The Cuban State: Jack of All Trades, Master of None

Fernando Ravsberg*

HAVANA TIMES — “People were embezzling money from the State systematically. We had genuine criminal organizations that conducted risky, large-scale operations. These involved managers who declared losses or damages, which were in fact embezzled funds that were being syphoned to the underground economy. It was common for managers and salespeople at State stores to set aside the products with the highest demand in order to get money over and above the legal market price.”

Though they appear to be referring to Cuba, these comments are actually about the Soviet Union shortly before its collapse. They come to us from Gregory Grossman, one of the most renowned experts on the workings of the so-called “Second Economy” in the former USSR.

To get a sense of the significance that this parallel economy can have in a socialist country, suffice it to note that, in 1988, 219 billion rubles were paid in salaries in the Soviet Union, while the population spent or saved 718 billion – three times as much (1).

As in the USSR, that underground economy has not been studied in depth in Cuba, even though its effects are notable – and unacknowledged problems, far from being solved, usually end up blowing up in one’s face.

Cuba’s economic difficulties have a variety of ingredients: the island’s status as an underdeveloped nation, the chosen socialist model, the mistakes made by the government, the US blockade and internal corruption (whose expression is the black market).

There is very little that can be done to remedy some of these situations, because they stem from the country’s historical reality or the will of others. However, it is well within the government’s power to mend its ways, change the model and put an end to corruption.

The search for a new economic model and the struggle against corruption go hand in hand because the current model is what encourages embezzlement, as does any centralized State that vainly seeks to control every last economic mechanism in the country.

The ensuing chaos is the breeding ground for corrupt officials that misappropriate State resources to pocket these. They are the “wholesalers” who keep the black market, the island’s Second Economy, stocked up.

Thanks to the work of the Comptroller’s Office, we know that there are large numbers of ministers, vice-ministers, foreign entrepreneurs, Cuban importers, store managers, administrators, company presidents and many others among the corrupt.

We are dealing with a new social class that amasses its fortunes by stealing from the country and corrupting all those who have dealings with them, turning them into their accomplices. It is a parasitical class that has become the nation’s worst enemy.

And they reproduce very quickly: they are sent to prison and, three months later, their replacements are at it again. What happened to their predecessors only appears to teach them to be a little bit more astute and evade State inspections.

Like the former Soviet Union, these officials who become “wholesalers” in the black market are the result of an economic model that places all of the country’s companies and businesses in their hands, making it impossible to control their activities rigorously.

Cuba would be well-served if the government defined which means of production it considered fundamental (which are to be maintained as public property, that is), in order to open other sectors to cooperative, private and even foreign management.

The step taken through the authorization of self-employment and cooperatives in areas such as hair dressing, transportation and, more recently, cafeterias, points in a direction that could continue to open up other sectors of the country’s economy.

Why continue to keep under State management stores that are constantly being pillaged by their own managers and clerks, that are always under-stocked owing to lack of foresight by importers and devoid of proper sanitary controls?

The State needs to stop frying rissoles in order to focus and properly manage and control banking, tourism, the energy sector, nickel production, oil refining, tobacco products and socially important sectors like education and healthcare.

The Soviets tried to create a society fully controlled by the State and produced their own undertaker this way: a caste that took hold of all the means of production the nation had placed in its hands.

Of course, they didn’t have a Jose Marti to warn them that “with every new function, a new caste of functionaries will come,” and that, later, it would be very difficult to “confront these functionaries, tied by common interests.”
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(*) Visit the website of Fernando Ravsberg.