Monday, January 31, 2011

Cuba: A Socialist Look at the Economic Reforms

While there have been many hopeful, critical, skeptical, even cynical assessments of Cuba's unfolding economic reforms, few writers other than Pedro Campos (also here), Samuel Farber (Spanish), and other writers associated with Kaos en la Red and Havana Times have critically assessed the changes from the democratic socialist (or Trotskyite) left.

The young Cuban scholar Armando Chaguaceda (who is currently studying in Mexico) and his Mexican co-author Ramón I. Centeno attempt just that here (.doc).

Have a read and decide for yourself whether they succeed.

Cuba: A Socialist Look at the Economic Reforms
By Armando Chaguaceda and Ramón I. Centeno [1]

The upcoming VI Congress of the PCC (Cuban Communist Party) will consolidate the range of possible scenarios for the reconfiguration of the Cuban economic model. As self-employment grows and as transformations in the system of foreign enterprise take place, the changes in the different structures of the productive units in Cuba are being consolidated. The implied challenges to a democratic socialist renovation of the country mean that we need to consider opportunities that promote self-management. We need a management model that requires democracy in the workplace in order to succeed, thus evading the false dilemma of having to choose between a restoration of traditional capitalism and a continuation of the monopoly of the party/state bureaucracy.

1. Organizing production and economic reforms.
The economic period that began at least two decades ago forced a change in the social and economic policies of the Castro regime. Together with rearrangements at the ministerial and management levels, self-employment and foreign investments were allowed. The social costs generated by the crisis were shared by all of society. Thus, social services and entitlements were maintained, although their quality suffered. However, in spite of protecting certain vulnerable groups (children, the elderly), during the Special Period poverty and inequality increased (Espina 2008; Ferriol in Mesa Lago, 2005). This meant that even greater reforms were required to sustain the economy and the existing social policies of the country.

On August 1, 2010, at the Asamblea Nacional del Poder Popular (ANPP) [National Assembly of People's Power], General Raúl Castro announced the coming lay-offs of approximately one million state workers. In order to counteract the consequences of such a measure, he also announced the enlargement of "work as self-employment and using it as another alternative for laid-off workers, eliminating various prohibitions in the licensing process and the commercialization of several productive areas, making the hiring of labor more flexible" (Castro, 2010). The compensatory character of this opening towards micro-investments means that self-employment is no longer being compared to necessary capitalist "piranhas" (Henken, 2008) but, instead, has been transformed into a vehicle for "increasing levels of productivity and efficiency," distancing itself from "those ideas that condemn self-employment to near extinction and stigmatize those who decided to do it legally in the decade of the 90s" (Granma, September 24 2010). As a result, owners of small restaurants and cafeterias and auto repair shops, small shoe manufacturers, taxi drivers or those who rent rooms to tourists have been integrated with increasing legitimacy into the Cuban economic model.

The enlargement of this private sector seeks to incorporate, in a period of six months from its announcement, 250,000 new self-employed and 215,000 co-op workers. Unfortunately, a market for credit and supplies is still lacking. The regime also plans to burden the sector with huge taxes (five different kinds) amounting to 40% of earnings, a tax rate higher than the average in Latin America. Although tax revenues are expected to quadruple in two years (2009-2011), from 247 to 1000 million pesos, the heavy taxation will put the survival of most of these enterprises in question even in the short run. (Mesa, 2010, B).

In this context, the "Alignments of Economic and Social Policy" to be presented to the VI Congress of the Cuban Communist Party confirm the model's re-orientation with a redistribution of the social costs of the reform. The Alignments anticipate that "undue subsidies and gratuities" will end (point #44), and the "orderly elimination of the rationing card" will proceed (point #162), all of which will create multiple problems as they threaten the already meager consumption levels of the poorest sectors of society, those who do not receive foreign currency from abroad and who cannot obtain it in Cuba. The living standards of these sectors will continue to deteriorate, with the return of massive unemployment after half a century, since not all of those laid off will be able to become self-employed.

Together with the increase in small businesses, the Alignments implicitly ratify the importance of the integrating the business model into the global economy, given the importance of the foreign currency generated by exports (Pérez López, 2003; Everleny, Omar, 2010) that finance the importation of goods and services that Cuba needs but does not produce, mainly food.[2] As far as the rest of the business sector is concerned, there is a marked obsolescence of capital plant and equipment and an under-utilization of the formally-employed workforce of about 26.9% in 2010 (Mesa-Lago, 2010).

