SocialismToday           Socialist Party magazine

Socialism Today 144 - December/January 2010/11

Cuba: the future uncertain

In the midst of severe economic crisis, the Cuban regime has moved to free up sections of the economy and cut back state-sector jobs. Obviously, this raises important questions for the workers and youth of the island, but also for socialists internationally. Do these measures spell the beginning of the end of Cuba’s planned economy? If so, what would be the most likely scenario: a repeat of Russian or East German capitalist restoration? Is this process inevitable? TONY SAUNOIS reports on the recent important developments.

IN SEPTEMBER THE Cuban government announced a series of economic ‘modernisations’. Among the most significant was the proposal to slash 500,000 jobs in the state sector by March 2011 as a first step to reducing employment by a million. Licences are to be issued by the state to allow the creation of self-employed persons (‘cuentapropistas’) with the legal right to employ others, not just family members.

These measures are the government’s response to a worsening economic situation which has gripped the country, resulting in food shortages and deteriorating living standards for the mass of the population. The ‘reforms’ have opened a discussion within Cuba and among socialists internationally about the future of Cuba and the planned economy – which, although weakened by bureaucratic measures, remains largely intact at present – and the prospect of capitalist restoration. Such a development, should it take place, would represent a setback for workers and the labour movement worldwide. It would be used by the capitalist class internationally, and especially in Latin America, to discredit the idea of socialism and propagate the idea that capitalism is the only viable social system. The fate of Cuba, therefore, is of crucial importance not only for the Cuban people.

Throughout the 1990s and the first decade of this millennium, Cuba and, later, Venezuela under Hugo Chávez have been perceived by significant layers of workers and young people as the only countries on the ‘left’ which were prepared to stand up to George W Bush and US imperialism, and to show that an alternative was possible.

Capitalism has not been overthrown in Venezuela, despite some progressive reforms introduced under Chávez. Nonetheless, together with Cuba, they defend the idea of ‘socialism’. Unlike Venezuela, Cuba has a centralised planned economy, a universally heralded healthcare system and free education. Its willingness to deploy thousands of doctors and medical teams around the world to crisis-torn countries after catastrophes, such as the earthquake in Pakistan and Kashmir, has ensured massive sympathy from the oppressed in Asia, Africa and Latin America and, especially, young people in Europe and the USA.

The restoration of capitalism in Cuba would be seen as another setback, although not of the same magnitude as the collapse of the Stalinist regimes in the former Soviet Union (USSR) and eastern Europe in 1989-92. The situation facing world capitalism is entirely different today than it was then. Yet, while Cuba does not have the same international significance, capitalist restoration would have serious consequences. After all, around the world there are more illusions in Cuba than existed around the regime of the USSR at the time of its collapse.

Worsening economic crisis

CUBA IS CERTAINLY confronted with its most serious economic crisis since the ‘special period’ following the collapse of the Soviet Union in 1991-92. This had devastating consequences in Cuba. GDP dropped by a staggering 34%. Food rationing was introduced but, on occasions, only one-fifth of the UN minimum nutrition levels were reached. According to some reports, calorie intake fell from 3,052 per day in 1989 to 2,099 in 1993. It was a testimony to the social base and support for the revolution that the Cuban regime survived this period. This is especially true following the introduction of the Helms-Burton Act in 1996, which strengthened the US embargo in an orchestrated attempt to strangle the regime and bring about its implosion.

The Cuban regime was compelled to take some emergency measures to open up sectors of the economy, such as tourism, to the private market and international investment. This, together with other initiatives and, subsequently, securing oil agreements with Chávez, was followed by a stabilisation and a certain economic recovery.

However, some measures, especially the introduction of a parallel dollar economy in the tourist sector, widened inequalities between those with access to the dollar economy and those left outside it. While stores selling goods to the dollar economy were stocked with an array of the most modern consumer items, the state stores selling in the Cuban peso are sparsely stocked.

The economy grew steadily between 2003-07, reaching a peak of 12.1% in 2006. However, since then it has contracted sharply. In 2008, it recorded a fiscal deficit of 6.7% of GDP - an increase of 70% compared to 2007 – and a current account balance of payments deficit of $1,500 million. This compared with a surplus of $500 million in 2007. Cuba’s foreign debt had spiralled to $17,820 million in 2007, 45% of GDP. It defaulted on its international debt repayments in 2008. Cuba has also been hit by a fall in the price of nickel, which accounts for approximately 25% of its exports.

