Cuba’s Begrudging March Toward Capitalism

05.12.11

Cuba’s Begrudging March Toward Capitalism

05.12.11
Terry FeuerbornTerry Feuerborn

“There is no doubt that in the organization of our economy we have erred on the side of idealism and sometimes even ignored the reality of the objective economic laws we should comply with.” – Fidel Castro, December 17, 1975

Fidel’s realization was not purely organic. Cuba’s overreliance on economic and military assistance became apparent when the Soviet Union collapsed two decades ago and the country’s leaders were forced to come to terms with a new reality. Now under the direction of President Raúl Castro, Cuba has begun to slowly inch towards a capitalist free-market system.

“The extent of Cuba’s reliance on Moscow and its satellites became dramatically exposed with collapse of the Soviet bloc in 1989. In just four years, from 1989 to 1993, the Cuban economy suffered a 35-45 percent fall in GDP as commercial relations with the former Soviet Union declined by more than 90 percent; trade with Eastern European countries ended almost completely…Not only did Cuba loose [sic] its principle trading partner, but it also lost Soviet economic subsidies and aid,” writes Agnes Martha Wierzbicki.

Recently, the Cuban government has issued new guidelines and regulations that ostensibly opens the Cuban economy to free market principles. Included will be guidelines on the selling and buying of private homes, private farming is admissible and automobiles may be sold. Also, importantly, ration books will be trimmed. The ration books provide Cubans with subsidized food and other necessary items.

“I can assure you that the Guidelines are an expression of our people’s will, contained in the policy of the Party, the Government and the State, to update the Economic and Social Model in order to secure the continuity and irreversibility of Socialism as well as the economic development of the country and the improvement of the living standard of our people combined with the indispensible formation of ethical and political values,” Raúl Castro said in announcing the new changes.

The very fact that the changes are being made by the government acknowledges a certain reality. Many of the changes will allow Cubans to legally sell homes and automobiles. These economic activities have been ongoing for decades on the Cuban black market where people previously bought and sold automobiles and houses. The Cuban black market or the mercado negro is viewed as importantly as the ration cards issued by the government. Following the collapse the Cuban economy after the collapse of the Soviet Union, by some estimates transactions from the black market outpaced legal or formal transactions. As a result, Cuban officials began enacting limited reforms aimed at resuscitating the Cuban economy. Arch Ritter of Carleton University in Ottawa suggested of the changes, “These are very important steps…To have a housing market, for example, will be of tremendous importance to Cuban citizens, because there hasn’t been a market in 50 years. In Cuba, people are born in the same house they die in.”

Raúl Castro, in an attempt to address the absurdities of a system that rations coffee to newborns and cigarettes to smokers and nonsmokers alike said, “Undoubtedly, the ration book and its removal spurred most of the contributions of the participants in the debates, and it is only natural. Two generations of Cubans have spent their lives under this rationing system that, despite its harmful egalitarian quality, has for four decades ensured every citizen access to basic food at highly subsidized derisory prices.” Castro continued, “Since the ration book is designed to provide equal coverage to 11 million Cubans, there are more than a few examples of absurdities such as allocating a quota of coffee to the newborn. The same happened with cigarettes until September 2010 as they were supplied to smokers and non-smokers alike thus fostering the expansion of that unsafe habit in the population.”

The economic changes reflect the reality that there is no self avowed communist state in the international system that can sustain itself by adhering to old outdated economic models. North Korea relies on huge subsidies from China to stay afloat even as tens of thousands of its citizens starve to death from malnutrition. Cuba realizes that its economic model is not sustainable and that its neighbors have disavowed their various forms of socialism in favor of capitalism. In very real terms, Cuban economic growth has stagnated and it must confront this reality by allowing free-market capitalism.

As the international system becomes more interdependent Cuba realizes that it can no longer adhere to purely communist economic principles. Cuba lacks vast tracks of natural resources like oil to sustain its economy and it has had to turn to its neighbors for assistance to avoid a complete economic catastrophe. However, despite some signs that Raúl Castro was prepared to tackle fundamental problems inherent in the Cuban economy, there are some indications that the president might not be as revolutionary as some have thought. Despite earlier announced plans by the government to eliminate roughly 500,000 state jobs it has since abandoned those plans.

Even as Fidel Castro initiated some limited reforms in the 1990s the standard of living for many Cubans remained precariously low compared to other regional states. The changes included land reforms and other changes that attempted to address pervasive shortages of food and a lack of consumer goods and services. However, with Russian assistance gone Cuba has still relied on assistance from others. Venezuela has provided Cuba with discounted oil since the 1990s. Presently, President Hugo Chavez provides Cuba with about 100,000 barrels of oil a day. To pay for this oil, Cuba has provided Venezuela with approximately 30,000 medical personnel.

However, as Raúl Castro and other Cuban officials allow free-market principles they still attempt to portray the changes as an organic process and not as a repudiation of communism per say. “For this reason, I can assure you that the Guidelines are an expression of our people’s will, contained in the policy of the Party, the Government and the State, to update the Economic and Social Model in order to secure the continuity and irreversibility of Socialism as well as the economic development of the country and the improvement of the living standard of our people combined with the indispensible formation of ethical and political values,” Raúl Castro argued in defending these fundamental changes.

Even as Raúl Castro implements these changes he ostensibly is offering a rather blunt assessment of Cuba itself and is challenging basic long held assumptions. No longer, as he has said can the Cuban economy support itself at is current pace. Cuban economic activities have not kept pace with Cuba’s growing population.

As is the case in the United States, the Cuban social safety net can no longer support an elderly population without fundamental changes. Cubans age 15-64 constitute roughly 71.1% of the population with Cubans ages 65 and older constituting 11.4% of the population. However, despite the fundamental changes proposed by the government, skepticism remains if the changes will in-fact alter the daily lives of Cubans. Cuban, Johan Rodríguez commented, “We have a way of making changes but keeping everything the same…The basic problem is we have no money. I am hoping what they are discussing will change that.”

Moreover, the mere fact that changes are being considered to the very foundation of the Cuban economy offers the clearest signs yet that the country is willing to reconsider its identity in the face of a changing world. Of the island’s 11,087,330 residents, 823,000 work in some sort of private sector job while 85% of Cubans are employed by the state. This is not a sustainable economic model and Raúl Castro knows this.

Perhaps the most significant development for Cuba was in July 2006 when Fidel Castro ceded power to his brother Raúl Castro due to health concerns. Not that the world wished Fidel ill, with the exception of jailed and exiled Cuban dissidents, but many knew at the time what many Cubans are aware of now. It was time for the old standard bearer of the Cuban revolution to step aside while fundamental changes were instituted that either Fidel refused to address or was unaware needed to be implemented.

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