That said, I’ll offer what I believe to be the chief elements of Venezuela’s destabilization and decline, in their rough order of impact and importance:
1. Decades of pervasive and severe corruption — in both government and business independently…and as a “crony capitalist” combination of the two.
2. The predictable course of “the resource curse,” as a consequence of huge oil reserves, the country’s over-dependence on that single source of wealth, and the unreliability and decline in profitability of those reserves.
3. Authoritarian mismanagement and incompetence — Chávez, and then Maduro, could have ruined any form of political economy with their heavy-handed incompetence, but in this particularly case it was clearly a megalomaniacal, utterly failed implementation of a socialistic state-directed economy. (see T. Collins Logan's answer to What are the different types of socialism?)
4. Amplification of problems by sanctions — although there is substantive debate around both the extent of this amplification, and the efficacy of sanctions in achieving intended aims, the sanctions certainly aren’t helping the people of Venezuela in the short run.
I have included some links below to support each of this assertions.
But why is Venezuela’s form of political economy such a “hot topic” right now? Mainly, it is because of right-wing propaganda that has sought to demonize anything that opposes or constrains free market capitalism, or in any way disrupts the gravy train of corporate wealth generation and accumulation that pro-capitalist policy provides. Calling anything that fails “socialism,” and anything that succeeds “capitalism,” has been a favorite conservative tactic since the first “Red Scare” after WWI. In reality, most successful economies in the world are mixed economies that have both socialist and capitalist elements.
I hope this was helpful.
Corruption in Venezuela - Wikipedia
Venezuela Corruption Report
Cronyism Damaged Venezuela before Chavez
How Hugo Chávez Blew Up Venezuela’s Oil Patch
Venezuela and the “resource curse”
International sanctions during the Venezuelan crisis - Wikipedia
Mixed economy - Economics Help
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