Cuba’s New Investment Law Does Not Promote Socialism

What do the wage exploitation of workers by foreign capital and the State, usufruct contracts for foreign capitalists and the lack of any support for the development of socialist forms of production have to do with socialism?

Pedro Campos

Kiosk selling magazines in Havana. Photo: Juan Suarez

HAVANA TIMES — The new foreign investment law that seeks to attract foreign capital in order to “develop the country’s economy” is the Cuban government’s most recent effort to gather “water and coal” for the process of “updating” a “State socialism” that everyone considers a failure.

In its desperate attempts to maintain bureaucratic control over Cuban society – a society that is slipping away from the government’s hands more and more –, Cuba’s political and military elite has gone as far as looking for allies among its traditional enemies and urge the United States to lift its blockade/embargo, so that foreign millionaires can generously pour their dollars over the country in the form of tourism and business.

So that no one will think the socialist objectives avowed for more than fifty years are being betrayed here, the elite is promoting the Chinese and entirely non-Marxist premise that “socialism will come with abundance.”

The magic formula is as follows: more capitalism under the control of the “communists”, in order to arrive at socialism. Carlos Alberto Montaner and his liberals must be having a blast.

These “trinket socialists” (people who believe socialism is about an abundance of trinkets and whose ideas, lacking a scientific basis, are as cheap as trinkets), do not know or perhaps try to ignore the fact that socialism is a system, not of distribution, but of production, a system based on free forms of labor that gradually prevail over and replace the forms of salaried exploitation that characterize capitalism.

Such a system could not be imposed on people by decree, violent expropriations, force or, much less, the continuation of salaried exploitation by the State, as the neo-Stalinists-turned-reformers have already tried to do. It would come about as forms of production based on freely associated labor – proving to be more humane, democratic, free, non-exploitative and productive – began to spread gradually and naturally.

If that is to be the road to socialism, if the poorly-scripted, badly-rehearsed and failed Stalinist socialism based on State ownership and the continuation of salaried labor is to be put behind us, then those interested in making progress towards that new society would need to encourage free production associations.

These would be cooperatives, companies managed by employees, co-management by the workers and the State or by the workers and other production organizations, mutualistic productive organizations, family enterprises and self-employment, all of which characterize the forms of self-managed production characteristic of socialism not to be confused with autarchy (1).

Cuba’s new foreign investment law, however, isn’t heading in this direction, but is designed to encourage direct capitalist investment (the direct exploitation of Cuban wage workers, that is) or partnerships with the State, to perpetuate and perfect the joint exploitation of workers by the State and international capital – a relationship in which foreign capital exploits the wage laborer and the State “settles for” 70 % of the salaries paid to the doubly-exploited subordinates.

Quite simply, this law leaves no space for the creation of banking institutions that can offer micro-credits that could benefit the self-employed and cooperatives. Nor does it allow for the free import and export of the products by associations or any kind of mutually beneficiary partnership with foreign capital. In short, it does not promote socialist forms of production.

The law does not promote socialism in Cuba – it promotes capitalism.

It remains to be seen whether, after the publication of this article and following the comments made by Cuban economist Omar Everleny, we will be seeing new regulations specifying that “entities” such as cooperatives can also enter into some kind of mutually beneficiary agreement with foreign capital. Everything is possible when it comes to discrediting the socialist and democratic Left!

Any capitalist law that allows for the development of free, associated or individual labor, that provides credits and import and export facilities for such associations, is a thousand times more socialist than this foreign investment law.

The government vociferates that it is not selling the country to foreign capital, but a quick glance at the legislation suggests otherwise, that Raul Castro’s government doesn’t lose sleep over selling the Cuban workforce – the work, effort, sacrifice, knowledge and training of Cuban workers and professionals, what they call “human capital” – to the best bidder.

They are selling the most valuable of all capitals, the only one capable of creating new riches, for all of the investment in the world, all of the technology, money and resources mean nothing if one does not have a workforce capable of making these produce something.

If the wage exploitation of workers by the Cuban State and foreign capital is extended, if ownership over the means of production continues to be in the hands of the State and usufruct contracts can have terms as long as 100 years, to the benefit of foreign capitalists (something which recalls the Platt Amendment, coal mines and the Guantanamo naval base -, if the law does not favor socialist forms of production, if no democratization of the country’s economy and politics is in sight, then, what does any of this have to do with socialism?

Marx and Engels must be rolling in their graves.

(1) On hearing talk about self-management, many confuse the phenomenon with autarchy. Self-management is the management of a business, company or other association by its members. It does not exclude but rather relies on cooperation and exchange. Autarchy is something quite different: it is a kind of self-sufficiency that has no need of cooperation or exchange with anyone.
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14 thoughts on “Cuba’s New Investment Law Does Not Promote Socialism

  • Suppose it is true that the state “confiscates” 70% of the wages negotiated for the workers it supplies while maintaining a controlling interest in state ventures. So what? That’s a win, win for the state. The only thing that is espoused here is a general assumption that that 70% is somehow expropriated by corrupt individuals & not used to fund expenses incurred by state operations. That’s how things are done within a totalitarian socialist state. Where is the proof that the moneys are ending up in bank accounts in Bahamas or away from the people the state is supposed to serve? Socialism is a group effort, not an individual one & therefore the value of productive effort comes out in the general wash for the benefit of all.