While self-employment concerns the internal market, foreign sector enterprises - frequently financed by foreign capital - answer to the international market. The small private enterprises are micro- and small businesses, while those industrial organizations with foreign currency flows are medium and large. Both have altered the gamut of productive units in Cuba, which has encouraged a discussion of the possibilities of a socialist and democratic renovation of the country under such conditions.

2. Self-Management for a Democratic Socialism
The reconstruction of socialism implies recovering the concept of workers' collectives functioning as associations of free producers, linked together from below, supplied with ample space to function, and forming participatory structures that merge in the establishment of a national confederation. Currently, this workers' participation assumes two principal variants, based on their historical experiences: 1) democratic planning; and 2) self-management. In the former, emphasis is on the center, while in the latter, it gravitates towards subordinate networks and levels.

The first variant entails the elaboration, by means of the active participation of the citizenry (via diverse structures at various levels), of a national plan that defines the main directives of economic policy. The result would be a normative instrument that orients the activities of the individual productive units - and their aggregates - within a defined context and time-frame. There are real difficulties in the implementation of such a process because, even if it were possible to devise a reasonable plan, the plan would then have to be made effective, which implies another very complicated process to determine precise production quotas for each enterprise, and harder still, to establish their mutual interrelationships, by means of information media different from market monetary relations. Despite its limitations, democratic planning would at least offer a greater degree of participation than does the vertical statist planning model currently practiced under Cuba's state socialism.

For its part, self-management relies on the active participation of the workers in the administration of the places of production, expressing the direct action of workers' collectives through concrete structures (in each factory, farm or services entity) of decision-making, execution, and control. In clear contrast with the democratic planning variant, which is associated with the statization (as a first step towards a supposed "socialization") of the entire means of production of a nation, workers' self-management initiatives emerged mostly as improvised experiments, implemented spontaneously by decisive workers responding to immediate situations (business failures, abandonment of workplaces by their owners), thus expanding control of their workplaces and, therefore, of the sources of their livelihoods, while recognizing the importance of certain market spaces in which to produce.

In other words, the adoption of this concept implies allowing the existence of a market, constrained by various degrees of regulation and restriction, within the Transition Period. Evidence shows that the relationship of market to self-management is a tight one, since financial instruments present in planning of this type allow for greater decentralization and democratization of the production processes, with greater autonomy granted to grass-roots collectives, greater than that of planning based on the central allocation of physical resources, such as prime materials, means of production, etc.[3]

The modalities of self-management can be divided into three basic varieties (Recio, 2001):

1-     Total management of the enterprise by its workers (whether manual, intellectual, production or services) who control - through revocable representation - the direction of the enterprise, via analysis, discussion, and decision-making, by a workplace assembly (classic self-management).

2-     Shared participation of the workers' collective and state or private directors in the management of the enterprise by means of Management Councils, with both parts enjoying decision-making prerogatives (Co-management).

3-     Opportunities for consultation, the gathering of demands and proposals, including the right to veto particular measures, on the part of the workers, but without their direct participation in the management of the enterprise. (Workers' Control).

The contribution of workers' self-management to the democratic renewal of Cuban socialism resides in its dual character, that is, that it must be both political and economic[4]. This is because collective execution within the enterprise cannot be an exclusively economic fact, but must seek, from its inception, to deploy processes of political empowerment and effective and wide-ranging control of the entire spectrum of decisions, ramifying on an ever-widening scale to create new institutions of an entirely new political system of the country.

3. A minimal agenda for today's scenario.
In Cuba's current social consciousness, there are today two major views about the possible routes for socio-economic re-ordering and for citizens' participation in the process. For some, privatization of the means of production and services would be the divine panacea that would solve the deficit of consumer goods by supplying the needed efficiency. At the opposite end of the ideological spectrum we find the failed vision of centralized and vertical socialism, restricted by orders emanating from the highest levels of the state apparatus.[5] Without suggesting that both are akin either ideologically or programmatically, it is apparent that both projects are extraordinarily similar: they exclude truly popular, democratic, and horizontal forms of public management: as if the debate between thesis and antithesis does not allow room for the necessary synthesis.

