Cuba Reviews Credit Policy for the Private Sector
HAVANA TIMES — The Central Bank of Cuba is revising the requirements of its new credit policy for private sector workers, according to a report broadcast on state-run television Thursday.
Banking authorities consider the number of loans requested by “self-employed workers” (which includes small private employers) as having been too “modest” to date and are therefore “revising the requirements set by banking institutions in relation to that sector of the economy.”
The new credit policy that took effect this past December permitted the financing of the non-state sector and prioritized self-employment, agricultural production and housing rehabilitation – the latter of which having received the most loans (about $14 million).
You know, comrades, bank “credit” is at the heart of both capitalism and socialism.
Looked at in general, bank credit is a way for working people to “complex-exchange” or “super-barter” their future productive activity for the past, present and future productive activity of other working people.
Under capitalism, a bank does not take money out of its vault for loans. It keeps whatever savers have on deposit in the vault, and extends credit to borrowers as a fraction, or a multiplication factor, thereof. This is, in effect, creating new money with the flick of a computer key, as a debt-bearing and interest-bearing “loan.”
The whole banking system honors checks written on these credit extensions, and so the new money is “real” money in the system. This allows the complex-trading or super-bartering of working people to take place, and it is a marvelous invention or development of human society.
The problem under capitalism is that the bank is allowed to charge time-based interest on a credit extension, as though it were money loaned from its vault. In fact, any interest charged–as a time-based money rental fee–is unjust, for the bank is merely creditizing or monetizing the future productive activity of working people. It is not renting out its preexisting money. All the bank should be able to charge therefore is a one-time, credit generation and payback administration fee.
Under capitalism however, banks engage in the legal racket of extending credit for the workers’ complex trades, and charging unjust, time-based interest. These sorts of credit extensions are good, but the charging of interest on them, as a legal institution, is evil.
The problem that Cuba is facing, with its financial/credit system, seems to be due mostly to the central bank being responsible for making all the credit extensions, both capital investment “loans” and consumer consumption “loans,” to the people. A modern economy needs such constant, daily “loans” to take place in every community nationwide, in order for the historically-evolved process of super-bartering to occur. If this process is restricted, the society will suffer massive and chronic financial constipation. Regularity can only be re-established through a corrected socialist program.
A central bank, operated by salaried functionaries, simply cannot carry out this massive exercise in super-bartering. All it apparently can do is take small bites out of the giant social/economic need, and hope for dynamic results.
In the US, we are trying to design a new money, banking and credit system for the socialist cooperative republic we are promoting before the nation. It would be cataclysmic–in a good way–if Cuba could perfect its financial system as a template for us and other capitalist-country, transformationary movements.
We are convinced that small, community, cooperative banks–co-owned by depositors, workers and the state–are a large part of the answer, along with (1) legal abolition of interest on credit debt and (2) re-establishment of private productive property rights under socialist state power.