Cuba: Socialism, Private Property and Wealth

By Fernando Ravsberg

Photo: Raquel Perez Diaz

HAVANA TIMES — The Cuban Parliament has finally approved the groundwork for the reforms process put forward by President Raul Castro and his government. However, it has done so with some reserves, the most sensitive subject seems to revolve around private businesses and a consequent accumulation of wealth.

Legalizing private property over modes of production has raised clear suspicions among some legislators. They fear that wealth will start becoming concentrated and that this will lead the country to experience a social inequality similar to that in the rest of Latin America.

However, economists ensure them that without the accumulation of capital, private businesses won’t be able to develop to such an extent. Business people need to reinvest, they need funds to put up with losses, they need tax breaks from the start and personal financial incentives.

So then we reach a point where social differences will inevitably deepen. The national economy can no longer be regulated by the socialist laws of “From each according to his ability, to each according to his contribution”, not even in theory.

Although, it’s only the shreds of this economic principle that remain in reality and it’s been like this for a long time. Ever since salaries lost their real value in the ‘90s, the prevailing axiom in the economy seems to be “From each according to his/her astuteness, to each according to their cunning.”

2. The self-employed will never be able to become businesspeople while they are banned from accumulating capital. Photo: Raquel Perez Diaz

“Meritocracy” has also lost popular support, according to which those who piled up revolutionary duties could live better than the rest of Cubans. The problem here is that it became hereditary and today their children are enjoying these privileges, even though they have no track record of contribution of their own.

Inequality isn’t the result of “updating the system”, it has been growing since the ‘90s because of many different factors such as family remittances, dollarization, opening the national economy to foreign investment, tourism or children of the elite reaching adulthood.

The reforms seek to “legalize” the country that currently exists, in some way or another. Self-employment, the underground small and medium sized business person or those alleged Cuban managers of foreign companies who are in actual fact the real company owners.

With these changes, the national economy will start to integrate this underground world, which has been operating on the side for many years. This grounding in reality will allow a better distribution of wealth because the government will be able to charge taxes to those people who have never paid them.

There is a lot of suspicion in Parliament, in the PCC and in society on the whole with the approval of private property over modes of production.

Of course, now there are new dilemmas, like what always happens whenever you leave stagnation behind and begin to move forward. Some economists claim that if you don’t allow the self-employed to accumulate a bit of wealth, they will never be able to become business people.

Without accumulation of capital, the only people who can become owners of small and medium-sized companies are those who receive money from abroad or those who managed to accumulate it during socialism, a significant part of whom are corrupt and/or criminals.

In one way or another, this concentration of wealth will lead to deepening social differences between Cubans and in a poor country this can even lead to a few people taking the largest slices of cake for themselves, leaving others without even a taste.

However, the truth is that there is still a lot to establish: How many employees can a medium-sized company employ? What are the limits on the accumulation of capital? What government mechanisms will redistribute wealth? How will the government ensure that there are equal opportunities for all Cubans in this kind of society?

The terms “private enterprise” or “wealth accumulation” can scare a few people a lot and encourage others too much, but until details are revealed, we are only dealing with abstractions. And it will be these details that then define the country’s future socio-economic model.

17 thoughts on “Cuba: Socialism, Private Property and Wealth

  • I write Terry about the current Cuba. You refer only to “the two countries” but my belief is that the horizons of Cuba’s future need to stretch well beyond that. When I write of Cuba’s current laws, of the repression and denial of liberty I write of today.
    There is a brittle surface of western semi-normality – evident for example in the Viazul coach service, paladars, casa-particulars and hotels. But those are not for Cubans. There are also the musical venues like the trova in Camaguey where maybe one day in the future we may share a Bucanero, but the trovas charge over a Cuban’s days pay for entry and now 2 CUC for a beer. Walk through the residential areas of non-tourist towns in Cuba and look at the conditions. You speak also of pessimism – and I hope that you are correct and that you are the realist – if only!

  • The “aims” you write of are simply that liberty and freedom as defined.

  • I note that you still do not actually respond to my points. It is obviously your prerogative not to do so.
    You clearly have your political opinions and aims which I can only presume are expanded upon profusely in your book.
    It is most encouraging to read that you consider these aims to be worth writing about but that you do not go so far as advocating the spilling of blood (pen mightier than sword perhaps?).
    Regarding the bloodspill which ensued following the triumph of the Cuban Revolution: There are those that say that this was led by the triumphant revolutionaries. There are also those that say that the revolutionaries actually sought to diffuse the mass public clamour for retribution.
    I wasn’t there myself so I don’t know who to believe (I suspect the reality was somewhere in between).
    I think that you are very clear about who you believe.
    But either way, perhaps we can agree that revolutions. conflicts, counter revolutions in fact all such dramatic, abrupt change can be a bloody business.
    This was my point in the first place.

