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Restructuring Cuba's Economy

A Cuban Spring?

by ROGER BURBACH

This is a fruitful period of experimentation and debate in Cuba. It is now almost seven years since Raúl Castro replaced his brother Fidel, first as interim president in 2006 and then as president in 2008. Under Raúl, the country is taking steps to transform the economy, and a critical discussion is erupting over the dismantling of the authoritarian Communist model. Julio Díaz Vázquez, an economist at the University of Havana, declares: “With the updating of the economic model, Cuba faces complex challenges . . . in its social and political institutions. . . . The heritage of the Soviet model makes it necessary to break with the barriers erected by inertia, intransigence, [and] a double standard.” He adds, “These imperfections have led to deficiencies in [Cuba’s] democracy, its creative liberties, and its citizens’ participation.”1

Among the most important changes that have echoed internationally is the decree that took effect January 14 allowing Cubans to travel abroad without securing a special exit permit. Also, homes and vehicles can now be bought and sold openly, recognizing private ownership for the first time since the state took control of virtually all private property in the early 1960s.

The government is distributing uncultivated land, which constitutes about half of the countryside’s agriculturally viable terrain, in usufruct for 10 years in 10-hectare parcels with the possibility of lease renewal. To date there are 172,000 new agricultural producers. Beyond agriculture, 181 occupations filled by self-employed or independent workers such as food vendors, hair stylists, taxi drivers, plumbers, and shoe repairmen can now be licensed as trabajo por cuenta propia—self-employment. As of late 2012, about 380,000 people are self-employed in a work force of 5 million.

The most dramatic move against the old economic order came in April 2011, when the Sixth Communist Party Congress issued 313 lineamientos, or guidelines. A potpourri of measures and recommendations, the document calls for autonomy for the state enterprises, an expansion of cooperatives, new taxing laws, and changes in the system of subsidies, including modification of the monthly food rationing system. The government established a committee of over 90 people, led by former minister of economy Marino Murillo, to implement the policy recommendations.

A major weakness of the lineamientos, according to Armando Nova of the Center for the Study of the Cuban Economy, is that they fail to tackle major macroeconomic challenges. While the lineamientos acknowledge the country’s low economic productivity, as well as large trade deficits, there is no analysis of how to overcome these systemic problems. Moreover, the lineamientos contain no overarching conceptualization of where the society is headed other than a general commitment to socialism. “What type of socialism is being referred to?” Nova asks.2 Is the new socialism akin to what Lenin outlined in the New Economic Policy (NEP) in 1921, when Russia permitted small-scale peasant production and private businesses? What is the role of private property in Cuba, and how can a new economy curb the growth of inequality? These are all critical questions that the Sixth Party Congress failed to address.

There are, however, different schools of thought on how to move the economy forward. Camila Piñeiro Harnecker, in an essay titled “Visions of the Socialism That Guide Present-Day Changes in Cuba,” describes three different visions: (a) a statist position, largely reflecting the old guard, (b) a market socialist perspective, advanced by many economists, and (c) an autogestionario, or self-management, stance that calls for democratic and sustainable development primarily through the promotion of cooperatives.

The statists recognize that Cuba faces serious economic problems but argue that they can be corrected through a more efficient state, not through a dismantling of the state. They call for more discipline and greater efficiency among state industries and enterprises. A loosening of state control, they contend, would result in greater disorganization and even allow capitalist tendencies to emerge. This position points to the disaster that occurred in the Soviet Union in the late 1980s after an attempt to end central control over state enterprises.

The statist position is most deeply entrenched among midlevel bureaucrats and the party cadre, who fear a loss of status and income with the end of direct control over Cuba’s economy. Some heads of the Cuban military enterprises—which include food and clothing factories, as well as hotels, farms, and telecommunication stores—also manifest this tendency, although surprisingly many officers, including Raúl Castro, are in favor of decentralization and a greater use of market mechanisms.

