It’s been 52 years since the revolution and Cuba is still unable to get its planned economy to work. Social services, once the pride of the revolution, are no longer affordable and are visibly deteriorating. The inefficiency of the economy also risks alienating the people form the government. Hardship is undermining the political pact that has held Cuba together for decades and made it politically strong: the post-revolutionary pact between the elite and the people which, in exchange for political loyalty, supplied national independence, social protection and the abolition of poverty. The generation that lived through the revolution and benefited from it slowly passing away. And the unproductive planned economy offer the young generation the prospect neither of work nor of consumption.
Beneath the apparent political stability formerly homogeneous social structures are fragmenting. This development touches a nerve in the Cuban psyche. It was Fidel Castro himself who quoted Marx’s famous proposition in Critique of the Gotha Programme: From each according to his abilities, to each according to his needs (Castro 1973). For the revolution this maxim underpins their sense of identity. However, since then it has lost its credibility. What was a relatively homogeneous society is now drifting into more marked differentiation and inequality and thereby into structural instability.
Against the backdrop and since the summer 2010, far-reaching economic reform measures have been launched. It they are successful, they could transform Cuban socialism from the ground up.
Only now, long after the demise of the Soviet Union and the Eastern Bloc, is Cuba finally taking a reform path which is seeking to permanently modify the model of a centrally controlled, planned economy. More timid steps in this direction were taken at the beginning of the 1990’s. At that time, the cessation of Soviet subsidies and foreign trade relations with COMECON countries slashed Cuban GDP by a third almost overnight. Foreign trade fell by 80%. However, the – at the time – comparatively modest liberalisations which successfully pointed the way out of the crisis were withdrawn again at the end of the 1990’s on ideological grounds (the Party conjures up the spectre of a new bourgeoisie).
In contrast to today, the Cuban leadership at that time interpreted the crisis as a consequence of the dissolution of the Soviet bloc and thus as externally induced. The current crisis, however, is regarded unequivocally as the result of the inefficiency of Cuba’s own economic model. No one has expressed this more clearly that the President General Raul Castro, most recently in his speech before the Cuban National Assembly in mid-December 2010, when he warned, £either we change our ways or go under.” Cuba must correct the ‘mistakes’ of the existing economic model without delay. It is therefore picking up where it left off at the Fifth Party Congress in 1997. However, after a lost decade the initial conditions are a lot worse.: the country has become even more de industrialised, productivity has fallen further and infrastructure has continued to deteriorate.
In the guidelines on economic and social policy, the policy document for the 6th Party Congress of the Communist Party in April, which as been under discussion since November, the balance between the state, cooperative and private sectors has been the subject of debate. It is made clear that reforms are intended to save socialism, not to weaken and certainly not to abolish it. An expansions of ‘working on one’s account’ – in other words, privatisation in the areas of crafts and small business, as well as making components of the budget to provincial and municipal levels is also under discussion.
Land distribution is already in its second year. Alongside that, the cooperative sector is being strengthened and the wide range of social subsidies – food rations, canteens in sate owned enterprises – is being cut back. But in the future, the most important aspects of the economy will continue to be subject to planning and the most important aspects of the economy will continue to be subject to planning and the most important means of production will remain in state hands. The keynote of the reforms is that Cuba must bid farewell to the paternalistic state. The aim of this agenda is to bring down wage costs by ‘releasing’ workers in the state sector and raising the extremely low labour productivity in state owned companies. The soon to be created private sector and the cooperatives are supposed to absorb these workers and to improve availability of services and goods. The new self-employed are also supposed to contribute to improving state finances by means of their tax payments. In agriculture, the measures are intended t lead to a rapid increase in production and to an equally rapid substitution of imports of agricultural products (Cuba’s import quota is between 70 and 80 per cent). These desired effects shall give the poor state additional financial leeway.
The measures introduced under the banner of a pull back of the omnipresent state will affect, first and foremost, the labour market. These measures are radical and are being implemented quickly. By April 2011, 500,000 public employees are to be ‘released’, rising to 1.3mn by 2015. Given that the total labour force is 4.9mn the reform is on a gigantic scale especially in a society were ‘unemployment’ was a faux-pas word in the political vocabulary.
On the other hand, the private sector, according to official figures, employs only around 144,000 Cubans, This figure has already increased by 80,000 since September as a result of the new self employment opportunities. However, new legislation opening up previously black market business should account for a good proportion of these.
Even Cuban experts are unclear about where the future army of job seekers are to find employment. They consider the list of 178 occupations in which self employment licenses can be applied for as much too narrow and are calling for its extension t encompass modern and professional occupations. Also under debate is the need for a comprehensive accompanying package which would complement the creation of a small functioning industry and small business sector (credit lines, regulations on taxation and social contributions, import regulations and so on). Clarity with regard to this key point for the success of the reform plan is not yet functioning. Internal opposition seems t be the reason for this, as head of state Raul Castro made clear in his speech last December. He called on sceptics in the |Party and in the political leadership to either change their views or resign.
Besides the inertia and aversion of the Party and state bureaucracy the biggest obstacle t successful implementation of the measures outlined above may well lie not in their ‘radicalness’ but in the ‘unpreparedness’ of the population. For decades, Cubans have been used to being looked after by a paternalistic state, from the cradle to the grave. In this context low productivity and a weak work ethic flourished with little disciplinary consequences for the individual worker. The state came up against this climate with periodic appeals to revolutionary discipline. Personal initiative responsibility were not at a premium or even stigmatised. Now, large numbers of people are supposed to become risk taking and decisive entrepreneurs overnight.
Cubans therefore do not really know whether they should be happy or apprehensive about the reforms. It remains to be seen whether the population is ready to apply the organisational and improvisational skills it has exhibited on the black market under legal conditions. Whether the existing incentives are sufficient to generate the desired dynamic and so save the revolution is uncertain. It is equally likely that bureaucratic irresponsibility and the primacy of political control will put paid to the readiness to take risks and the initiative needed if the new measures are to succeed.
In any case, the magnitude of the reform process which is now under way is such that it can be compared to the initial stages of the reforms in China and Vietnam. Like its Asian reference models Cuba is taking the reform path under strict Party control. At the same time,. it is emphasised that there is no wish to copy anyone – they want to go their own way. In this light, Fidel Castor’s warning in 2005 is becoming ever more prophetic: “The revolution can only be defeated from within.” In order to avoid this and to overcome the present crisis, the Cuban leadership will have to show imagination, courage and trust in its own people. But these were not the very reasons for the success of the revolution in 1959?