  • Yes Nick I am confident about my book. It is a year ago since another contributor to these pages challenged anyone to disprove any of the facts I recorded in it. To date, nobody has.
    Regarding ‘liberty’ and ‘freedom’ I will stick with the defined meanings of the word:

    “the state of being free within society from oppressive restrictions imposed by authority on one’s way of life, behaviour, or political views.”

    “the power or right to act, speak, or think as one wants without hindrance or restraint”

    Neither of us can argue that the people of Cuba under the current political regime have either liberty or freedom.
    I like the young hotel manager do not seek bloodshed in Cuba, but you are correct in pointing out that the Castro regime bothfavoured and practiced it.

  • Carlyle, of course I’m an optimist… and why not? As you know, I had always encouraged and predicted that the long overdue and inevitable rapprochement with Cuba would happen, and that it desperately needed to happen soon too. Now as then, it’s still the only logical and effective means of building better relations between the two countries to optimistically promote new ideas for the greater good of all.

    Carlyle, I prefer to live in the present regarding Cuba instead of continually dragging up the past as if any of that old news has any bearing on the here and the now. It’s unfortunate that some will always remain pessimistic when frozen to the past, instead of optimistically looking forward and promoting a better future. By remaining pessimistic, they unwittingly choose to be part of the continuing problem, instead of part of the inevitable solution.

  • My thanks indeed for your interesting comments.
    You bring in the current homicide rate in Russia as well as the swift and bloody retribution toward those perceived to be Batista’s henchmen.
    You also manage to quote from your own book which is a most admirable display of self confidence.
    However, you do not quite manage to address my points.
    Just to clarify: I refer to some of the disastrous consequences of what occurred after the collapse of The USSR. Both in terms of the immediate aftermath and the long term decline of many of Russia’s regions. Arguably these ill effects could have been tempered with a more measured approach to the changes that were desired and needed.
    The principal architect of the sudden changes now cuts a somewhat tragic and regretful figure.
    The reason for my referring to this aspect of Russian history is to illustrate the potential consequences of sudden change in Cuba.
    I also refer to the fact that some would regard blood on the streets as a price worth paying for their ideas of ‘liberty’ and ‘freedom’.
    Your quote from the Hotel Manager suggests that he did not think so.
    Your remark that ‘he is still waiting’ suggests that, at least to some extent, you may disagree with him?

  • You are correct about the murder rates in Russia. In 2014 (latest year available) the number of intentional homicides in Russia was 13,68. That exceeds the total figure for the US which was 12,253.
    A couple of observations about those figures, The population of the US is more than double that of Russia – so whereas Russia had 10 homicides per 100,000 people, the US had 4 and for your particular interest, the UK 1.
    The homicide rate in the US is much discussed as one of the frequent criticisms of that country – including here in the Havana Times – but when did one see criticism of the Russian figures?
    I know of no one who wants to see blood flowing on the streets of Havana – the blood letting at La Cabana under the direction of Dr. Ernesto ‘Che’ Guevara being the last publicly declared occasion. But let us not forget the total of 3,615 executions by firing squad under Fidel Castro’s period of dictatorship recorded in Cuban archival materials and the additional 1.253 extra judicial killings during the same period.
    I recall Nick some ten years ago in discussion about the Castro regime and its eventual end, with a young graduate of Havana University who was managing an hotel, he said:
    “We have seen enough blood in Cuban history and don’t want to see more and so we can wait.” He is still waiting.
    As I expressed on these pages recently, the pressures of resentment of the lack of progress and change are being bottled up. Young Cubans can no longer release that energy by endeavoring to escape to the US.
    We who discuss Cuba here, have no influence upon the direction that the people of Cuba may take following the eventual end of the communist dictatorship, nor should we. We can only express our hopes for their future:

    “For the people of Cuba there remains only that faint hope which they have tenaciously clung onto for so many long years. Hope for the younger generations that they may yet know freedom and opportunity to live in their beautiful country free from repression, with freedom of expression, freedom of the media and freedom to vote for political parties of choice. Cubans deserve no less, for only then will they become members of an open society in a free world that waits to welcome them with open arms. Liberty and that poignant cry for freedom beckon and humanity demands.”

    Cuba Lifting the Veil

  • Mr MacD, ‘Humane’ is an interesting word and an artful spin.
    My point refers to the terrible levels of violence which occurred after the dramatic changes in Russia. I also refer to the abject poverty which has taken hold in certain parts of the country, the haphazard healthcare provision, the lowering of life expectancy, the rise in child malnutrition, the lawlessness and the obvious fact that Russia is more authoritarian than ever.
    Gorbachov clearly regards himself as a failure for allowing this to happen.
    It’s certainly not for the likes of me to decide what happens in Cuba.
    I simply prefer that some of the worst aspects of the changes in Russia do not occur in Cuba.
    Moscow became one of the murder capitals of the world.
    I wouldn’t wish the same fate for Havana.
    Perhaps there are some that would see that amount of blood on the streets of Havana as a price worth paying?
    Maybe some would describe that as ‘humane’?