Those committed to a socialist market economy contend that only the market can unleash Cuba’s productive forces. To increase productivity and efficiency, the state needs to grant more autonomy to enterprises and allow competitive forces to drive the market. In the short term, privatization is necessary, even if this means an increase in inequality, the exploitation of wage workers, and environmental degradation. As the country develops, the state can step in to level the differences and distribute the new surpluses to support social programs.

The economists who argue for market socialism tend to be located in what is referred to as academia—the research institutes and centers, many of which are affiliated with the University of Havana.4 Academia looks to the Chinese and Vietnamese experiences, particularly their appeal to foreign investment, although they believe that Cuba should do a better job of controlling corruption. This position also finds support among state technocrats and some managers who want to see their enterprises expand and become more profitable as they are privatized. There is also significant support for the market economy among self-employed and working people who feel that they can enjoy the material prosperity of China or the Western world only through more individual initiative and private enterprise via the market.

The autogestionario position, which Piñeiro advocates, has a fundamentally different view from the economists over how to break with the old statist model. Instead of relying on competition and the market to advance productivity, the democratic socialist values of participation, association, and solidarity should be at the heart of the workplace and the new economy. Control should not come from the top down but from the bottom up, as workers engage in self-management to further their social and economic concerns. As Piñeiro writes, “The autogestionarios emphasize the necessity of promoting a socialist conscience, solidarity, and a revolutionary commitment to the historically marginalized.” These principles can be practiced in cooperatives and municipal enterprises, leading to increased consciousness and productivity in the workplace.5

Piñeiro admits that support for the autogetionario position is less consolidated, coming from intellectuals, professionals, and those involved in the international debates over 21st-century socialism. One of the problems is that the old statist model used the terms participation, autonomy, and workers’ control to characterize the relations in the factories, enterprises, and cooperatives that operated poorly in Cuba, and this language has now fallen into disfavor. Today those who try to revive these terms are often seen as making a utopian attempt to resuscitate failed policies.

Ultimately, Piñeiro is optimistic, seeing “a new path for the nation.” It will be a hybrid composed of “a state socialism better organized, a market,” and “a truly democratic sector.”

The periodical Temas is one of the main forums for debate over the Cuban economy’s direction. As editor Rafael Hernández said in an interview in November 2012, “The process of change is slow but irreversible. The question is whether the improvement in economic conditions can be rapid enough to maintain the support of the people at the base. Cooperatives that now exist only in the agricultural sector have to expand into small manufacturing and the services.”

Hernández sees the need to engage the professional and technical sector that constitutes one quarter of the Cuban working population because of the revolution’s historical commitment to public education. He explains: “Their talents have to be harnessed to the process of economic and social change. We need a public sector, not a governmental sector.” He points to the need for elderly care facilities as an example, saying, “My mother had Alzheimer’s. I had to take care of her at home, but she would have had a better environment and perhaps even better care if doctors and medically trained personnel had been able to set up retirement homes either as cooperatives or private medical facilities paid for by some combination of government subsidies and contributions from the families.”

Hernández also argues that the magazines, newspapers, and publishing centers need to be held accountable to the public as opposed to the state. Like Temas, other periodicals should be run by workers and editorial councils in order to better respond to the public interest. The day before my interview, Temas writers and staff traveled to one of Havana’s municipalities to discuss their new issue on social development and the implications for the local residents.

