Every revolution promises to bury an old elite. Almost none of them promise, out loud, to build a new one. But that is what happened in Venezuela after 1999 and in Zimbabwe after 2000, and the pattern is clear enough, and repeated enough, that it deserves a name
more precise than "corruption" or "failed socialism."
The sociologist Vilfredo Pareto had a term for it a century ago: the circulation of elites. Not the abolition
of a ruling class, but its replacement — one hierarchy
swapped for another, with the human cost of the
transition borne almost entirely by the people who
were promised liberation from it.
This is not an argument against redistribution as
such, and it would be dishonest to pretend otherwise.
Land reform has worked. Wealth taxes have funded
functioning welfare states. The question this history
actually raises is narrower and more useful: what
determines whether a redistribution campaign
produces a broader, more independent citizenry, or a
narrower, more dependent one commanded by generals and party loyalists? The answer,
uncomfortably for ideologues on both sides of the
redistribution debate, has less to do with who is being
dispossessed and more to do with who ends up
holding the deed afterward.
Two revolutions, one blueprint
Hugo Chávez took office promising to break the grip
of Venezuela's traditional business class — the
import-export families, the large landowners, the
technocrats who had run the state oil company,
PDVSA, with a professional's remove from party
politics. Over the following decade, his government
expropriated farms, steel plants, banks,
telecommunications firms, and eventually much of
the oil sector itself, all under the banner of twenty-
first-century socialism.
What is striking, looking back, is not that the old elite
lost power. It did. What is striking is who inherited it.
The nationalized enterprises did not become worker
cooperatives, and the seized land did not, for the most
part, end up in the hands of the rural poor it was
promised to. Instead, control flowed to a new class of
the politically loyal: military officers, party
administrators, and a rotating cast of well-connected
contractors that Venezuelans came to call, half-
mockingly, the bolibourgeoisie — the Bolivarian bourgeoisie. The armed forces did not merely guard
the revolution; they became one of its principal
economic beneficiaries, eventually running mining
and oil ventures and controlling the distribution of
scarce food and fuel, a position that let a general
decide who ate and who didn't, and profit from the
deciding.
Zimbabwe's Fast-Track Land Reform, launched by
Robert Mugabe in 2000, followed a different
ideological script but an almost identical structural
one. The target was different — roughly 4,500 white
commercial farmers who, twenty years after
independence, still controlled a wildly
disproportionate share of the country's most
productive land, a legacy of colonial dispossession
that was a genuine and unresolved injustice. But
when the land was seized, it rarely reached the
landless peasants in whose name the campaign was
fought. High-value, mechanized farms went instead to
ZANU-PF ministers, senior officers, and the
intelligence officials Zimbabweans call securocrats.
When diamonds were discovered at Marange in 2006,
the military moved in directly, partnering with foreign
firms to extract the stones through channels that
bypassed the national treasury altogether.
In both countries, agricultural and industrial output
collapsed. In both, hyperinflation followed —
Zimbabwe's peaking in a currency so debased it required a hundred-trillion-dollar note; Venezuela's
climbing high enough that shopping required
calculators rather than wallets. And in both, the
collapse did not weaken the new elite. It fed them.
Inflation as extraction, not accident
This is the part of the story that gets lost when
hyperinflation is treated purely as economic
mismanagement, a regrettable side effect of bad
policy. In Venezuela and Zimbabwe alike, it also
functioned as a wealth-transfer mechanism, and a
remarkably efficient one, for anyone positioned close
enough to the state to use it.
Both governments maintained official exchange rates
wildly out of step with reality, alongside a black-
market rate that reflected the currency's actual,
collapsing value. A well-placed official who could
access dollars at the official rate — ostensibly to
import medicine, or machinery, or food — could then
sell those same dollars on the black market and
multiply his local-currency fortune many times over in
a single afternoon. This was not a loophole regimes
failed to close. It was, for the inner circle, one of the
more lucrative businesses in the country, and it
required the ordinary economy to keep collapsing in
order to keep working. Independent businesses,
unable to access the preferential rate, were slowly strangled; the population, its savings wiped out, grew
steadily more dependent on state rations and
subsidized goods — a dependency that was, not
incidentally, also a source of political control.
None of this required central planning in the
conspiratorial sense. It required only that the state
retain discretionary control over currency and
distribution, and that access to that discretion be a
function of loyalty rather than law. Once that condition
was in place, the incentives did the rest.
