The Cart, the Horse & the Road Ahead

By Pedro Campos and other comrades

HAVANA TIMES, 4 oct. — Faced with the crisis of the state-run economic model, the leadership of the Cuban government/party/state has accelerated what it calls this model’s “updating” – a strategy that seems to combine, as its fundamental elements, the reduction in financial outlays by the State through the gradual elimination of social services, and production cost reductions by decreasing expenditures on wages.  One of the axes of this latter effort will be the “rationalization” (mass layoffs, it should be called) of more than a million workers, with 500,000 to be handed pick slips within the next six months.

To provide employment for those who are sidelined, what is foreseen is the stimulation of other forms of production outside of the state sector.  These will include cuentapropista (self-employment) activities, cooperativism beyond agriculture (though this still hasn’t been made official), and private businesses authorized to hire wage-laborers.  Likewise, to increase State revenues, new policies are being put in place with respect to taxation and efforts to increase receipts collected from international tourism and foreign-owned investments in several areas.

We applaud the fact that actions are being taken to free us from stagnation and that at least basic issues are being addressed, which can prompt radical change in the model toward more socialism (such as the extension of cooperativism to the other branches of the economy).  However, contrary to the official line, the content, form and order of what has begun demonstrate signs of improvisation, a lack of foresight, the absence of transparency, contempt for revolutionary theory, pressuring and imposition.

Measures are being dictated without society having come to a consensus and without the mediation of any democratic mechanisms.  There has been neither a party congress, a conference, a congress of the nation, dialogue with the population, nor open and horizontal debate in the national press.

There have only been the national consultation of 2007, whose findings are still unknown; and the “free for all” that many of us Cuban revolutionaries and communists initiated over the intranet, through the international left network and in a few limited settings for debate.  In doing so we have run countless risks, suffered being misunderstood and have been subjected to more or less familiar veiled repression.  Adding to this are the tremors of uncertainty and uneasiness that sweep across the country soto vocce [under people’s breath] concerning these ill-thought-out and top-down changes.

As evidence of this, people cite the fact that many workplace cafeterias were closed without the necessary conditions having been put in place so that this need of workers could be met.  Likewise, a law was approved only a few months ago extending the retirement age by five years.  This was passed despite many objections both on the part of the public and elements within the bureaucracy itself.  That top-down action to extend work now appears absurd given the announcement that more than one million workers are “redundant.”

The government proposes to offer those who are laid off the option of self-employment by relying on private capitalism and probably cooperativism.  However, there are no laws that —given the vagaries of the State— guarantee these activities, people’s properties or investments, or commercial operations.

What’s more, the public is provided information about only some of the decisions made, while explanations appearing in the Granma newspaper do not contain without transparent legal statutes, fail to mention the enormous taxes, excessive regulations, disincentives and do not specify the sources of funding and financing for those newly independent workers.

A new law pertaining to cooperatives is urgently needed, but the authorities continue to merely circulate an unofficial document (this has not been denied) on the process of payroll reduction in the city of Havana (dated August 24, 2010) which contains a list of 74 ideas for cooperative activities.

There is distrust because people haven’t forgotten the arbitrariness and the disqualifications previously made by State institutions against self-employed workers and the UBPC (a type of agricultural cooperatives) in considering them “emergency alternatives” of the system and not as properly characteristic of the socialist stage.

In the letter and spirit of the approved measures, self-employed workers are being confused with small and medium scale capitalists who exploit wage labor.  This is continued without understanding that what gives the essentially class character to ownership is not its apparent legal form but the way in which it exploits labor.  Slave ownership is that which exploits slave labor, and capitalist ownership exploits wage labor, whereas socialist property is where work is freely associated; it is a cooperative type of self-management en route to the disappearance of all types of human exploitation.

Everything continues to be seen from the optics of the interests and almost absolute control of the State, even when excessive bureaucratic regulations and monopolies act to put a brake on all production activities, services and commerce carried out by the population, since the realization of many of their activities are outside the State system (including many agricultural and fishing products, and especially the buying/selling of the means of life, housing and vehicles).  These are factors that would energize the economy and facilitate the generation of financial resources for many families to begin a new economic life.