However, within the complex dilemmas of public policy in Cuba, decisions are being taken that strengthen those associated with the market, but with no provision for economic development to go along with this process within the Socialist Transition. Private or semi-private production units (such as mixed enterprises) are acquiring greater importance. But as this occurs to the detriment of popular power, the result is increasing ideological confusion; the state continues to speak of the vindication of the very socialist values that now seem doubtful.  As a result, the discussion on how to foster socialist democracy in the workplace is moving to the foreground, proposing a relationship plan-market far from both recalcitrant statism and extreme deregulation, while being based on forms of ownership that are distinct from both bureaucratic monopoly and big private ownership.

A hybrid economic model is thus taking shape in the island that is increasingly in conflict with the Revolution's ideology. Our answer to this decoupling between economic decisions and the project for society as a whole is the conscious building of a mixed economy, where democratic participation of the productive units will serve not only as a model for economic management but also as a political counterweight to those sectors that might develop material interests that point to a restoration of traditional capitalism. The way towards a renewed, truly democratic socialism implies:

A)    Discussions, at the local and national levels of Popular Power, of alternative variants of the economic plan and the budget. In spite of the difficulties, this form of democratic planning would achieve the popular participation that is lacking today.

B)    New industrial, service, and commercial co-operatives of small and medium size, for which we need new legislation, since current laws restrict this type of activity to agriculture. The renewed entities of municipal power would assume a mainly fiscal role, collecting new taxes and offering the people access to better services.

C)    Deploying the full potential of the state-enterprise system by promoting the active participation of workers in the discussion of goals and of ways to implement them [6], developing instances of workers' control, and favoring the crucial role of democratically-renewed trade unions.

D)    Integrating the self-employed via a policy of inclusion into the local economy, with guaranteed access to raw materials and credit, while establishing regulation and financing by popular organs at the municipal level.

Any packet of reforms must look at the interrelationship of a broad range of decisions, committed actors, and implementation time-lines, their social effects and the ideological content of the measures taken, while avoiding both a phobia of the market and a worship of the state (or their opposites). We must avoid the false premise of having to choose between efficiency and growing inequality, on the one hand, or a social safety net and material scarcity, on the other. During the 60s, consistent with the ideology and ambiance of the times, Ernesto Guevara said he was not interested in communism without communist morality. Half a century later, we should not be seduced by reform without participation.

4. Conclusion
The current situation reveals the absence of a coherent plan of reforms that would overcome improvisation and efficiently coordinate the different economic players by way of greater entrepreneurial and territorial autonomy [7], a controlled market and a guiding plan, with greater participation of workers and consumers in the debates over change. The persistence of leaders (and points of view) locked in the traditional state model can be a dead weight on the success of the announced reforms. Nevertheless, we see a ray of hope in the coming debates of the next congress of the Communist Party, the force that officially leads Cuban society.

If there is agreement between the political rhetoric, the actions currently being carried out, and a commitment to an emancipative social project, the country's leadership will take advantage of this to launch a wide-ranging discussion among all sectors of the population about the problems, the mistakes, the urgent matters, the available resources, and the possible solutions, in the framework of a participatory and democratic socialism. That would set the tone to combat the tendencies that favor capitalist restoration, whose propaganda contributes to the stagnation of the current model. This way, self-management, as a model that requires democracy in order to succeed, can accompany the contributions of planning and of the market, strengthening the socialist content in the current reforms.

(Castro, Raúl. 2010) "Discurso a la Asamblea Nacional del Poder Popular", en Granma, 2 de agosto de 2010, pp. 4-5.

(Centeno, Ramón, 2010) ¿Los gerentes al servicio de la nación?: el estado cubano y las empresas dirigidas al mercado internacional, Tesis de Maestría, FLACSO-México, México DF.

(Central de Trabajadores de Cuba, 2010) “Pronunciamiento de la Central de Trabajadores de Cuba sobre los próximos despidos”, Granma, 13 septiembre, la Habana.

(Chaguaceda, Armando ¬comp-, 2005) Cuba sin dogmas ni abandonos. Diez aproximaciones a la transición socialista, Editorial Ciencias Sociales, la Habana.