It is in response to this worsening economic crisis that the new measures must be seen, as well as the sharply worsening social conditions of the masses that has flowed from them. The adjustment package announced by the government included a large reduction in its food imports. Prior to the revolution in 1959-60, 80% of food consumption in Cuba was largely provided from within the country. Today, 80% is imported.

Threatening the gains of the revolution

THESE RECENT DEVELOPMENTS are in stark contrast to the great social and economic gains which took place following the revolution. These were made possible by the overthrow of landlordism and capitalism, and the introduction of centralised economic planning.

Fidel Castro justifiably defended the gains in 2008 when he pointed out that, since the revolution, life expectancy has been raised by nearly 19 years, to 77.5 today. Infant mortality stands at 6 per 1,000 in the first year of birth – slightly worse than Canada. Thirty thousand doctors are working in more than 40 countries. A highly effective, free health system and free education were introduced. Illiteracy was abolished within the first few years of the revolution. These conquests were maintained even during the ‘special period’. Nonetheless, housing conditions are extremely poor for many Cubans.

Many of these gains would be reversed with the counter-revolution and restoration of capitalism. In Russia under Vladimir Putin, for example, male life expectancy fell to 56! This is a warning of the fate that could await the Cuban people. Cuba could be dragged down to the economic and social conditions which currently exist in Nicaragua or El Salvador. Yet, this is now developing as a serious threat because of the economic decline which is taking place.

The reason for this emerging threat lies in the character of the Cuban regime and its inability to develop further the economy. Cuba is dependent on and integrated into the world market. Globalisation means that all countries are linked and cannot escape from developments within the world economy. In the past, this was partly masked because Cuba was dependent on the subsidies from Stalinist Russia. Since that system collapsed, Cuba’s growing trade with Venezuela, Canada, China and Spain (its largest trading partners) has not been sufficient to allow it to remain immune from world economic developments.

Furthermore, its problems have been aggravated by bureaucracy, inefficiency, waste and corruption within the Cuban economy itself. The crisis is demonstrating in practice the impossibility of building socialism in one country and the need to spread the revolution and establish a democratic socialist federation of Latin American and Caribbean states to democratically plan the development of these economies. This could begin with the establishment of a federation of Cuba, Bolivia and Venezuela to give a practical example of what is possible.

The revolution in Cuba in 1959-60 eventually resulted in capitalism and landlordism being snuffed out and a centralised planned economy being established. However, despite enjoying overwhelming support from the workers and peasants, this did not result in the establishment of a regime of genuine workers’ democracy. Instead, a bureaucratic state apparatus was constructed. This was in contrast to the workers’ and peasants’ democracy which took power in Russia in 1917 under the leadership of Vladimir Lenin, Leon Trotsky and the Bolsheviks.

A bureaucratic state apparatus was established which Fidel Castro rested on. Despite mass support, this regime ruled in a top-down, administrative manner. It was not as brutally repressive as the Stalinist regime which eventually emerged in Russia following the isolation of the revolution and Lenin’s death in 1924. The mass purges, and cult of the personality under Stalin have not been a feature of Castro’s Cuba. However, repression of minorities and dissidents did take place. Apart from some political opponents, there was also the repression of gays and lesbians, something which Fidel Castro has now admitted was a ‘mistake’.

A bureaucracy in crisis

IN THE INITIAL stages of the revolution, the deficiencies of top-down administration were partly masked by the general development of society and the economy made possible by planning, and the favourable trading status Cuba enjoyed with the USSR. Even then, however, it resulted in economic zigzags, waste, corruption and inefficiencies. Since the loss of economic support from the USSR and deepening economic stagnation and crisis, these have deepened along with the re-emergence of other social issues such as prostitution, which the regime boasted it had eradicated.

A planned economy needs democratic control and checks at each level if it is to fully function and develop. Without this, bureaucratic privileges, and top-down administrative methods, which result in waste, inefficiency and corruption flourish. This eventually leads to stagnation and regression. These features were present from the beginning of the Cuban regime. They have now assumed ever increasing proportions as the crisis has intensified. Trotsky warned of this danger in relation to the former Soviet Union when he posed the question: "Will the bureaucrat devour the workers’ state, or will the working class clean up the bureaucrat?"

A section of the bureaucracy in Cuba has concluded that steps towards capitalist restoration offer the way out. Esteban Morales, director of the US Studies Centre at Havana University, and left-wing socialist critic of the regime, warned in an article, Corruption: The True Counter-Revolution (21 April 2010): "Without a doubt, it is becoming evident that there are people in positions of government and state who are girding themselves financially for when the revolution falls, and others may have everything almost ready to transfer state-owned assets to private hands, as happened in the old USSR".