  • Thanks for the laugh Nick!

  • Yes Nick, Gorbachov obviously realises that he made the mistake of acting in a humane manner – something which Communism cannot afford.

  • You are right Terry.
    Cuba has gone through big changes over the last couple of decades.
    It will continue changing. Some changes will be criticised.
    Some in Cuba say the changes are too slow and others say the changes happen too fast. It is unlikely that Cuba will become some morph into a Paradise on Earth any more than The Revolutionary dream of creating some kind of perfect society was realised.
    But all these things are relative and the very last thing Cuba needs is the kind of dramatic change which occurred in Russia.
    I saw an interview with Mikhail Gorbachov recently.
    He came across as an unhappy old man dwelling on the disaster which he clearly blames himself for.

  • Hi Terry! You are obviously an optimist. Marxism does not make provision for change to democratic processes. I hope you are correct, but don’t see any basis for that optimism.

  • And the winner is…….
    (Pause whilst opening envelope)…..
    Stalin for winning World War 2 !!
    oops wrong envelope….
    Let’s try again.
    And the winner is……
    Putin for managing to take revenge for the USA putting the idiot Yeltsin in The Kremlin by putting the even bigger idiot trump in The White House.
    Right envelope that time.
    So the Oscar goes to one of the KGB’s finest ever heroes……
    Mr Putin !!

  • “As I think even you may realise, Cuba is not going to experience change under a communist regime.”

    I disagree. Cuba has already experienced tremendous change during the past 10 years… and that will continue in measured steps over time to insure a smooth transition to fully embracing capitalism and socialism combined and working in tandem for the greater good of their society. The Cuban government doesn’t need to reference the radical and abrupt end of communism in Russia for inspiration. That offers nothing to them. There are other more viable models available for guidance and inspiration with their inevitable preconceived transition for changes in Cuba while also continuing to protect their civil society.

  • Tough decision Nick – so who is your choice? Stalin, Breschnev, Khruschev or Putin?
    As I think even you may realise, Cuba is not going to experience change under a communist regime. My comment relates what actually took place in Russia and in my opinion there are no valid excuses.

  • I would agree with you that Mr Ravsberg puts forward an interesting article as he usually does.
    You mention The USSR as you often like to.
    Since the end of the Soviet era many things have happened including the following:
    Moscow quickly became one the murder capitals of the world.
    The wealth is now massively concentrated in the hands of a small percentage of the population as was the case in the Tsarist era.
    There has been a dramatic rise in the percentage of Russians in abject poverty.
    There has been a reduction in life expectancy.
    An increase in Child Malnutrition.
    An increasing problem in terms of healthcare provision.
    In the interests of objectivity, I would say that of course there have obviously been some improvements.
    However, the one sided version that you so enjoy trying to put across is not borne out by the reality.
    One could say that Russia has lost some of the benefits of the Soviet era and retained some of the worst aspects.
    If Cuba takes a more measured approach to change rather than the dramatic turn taken by Russia, then Cubans may avoid some of the more unpleasant outcomes suffered by the Russian people.

  • An excellent thoughtful article Fernanda Ravsberg.
    The opposition of communism to any form of wealth was demonstrated long ago in the USSR where the richer peasants named ‘kulaks’ who owned maybe two or three cows and up to 10 hectares of cultivated land to provide for their families of an average of seven people, and providing an income of maybe 50 – 56% above the average of the ‘proloteriat’ had to be crushed and eradicated. The kulaks had made the mistake of refusing to sell their product for less than the cost of production. In Cuba, the small ‘farmers’ having to sell at prices established by the regime, have reacted by not producing products which show negative returns, hence the dearth of many vegetables and fruit.
    As demonstrated, for Raul Castro and the Communist Party of Cuba, an improvement in the economy creates a fear of the introduction of capitalism.
    The ‘wealth’ described by Fernando Ravsberg is miniscule compared with the investment necessary to farm efficiently. The imposition of ‘Socialismo’ has in consequence led to ever declining food production in Cuba.
    ‘Socialismo’ reflects that comment by Winston Churchill that I have previously mentioned:

    “The inherent vice of socialism is the equal sharing of misery.”

    The Communist Party of Cuba is determined to prevent escape from poverty into the alternative of prosperity. That is their raison d’etre!

Leave a Reply

Your email address will not be published.