Venezuela's economic growth rate has been among the fastest in the world, thanks to high oil prices. This funded the expansion of government "missions" to provide health care to the poor via Cuban doctors, teach more than 2 million adults to read, expand higher education, implement land reform, expand social programs for the indigenous population, and much more.

Chávez's Venezuela has broken from the so-called Washington consensus, the neoliberal doctrine of privatization, deregulation and "flexible" labor policies. After 30 years of assaults by international capital aimed at dismantling the welfare state and rolling back social progress, Venezuela has moved defiantly in the opposite direction--with Chávez emerging as the leading critic of the U.S. on the world stage, using oil wealth to pursue Latin American economic integration outside Washington's orbit.

In early 2005, Chávez declared that his aim was not simply to break from neoliberalism, but to build "socialism for the 21st century." Following his reelection in December 2006, he obtained from the National Assembly the right to issue decrees to nationalize key sectors of the economy--including renationalizing the main telecommunications company and taking state control of sectors of the oil industry that were not already controlled by PDVSA.

At the same time, Chávez called for the creation of a new party, the PSUV--in which leftist and center-left parties that had been allied with him could either join, or, he said, be counted among the opposition.

Now come constitutional reforms that, if enacted, will shake up political life still further.

They can be roughly grouped into seven areas: (1) the designation of four forms of property--social, collective, mixed and private--intended to expand state and popular control of the economy while preserving the role of private enterprise; (2) the creation of regional vice-presidents, who will replace state governors and become part of the executive branch of government; (3) the extension of "popular power" by redrawing the political map so that cities, comprised of self-organized communes, "will constitute the basic space and indivisible nucleus of the Venezuelan Socialist State," with additional councils created for workers, peasants, students and other social groups; (4) the integration of the social missions, originally parallel to the old government bureaucracy, into the state; (5) the assertion of state power over natural resources, including an outright prohibition on the large private landholdings known as latifundia, and government control of the exploitation of hydrocarbons; (6) the integration and centralization of the various branches of the Venezuelan military, which would also gain the ability to exercise the administrative and investigative powers currently limited to the police; (7) and the extension of the presidential term and removal of term limits.

By simultaneously launching both the PSUV and constitutional reform, Chávez is maximizing political pressure on both the left and the right.

If the reforms are approved, for example, opposition leader Manuel Rosales, who ran against Chávez for president, would see his position as governor of the state of Zulia disappear. But boycotting the constitutional referendum and/or the elections to follow--as the opposition did in the last legislative elections--would simply guarantee a victory for Chávez.

If the right is in a bind, the left faces hard choices of its own. The creation of the PSUV has led to defections in many groups, with a section of the Communist Party entering the new party. The Party of Socialist Revolution, whose activists play a key role in the class-struggle current of the National Union of Workers (UNT) federation, C-CURA, has also split, with many leading labor activists choosing to join the party.

The argument for entering the PSUV is that it gives an opportunity to engage in debates with large numbers of militants who have so far lacked any political organization.

"For the workers and leading trade unionists that have joined the PSUV, it is very important that there exists the possibility of building socialist battalions by social sector," that is, according to class," wrote Gonzalo Gómez of the Marea socialist tendency in the PSUV, arguing for a revolutionary current that struggles for the PSUV "to become a real revolutionary party that expresses the interests of the working class, that fights for socialism without bosses, bureaucrats and corrupt elements. That is the only way to socialism of the 21st century."

Yet the PSUV itself, which claims about 5 million members following a summertime mass recruitment campaign, will have to grapple with the issue of major constitutional reform even as it holds its founding conference this autumn. Already, left-wing critics inside and outside of it complain that the PSUV is dominated by bureaucrats and business types in the orbit of PDVSA and with other lucrative connections to the government.

All this takes place against a backdrop of class polarization. While economic growth has stimulated a major boom in consumption by the upper middle class and the wealthy, the resulting inflation has squeezed workers and the poor--despite a big increase in the minimum wage and sharp falls in the poverty rate from 55 percent to 34 percent. Moreover, the state-subsidized grocery stores are often short of staple goods, owing to sabotage by agribusiness companies and speculation by traders.

A major flashpoint for organized labor and the left is Sanitarios Maracay, a bathroom fixture manufacturer that had been run under workers' control since last November when the employer abandoned negotiations.

After a police attack failed to dislodge the occupying workers months ago, the boss finally succeeded August 10 in rounding up former workers to oust the occupation. The government, which had blessed some earlier factory occupations by nationalizing the plants involved, refused to nationalize Sanitarios Maracay under workers' control, because the factory isn't "strategic."

As occupying workers got the cold shoulder from the government, Oswaldo Vera, a National Assembly member and leader of the Bolivarian Socialist Workers Front (FSBT) current in the UNT, floated the idea that constitutional reform creating "workers councils" would replace trade unions--although officials later retreated under criticism. Chávez himself, quoting the German revolutionary Rosa Luxemburg out of context, declared that trade unions should be subordinated to the socialist party--i.e., the PSUV.

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