A debate is also emerging in Cuba over democracy and socialism. Temas recently ran an article by Julio César Guanche, “La participación ciudadana en el estado cubano” (Citizen Participation in the Cuban State). After a lengthy discussion of the centralization of power in Cuba’s presidency and the limits of Cuba’s National Assembly of Popular Power, Guanche calls for a new “collective order” comprising “the state, the public sphere, mass organizations [and] citizen groups . . . guided by the principles of autonomy and cooperation, with the direct participation of the [popular] bases.” He argues that Cuba should draw on the “new Latin American constitutionalism” in Venezuela, Bolivia, and Ecuador, where constituent assemblies were convened to draft new constitutions that embrace the principles of both representative and direct democracy. Guanche concludes his article by stating that to bring Cuban institutions up to date, and “to radicalize democratic socialism,” Cuba needs its own “national constituent process.”6

A critical question is what the updating of the Cuban economy means for social and economic equality. Will everyone advance, or will there be “winners and losers,” as under capitalism? Myra Espina Prieto, in a publication of the Center for the Study of the Cuban Economy, analyzes the social impact of the policies that flow from the 313 lineamientos of the Sixth Party Congress. On the positive side, she sees an increase in individual opportunities through the creation of a “multi-actor” economy that includes “mixed capital enterprises, cooperatives, the usufruct agricultural producers, self-employed workers, etc.” At the same time, she notes the “precarious” nature of many of the new forms of employment that could “increase the levels of poverty.”7 Most of the 181 occupations opened up for self-employment are low skilled and low paying, reproducing what one finds in other Latin American countries—an impoverished informal economic sector.

My personal experiences in central and old Havana corroborate her concerns. Visiting in November 2012, I noticed a significant increase since the previous April in fruit and vegetable vendors in the streets, a larger number of marginal private cafés, and people vying to enter the tourist trade, either through the offering of simple services like bicycle-taxis or, more notably, female and male sexual companionship. When I asked why this was occurring, the responses indicated many were losing their formal jobs as state enterprises were downsizing and laying off redundant workers to increase efficiency and productivity.

As Rafael Hernández says, “There is a push from below. The people have endured much since the collapse of Soviet aid, now over two decades ago. The time has come for them to experience a better life. If we can get economic results, there will be broad popular support for a corresponding participatory and democratic opening.” Julio Díaz Vázquez told me in November, “There is more critical discourse in Cuba at all levels than ever before. Now we have to see if we can end the old economic system and construct a new society.”

The times are challenging in Cuba. It may be an overused metaphor to describe a society as having a “spring.” But if some combination of the three visions can drive the Cuban economy forward, there may indeed be a Cuban spring.

Roger Burbach is the director of the Center for the Study of the Americas (CENSA) based in Berkeley, CA and is the author with Michael Fox and Federico Fuentes of Latin Americas Turbulent Transitions: The Future of 21st Century Socialism, to be released in January, 2013.

Notes.

1. Julio A. Díaz Vázquez, “Cuba: actualización del modelo económico-social,” Centro de Investigaciones de la Economía Internacional, Universidad de la Habana, unpublished manuscript, November 2012.

2. Armando Nova González, “Teoría y práctica en los lineamientos de la politica económica y Social,” Temas, no. 72 (October–December 2012):78.

3. Camila Piñeiro Harnecker, “Visiones sobre el socialismo que guían los cambios actuales en Cuba,” Temas, no. 70 (April–June, 2012): 46–55. Also see her edited anthology, Cooperatives and Socialism: A View From Cuba (Palgrave MacMillan, 2012).

4. Interview with Julio A. Díaz Vázquez, Havana, November 2012.

5. Piñeiro Harnecker, 50.

6. Julio César Guanche, “La participación ciudadana en el estado cubano,” Temas, no. 70 (April–June, 2012):77–78.

7. Myra Espina Prieto, “Retos y cambios en la política social,” in Pavel Vidal Alejandro, Omar Everley Perez, Villanueva , eds, Miradas a la economía cubana, el proceso de actualización (Havana: Editorial Caminos, 2012), 162, 167.

*This article appears in the Spring issue of the NACLA Report on the Americas, The Climate Debt: Who Profits, Who Pays? See: https://nacla.org/edition/8974

Roger Burbach is the co-author with Michael Fox and Federico Fuentes of Latin America’s Turbulent Transitions: The Future of Twenty-First-Century Socialism, just released by Zed Books. To order the book, see www.futuresocialism.org