The vanguard's alibi
What makes this pattern durable, rather than a one-off
historical accident, is the ideological cover available
to the people running it. Both Chávez and Mugabe
cultivated a personal image of austerity and sacrifice
— leaders who claimed to own nothing, who lived for
the revolution rather than off it. That image did real
political work. It let the visible faces of the movement
stay "clean" in the eyes of their base even as relatives,
generals, and party functionaries around them
accumulated fortunes that had no legitimate
relationship to a state salary.
The deeper justification runs through what might be
called vanguard reasoning: if you believe your
movement is fighting an existential war against
entrenched imperial or colonial interests, then the personal wealth of the people prosecuting that war
can be reframed as logistics rather than looting — the
material base a revolutionary elite needs to keep
functioning. Dispossession of the old elite gets called
justice; enrichment of the new one gets called
reparation, or simply goes unmentioned. It is a
strikingly effective piece of moral bookkeeping, and it
is not unique to the left — plenty of nationalist and
religious movements have run versions of the same
trick — but it found a particularly potent expression in
Caracas and Harare.
The counterexample that proves the
point
If this were simply a story about redistribution being
inherently corrupting, it would be a much less useful
argument. It isn't, and the clearest evidence is South
Korea's land reform of 1949–50, carried out in the
wreckage of colonial occupation and civil war against
an entrenched landlord class that was, if anything,
more dominant than Venezuela's business elite or
Zimbabwe's commercial farmers.
The difference was structural, not moral. The South
Korean state did not seize land and retain it. It bought
land from large landlords using government bonds
and sold it, on subsidized terms, directly to the tenant
farmers who worked it. The landlord class lost its dominance — but it converted its bonds into capital
that helped seed the country's later industrial boom,
while millions of former tenants became, for the first
time, independent property owners rather than
dependents of either a landlord or a ministry. Because
the state functioned as a transactional intermediary
rather than a permanent owner, no new landed
bureaucracy had the opportunity to form in the
vacuum.
The lesson is not that redistribution should be
avoided. It's that the destination of the asset matters
more than the fact of its transfer. Redistribution that
ends in individual, legally secured private ownership
tends to produce a broader middle class.
Redistribution that ends in the state's own hands — or
in the hands of a party and a military that treat the
state as their patrimony — tends to produce a
narrower one, dressed in the rhetoric of equality.
Why sanctions rarely fix this
There is a temptation, watching this pattern from the
outside, to reach for sanctions as the corrective —
freeze the generals' accounts, cut off the party elite's
access to Western banking, and wait for reform. The
historical record suggests this mostly reshuffles the
survival strategy rather than ending it. Cut off from Western finance, both the
bolibourgeoisie and Zimbabwe's securocrats pivoted
toward shadow economies and non-Western patrons,
above all China, which has extended tens of billions of
dollars in resource-backed loans to Venezuela and
invested heavily in Zimbabwean mining, in each case
through channels that run directly through the
executive rather than through transparent public
institutions. Sanctions also hand the regime a
genuinely useful piece of propaganda: they let a ruling
class blame foreign "economic warfare" for a collapse
substantially of its own making, and that argument
lands with real force on a population that is, in fact,
suffering under the sanctions regime, whatever its
ultimate cause. The elite, meanwhile, is usually the
group best insulated from the pain, having already
built the private supply chains and shadow-banking
relationships needed to route around it.
None of this means sanctions never matter or should
never be used. It means they are a blunter instrument
against this particular pathology than their advocates
often claim, and that treating them as a substitute for
institutional reform — rather than a supplement to
pressure for it — tends to prolong the very structure
they're meant to dismantle. What this should and shouldn't tell
you about redistribution debates at
home
It is tempting, and it would be intellectually lazy, to
treat Venezuela and Zimbabwe as knockdown
arguments against wealth taxes, land reform, or
antitrust enforcement anywhere else. They aren't,
because the mechanism that produced the
bolibourgeoisie and the securocrats wasn't
redistribution in the abstract — it was redistribution
executed by decree, without compensation, without
judicial recourse, and without ever releasing the
state's grip on the seized asset. A wealth tax
administered by an independent revenue agency
under judicial review is not the same animal as an
expropriation decree enforced by the same military
that then inherits the expropriated farm.
