By John Smith
HAVANA — The devastating economic effects of the collapse of the Soviet Union and east European socialist camp on Cuba and the subsequent "special period" of economic readjustment have been well documented, inspiring enormous amounts of solidarity across the world in order to help maintain and develop Cuban socialism.
While the measures adopted by the Cuban government to stimulate economic recovery and reinsert Cuba into the world economy have unsettled many socialists — in particular the emphasis on foreign investment, tourism with all of its negative social effects and more recent private employment and market-style reforms — these concerns have been conditioned by the acknowledgment of the limited options available, and the constant commitment to maintaining the conquests of the Cuban Revolution.
Similarly, there has been much rightful condemnation of the tightened US blockade of Cuba in this period, its cynical effects in denying essential goods such as medicines, basic foodstuffs etc to citizens, its attempt to drive the weakened economy into complete failure.
However, while many of us have a little nervously viewed and tried to rationalise the national responses to the crisis, in-depth analysis of the very real effects of these on "ordinary" Cubans, and the questions that the ongoing process of readjustment here must raise, have often been too quickly dismissed by socialists. This occurs as a result of our solidarity, commitment to working against the blockade, and knowledge that Cuban leaders are more aware than any of the risks and contradictions, and act with the explicit objective of saving the conquests of the Revolution.
Within this context, criticisms of national policy directions are quickly treated in the left as being unproductive and damaging, and playing into the hands of the enemy. What follows is a critique of some Cuban government policies, and an underlying assertion that to consistently overlook such analysis is similarly unproductive or damaging to the development of our own thought and action.
Meaning of reforms
The recent overview of economic recovery in Cuba provided by Chow Wei Cheng, 91×ÔÅÄÂÛ̳ Weekly #186, is indicative of this tendency, uncritically accepting official figures and abstract indices of "recovery" as being automatically good for Cuban socialism and/or the bulk of Cuban citizenry. Such a method is something we as socialists are never guilty of when addressing, for example, the Australian government's proclamations of "recovery", instead seeking to uncover what such figures, reforms, policies mean for real working people.
Before accepting Chow Wei Cheng's summary of the emergent economic recovery in Cuba as being a victory for Cuban socialism or socialists worldwide, we should ask what these reforms mean in immediate and future terms for the shape of the settlement being reached with the world capitalist economy, and the implications for the domestic population.
More specifically, what are the consequences of the dramatically reduced government deficit, increased direct foreign investment, more tourists, and international (capitalist) confidence in the "dynamic reformers" in Cuba shaping the "mixed economy" coming from London's "Beta Asset Management" (to cite some of Chow Wei Cheng's indicators)? We could add the again recently expanded self-employment, state industry efficiency measures, price increases to stabilise internal finances, etc.
Most significantly, the "real wage" of Cuban workers has fallen dramatically over the past few years as a direct result of such policy responses. The Cuban people have faced increased prices for public transport, electricity and phone charges, non-essential items like cigarettes and rum; new charges for water usage, drainage, entry to sporting and cultural events, admission to some extracurricular educational courses and the prospect of a new income tax this year.
All of this has occurred within the context of stable wages in monetary terms, the elimination of many goods from the state-subsidised "libreta" system and high prices either on the black market for clothes and other goods, or in the Free Farmers Markets for food. True, the amount of "excess" currency in circulation, and hence inflation, has fallen, but at an extreme social cost for many.
Quantifying just how many have been badly affected is difficult for an observer, though should logically be related to the number of Cubans who were and are holding these excess pesos. That is, the more concentrated their holding, the more widespread the suffering from increased prices and expanded charges.
Regular writer on Cuban affairs Dalia Acosta reports, "Estimates state that 70 percent of the nation's 11 billion pesos are in the hands of 10 percent of families, with six percent of savings accounts holding 70 percent of banking deposits". While unable to verify such percentages, there should be no doubt that life on an average wage of 150-200 Cuban pesos/month has become increasingly tough as its real value declines. A recent survey conducted by the Communist Party of Cuba confirmed this, with an overwhelming majority of those surveyed complaining that their wages were insufficient to cover the basic costs of living.
Efficiency
Compounding this problem of a general fall in real wages are other reforms seen as integral to reactivating the economy and competing in international markets. A consistent push for efficiency and productivity of state enterprises has seen, as noted by Chow Wei Cheng, major cuts in state subsidies to loss-making enterprises and, more significantly, the planned rationalisation of anywhere between 500,000 and 750,000 jobs. Guaranteed employment, such a significant achievement of the Revolution, has clearly become a thing of the past.
Although the Cuban government continues to explicitly reject neo-liberal policy prescriptions in its current readjustment and reform agenda, the distinctions between the two become increasingly blurred. A constant emphasis in the media on improving efficiency, productivity and labour discipline, combined with the shedding of state jobs in the name of efficiency and competitiveness, reduced government deficits, a decreased state sector, user pays, hardly constitute a radical alternative.
