Cuban Economic Changes & Some Theory
- Cuban Economic Changes, & Some Theory
October 8th, 2010
The changes in the Cuban economy show the heavy burden that the state has taken in offering virtually full employment. The recession has complicated things for Cuba as well as the rest of the world and it is interesting to see they are reducing government employment at this time. The price of nickel, a major export is down and tourism is not as strong as it was. Although official government figures show growth in 2008 and 2009, there are indications that things in one of the worlds remaining state controlled economies are not all roses. On the other hand Cuba has managed to maintain free medical care and free education despite the tough economic times. Certainly for Cuba this is not as tough as it was when the Soviet Union collapsed. As much as capitalists like to disparage the Cuban model, there are a lot of benefits in a socialist model even in a relatively poor country like Cuba.
As a would be communist state, is there a possibility of real socialism in one nation? Certainly Cuba has given it a pretty good shot. But at what price? Single party rule, is assuming that the party represents the interests of all the people. But without some change over in leadership there is little room for innovation or encouragement for those who would aspire to lead. I am not proposing an American style sleight of hand, but it seems to me that without some method of recall and oversight that there will always be a tendency for bureaucratic or technocratic control to be leveraged by elites who have become entrenched in power.
There is something to be said for a system that is stable enough for scientific planning to take place. Look at the knee jerk approach to creating a green economy in the USA as an example of how not to implement policy. What we have in the USA does reflect a debate, at least among elites.
I would like to see the eventual emergence of real communism. That is supposed to imply the dissolution of the state. In a complex world with instant communications available now through the internet, there is the possibility of direct democracy. The question is how will policy be done in a world where everyone gets an input? Do we simply go with the average of all, a literal version of Rousseau's General Will? It is conceivable. What we have now in the USA with its complicated tripartite system of power is something that is designed to be hard to bring about major innovations and in the USA there is a cult around the constitution of over 200 years ago that is equivalent to the cult of personality in some other states. The problem with it is its bias towards the business interests who have the time and money to afford to buy lobbyists to influence the process of decision making. It could be argued that in the USA we have a plutocracy not a democracy.
Cuba has a structure that is based on the principal of democratic centralism. There are municipal elections and not all the members of the national assembly are members of the Communist Party. But like China, the Communist Party is firmly in control of the nation and is not likely to give up power any time soon. This allows for a large degree of planning and decision making that is not influenced by corporate or capitalist interests. What has resulted is an economy and polity that has generally benefited the average Cuban with much lower income discrepancies than in more highly developed nations like the USA. But there has been a price.
An Anarchist Communist solution would be different than that which is the current state of affairs in Cuba. We would have workers councils and co-ops, community control of resources and decision making, with syndicals on an industry wide basis coordinating production with the consumer co-ops. It would be fairly complex but much more decentralized. But it is questionable if an Anarchist Communist society could have survived the onslaught of Capital and the nations that represent its interests. We have no place in the world where that example has survived and the historical examples have been limited in a modern industrial society to mostly Spain in the 1930's. Not much to go on. But Cuba exists and with its good and bad points, it is an example for us all.
From Terraviva Europe
LABOUR-CUBA: Torn Between Hope and Anxiety
By Patricia Grogg
HAVANA, Oct 7, 2010 (IPS) - The radical restructuring of employment launched by President Raúl Castro has Cubans, on the one hand, feeling anxious about possibly losing their jobs and, on the other, looking forward to testing the real scope of opportunities in the private sector, where an estimated 250,000 additional people may soon be working for themselves.
Registration to work on a self-employed basis in one of the 178 areas that have been authorised was to have started this month, but officials at both the Ministry of Labour and Social Security and the national tax office told journalists they had received no detailed instructions.
Nor has the Ministry of Finance and Prices published its resolution on the new taxation scheme. "I want to know how much a permit will cost me. If the taxes are too high, I will try to carry on as I have so far," said Caridad, who has worked as an unregistered seamstress for several years.