He cites the case of the removal of General Acevedo as director of the Institute of Civil Aeronautics of Cuba without a full public explanation. Morales concludes that was because it would embarrass the regime to have to explain why "the people created and formed by the revolution" have squandered the money and resources of the people. He concludes with a hypothesis that "the chiefs are receiving commissions and opening bank accounts in other countries". Morales, a respected writer on the racial question in Cuba, was expelled from the Cuban Communist Party following publication of this article.

This reflects the struggle and debate unfolding within the Cuban Communist Party and the regime in general about which road to take. There are certainly different wings within the bureaucracy. The most pro-capitalist has its strength in the armed forces – with its own enterprises in different sectors of the economy – from which Raúl Castro, Fidel’s brother, comes. Since coming to power, Raúl has replaced an estimated 60% of government ministers, bringing in people closer to him. He has taken tentative steps to follow the ‘Chinese path’. A series of meetings and exchanges with the Chinese regime has taken place. He drew on the experiences of eastern Europe during a visit by the last leader of East Germany, Hans Modrow.

The cuentapropistas

RECENTLY, RAÚL ANNOUNCED the granting of licences for people to become self-employed, the ‘cuentapropistas’, and employ a limited number of workers. There have also been some changes in land ownership and the opening of limited farmers’ markets outside state control. While these steps are significant and represent the introduction of some capitalist elements into the economy, they are also limited and remain precarious at this stage. They are monitored by the state and have not yet touched the decisive parts of the planned economy.

These cuentapropistas will apply to plumbers, electricians, hairdressers, and some other sectors. This ‘reform’ was also introduced during the special period in the 1990s. At its peak, they numbered 200,000. These were then reduced as Fidel re-centralised the economy. The establishment of cuentapropistas will still require state permission. Last year, the total employed in this category numbered 143,000, out of a workforce of around 5.7 million. Added to this, however, is a large number of state-employed workers who undertake ‘jobs on the side’ to make ends meet.

A tax system has been introduced for these small enterprises for the first time. Taxes are not paid in Cuba. For the first time since 1968, small enterprises in 83 job classifications will be able to employ staff other than family members. In 1968, Castro nationalised all small businesses and enterprises on the island. (Militant, the forerunner of the Socialist Party, opposed this measure at the time.)

The nationalisation of all small businesses, shops, etc, undoubtedly increased the bureaucratisation and inefficiency in many sectors. The introduction of a democratically planned centralised economy needs to be based on state ownership and planning of the companies and banks which dominate the economy. It is not necessary to nationalise every hairdresser or minor enterprise. Rather, the establishment of local co-operatives that can trade with and be linked to the relevant state sector would enable these sectors to function more efficiently.

These measures were partly in response to the upheavals that had shaken eastern Europe – especially the movement in Czechoslovakia – under pressure from the bureaucracy in the former USSR. Castro admitted in 2005: "Among all the errors we may have committed, the greatest of them all was that we believed that someone really knew something about socialism" – referring to the Soviet Union. "Whenever they said, ‘that’s the formula’, we thought they knew. Just as if someone is a physician".

It is significant that Fidel Castro has recognised this mistake. But the problem lay in not understanding what alternative was needed: the introduction of a system of real workers’ control and management, and spreading the revolution to the other countries of Latin America and the Caribbean. This reflected the character of the state formed after the revolution, which arose from the fact that the working class had not been at its head. The dilemma facing Fidel, and Raúl today, is that they are compelled to zigzag in policy in search for a way out of the crisis as they have no alternative.

Cautious and hesitant

THE PROBLEMS THE current measures may yet encounter have already been experienced in the agricultural ‘reforms’ introduced in 2008. This was one of the most important announced so far: turning over idle land to private farmers and co-operatives. By the end of 2009, 100,000 beneficiaries had received a total of 920,000 hectares, equivalent to 54% of the country’s unused agricultural land.

Yet, while ownership has changed, no market system has been permitted for purchasing inputs, equipment or technology, for credit, buying hard currency and final sales. Acopio, the notoriously inefficient and corrupt state purchasing and distribution agency, still requires farm producers to sell 70% of crops to the state at low prices.

