By Eileen Sosin Martinez  (Progreso Semanal)

Cafe G
What’s left of the once popular state-run Cafe G.

HAVANA TIMES — A group of friends walked past the corner on 23rd  and G Streets in Havana. Alain stopped and looked at the poor state of what was once the busy Cafe G, the place of so many good memories during their university years, just a few years ago. “Do you realize… Now, if this were privately-run… it would pick itself right up off the ground.”

I’ve heard this phrase several times, which summarizes the undisputed proof of before and after private individuals take over state-run businesses. In many places in the city, state-run establishments have come out of ruin – construction-related or financial – to become dazzling private businesses. And is that a bad thing? No, of course it isn’t.

The bad thing is, or rather, the most worrying thing is Alain’s conclusion where private enterprise works, is efficient – even aesthetically pleasing – and that establishments run by the state, aren’t. A presumed dichotomy which isn’t healthy at all.

Professor and researcher Ricardo Torres explains that the socio-economic structure of the transition of Cuban society towards socialism has been mixed, given the co-existence of different types of property. “It’s supposed that conditions were created so that social and collective typologies would become the most dominant in this process.”

In the Cuban context, these more social channels would be cooperatives and state businesses. Later, it became difficult to understand why you only needed to get a license, which the municipal government is authorized to hand out, so as to open a private business; while a non-agricultural cooperatives need authorization from a minister, or the Council of Ministers itself.

Cafeteria particular. Photo: Juan Suarez
Private cafe. Photo: Juan Suarez

Meanwhile, state-led businesses hardly react to measures implemented so as to make it more flexible and productive. Last year, it was announced that a new Business Law would come into effect in 2017, without us hearing anything else about how this legislative process would come about.

In both cases, the “gradualness” and “experimental” nature of them – which could be positive attributes – become marsh water where very little moves forward or nothing at all. “What is happening today, in my opinion, is that the most dynamic sector isn’t the public sector [as the government had hoped]; even in terms of growth, job creation and incorporating innovative approaches in economic processes,” professor Juan Triana rounds up.

Some experts have mentioned the fact that society is transforming today at two different rates: one slow, which takes place higher up, and implies legal and structural changes; and the other is fast, which we see on the street, where small businesses are found, but also the increase in prices and a greater difference between people and groups. Far from middle-ground, the slow transformation seems too slow, while the fast one also seems too fast.

Around a third of the active working population works in the private sector. “The structure of their interests, of how they see the future, is completely different,” points out Triana, “This completely changes the social and political balance in Cuba.”

A study* among the self-employed in Havana revealed that it was important for them to belong to this group, which satisfies their needs, gives them a better quality of life and economic solvency; both for them and their families.

Private cafe La Isla. Photo: Juan Suarez
Private cafe La Isla. Photo: Juan Suarez

All of them believed that they would be better off in the future than they are now, but not the rest of the groups surveyed, especially laborers and those dependent on the public sector. “They would have to make a lot of changes (…) Right now, nothing is done in a stable manner and looking towards the future (…) The State is very poorly administrated and anything can happen. (…) I believe that I am at the top of what I can do, due to the country’s situation and the economic shortage; I don’t believe that its path will change,” were some of the opinions which were collected.

In spite of all of the problems that they face, private ventures have managed the unusual achievement in Cuba of producing results. Maybe this is why so many Cubans perceive it to be the launching pad for change. Socialism necessarily implies the socialization of wealth and power. However, in the Cuban reforms process, more collective professions have had less of a margin to display their potential.

“In a context where public businesses reign and are mainly inefficient, wealth isn’t socialized and people aren’t free of alienation, in fact it’s the opposite. What is a business worth if it is public and continues to record losses or grows at a rate which falls short of its potential, doesn’t create well-paid jobs, pollutes the environment and provides poor quality goods and services? These questions should form part of a serious social debate,” Torres points out.

The former minister of Economy, Jose Luis Rodriguez, has insisted on the role that workers play. “This is the key issue, in my opinion. It’s not easy; it can’t be fixed just like that… But, if people don’t feel empowered, that they aren’t directly participating in the decision-making process, we won’t make progress at the rate we want to, because these people don’t feel like they are part of this process, or that they have a responsibility in bringing about change.”

Changes occur because of people. That is to say, it isn’t just about optimizing processes, rationality, investments, statistics… but opinions, knowledge, moods, feelings and life projects also have to be taken into account…

The implementation of the Cuban Communist Party’s Guidelines not only contributes to “updating” our economic model, but also our social relationships, notes psychologist Daybel Panellas. Economists claim that the debate goes further than pure economics.

Dulce Havana, a private sweets shop. Photo: Juan Suarez
Dulce Havana, a private sweets shop. Photo: Juan Suarez

If the State and the private sector are understood as good and bad – or vice-versa – like the useless monster and the personification of progress; if strengthening one of them means that the other one is undermined, if they seem like complete opposites, and not complementary or interlinked… If these representations become hegemonic, we would have lost our direction.

And as we already know, before following foreign paths, it’s best to pave our own way forward. But we have to keep on moving forward. Raul Castro said so: without hurry but without stopping. That’s to say, without stopping.
* “Reconfiguring social relationships: insights from self-employed workers in the capital” Daybel Panellas Alvarez. In: Perspectives on the Cuban economy, Analysis of the private sector, Caminos Publishing House, Havana, 2015.


27 thoughts on “Is Privately-Run Business the Magical Answer for Cuba?

  • Tata Steel is expanding production world wide, just not in the UK. Costs are still cheaper in India, Bangladesh and Vietnam. UK production is devoted to high quality specialty alloys.

    There can be a case made for publicly run series in some sectors in your country (UK) or mine (Canada) (i.e. the post office, public education, healthcare) but these organizations exist in an overall system of free enterprise and capitalism.

    In Cuba, the situation is very different. They have no free press or publicly accountable government. Corruption and inefficiency will be inevitable.

  • You’re point on tariffs is a red herring as there were tariffs on items produced in the private sector as well. Look at the disappearance of the manufacturing and clothing sector during the same period. Also tariffs were applied on British goods as well as foreign government subsidies – so it worked both ways. If you look at the whole picture the nationalized companies that were profitable remained profitable remained profitable after privatization, the ones that weren’t due to many factors were either restructured and downsized and became profitable like British Steel (Thatcher wouldn’t have been able to sell it off if it wasn’t) or like British Coal went into further decline even after being decimated under state control. As you say cheaper coal could be imported from outside – however state owned mines in Poland provided some of that. If you wanted to prove that private has the magical touch that public doesn’t then you would expect Tata Steel to be reopening closed plants or opening new ones and reemploying ex-steelworkers. And the same with the coal mines. But that isn’t the case.

    With Cuba I agree that too much centralized state control and inertia is a big problem. But the answer isn’t Thatcherism. A lot of areas still haven’t recovered from her legacy.

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