Currencies out of Whack

Osmel Almaguer

The two Cuban currencies and the USD. Photo: IPS Cuba

In the 80’s it was common to find one-cent coins scattered on the ground. They simply weren’t useful. The cheapest things cost five cents, and prices were grouped in increments of five cents (5¢, 10¢, 25¢ and so on).

However, back in the 1950s the situation was completely different.  Un centavo (a penny) could be a source of dispute between two people. With a penny you could at least buy a piece of candy, so these coins were not commonly found lying on the ground.

Today, not only have pennies become useless, but neither are pesos (about $.04 USD) enough to buy a similar piece of candy that was had for a penny in the past.  The Cuban peso has become a sort of penny for the CUC, the form of hard currency used here.

For a long time there has been talk of unifying the two currencies. I don’t think this will happen soon. To be honest—though it may seem like a radical thought—I do not think this will ever be done.

How would such an operation be carried out?  Would the Cuban peso be given a new value? Would they eliminate that old currency to leave the hard currency CUC to govern our economy? Would the old peso remain as the only currency, with its current low value?  How much would they then pay the average worker?

Many questions come to me and make me think about this change as something as incomprehensible in my mind as the notion of infinity.

I think that whatever happens, the current money-wage-price relationship is absurd and we need a change.  Otherwise things will never add up and the situation will continue to get worse.





Osmel Almaguer:Until recently I would to identify myself as a poet, a cultural promoter and a university student. Now that my notions on poetry have changed slightly, that I got a new job, and that I have finished my studies, I’m forced to ask myself: Am I a different person? In our introductions, we usually mention our social status instead of looking within ourselves for those characteristics that define us as unique and special. The fact that I’m scared of spiders, that I’ve never learned to dance, that I get upset over the simplest things, that culminating moments excite me, that I’m a perfectionist, composed but impulsive, childish but antiquated: these are clues that lead to who I truly am.

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One thought on “Currencies out of Whack

  • To analyze the dual-currency question It might help to consider the nature of money. What is money?

    It is a denominated instrument for productive labor deployment. This instrument need not have any intrinsic value as a commodity, such as gold or silver. In fact, modern money is created without the slightest consideration of the value of any precious metal, because modern monetary instruments are created on a different objective basis. This basis is the productive potential of human beings, whom we may term collectively the “laborers.”

    Money is a denominated instrument for deploying workers, and it then allows the means of life produced by these workers to be exchanged in the marketplace.

    Under capitalism, private banks create the money supply by 1) finding qualified borrowers (those who can produce in the economy and pay back a credit “loan”), and 2) locking in collateral to enforce loan repayment. Banks may then create credit/money out of thin air and call it a loan, as thought it were the bank’s preexisting property. Interest is then charged over the life of the “loan” as a rental fee.

    Under capitalism, enterprise leaders obtain such credit “loans” on the basis of the laborers who will engage in productive activity and produce the people’s means of life. Under state monopoly socialism however this sort of money creation is impossible because the state owns the banks and everything else productive. The independent entrepreneur does not exist. The state therefore is saddled with the task of poofing money into existence based on the narrow-minded criteria of those in charge of planning and productive administration, and this combining all functions into one has proved to engender economic constipation.

    For Cuba to unify its currency, she needs to overcome the stultifying attributes of the state monopoly mode of production. This can be done by allowing depositor-worker cooperative banks with the power to create money on the “fractional reserve” principle; socialist cooperative entrepreneurship; and socialist free enterprise.

    If the state monopoly mode of production is not superseded by a non-state monopoly form of socialism however, the absurdity of the dual currency will continue to exist.

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