It is true that the pace of reform is deliberately slow and controlled, with truly impressive efforts made to minimise the impact on those worst affected and maintain basic social services. However, while still a long way from the classic, IMF-style neo-liberal project, the general directions and accompanying rhetoric raise difficult questions.
More critically, is it being reactionary to ask just how many conquests of the Revolution are to be saved? The right to a job, to social security, have long been argued by Cuba as fundamental human rights, yet seem to be losing ground in the midst of normalising internal finances, striving for greater efficiency, and rationalising the use of state resources (including human resources). Education and health care remain universal and free, though increasingly many medicines can only be obtained with hard currency. University places are declining, as is the old system of scholarships for uni students, being replaced with deferred loans.
Is this the saving of socialism, or the transition to western-style social democracy? Should socialists welcome the "mixed economy" taking shape as being inherently good for the socialist project?
The push for international tourism continues to be a major aspect of the economic recovery, and is fast approaching the number one industry in terms of hard currency earnings for the country. The benefits of this policy are tangible and unquestionable. As government earnings of hard currency have increased, so too has the provision of electricity, transport, and other social services. For example "electricity outs" have decreased dramatically from 12 or 18 hours a day, four or five days a week in some of the hardest times of the special period, to 4-6 hours two or three days a week. The number of buses has and continues to be increased, particularly relative to the virtual standstill of public transport in 1992-3, though transport remains a critical issue.
That this hard currency comes at the expense of a more or less equal amount going to the foreign partners in the industry, and a range of related, complex social questions, should not be overlooked.
Prostitution has re-established itself as an illegal but tolerated industry, becoming organised by intermediaries in more concentrated tourist areas such as Varadero. The danger of the tourist industry itself becoming set in these terms internationally must exist, though is not on the public agenda in Cuba, as the social costs are presented as unfortunate but inevitable and the emphasis remains on economic benefits.
Mothers can be seen any day in Old Havana directing their young children to ask tourists for money, while professionals from all spheres are increasingly abandoning their work for the tourist and related industries, driven by some combination of faltering ideology, economic hardship, and the potential relief that the access to some hard currency can bring. (About 20% of Cubans have access to hard currency in some form.) The teaching profession for one, has suffered a massive exodus, facing a shortfall of some 8000 teachers for the school year beginning in September.
Foreign investment
The number and size of foreign investment projects in other branches of the economy are similarly invoked in Cuba and elsewhere as indicative of the successful reintegration process. In a strange way, foreign capital is presented in benevolent terms, here to "help" the economy recover, provide employment, etc. Many of the new "corporations" (joint ventures) provide their workers with company T-shirts, shoes, cooking oil etc to remind them that these multinational companies are their friend.
Once again an account of the effects of this on working people, and the governing socialist principles, ought to be debated. To what extent do the subsequent social relations indicate an imminent end of another fundamental conquest of the Revolution: the end of workers producing a surplus for national and/or international capital?
Much of the rhetoric and practice of the last few years of social and economic change can be characterised within this framework of giving ground to capitalism, taking a backward step, in order to save socialism. In closing the 5th Congress of the Federation of Cuban Women, President Fidel Castro lamented that growing inequality was unfortunate, but inevitable, as Cuba adopted "capitalist mechanisms" and "elements of capitalism" necessary to overcome the economic crisis.
The promise of hardship now but benefits for all at some unspecified future time sounds uncomfortably familiar. To repeat the earlier question, what is to be saved? And more importantly, what is the envisaged end point of this transition?
Some less than comforting answers are provided by the minister for foreign investment and economic cooperation, Ernesto Melendez, in an interview in Granma International (June 7, 1995). He acknowledges, in line with Carlos Lage's earlier announcement, that virtually every industry is now officially open to foreign investment, and recent changes to the laws governing this now allow for a controlling share by the foreign partner. This had previously been possible only within tourism, but now is extended to all other areas on a case by case basis.
With respect to these, Melendez notes that "the most significant now under discussion is a partnership with the Western Mining Corporation of Australia". This policy of allowing a controlling share to the foreign investor (up to 100%?) is justified with the following: "I should inform you that several investment laws throughout the world allow for 100 percent of the shares being controlled by foreign investors, with government approval".
It is difficult not to conclude that the expropriation of surplus value by multinational capital is here to stay, guided by laws and procedures throughout the (capitalist) world!
Hard currency
In such arrangements, the foreign company pays the Cuban government in hard currency for the local work force at the official rate of US$1 to one peso, the government then paying workers in national currency. Western Mining then, for example, gets a mine worker for approximately US$300 a month, a cheap and disciplined work force, guaranteed recovery of its investment within a fixed period, first preference over national resources and infrastructure and tax breaks on the majority share of profits to be extracted from local labour. Little wonder for their and Gareth Evans' recent interest in Cuba.
