Estanflation, as the term is been used here, is when inflation and recession are present in the economy. Populism is a charismatic mode of linkage between voters and politicians that relies on the idea of a popular will and a struggle between ‘the people’ and ‘the elite’. Venezuela is an oil-rich country ruled by a populist government that has fueled inflation to endemic proportions. In recent years, despite strong worldwide deflationary pressure, Venezuela’s inflation rate has been among the highest in the world (22 per cent in 2007, 31 per cent in 2008, 25 per cent in 2009, and 27 per cent in 2010). Inflation, however, is not the gravest economic problem. The economy contracted -3.3 per cent in 2009 and -1.9 per cent in 2010 (seven consecutive trimesters of negative growth). What makes the estanflation case of Venezuela unique, apart from the theoretical third phase of populism, is the fact that poverty decreased from a very high starting point of 54 per cent in 2003 to 24 per cent in 2009, while extreme poverty rate plunged from its latest peak of 43 per cent in 1996 to a remarkable 6 per cent in 2008. Can a populist government control estanflation? It depends. Maybe populism can work in Venezuela, since the social programs are financed by huge oil revenues. This qualitative research explains the nature of these relevant issues and provides an accurate account of future events using a critical postmodern perspective based on a narrative rhetorical analysis data collection approach.