To create new sources for employment, the exploitation of wage labor has now been admitted for private owners.  This means the open unhindered development of private capitalism in contradiction to Article 21 of the Constitution though hiding behind the euphemism of cuentapropistas que pueden contratar personal (self-employed workers who can hire personal), disqualifying this from the concept of self-employment.

With the aim of increasing the hard currency revenue into the State economy, they have not been satisfied with having almost absolute control over property and surpluses, a monopoly on foreign and domestic commerce, centralized finances, excessive fees on immigration permits and documents, high monopoly prices for products of basic necessity, the retention of the bank accounts of foreign investors and others.

Adding to all of this they have now announced plans and major expenditures aimed at stimulating high revenue-generating tourism, direct foreign investment and are even expanding the time of land leases to foreigners to 99 years (while new transfers for the use of arable land by Cuban citizens extends only 10 years at a time).  This is being done despite the economic, social, politics and ecological implications that such measures could have for the future and for our own national security.

It’s true; the State coffers are in crisis.  It needs funds, though its bureaucratic apparatus and companies are replete with unproductive and privileged personnel who produce nothing, and they constitute an enormous weight on those workers who actually do produce.  However the State is seeking to improve its finances through the layoff of masses of workers (even if many of them are themselves bureaucrats) instead of approaching this through incentives for production and the domestic market, and in the valorization of the Cuban workforce.  Nor is this being attempted by also creating alternative positions, new laws or the proper conditions for those who are laid off to subsequently transition into other productive and gainful activities.  This could lead to unnecessary chaos, social collapse, a massive uncontrollable exodus and could further complicate the country’s social and political situation to degrees never imagined.

It doesn’t seem that things are turning out well for the interests of the masses of people and workers, who are the ones who should count.  In elementary arithmetic addition, the order of the numbers doesn’t alter the sum. In economic, political and social matters, it does. The State is putting the cart before the horse.

Potential consequences of “updating” the model

If in the end there is not a wide scale opening for cooperativism, and if at least some government enterprises do not transition to a system of self-management or dual State/worker management, the only new features will be the opportunities provided by private capitalism and more direct foreign investment.  Such “changes” will be for the strengthening of capitalism, not socialism.

In the absence of a coherent socialist labor policy that prioritizes the advance of new freely associated production relations (cooperatives, self-management, dual-management and self-employed labor), it appears that those who understand that the wage-labor and paternalistic statist model supported by external subsidies “doesn’t even work for us anymore,” are instead applying a type of neoliberal shock therapy.

There could be a worsening of all the model’s contradictions: in policies and programs, social differences between the bureaucracy and the workers, unemployment, poverty, job insecurity, as well as problems related to racial conflict, immigration, health care, education, crime, corruption and other areas.

The consequences could be traumatic for the Cuban people, as well as for the society that they have tried to build and for the future of Latin American and world socialism. We do not want the collapse, this would only serve the interests of the two extremes: the one that seeks annexation and the other that would prefer “socialist” Cuba’s disappearance over having to make the necessary socialist changes.

Cuba doesn’t have unemployment insurance, food stamps or other mechanisms that other countries provide to relieve the situations of those who are laid off.  Moreover, as far as we know, programs like that are not being proposed since the necessary resources for them do not exist.  In fact the government has been gradually eliminating all “subsidies and gratuities” that are included in the ration book.  While a few products are still offered in it at low prices, an effort is being made so that people “feel the need to work,” according to the official slogan.

We all know that for decades the State has been the one that has inflated its payrolls and that because of this the bureaucracy is enormous. It’s not possible to reverse the situation in one fell swoop over a few months, and much less when the conditions have not been created with new investment and new work positions that can remedy past errors.