Arguments that the hard currency gained by the government is returned to all Cubans through social services (albeit in a rather abstract way), and acknowledgment of the very real need for investment in all industries, are valid. This criticism is not suggesting that the Cuban government is not doing everything in its power to make such agreements as beneficial as possible to the national and domestic interests. Yet aside from the fact that the country's share of these profits is just that, a (now potentially minority) share, this "irreversible process", as often described by Carlos Lage, marks a qualitative shift away from socialist relations. Does this constitute saving socialism?
Other indications of such a shift include the newly emerging real estate industry being established for foreign companies and individuals, with prime real estate in Havana city apparently being reserved for this purpose. Foreign "ownership" (actually, as in most capitalist countries, constituting up to 99 year, extendable, leases) is being negotiated for private housing, offices and tourist facilities for companies with joint ventures or, as expressed by Melendez, for operators who want to establish "time-sharing, sales or rentals of apartments", using existing or newly built constructions.
This policy is defended in familiar terms — on the basis that it will raise the value of surrounding areas, improve the same through private investment in infrastructure and provide jobs for Cubans in the design, construction and materials industries.
When questioned on the possibility of foreign investment in the domestic market, Melendez responded that given the current inconvertibility of the Cuban peso with hard currency, "the domestic market does not need to be divided up at this time; it can be absorbed by the national organizations. Perhaps some marketing specialists can be incorporated and certain management companies may participate" (my emphasis). Given that full convertibility is a longer-term objective, this seems to suggest that accompanying this will be foreign investment in the domestic economy, thus taking the provision of domestic goods and services at least partially out of national state hands.
Perhaps the most difficult proposal to comprehend, and confirming the strange discovery by some policy makers here of the value of world capitalist practices, is the enthusiasm for "industrial parks" being set up by foreign capital to generate employment. Melendez describes these as projects in which the foreign investor can "set up a workshop or factory, generally for labor-intensive production ... exempt from export duties ...", explaining that they are "common in several Latin American countries, especially in Mexico. The foreign executive buys the raw materials abroad, contracts the workforce, trains the workers in the technology it uses, and pays for the services and supplies."
This concept, epitomising some of the worst aspects of international capital and its exploitation of the South in order to maintain profit levels through cheap labour and attractive financial arrangements, is thus presented in almost neutral or benevolent terms: a policy "with interesting prospects which we are definitely looking into".
Aspects of capitalism
The economic recovery in Cuba is firmly based in this framework of selectively applying aspects of capitalism, countering criticism on the basis of such practices being long standing and common throughout the (capitalist) world, (wasn't this precisely what made the Cuban experience so different and attractive to those pursuing a socialist alternative?), all with sufficient government regulation to avoid the more extreme consequences of such practices and assist those most adversely affected.
Socialists, and the Democratic Socialist Party in particular, have consistently rejected the view that such concepts, structures and practices are the only realistic option in our own context, instead vigorously affirming and defending the necessity and viability of a radical alternative. Can we reconcile this position with the Cuban approach?
Calls from the International Solidarity Conference held in Havana in November for supporters to work in the promotion of foreign investment in Cuba by companies in their respective countries, fully captured this contradiction. Can the solidarity movement realistically see itself "selling" Cuba to potential investors as a great opportunity to make serious profits?
Finally, one of the indirect results of the reforms is to further compound the recently acknowledged "crisis of values" apparent in some sectors of society. With more and more services being legally transferred to private operators, the encouragement of displaced workers to move into this private sector, the growing and striking social disparities, prices increasingly determined through supply and demand, and access to hard currency becoming the preoccupation of many, many of the social and socialist values that so attracted people internationally to everyday life in Cuba become almost impossible to maintain.
None of this is intended to "tell" the Cuban government or people what they should or should not be doing. Such an objective would not only be overly presumptuous, but in contradiction with the very principals we in the solidarity movement have consistently maintained: the right of Cuba to make its own decisions, to choose its own path, without external interference.
Rather, what I have sought to convey is some thought-provoking detail behind the current, complex situation in Cuba. Additionally, I hope I have affirmed the imperative need for us as socialists to maintain our critical attitude when examining developments in Cuba and indeed any country, as has been apparent in GLW with respect to South Africa and the ANC for example, from the point of view of furthering our own national and the international socialist project, and without abandoning the Marxist principles which guide our analysis.
Juan Antonio Blanco, in Links #4, warned of elements within the Cuban government presenting themselves as the "vanguard" of critics of some of the worst aspects of Cuban bureaucratism (perhaps the same "dynamic reformers" that so impressed Beta Asset Management), while in reality setting the ground for their transition to become the new bourgeois.
Many Cubans on the street already view Cuban officials, bureaucrats and administrators involved in some of the new corporations in such terms. While Cuba did not collapse into rampant, vicious, state-led capitalism in line with the USSR and eastern bloc, we ought not assume that perhaps a more gradual and less severe version of the same process cannot occur. I look forward to being proved wrong.