However, while the pressure towards capitalist restoration is increasing, it is not at all certain it will be completed. One obstacle is the fear within the bureaucracy that opening up the economy would result in an influx of Cuban exiles reclaiming property, land and factories, and the sweeping out of the regime. The bureaucracy would not be able simply to seize state assets as happened in the former Soviet Union. It is fearful that its fate could be more like that of the former Stalinist regime in East Germany, which was swept aside by capitalist West Germany and its state machine.

The Cuban regime is thus proceeding extremely cautiously and hesitantly. In announcing recent economic reforms, Raúl Castro insisted that "the socialist system was irrevocable". Economy minister, Marino Murillo, stated that, while the role of the state would be reduced in the small business sector, it would, "continue to direct a centralised economy".

The international press gave a large amount of publicity to the statement by Fidel Castro to the US journalist, Jeffry Goldberg, when he declared: "The Cuban model doesn’t even work for us anymore". This statement reverberated around the world, interpreted as Fidel repudiating ‘socialism’. Less attention was given to his later comments, at the launch of the second volume of his memoirs: "My idea, as the whole world knows, is that the capitalist system now doesn’t work either for the United States or the world, driving it from crisis to crisis, which each time are more serious".

A volatile mix

THE REGIME FEARS triggering a social crisis which could spin out of control and provoke a split within the bureaucracy and state apparatus. The fourth Cuban Communist Party congress in 1991 was preceded by the organisation of large ‘consultations’ and mass meetings involving up to three million people throughout the country. These were relatively open and reflected the attempts of the leadership under Fidel to act in a bonapartist manner and try and rest on the masses as it faced up to the effects of the crisis.

Significantly, following Raúl Castro’s speech in Camaguey in 2007, the results of the consultations were kept secret. The decisions taken relating to economic reform were kept in the hands of a small group. This reflects the lack of confidence and hesitancy of the regime at this stage.

It is entirely possible that, while further steps are taken towards the introduction of capitalist measures, the state will retain a central or powerful role in the economy. A hybrid regime – where significant inroads towards capitalist restoration have been made but where the state and the bureaucratic regime maintain a powerful controlling influence – could emerge. In some respects, this already has developed. It is also possible that, once embarked upon, the reforms could gain momentum and a logic of their own, which could also provoke social conflict.

The prospect of a deepening crisis in the world economy could re-enforce the state maintaining a strong influence over the economy. It could even result in the re-intervention by the state into those sectors in which its grip was loosened – as happened following the special period. The difference this time is that the economic crisis is again becoming sharper in Cuba and is accompanied with other threats.

In particular, there is the growing gulf between the older generation, which identifies with the revolution and its tremendous social gains, and the experience of the younger generation, which has grown up under the current regime. Nearly three quarters of the Cuban population were born after the revolution. The alienation of the youth to the stifling effects of the bureaucracy, travel restrictions, denial of internet access, suppression of music, etc, risks an eruption of social upheaval. The replacement of Fidel by his brother Raúl has only compounded the problem. The youth have grown up under a regime which has managed shortages, a weakening healthcare system, inadequate housing, etc. Their commitment to the revolution is less, given the absence of a clear democratic socialist alternative to the existing regime or a perspective for international socialism.

International democratic socialism

THE CUBAN REGIME is clearly entering a new stage where capitalist restoration is emerging as an extremely serious threat. Some significant steps along this road have been taken but have not been completed, as yet. The debates that are beginning to open up at all levels concern the direction society is to take. The way out of the current impasse lies not in the direction of capitalist restoration but by defending the centralised planned economy, implemented in a genuinely democratic way. It is vital that all workplaces should freely elect committees to oversee the day-to-day running of the factories and offices. These bodies need to be linked up nationally to establish a system of democratic workers’ management to plan the economy and work out production targets and an emergency plan. All officials should be elected and subject to immediate recall, and should receive no more than the average wage of a skilled worker.

Restrictions on travel and internet use should be lifted. Free trade unions, independent of the state, need to be built. Workers and young people should have the right to form discussion groups, tendencies and political parties which do not collaborate with imperialism and its efforts to restore capitalism. These and other democratic changes need to run alongside the opening up of the press and media to democratic control by workers and young people.

These measures, together with an appeal to spread the revolution and form a democratic socialist federation with Venezuela and Bolivia are now necessary as a first step towards a socialist federation of Latin America. Jointly planning these three economies could demonstrate in practice how a planned economy could begin to work. These urgent steps are needed to prevent the tendency towards capitalist restoration, defend the gains of the revolution and begin to build a genuine democratic socialist society.


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