Over the 50 years of the Cuban Revolution, social security has been held as a supreme value.   We cannot go back to situations in which the sustenance and health of entire families without breadwinners were endangered and left without basic protections. In addition, it is understandable that dissatisfaction is created when there are no guarantees of at least minimum benefits for workers. The process of reorganization of self-employment, cooperativism and other structures of production should have a period of maturation, during which time it will not be easy for many people to make the necessary adjustments, though in meanwhile they will have to eat and live.

Therefore, the million-plus people who are to become “rationalized,” will have to choose between the seven following variations (though there could be others):

1 – Accept a new job offered by the State, [mainly in agriculture or construction] though many people will reject these.

2 – Begin a new life as a self-employed worker or a member of a cooperative – a very risky proposition for those accustomed to a fixed wage and in the absence of a clear program of micro-lending and other concrete facilities for legal protection and the success of such companies.

3 – Seek a means to emigrate.

4 – Become involved in crime or what are termed “illicit economic activities” (according to the excessive regulations of the Cuban state) in what is also called the “informal sector” (those people working in the subsistence economy as street vendors or local service providers who don’t have a business in a fixed location or an assured income).

5 – Live off family remittances sent from abroad.

6 – Go hungry and needy.

7 – Take to the streets in protest, as is done all over the world by those who have been laid off. This is not very different from what was attempted but was subsequently suffocated in the first years of Cuba’s Special Period economic crisis.

All those alternatives would demand an increase in personnel and resources on the part of the bureaucracy to “relocate” those who are “unsuitable,” to “control and to inspect” self-employed workers and cooperative members, to “manage” the eventual increase in emigration, to combat crime, to struggle against the “illicit economy,” to “collect” hard currency that comes from remittances, to treat the illnesses stemming from poor diets and to repress eventual demonstrators.  This would consequently lead to the re-creation of the vicious cycle of State expenditures and an excessive number of unproductive officials so characteristic of the bureaucratic system.

There are superficially —in a second plane, as “alternatives in the face of the situation”— fundamental aspects of the change (like self-employment and cooperativism) with priority being given to one element of the “solution,” those who are laid off.  But this will not solve the nation’s problems; it will only create others and will eventually complicate everything – who knows to what point.  In terms of the organization of labor, the Cuban State will be required to obligate people to work under the most brutal norms of private capitalism by attempting to apply its same mechanisms: impoverishment, hunger, misery and an army of the unemployed exerting downward pressures on the price of labor.

It seems absurd and counterproductive to try to counteract the underproduction crisis, which “State socialism” generates, with the same restrictive measures that private capitalism uses in confronting the opposite: an overproduction crisis.  This must be the result of prioritizing, improving and enlarging the wage-labor force that generates profits for the State instead of changing the production relations, which is what is demanded in the crisis to get the economy back in motion.

It was said that with the layoffs no one would be left to their own fate, but the “decisions” made portend something different.  With political speeches, one cannot eliminate the objective consequences and the anxieties that this package of measures is now creating. The dissatisfaction of those who will be “rationalized,” which will increase over time, will fuel those currents existing outside and within the bureaucracy in favor of the restoration of private capitalism.  It will especially bring more scorn for the socialist idea in whose name they claim to act.  Some comrades even fear an eventual social explosion.

We hope that good sense prevails and that it’s not forgotten that in the first article of the socialist constitution it is expressed that: “Cuba is a socialist state of workers, independent, organized and sovereign with all and for the good of all, as a unitary and democratic republic, for the enjoyment of political freedom, social justice, individual and collective well-being and human solidarity.”

Very modestly, the government is beginning to experiment with some new forms of production but with excessive oversight, controls and precautions that slow their development.  Nor are these being promoted in a way that would allow them to give clear recognition of the failure of the paternalistic wage-labor statist model and generate a wide movement of support from the rank-and-file. Everything is done from the centralized State, with decisions from “above,” direction delivered through orders and commands, and with the fear of handing the reins of the economy over to the workers themselves.

It is demonstrated everywhere that while the controls of the bureaucratic apparatuses are ever increasing, along with taxes, so too are obstacles emerging to economic and community development together with dissatisfaction and popular protest.

