Economic reform in Cuba: principles and pseudo principles

The reform is not reversed. This is one of the messages sent by the recently concluded 8th Congress of the Communist Party of Cuba (PCC). And it is that, judging by the delays and setbacks that an unidentified group of “bureaucrats” – necessarily high ranking – managed to interpose as early as 2014, the slowing of the process in this conclave was a possibility.

Although the final versions of the so-called “guidance documents” have yet to be released, what happened at this event, both due to the content and nuances of the main speeches and nominations in hierarchical structures, allows us to take a look at a fraction of the complex plot that seems to compete in these structures for some time: the different visions of the country model and the distribution of powers to undertake them.

Many of the most critical debates in deliberative spaces in Cuba today were addressed in the opening and closing reports of the event. In economic matters, an important part of the argument is aligned with what was conceptualized during the two previous Congresses, which ratifies its validity and demands its immediate implementation.

VIII Congreso del PCC: A preliminary balance

However, some critical points for the economic advancement of Cuban socialism and some substantial and decisive ongoing processes were not resolved in the central speeches of the conclave. Instead, it aimed to elevate to principle the unnecessary continuities of tenacious positions, supported by conceptually precarious theses.

As approved in Resolution on economic issues, Congress ratified that “we are in the historic period of the construction of socialism”. This statement, although it may seem trivial to many, constitutes the conceptual support for undertaking the reform; because this means, compared to the model of statist socialism that we have inherited, which recognizes socio-economic heterogeneity, the need for the coexistence of different forms of property, the impossibility of doing without the market as a basic mechanism of coordination between economic actors, and the impossibility of governing the economy by decree, among other aspects. The fundamental mission of this period, well understood by the Chinese and the Vietnamese, is to develop productive forces.

However, in this economy, of which we already agree on its heterogeneous character, and which is also extremely open – given the composition and the quantity of its financing -, assuming that any foreign trade operation is carried out by The intermediary of state enterprises constitutes a colossal attack on the development of the productive forces. In the meantime, it does not guarantee any main function to the socialist ideal which governs the project. It is only a perverse burden of the inherited model.

Although the depth of the current supply crisis calls for swift and bold solutions, and there are proposals in this regard that deserve to be considered, I agree not to promote import channels. private for retail. However, the urgent need to generate new national goods, to which the private and cooperative sector is summoned, cannot be solved as long as their demands for importation of fixed assets and inputs continue to be subjected to aberrational dynamics. public enterprises. companies that currently control this activity.

However, the greatest sin does not lie in the state condition of the companies responsible for providing foreign trade services, but in the oligopolistic distribution that prevails. This is the main source of the inefficiency and rentism that prevail in Cuba today. In this area, as in others, operating companies must be competitive and this will not be fulfilled as long as they enjoy artificially guaranteed market shares. the Central report himself states that “the state trading system faces the challenge of demonstrating in practice and consolidating its position as the dominant form of management in the economy. It is not something obtained by decree…. Old bad habits must be changed and entrepreneurial and proactive traits developed in the management teams of our companies and establishments, which will function every day with greater autonomy, pursuing higher productions with more efficiency.

To counter this distortion of the operating model, the authorities could mobilize a few viable options in the short term:

  1. Within the framework of the granting of autonomy, all public enterprises could be empowered to carry out foreign trade operations, thus creating better conditions of competition between them.
  2. The legal norm which governs the emergence of MSMEs (micro, small and medium-sized enterprises), must allow them to directly choose their portfolio of foreign suppliers and customers, without imposing on them by decree the compulsory intermediation of public enterprises, which they could not not need.

Absolute state control over foreign trade is far from constituting a principle of socialism, much less if it operates through a monopoly structure. The only thing that it produces effectively are the obstacles to the development of the productive forces, as well as a formidable instrument of non-fiscal control and collection. The promotion of private commercial imports would have more costs than benefits if one suggested only “to establish a non-state internal trading system”. But, at the same time, it is essential for the accelerated development of national productions which must be undertaken by the private and cooperative sectors.

Another controversial issue addressed by the central report refers to the old and legitimate claim that the practice of professional activities is recognized in the private sector. A policy announced more than three months ago by the Council of Ministers – which patiently awaits the legal standard to implement it – will significantly increase the number of activities that can be carried out in private, including by professionals.

There is no reason to associate the fair demand of certain sectors – such as architects, lawyers, accountants and tourist guides – which were excluded in a first version, with aspirations for privatization. The private exercise of a profession does not imply the privatization of the means of production in which this professional works, and even less for the aforementioned professions. These types of connections which are argued from the extreme show a simplification similar to those which still identify the Biden administration as a socialist threat to the United States.

However, I share the fear that some actors – especially those closest to this possibility – aspire to a privatization process that allows them to be allocated the assets they are currently managing. Here is a critically important threat that has not been adequately addressed in the reports.

On the other hand, the isolated mention of tourism and confidence in its future possibilities is a way to protect the investments in the expansion of capacities which continue to take place in this sector. The persistence of this work has been strongly questioned given the uncertainty associated with future scenarios and given the sunk opportunity costs of not moving these resources today to other survival priorities, including including food production. Therefore, this should not be seen as a settled issue.

Referring to the dollarization process that has developed in the economy, the report predicts indefinite sustainability. While this is a complex question, perhaps economically inevitable, the truth is that these sales increase the real inequality gaps that are not the result of interpretation issues or communication gaps. As long as the state does not intervene in the foreign exchange market to provide legal means of access to freely convertible currency in exchange for Cuban pesos, the state’s policy will be to exclude large masses of people from the consumption of stores that sell in hard currency. . What is worse is that this exclusion is determined, not by low income levels, but by its disconnection from external sources of remittances. It is a real privilege which, as a concept, is closer to contradicting a socialist principle than the questions raised above. It cannot be supported.

In the midst of the most unfavorable economic crisis of the last 25 years, under the pressure of the most complex health situation since the pandemic began, without the economic seat having changed one iota with the new US administration, and now under internal fire from actors seeking to challenge the political system, the Cuban authorities face a colossal challenge. The unity of goals that is achieved in government, the transparency with which it projects its goals and actions, the way it is increasingly built on participatory designs, the humility to correct mistakes and Irrefutable adhesion to the socialist rule of law endorsed in the Constitution, are some of the essential starting conditions.

Oscar Fernandez

About Thomas Thorton

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