More Production in Cuba Won’t Lead Directly to Lower Prices

by Pedro Campos, photos: Caridad

HAVANA TIMES, Jan 27 — Some economists and officials of the party-government have committed themselves to lowering the prices of agricultural products by simply increasing production, as if Cuba were a free market economy and didn’t have monopolies; and all of that regardless of the way to obtaining it.

Our economy, and particularly agricultural production, continues to be hamstrung by countless numbers of links, laws, regulations, impositions and the stigma generated by the failed statist model. What’s more, these persist.

One needs only to point out:

— The arbitrary production plans that force many farmers to produce certain crops,

— The government harvest purchasing system with which farmers must comply,

— Absurd laws on livestock control, the dual currency, multi-markets (the hard currency and national currency markets, capped and parallel prices, supply and demand markets, special shops for the military and other sectors of the bureaucracy, and the black market),

— Subsidies on some products that are still sold through the ration book,

— The estimulos (incentives) around which a whole system has been built for large-scale corruption, individualism and the quasi-decreed tenet of “everyone for themself” – which affect all the exchange relations in society.

The problem is not simply to produce more, but how to achieve this and for whose benefit. Producing more, regardless of the way this is done, could result in returning land to those who have the money, skills and resources to expand production: US companies and property owners of the past.

The greatest food-producing country in the world is the United States, with China being second in industrial production (and a place where there is super-exploitation of its workers). In both cases, the determining mode of production is capitalism, or wage-labor production.

In both countries there are huge inequalities. In both we are seeing increasingly more poverty alongside the concentration of wealth. Are there low prices in these countries compared to the incomes of their workers? Is that where we want us to wind up?

This is not a defense of bureaucratic statism; but Cuba — with its low levels of production and all its centralism, with its deficits in libertarianism and democracy — has lower levels of social distress than China.

The Cuban people are also better fed than the Chinese people on the whole, and the island has many indicators of better health care and education than does China or the US, though these are two high-producing countries.

Therefore, the problem is not production per se but how involved the workers and the people are in production, the distribution (of profits) and consumption.

Statism in Cuba operated under the belief that socialism was merely a better-centralized system of distribution, regardless of the concrete and immediate interests of workers, and this is one of its biggest mistakes.

Its adherents promoted egalitarianism, as a deviation from equality, which some now want to deny as a socialist principle for the benefit of the social inequality generated by the position of each worker in relation to the means of production.

Producing more, based on capitalist formulas (wage-labor production), benefits firstly the owners of capital who exploit the labor of others, speculators in the market and the state tax collections. But this doesn’t necessarily aid consumers, the general population or the workers, who continue to receive low wages.

The distribution of state-owned land — that could well become a cornerstone for the future development of socialism in Cuba — has suffered from serious problems in its conception and implementation.

At no time here was distribution established under the democratic control of communities, which would have prevented corruption and favoritism; but above all, the priority was placed on distribution into private hands, without any encouragement given to the formation of producer cooperatives on these lands.

Instead, the government only required the subordination of farmers to the “Credit and Service Cooperatives,” which in practice are bureaucratic apparatuses that serve as intermediaries with the state, banks, administrations and markets – distorting every sense of cooperativism.

There are also other restrictions, such as the limited time of usufruct (leasing periods), prohibitions against building structures, the prices of inputs, needed training and others that the state seems willing to address.

To provide transparency to the process of land distribution, it would be necessary to publicly present national statistics on the distribution of the best farming land, those that already possess infrastructure and facilities and are close to irrigation systems and transportation.

This would provide information about those who distributed land and what were their ties were with those who benefited and the state institutions, especially on the re-distributed land of the UBPCs [“Basic Unit of Cooperative Production,” a type of agricultural cooperative on state land], along with an assessment of the real need for such decisions and the criteria of the members of those entities.

The laws promoting wage labor in agriculture have been prioritized over regulations that encourage cooperativism. This has reached the point where the government is going to turn over more land to the “private individuals who have demonstrated high levels of production and productivity,” which only can be achieved by the participation of private employees and the use of means that are only available to people with established capital.

Increasing production does not directly lead to lower prices

The distribution of land that is being done by the Raul Castro government can unquestionably increase food production. But this won’t necessarily lower the price or food or benefit the vast majority of people who are concentrated in cities and who live off of very low wages with very little purchasing power.

There are several reasons for this. Among these are the government acting to stimulate — through giving preferential rates — production directed towards government-owned tourism entities so that import substitution can lower the production costs in that sector.

Meanwhile a large part of internal distribution remains under control of the bureaucratic apparatus of the distribution centers of the Ministry of Agriculture (MINAGRI), with all the implied consequences. The rest are subject to the market law of supply and demand, which — by continuing with the current deficit — are experiencing skyrocketing prices.

