Some friendly positions on Cuba’s economic policy changes

By Brian George


Photo: Fredo_photo.

That the Financial Times and Wall Street Journal should wishfully, and inaccurately, hope Cuba’s recent economic policy changes represent an embrace of capitalism is not surprising. But in addition to this hostile analysis there has also been comment on these new economic policies that comes from friends of Cuba. As it comes from friends, the following comments are also meant strictly in that light of friendly discussion.

Richard Gott, a well known expert on Latin America, and a firm supporter of both Cuba and Venezuela, rightly ridiculed the notion that Cuba’s new economic policies represented a turn to embrace capitalism. Writing in the Guardian’s Comment is Free, his analysis was: “Hundreds of thousands of people [in Cuba] now work on their own account, soon to be joined by half a million others – or possibly more.”

“The plan has been worked on and endorsed by the country’s powerful state trade union federation, and there is no doubt that the new policies will be well received by most people.”

“The Cubans are by no means thirsting to embrace the capitalist system, as some commentators have suggested, but they are certainly ready to take more responsibility for their own lives. Unlike many other people in Latin America (or indeed in the US), they are well educated, well looked after, and healthy. The state will not just throw the workers in at the deep end. There will be programmes of training to ease the move from state employment into the world of private enterprise.

“This is the first step in the reorganisation of the Cuban economy, and the Cubans are fortunate in having the powerful backing of oil-rich Venezuela. Hugo Chávez will be helpful during this transition period, not least because the Cubans will be moving closer to the mixed economy that he has always favoured. The current arrangements, with Cuban doctors working in Venezuela and being paid for with subsidised oil, work well for both parties.”

That Cuba is not embracing capitalism is certainly correct. But the term “mixed economy” is confused because it does not say in what structure the “mixture” exists. Pre-Thatcherite Britain used to be referred to as a “mixed economy” because there were nationalised industries, but in fact its structure was thoroughly capitalist with a few state-owned firms operating in an economy dominated by large scale private capital. What is specific about China’s economy for example, in contrast, is that it is large scale companies which are state-owned and the private sector dominates smaller enterprises than the state sector. In short China’s economic structure is that it is the state-owned sector that is dominant – as was shown again in its recent stimulus packages to deal with the international financial crisis. These were delivered through investment by state-owned companies and state-owned banks which, between them, were sufficient to determine the course of the economy.

The idea of a “mixed economy”, because it doesn’t present a clear structure, is a confused one. What Cuba so far is moving to, and hopefully will stick with, is to rightly recreate/enlarge a petit-bourgeoisie/private and small-scale enterprises, while retaining large scale enterprises within the state sector.

Stephen Wilkinson, another supporter of Cuba, also rightly understands the new economic reforms are not a move by Cuba to adopt capitalism. He writes of these new policies:

“This leads some to suggest that the Cubans are following a Chinese or Vietnamese model. True, there are similarities between the two Asian tigers and what was announced yesterday.

“The Cubans have certainly studied both models closely. But my sources tell me that at a very high level, while the economic progress of the pair impressed, neither met with approval in their entirety.

“Cuba, they say, wishes to avoid the negative social consequences of the Chinese experience.

“A more laudable direction of travel is towards Latin America where Cuba recently announced that it was seeking to eventually form an economic union with Venezuela.

“Hugo Chávez is leading Venezuela away from the free-market capitalist model towards what he calls ‘21st Century Socialism’. Interestingly this includes encouraging workers’ co-operative enterprises. Might this be Cuba’s first step towards meeting Chávez half way?”

Certainly the Cubans should, and can, avoid the excessive inequalities that developed in China. And no economy need be supported in its “entirety”. Certainly workers co-operatives can play a valuable role in an economy – particularly in medium scale enterprises. But the suggestion that large scale industrial core of an economy can be run by workers co-operatives is simply unrealistic. Only the state, in a non-capitalist economy, has the structure and resources to co-ordinate large scale production.

Marxist economic theory is that the economic structure which is required in the first stages of socialism is dominant state ownership of large scale production with co-operatives and private ownership in small scale production where the dividing line is drawn in medium scale production is a concrete judgement dependent on time and situation. The economic success of China and Vietnam confirms such a structure works. This is the type of fundamental economic structure Cuba requires and which can be applied in other countries in Latin America aiming for socialist transformation.

How a structure is concretely applied in another country such as Cuba is, of course, a matter that has to be judged according to the concrete conditions which exist and the specific character of a country.