Ethiopia, and North Korea
This article is part of the Summary of the Basic Course on Libertarianism
Last updated: 2026-07-02
Venezuela (21st-Century Socialism)
1. Mass expropriations of farmland and agri-food companies
Between 2003 and 2012 more than a thousand companies and several million hectares were nationalized. Food production fell by approximately 75% while the population grew by 33%. Venezuela went from producing nearly 70% of the food it consumed to importing the vast majority. When oil subsidies were reduced, the country faced catastrophic shortages. Without market prices to guide investment and production, expropriated farms became inefficient or abandoned.
2. Rigid price controls on basic goods
The government set maximum prices for rice, chicken, milk, flour, toilet paper, medicines, etc., frequently below the cost of production. Producers stopped producing, smuggled goods, or went bankrupt. The result was empty shelves for years and endless queues. The state rationing and distribution system (CLAP and similar) was inefficient and corrupt. The absence of prices as a scarcity signal generated a colossal waste of time, fuel, and human capital in the daily search for food.
3. Politicization and decline of PDVSA
The oil industry —the main source of foreign exchange— was subjected to political control. Technicians and managers were purged or fled. Production fell drastically despite holding the world’s largest proven reserves. Oil revenues were allocated primarily to clientelist programs (“missions”) instead of maintenance, reinvestment, and exploration. When oil prices fell, the model collapsed without an alternative productive cushion.
4. “Socialist cities” projects and the Great Housing Mission
Megaprojects of housing and centrally planned urbanizations were launched, many of them incomplete, of low construction quality, or sited with no relation to employment, transport, or services. Enormous resources were frozen in unfinished or barely functional works while a severe housing deficit persisted.
5. Foreign-exchange controls (CADIVI and later systems)
The arbitrary rationing of dollars at a preferential rate generated massive corruption, a black market, and total distortion of imports. Entire sectors depended on cheap foreign exchange that was allocated politically, not according to profitability or real consumer need.
Ethiopia under the Derg regime (Mengistu Haile Mariam)
1. Forced villagization (1980s)
After the 1983–85 famine, the regime accelerated the forced relocation of millions of peasants into new centrally planned collective villages. Many of these villages were built on inadequate land, far from traditional fields and water sources. Agricultural production fell because accumulated local knowledge over generations about soils, microclimates, and rotations adapted to the environment was ignored. Thousands died during the process from hunger, disease, and disorganization. The program was abandoned in 1990 in the face of its evident failure.
2. Total nationalization of land (1975 Proclamation) and collectivization
All rural land became state property. Large-scale state farms and controlled peasant associations were created. State farms proved inefficient for lack of incentives and local managerial knowledge. Production stagnated or fell in many categories, contributing to vulnerability to drought.
3. Mass resettlements prior to villagization
The Derg relocated more than a million people to supposedly “underused” zones. Planning was deficient: lack of land preparation, housing, tools, and basic services. Thousands died of hunger and disease in the new settlements. Accumulated human and social capital was destroyed.
4. Prioritization of state farms over efficient family agriculture
Resources were invested in large-scale projects copied from Soviet models, while the agriculture of small producers —which historically had been more productive and adaptable to Ethiopian ecological conditions— was neglected (or repressed). The result was lower yield per hectare and greater dependence on external aid.
North Korea (Juche and central planning)
1. Extreme Juche ideology of self-sufficiency
The near-total rejection of international trade and of specialization according to comparative advantage left the country without the capacity to import food or inputs when Soviet aid collapsed in the early 1990s. The 1994–1998 famine (“Arduous March”) killed between 600,000 and more than one million people (estimates vary). The public distribution system (PDS) collapsed because planners could neither calculate nor rationally allocate scarce food resources.
2. Songun policy (“military first”)
Massive resources were diverted toward the army, the nuclear program, and heavy military industry, even in the midst of famine. While the civilian population suffered chronic hunger, tanks, missiles, and prestige projects were prioritized. This arbitrary allocation of resources according to political-military criteria (not economic ones) is a classic example of the impossibility of calculation.
3. The Ryugyong Hotel (or “Hotel of Doom”)
This 105-story pyramidal skyscraper in Pyongyang consumed enormous amounts of resources for decades and remained unfinished (or semi-abandoned) for a long time. It represents investment in image and propaganda projects without real economic viability: there was insufficient tourist demand, nor materials or foreign exchange to finish it coherently. A visible symbol of capital waste in a country with unmet basic needs.
4. Failed agricultural experiments and environmental degradation
Autarkic policies drove terracing on steep slopes and crops unsuitable for the soil and climate. Massive deforestation (for firewood and new land) worsened erosion and reduced the resilience of the agricultural system. When the 1995 floods arrived, the impact was catastrophic precisely because the ecosystem was already degraded by centralized decisions that ignored local knowledge and ecological limits.
5. Initial suppression of markets and later forced tolerance
For decades private trade was criminalized. When the centralized system collapsed, a network of informal markets (jangmadang) spontaneously emerged that allowed millions of people to survive. This demonstrates, once again, that spontaneous order and decentralized calculation tend to emerge even under ideological repression when the central plan fails.
These cases of Venezuela, Ethiopia, and North Korea reinforce the Austrian diagnosis: without market prices and private property, resource allocation becomes arbitrary and systematically wasteful. Planners pursue ideological or power goals (steel, bunkers, total self-sufficiency, socialist cities, military power) while the population suffers shortages of the most basic goods.
In Ethiopia, local ecological and agricultural knowledge was also ignored (a relevant aspect from a biological and historical perspective). In North Korea, autarky produced self-imposed environmental degradation. In Venezuela, the productive collapse was so deep that it left the country without real capacity to manage even its vast natural resources in a sustainable way.
This article is part of the Summary of the Basic Course on Libertarianism
Last updated: 2026-07-02
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