The socialist cure

So that the change of the “model” implies advances toward a more just, equal, free and democratic Martiana (from Jose Marti) society “with all and for the good of all,” the process should in any event be the inverse of how it is currently being projected.  It should have provisions that guarantee in advance the success of those “alternatives” to working for the State. This is true even under the urgency of the current situation.

From the vision of a more participative and democratic socialism, the “cure” would have to be different: first creating conditions so that the new freely associated forms of production, socialist ones, could be imposed in free and peaceful competition with pre-existing private and state capitalist forms.

Although urgent measures for the diversification of the economy and for establishing various forms of ownership are required, the road would be to advance gradually from the present predominantly wage-labor statism to a multiplicity of forms of production.  Priority would be given to freely associated types of cooperatives, self-managed and dual managed firms, and self-employed workers.  However, these would be free of all bureaucratic tutelage and operated under the minimum of regulations, ones that facilitate – not restrict. We have always spoken of a process, never an act.

It would be necessary to begin freeing up all the mechanisms and arbitrary regulations that present obstacles to productive actions and social exchange, monetary circulation and the movement of resources (especially those that affect individual, family and cooperative labor) so that people are allowed to look for alternatives and adapt them to the new conditions.

To make cooperativism and self-employment effective, it would first be necessary to create a body of laws —nothing complicated or unknown— that would aid and protected these forms.  These would be needed to free those forms of production from excessive mechanisms of State control in their management and operation, eliminating exaggerated and counterproductive taxes, ending restrictions to operating them in all legal currencies, as well preventing inspections and regulations that engender corruption (reducing these to simple licensing fees and instituting low taxes to those who end up establishing a cooperative or a business with stable revenues) and doing away with all regulations with respect to vendors and others who offer mobile services on the street.

It would be necessary to allow people to experiment for a prudent period of time, let’s say three months, with a kind of pre-license that would be free of tax payments.  If they were to succeed in the new form, they would then be legalized, issued a license and levied taxes.  Taking into account that we are transitioning from a paternalistic society to another one where people will have to be valued for themselves, it will be necessary to learn.   We will have to erase stigmas against self-employed workers being this or that.  Those who now seem to be in a hurry are the statists.

What is specifically necessary is the creation of a bank for cooperatives and perhaps another one for self-employed workers to promote these forms of production.  This would allow the receipt of financing from the State and from international sources, and the development of programs for extending credit and providing micro-lending with low interest loans to help with initial capitalization and with all necessary financial operations. Equally, it would be necessary to explicitly allow Cubans who are outside the country to help their relatives in these efforts with capital and resources; to facilitate self-employment, cooperatives and companies already under workers’ control; to carry out international financial operations; to limit controls on foreign exchange operations, importation and exportation to indispensable regulations that guarantee national development and do not damage the environment; and to facilitate cooperative unions of all type. It would be necessary to develop the Internet for a true interconnection between large, medium and small socialized companies and with the external world, as well as to make popular participation effective in all spheres.

In parallel to all of this, there would have to be deep changes carried out in the democratic system, something that many people have been demanding and that would facilitate true participation by workers and the people in that process of making modifications in workplaces and communities, and in all decisions that affect them.

The socialization process in government enterprises should begin with those that are not profitable and have “surplus” workers by transferring the management of these entities to the workers themselves, to workers’ control, something similar to what the workers in Argentina did with companies that were taken over, so that they are the ones who decide, democratically, how to continue administrating their activities, who to buy raw materials from, at what price, etc.

This would allow them to produce according to their effective potential, to enter into sales and loan agreements (democratic planning) and to determine the distribution of their revenues (deciding what part would go toward consumption and what would go toward extended reproduction, once discounts are made for costs, emergency funds, etc., as well as the revenues going toward the budget, taxes and for social and other expenses).