The Cuban government intends to shed half a million state employees between now and the first quarter of 2011, in the interests of efficiency and labour productivity, which it sees as essential in order to raise wages and "bear the enormous social costs" of the country's socialist system.
The employment restructuring aims for at least 80 percent of all workers to be engaged directly in production, services or other essential activities. Public employees deemed "available" (redundant) may be retrained and relocated in agriculture, construction or the police, which are short of labour, or become self-employed.
According to the authorities, reducing inflated payrolls and eliminating excessive subsidies and gratuities, as well as freeing the state from some of its responsibilities, should allow wage increases in the immediate future that have long been demanded by workers.
Castro said in August that "no one will be abandoned to their fate," and support would be available for those who "are really incapable of working (in other jobs)." However, neither the president's words nor the explanatory meetings held in workplaces have succeeded in calming workers' fears of finding themselves among the ranks of the unemployed.
"It is a logical concern," a Cuban economist who requested anonymity told IPS. "Breaking with 50 years of state paternalism isn't easy, but this reorganisation of the productive forces is absolutely necessary if we are to maintain other cherished rights, like free healthcare and free education."
According to official estimates, health and education alone account for 46.7 percent of state expenditure, and injections of new revenue are urgently needed. The right of Cuban citizens to free education and health services is guaranteed under the constitution.
Taxation rates would range from 10 to 40 percent, and taxes would be collected in national currency (pesos) in all cases. Transactions in convertible Cuban pesos (CUC), the only hard currency available on the island, will be subject to the official exchange rate at the chain of state exchange shops (CADECA).
The official exchange rate is 24 pesos to the CUC. Preliminary estimates from the tax working group indicate that 250,000 self-employed people would contribute an additional one billion pesos a year to state coffers from 2011 on.
Information provided by the government so far has confirmed the introduction of new features, like the freedom to subcontract workers in 83 areas of activity, and to rent full houses (previously Cubans were allowed to rent out no more than two rooms) in hard currency, as well as cars.
These rental facilities apply even to persons who have authorisation to live abroad, and to those who travel abroad for more than three months. Access by self-employed persons to start-up bank loans for the trade of their choice is also being considered.
For more info
The economy of Cuba is a largely state-controlled, centrally planned economy overseen by the Cuban government, though there remains significant foreign investment and private enterprise in Cuba. Most of the means of production are owned and run by the government, and most of the labor force is employed by the state. In the year 2000, public sector employment was 76% and private sector employment was 23% compared to the 1981 ratio of 91% to 8%. Capital investment is restricted and requires approval by the government. The Cuban government sets most prices and rations goods to citizens. In 2009, Cuba ranked 51st out of 182 with an HDI of 0.863; remarkably high considering its GDP per capita only places it 95th. Cuba also significantly outperforms the rest of Latin America in terms of infant and child mortality, morbidity, educational attainment and an array of other social and health indicators.
In the 1950s, Cuba had a vibrant but extremely unequal economy, with large capital outflows to foreign investors. The country has made significant progress since the Revolution towards a more even distribution of income. Despite the economic embargo by the United States, the economy grew at a rate higher than the rest of Latin America until the collapse of the Soviet Union, its main trading partner. Between 1990 and 1993, Cuba's GDP declined by 33%. Yet Cuba has managed to retain levels of healthcare and education, and since 2000 the economy is rapidly recovering. Cuba has a highly-developed service industry with one of the largest professional workforce in the world. Its number of doctor per capita is ranked #1 in the world.
Cubans receive low housing and transportation costs, free education, and health care and food subsidies. Corruption is common, though far lower than in most other countries in Latin America.
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For a more conservative view
Major business trade with Cuba done through this Dutch family business
Slate article on effect of recession on Cuban Economy.
Article on Recession in Cuba from Cuba Headlines
Democratic Process in Cuba
Description of Government of Cuba
An Anarchist approach to Economics
An Anarchist approach to Political Process