Some sense about Cuban changes

Thank you BBC for actually asking a proper expert about the proposed latest changes to Cuba's economic system. Stephen Wilkinson of the Centre for Caribbean and Latin American Research and Consultancy, London Metropolitan University, in an interview with the BBC explained, among other things, that:

The media frenzy that has followed the announcement that Cuba is to reduce its state workforce by 500,000 by the middle of 2011, is similar to that which followed Fidel Castro's throwaway remark last week that the Cuban model isn't working - it has largely missed the point.

This is not the end of communism or socialism in Cuba

The announcement yesterday by the Cuban Workers Confederation is highly significant and it does spell the final death knell of the old Soviet model of centrally planned socialism in Cuba, but it would be very wrong to interpret it, as some have, as the harbinger of free market capitalism and liberal democracy.

Far from it. The changes are couched in the rhetoric of revolution and the discourse is very much one of deepening the socialist character of the system rather than one of shifting towards capitalism.

Unlike the prospect of suddenly being left without work that faces many in the UK, as the present government's budget cuts loom, these cuts in Cuba are being undertaken after a long period of consultation with the trade unions and other organisations.

Workers know what is going to happen to them. The programme is to be undertaken in stages, the effect on people's livelihoods is to be mitigated and it is important to understand that the announcement does not mean that all the 500,000 workers mentioned are to become unemployed.

A large number of them will be offered alternative employment opportunities and a good many will continue in their jobs but will cease to be employed by the state anymore.

This is a far cry from the egalitarian days when workers were expected to labour for no recompense other than their own moral good and of the country and fellow Cubans”
End Quote In many cases it means that they will become self-employed or become part of a workers' cooperative.

Taxi drivers for example, or shop workers and workers in small manufacturing enterprises, all of whom are currently state employees, will essentially take over the administration of their own workplaces and earn their salaries directly from their takings or revenues rather than being a salaried state employee.

They will essentially be doing what they have always done - but they will no longer be on the state's payroll.

In cases where workers are made redundant they will be encouraged to set up new business or transfer to other sectors.

This does of course imply a huge change towards a system in which the market dictates the distribution of goods and services and this in turn also implies other significant changes.

As one Cuban economist put it to me recently, the role of the state is to be transformed from being the administrator of economic activity to the regulator.

Wilkinson goes on to say:

However, it would be wrong in the short term to see the reforms as leading inevitably to a change in the political organisation inside Cuba.

Cuba is to remain a one-party communist state for the foreseeable future.

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 Chavez 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 Chavez half way?

This new system is very reminiscent with the first economic changes applied in Gorbachev's Soviet Union in the mid 1980s, which in turn was an adaptation of Lenin's 'New Economic Policy' (NEP) of the early 1920s. While NEP was quite successful until Stalin closed the shop (literally) with the first five year plan in 1928, Gorbachev's economic policies, adapted by Abel Aganbegyan, did not end up with the revitalisation of the USSR's then stagnating economy. What Cuba does have on its sides is hindsight, and a lot will depend on whether the Cubans can apply the right measures to avoid the mistakes made in places like Cuba, Vietnam, the final years of the USSR and Tito's 'self-managed' Yugoslavia. In any case, exciting times await for Cuba, whose system is proving to be more adaptable to changing circumstances than were the former Eastern Bloc economies.