Especially in the case of Cuba, where there is a concentration of ownership of companies in the hands of the State, it would be necessary to decentralize it, to socialize it, to de-nationalize those entities (caution: this does not mean the privatization of property) that are not of strategic interest to the entire nation. It would mean granting a true social character to these companies through the transfer of property, leasing, sale, usufruct or through credits to labor, social or community collectives that would be responsible for making them productive while under collective, self-management and dual-management forms, without creating great earthquakes or social de-compensation. To decentralize management without labor control would be to foment the bureaucracy and to bring about conditions for capitalist reconversion.

The State should not administer production, but streamline itself down into small efficient operating apparatuses with general and methodological functions.  It should facilitate —not hinder— the operation of society; it should strategically plan and contribute to socially diverse development in all senses (urban, educational, cultural, those relating to public health in harmony with nature, etc.) all in accordance with a participative and transparent national State budget.  It should take action on indispensable questions for the proper operation and control of the nation as necessary.

General services like water, energy, transportation and communications (basic elements that guarantee health care and education for everyone) should basically remain under the ownership of the State or the appropriate community level, though always under the control of the workers and people with absolute transparency and in accordance with participative budgets.

So that socialization is not imposed, everything else must begin and end in the direct hands of units and unions of self- and dual-managed companies, cooperatives, small family businesses and self-employed workers.  Moreover, this would also include private companies that exploit wage labor, since these were approved “up there.”  As these businesses would no longer be self-employment, but the much feared pure and simple capitalism, their scope would need to be clearly limited by law and not left to ambivalent regulations, which could lead anywhere.

If the workers felt themselves owners of the means of production —since they would be through their active participation in ownership or usufruct, in the management of their workplaces and in the distribution of earnings— there would be no need for so many control mechanisms.  Nor would there be so many security guards, so many police, so many jails, so many laws and regulations, so many authorities to combat crime and corruption.

Given the naturally superior efficiency of the new ways of socialist production, the rationalization of payrolls in the State sector would come later and gradually as a natural consequence, as occurred in a certain way in the first years of the Special Period when many people, for obvious reasons, decided to seek self-employment or the emerging sectors. This would mean a less painful process of labor reconversion and would be the basis for the economic takeoff desired by everyone.

It should be the workers themselves —those who are in Workers Councils formed in each production or service center, not some bureaucratic apparatus or one designed by the experts— who decide on the possibilities for readjusting their payrolls once they have studied the potential for expanding production with their own resources or those obtained through credits.

How can this freeing of the productive forces and rallying of the masses take place without the wide participation of all citizens in the discussion, approval and application of any measures; without keeping in mind the specific interests of those affected, without people being able to freely choose how to work, without the workers being able to democratically decide how to organize production and distribution; without there being open discussion in the press and the parliament with all of the existing positions in society (although we don’t share some of those opinions), which impedes the popularization of the positions of a growing socialist wing radicalized by the revolutionary process; without the rights of all Cubans being fully respected?

Certainly this would be a true revolution in the organization of production and in the political system put in place; this would be the socialist transition that the Cuban Revolution has let freeze in space and time since the 1960s after all those “nationalizations” (“statizations,” they could be called) of the ownership and management of all companies.  Businesses that were large, medium and small, capitalist, private, individual, national, foreign, cooperative, mutual and even timbiriches (food stands) were placed in the hands of the bureaucratic apparatus reproduced by the “new” State.

Everything began to be determined solely according to judgments from up high.  This became the outline of “real socialism,” made sacrosanct since the time of Stalinism, tossing aside the important aspirations of the Cuban people contemplated in the original motor of the revolution expressed in the Moncada Program.

The government/party/state/union speaks of a several-year readjustment process and of “participation” that asks workers for their support for what has already been decided. Let’s hope this can be corrected along the way. If those who are making the decisions wish to hear, fine.  We have always been willing to cooperate.  We have been patient and tolerant.  We have remained silent in the face of provocation and the abuse of power.  We have called for dialogue and have exposed our points of view openly, without requesting anything in exchange and without an urge to take the lead, as this belongs to the people and the workers in a self-managed system.  We hope that sectarianism does not impede our being heard.  In any case, the conditions do not matter; we shall continue our patient battle.