Erasmo Calzadilla

HAVANA TIMES — Why has the Cuban economy slowed down? This is the thorny question at the heart of the interview with twelve Cuban economists conducted by Ariel Terrero.

Some of the causes of this deceleration the experts mention is Cuba’s excessive centralization, erratic investment policy, lack of control mechanisms, low domestic demand, measly salaries, scant participation of workers in decision-making processes, lack of transparency, the absence of a wholesale market, the nation’s de-capitalization, the two-currency system, the restrictions applied on State companies by the bureaucracy and the timid development of the private sector, which continues to stay short of freeing the country’s productive forces.

Since every expert mentions a different factor, Terrero titled his interview Doce economistas en pugna (“Twelve divergent economists”). I, however, fail to notice any real disagreement. What I see, rather, is an extremely high level of agreement.

All of them, including the journalist, start off from an implicit certainty: the normal, healthy, positive and longed-for thing is exponential growth, the more the better. To grow only a little bit, as happened this year, seems to them something alarming, worthy of a profound analysis and the symptom that something isn’t heading in the right direction. One of them even said emphatically: “0.6 % isn’t growth at all!”. Another called it an “anemic result”, and yet another stated: “stagnation is in no way good!”

I expected something more than an overview of our problems through the lens of 20th century capitalist economics from such renowned experts.

All of the variants of the capitalist economy reduced men and women to human resources (the term used by the twelve “apostles”) and led to to the current deterioration of our environment. The theoretical corpus that sustains this praxis stems from a dangerous and false axiom: the inexhaustibility of our resources and dumpsites.

A More Detailed Analysis

The excess of centralization, the inadequacy of Cuba’s investment policy and the other obstacles mentioned by the experts consulted can slow down economic development, but I don’t believe that is the gist of the matter. Just as a child cannot grow without food, a nation’s GDP cannot grow without energy.

The graph below, prepared by the International Energy Agency (IEA), represents the world’s energy consumption versus its GDP. As we can appreciate, the relationship between eating and growing, in addition to being obvious, is direct.

Graph 1

 

That is to say, it would suffice to look at a country’s energy consumption to get a good idea of the metabolic state of its economy. Let us sneak a peek at how our oil diet has evolved over time:

Graph 2: Consumption of energy derivatives from oil.

Looking at this data, is it any surprise the Cuban economy came to a sudden halt? No, what’s surprising is that it hasn’t plummeted more abruptly.

I am suggesting the GDP hasn’t grown much because we haven’t “eaten” much, but it is quite possible it’s the other way around. It’s possible it hasn’t grown much because of the problems mentioned by the “apostles” and as an indirect consequence of low consumption. Without denying the importance of this last point, the data below lead me to think that the lack of “grub” is more important than economists are willing to admit.

Domestic oil and natural gas production has been stagnated for years and investors haven’t yet taken the bait.

Graph 3: National production of primary energy: oil and gas.

With the serious problems it faces, Venezuela is unable to satisfy the exponentially growing energy demands of a country whose governing elite wants to see growth at breakneck speed.

Put differently: even if we were to eliminate all of the obstacles mentioned by the “apostles”, we would still be unable to grow as the god of Capital demands. The main reason for this is the shortage of fuel. Something similar is happening with sugar and nickel. The economists give us sophisticated explanations as to why these sectors aren’t growing without paying enough attention to the most important reason: the soils and mines are dry after years of intensive, short-sighted exploitation in search of economic growth.

Conclusion

The experts interviewed by Terrero differ on certain issues but agree on one, essential point: we need to grow and we need to grow a lot. If we do things right, they assure us, the Cuban economy will “take off with force, like a plane.”

Graph 4: -Venezuelan oil. Exports dropped 4.4% in 2013. Consumo=consumption, Producción=production, Exportaciones=exports

These respected authorities would tackle the present with the cognitive tools of the past and the past tells them that growth is the way. They do not understand the world is finite and cannot take it anymore, that it isn’t possible to continue to grow without destroying ourselves. They are unable to see the danger of joining the race towards the abyss, a race that will be suddenly cut short, because of inertia or their colonialist mentality.

They should devote their mental efforts to think of the way in which we are going to confront the coming crisis and the lack of fuels and do so seriously, without fantasizing about renewable sources of energy.

If the experts Raul Castro consults to make decisions are anything like these “apostles”, then our failure is guaranteed.


Erasmo Calzadilla

Erasmo Calzadilla: I find it difficult to introduce myself in public. I've tried many times but it doesn’t flow. I’m more less how I appear in my posts, add some unpresentable qualities and stir; that should do for a first approach. If you want to dig a little deeper, ask me for an appointment and wait for a reply.

One thought on “Cuba’s “Twelve Apostles” of Economic Growth

  • Erasmo wrote that Cuba’s nickel mines have run dry. Not true. Cuba will have a lot of nickel, and cobalt, for many years to come.

    “Cuba is an important nickel and cobalt producer, ranking sixth in the world in terms of nickel and (fluctuatingly) accounts for 8% of the world’s cobalt production. The nickel resource comes from extensive laterite deposits that are considered among the largest reserves in the world. Cuba ranks with Canada, Russia, Australia and New Caledonia.

    Unrefined nickel, plus cobalt, is Cuba’s largest export, in some years generating as much as $2 billion in export revenues. Cuban nickel is considered to be Class II with an average 90% nickel content.

    The ore is processed on the island in two formerly US-owned plants at Nicaro and Moa Bay. Plants are also located at Punta Gorda and Las Camariocas. The province of Holguín, where the Moa Bay mines are located, is estimated to contain 34% of the world’s known reserves of nickel, or some 800 million tons of proven nickel plus cobalt reserves, and another 2.2 billion tons of probable reserves.”

    – See more at: http://investorintel.com/gold-silver-intel/cracking-open-cuba-next-vietnam/#sthash.NCEYU5v4.dpuf

Leave a Reply

Your email address will not be published. Required fields are marked *