With the motivating offer to producers to sell to the tourism industry, the dual currency redoubled its influence on market prices and therefore inhibited these products reaching the popular markets, which continue to rely on the low wages paid by the government in Cuban pesos.

One should note that the CUC has always imposed its value in the national market value over the national peso.  It does so by being the currency that permits the purchase of fuel, other foods outside of the reduced ration books, appliances, clothing, footwear, high quality construction materials and various agricultural fertilizers and inputs, although the government maintains a minimum market of prices controlled in Cuban pesos.

Those who constantly ignore the presence of the dual currency, with all its consequences, in their analysis of our economy, are forced to commit costly errors. The dual currency distorts everything.

Moreover, the marketing of agricultural products is still done by the government with a monopoly over pricing, and by private intermediaries, and not by producer cooperative associations or marketing coops, who by their very way of selling products would take into account not only their own interests, but also the interests of surrounding communities and social groups to which they direct their sales.

The state should also establish full commodity-money relations in its “subsidized” distribution in cafeterias, educational facilities and hospitals, and such centers should respond with their budgets and revenues.

We know that many of the current subsidies are sources of corruption, the black market, embezzlement and “transfers” to other types of economy for the benefit of criminals and bureaucrats.

“Control, orders and sanctions,” all from above, have proved ineffective. It’s time to personalize the subsidies, not the production or consumption of products. The disabled person should be fully subsidized.

If the increase of agricultural production continues with the current regulations — of production and exchange — the main beneficiaries will be producers, sellers, the bureaucratic state apparatus tax collections and corrupt individuals. But what about the low purchasing power of the majority of people? If people can’t buy, why increase production?

Increasing production for the benefit of everyone demands other changes

Given all of this, it’s essential to analyze the problems in their complexity and in their whole (to the degree that one takes into consideration all the socio-psychological, economic and political factors) in the short, medium and long term and not just the immediate economic situation.

Pragmatism must be avoided as it is the essence of the philosophy of capitalism, the vulgarization of immediate benefit.

The government/party does not realize — I prefer to believe this — that in reality the encouragement of wage-labor agricultural production is indeed the promotion of capitalist production in the countryside and the development and strengthening of an agrarian bourgeoisie.

The consequences are already being seen in the markets, with food prices unaffordable for the average population and with the “heartless” expansion of the pockets of sellers and producers.

The political implications are longer term, which those in their ‘70s and ‘80s will not have to face.

If the “updating” does not want to end in the most vulgar form of capitalism, facing up to the escalating prices and the increasing social differences, particularly in agriculture, should be encouraged — in a special manner— by those who are ready to develop cooperativism in the countryside.

These efforts must be given ample facilities for commercialization, credit, means of production, low-price inputs and resources and opportunities to receive direct assistance internationally.

They must also prioritize the turnover of more land to those willing to form cooperatives with their current contracted workers, thus converting UBPC entities into genuine cooperatives and not taking even a single square inch of land from them or deactivating any existing cooperatives.

Rather, support should be given to the creation of self-managed companies on the state-run farms. Very importantly, this means developing self-managed cooperative systems specializing in the sale of agricultural products based on modifications in the storage-distribution system instead of stimulating wage labor and private sellers.

For the “update” to favor an increase in production — with lower prices and benefits for everyone — three main engines would have to become operative:

1– The passage of a new law on cooperatives that guarantees the basic principles of the world-proven cooperative system. Broadly speaking, these would include cooperative markets that are not cooperative associations subordinate to the government’s interests and with all resources and facilities provided to them for their wide development.

2 – The approval of a new law on socialist enterprises, one which conceives them not as governmental entities but as social entities that are self-managed or co-managed in tandem with the state. In these, the workers would be the ones who decide on the administration, management and the distribution of net earnings (profits) that remain after social obligations and the needs for their own expanded reproduction;

3 – The development of the full democratization of the political system, which — lastly but no less importantly — permits the direct exercise of democracy by the workers and the people. This would allow them real, effective control at all levels over political, social, and economic life, particularly through local participatory budgets across the nation and the wider realization of Marti’s utopia, as he longed for a motion “with all and for the good of all,” as is stated in the present constitution.

Without engaging these engines, the “updating” will tend towards the restoration of private capitalism in conspiracy with state capitalism but under the control of a party bureaucracy, and it won’t be anything more than another copy. Only that this time the model won’t be Russian, but Chinese.

We already know that extrapolated casts and molds are doomed to failure. We Cubans have a history, especially as major producers of food as well as libertarian, democratic, socialistic, humanistic national and universal roots. We don’t need to copy off anybody.

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To contact Pedro Campos: [email protected]