What the comparison should sharpen is a set of
questions worth asking of any redistribution proposal,
whatever its politics: Does the asset end up in
transparent, individually held private ownership, or
does it end up under the discretionary control of a
bureaucracy, a party, or an armed force? Is there a
legal process an affected party can actually use to
contest the seizure, or is the courts' role reduced to
ratification? Is the mechanism designed to be reversible and auditable, or does it concentrate
enough unchecked power that reversing it would
require another revolution?
Those questions cut across the usual left-right map.
They are, in the end, questions about the rule of law
rather than about the size of the state or the justice of
the underlying grievance — and grievances in both
Venezuela and Zimbabwe were, in significant part,
real. Venezuela's pre-Chávez elite presided over
grotesque inequality in one of the world's richest oil
states. Zimbabwe's white commercial farmers held
land under a settlement that was itself the product of
colonial dispossession, not a natural market outcome
deserving special protection. The tragedy is not that
these grievances were invented. It's that the
mechanism chosen to redress them reproduced, in a
new uniform, almost exactly the dynamic it claimed to
abolish: a small class living off the labor and
vulnerability of everyone else, this time with the added
protection of an army and a flag.
The pattern is still running
None of this is safely confined to history. Versions of
the same playbook are visible right now, in countries
that never called themselves socialist and in one that
has abandoned the pretense of socialism altogether. South Africa never expropriated on the scale of
Zimbabwe, but the "state capture" scandal that
engulfed Jacob Zuma's presidency ran on the
identical logic in miniature. The language was the
unfinished business of apartheid-era inequality and
the need for "radical economic transformation." The
reality, as South Africa's own judicial commission
documented at exhausting length, was that billions of
dollars were siphoned out of state-owned enterprises
like the power utility Eskom and the rail operator
Transnet and redirected toward a network of
politically connected businessmen, with remarkably
little of it reaching the poor in whose name the
transformation was supposed to happen. No farms
changed hands here, no currency collapsed into
hyperinflation — but the mechanism of a public asset
repurposed for private, politically loyal gain, under
cover of a genuinely just historical grievance, is the
same one that operated in Caracas and Harare.
Nicaragua offers an even starker case, because it
shows how quickly the "vanguard" alibi can curdle into
outright dynasticism. Daniel Ortega came to power as
the face of the 1979 Sandinista revolution against
Somoza-family rule — rule that was, by any honest
accounting, a kleptocracy in its own right. Four
decades later, Ortega and his wife and vice president,
Rosario Murillo, preside over a state in which
independent media, energy distribution, and major import businesses have been folded, with striking
directness, into a family-and-loyalist network backed
by the police and military. The revolutionary who rose
by dismantling a family's grip on the state built
another one. If Pareto needed a case study to make
the "circulation" in his theory feel less like an
abstraction and more like a literal handoff, Nicaragua
supplies it.
What connects these cases across four decades and
three continents is not a shared ideology — Chávez's
Bolivarian socialism, Mugabe's anti-colonial
nationalism, Zuma's transformation rhetoric, and
Ortega's Sandinismo have real doctrinal differences.
What connects them is a shared institutional failure
mode: a state that retains discretionary, unaudited
control over a newly seized or newly centralized asset
will, with something close to mechanical reliability,
find that control captured by whoever is closest to the
people running the state. Ideology supplies the
justification. It does not supply the safeguard.
A harder standard than "who
benefits"
It is worth being honest about what a piece like this
cannot settle. Reasonable people dispute how much
of Venezuela's and Zimbabwe's collapse to attribute
to internal decisions versus external pressure — sanctions, falling oil prices, the long shadow of
colonial economic structures that neither country built
from scratch. Reasonable people also dispute
whether "circulation of elites" is really distinct from
ordinary crony capitalism, in which market economies
produce their own politically connected winners
without any expropriation at all — a fair point, and one
that suggests the underlying disease is closer to
"unaccountable concentrated power" than to
socialism specifically. Sanctions regimes and Cold
War-era interventions in both countries' economic
trajectories deserve more scrutiny than a comparative
piece like this can give them.
But the core pattern — dispossession without due
process ending in re-concentration rather than
dispersal — is documented closely enough, in both
cases, to be taken seriously by people who want
redistribution to work and not merely to happen. The
uncomfortable truth for revolutionaries is the same as
the uncomfortable truth for defenders of the status
quo: inequality that is enforced by an unaccountable
class will eventually be replaced by inequality
enforced by a different unaccountable class, unless
the process that does the replacing binds itself, in
advance, to rules it cannot simply rewrite once it's
holding the deed.
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