(Espina, Mayra, 2008) Políticas de atención a la pobreza y la desigualdad. Examinando el rol del estado en la experiencia cubana, CLACSO CROP, Buenos Aires.

(Everleny, Omar, 2010) Notas recientes sobre la economía en Cuba, Décima Semana Social Católica, La Habana.

(Henken, Ted. 2008) “Vale Todo: In Cuba’s Paladares, Everything is Prohibited but Anything Goes”, en Brenner, Philip et al (eds.), A Contemporary Cuba Reader. Maryland: Rowmann & Littlefield Publishers, pp. 168-178.

(Hudson, Juan P, 2010) Formulaciones teórico conceptuales de la autogestión, Revista Mexicana de Sociología, No 72 (4), octubre-diciembre, México DF.

(Mesa Lago, Carmelo, 2010, A) Estructura demográfica y envejecimiento poblacional: Implicaciones sociales y económicas para el sistema de seguridad social en Cuba, Décima Semana Social Católica, La Habana

(Mesa Lago, Carmelo, 2010, B) El desempleo en Cuba: de oculto a visible ¿Podrá emplearse el millón de trabajadores que será despedido? Espacio Laical, Núm. 4, la Habana.

(Mesa-Lago, Carmelo, 2005) “Problemas sociales y económicos en Cuba durante la crisis y la recuperación”, Revista de la CEPAL, No. 86, agosto de 2006.

(Partido Comunista de Cuba, 2010) Lineamientos de la Política Económica y Social, noviembre, la Habana en

(Pérez, Arnaldo- comp-, 2004) Memorias Evento Participación social en el Perfeccionamiento Empresarial”, Editorial Félix Varela, la Habana.

(Pérez-López, Jorge F. 2003) “El sector externo de la economía socialista cubana”, en Miranda et al (2003).

(Recio, Alberto, 2001) Dimensiones de la democracia económica, en

(Vidal, Pavel & Everleny, Omar, 2010) Entre el ajuste fiscal y los cambios estructurales. Se extiende el cuentapropismo en Cuba, Espacio Laical, Núm. 4, la Habana.

[1] This text includes previous analyses by the authors (Chaguaceda ¬comp-, 2005) and (Centeno, 2010)

[2] This point combines with the problems in the agrarian sector. Cuba is not on the way to food self-sufficiency. There has been slow progress in land grants ¬ only 25% of fallow land was turned over for exploitation (Vidal & Everleny, 2010) - while during the first semester of 2010 there was a 10% reduction in food production compared to the previous year.

[3]Given that self-management seeks the economic viability of socialism, which implies a society-wide project, it certainly would require external controls in the decision-making process. A solution is the empowerment of “soviet” (in its Leninist meaning of the first year of the revolution) parliamentary actors in their role as “people’s auditors”, with the intent of articulating the management of the productive units with reduced participation in politics. For this reason the Bolsheviks created the Soviets.

[4] See a conceptual reconstruction that rescues the relevant contributions (Hudson, 2010)

[5] The first vision ignores the immense material and symbolic power of the great Cuban American bourgeoisie and its links with the American political class, which would compromise national sovereignty. The second has shown its inability to “re-think” the national economy in a rational way close to the people’s demands.

[6] See (Pérez ¬ comp-, 2004) and (Chaguaceda-comp-, 2005)

[7]In spite of the formation of a business layer (and ethos) in the management elite of the external sector (Centeno, 2010), its current inability to openly uphold a greater autonomy persists. However, in order for these enterprises to respond to a socialist development plan, there is still a lack of social control mechanisms, possible by workers control in the country, as shown in the previous paragraph.

About the authors
(Armando Chaguaceda, 1975): Politologist, historian and Cuban social activist, member of Observatorio Crítico (Cuba) and Observatorio Social de América Latina, Coordinator of the task force Anticapitalismo y Sociabilidades Emergentes (Latin American council on Social Sciences). He has carried out and published research on political participation in Cuba and Latin America.

(Ramón Centeno, 1983): Political scientist, engineer, and Mexican Trotskyist militant, Masters Degree in Social Sciences (FLACSO Mexico), specializing in the relationship of industry to politics and the role of entrepreneurs in the external sector of the current Cuban economy.

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