  • Very well done

  • Your definition of fascism is contradicted by the many theorists and historians cited in the references I posted above. Consider your own words,

    “Fascism is when the government makes partnerships with the private sector instead of doing its job of representing the public.”

    Is that not exactly what the new foreign investment laws do? The aim is to form partnerships with foreign investors, selling cheap Cuban labour through a Cuban government agency, while excluding the Cuban people from participation in free enterprise.

    Historically, to the extent that the Cuban Revolution was Marxist, it was not fascist, as those two ideologies oppose one another. But don’t forget: fascism also opposes capitalism and liberal democracy (see above). Fascism will form an alliance of convenience with capitalists, when it suits the rulers, but they will not allow the capitalists the upper hand, nor will they ever accept any degree of liberal democracy.

    What I am arguing is that today, because of the economic reforms Raul Castro has introduced, along with the steady expansion of the FAR into monopoly control of the Cuban economy through holding companies such as GAESA, and together with the increasing level of political repression, the system Cuba is headed towards very much resembles Fascism.

  • …and my point is that Raul Castro’s very limited economic reforms are not designed to transform Cuba into a capitalist society, but to preserve the regime. He said so himself.

    It’s not clear what your last sentence is supposed to mean. Are you saying that Pedro Campos wrote his essay “as if capitalists haven’t been trying to annex Cuba”?

    Or are you saying the Cuban government is desperately trying to reach capitalism, “as if capitalists haven’t been trying to annex Cuba”?

  • The article and your understanding of the situation reads like a cognitive dissonance campaign written by capitalists in the USA. All for what. This article is designed to picture Cuba flailing about desparately reaching to capitalism as if capitalists haven’t been trying to annex Cuba since the sugarcane fields were taken back by Cubans in 1959.

  • Fascism is capitalism. Fascism is when banks control the government like they do in the USA. Fascism is when the wealthy control the government. Fascism is when the government makes partnerships with the private sector instead of doing its job of representing the public. Cuba has consistently been the exact opposite of that until capitalism started to creep in.

  • Loans are a tax on the working class. Where do people think banks get
    money from? Capitalism is not a free market. The US embargo on Cuba has
    resulted in Cuba’s exports being blocked to countries who use American
    banks which has been how the USA has forced austerity upon Cuba. As always the talk that capitalists give about free markets is a
    total farce.

  • Thanks Griffin. Although I believe JG will never admit how wrong he is, these exhaustive definitions fit Cuba to a T (as in totalitarian).

  • fas·cism noun ?fa-?shi-z?m also ?fa-?si-

    : a way of organizing a society in which a government ruled by a dictator controls the lives of the people and in which people are not allowed to disagree with the government, very harsh control or authority

    See also:

    Historians, political scientists and other scholars have long debated the exact nature of fascism.[22] Each form of fascism is distinct, leaving many definitions too wide or narrow.[23][24]

    Fascist economics supported a state-controlled economy that accepted a mix of private and public ownership over the means of production.[182] Economic planning was applied to both the public and private sector, and the prosperity of private enterprise depended on its acceptance of synchronizing itself with the economic goals of the state.[183] Fascist economic ideology supported the profit motive, but emphasized that industries must uphold the national interest as superior to private profit.[183]

    One common definition of fascism focuses on three concepts: the fascist negations of anti-liberalism, anti-communism and anti-conservatism; nationalist authoritarian goals of creating a regulated economic structure to transform social relations within a modern, self-determined culture; and a political aesthetic of romantic symbolism, mass mobilization, a positive view of violence, and promotion of masculinity, youth and charismatic leadership.[25][26][27]

    Fascism is a form of radical authoritarian nationalism[1][2] that came to prominence in early 20th-century Europe. Influenced by national syndicalism, fascism originated in Italy during World War I, combining more typically right-wing positions with elements of left-wing politics, in opposition to liberalism, Marxism, and traditional conservatism. Although fascism is usually placed on the far right on the traditional left–right spectrum, several self-described fascists as well as some commentators have said that the description is inadequate.[3][4][5]

    Fascists sought to unify their nation through an authoritarian state that promoted the mass mobilization of the national community[6][7] and were characterized by having leadership that initiated a revolutionary political movement aiming to reorganize the nation along principles according to fascist ideology.[8]Fascist movements shared certain common features, including the veneration of the state, a devotion to a strong leader, and an emphasis on ultranationalism and militarism.

    Fascist ideology consistently invokes the primacy of the state. Leaders such as Benito Mussolini in Italyand Adolf Hitler in Germany embodied the state and claimed indisputable power. …Fascists advocate a mixed economy, with the principal goal of achieving autarky to secure national self-sufficiency and independence through protectionist and interventionist economic policies.[14]

    Fascism promotes the establishment of a totalitarian state.[162] The Doctrine of Fascism states, “The Fascist conception of the State is all-embracing; outside of it no human or spiritual values can exist, much less have value. Thus understood, Fascism is totalitarian, and the Fascist State—a synthesis and a unit inclusive of all values—interprets, develops, and potentiates the whole life of a people.”[163] In The Legal Basis of the Total State, Nazi political theorist Carl Schmitt described the Nazi intention to form a “strong state which guarantees a totality of political unity transcending all diversity” in order to avoid a “disastrous pluralism tearing the German people apart”.[164]

    Fascist states pursued policies of social indoctrination through propaganda in education and the media and regulation of the production of educational and media materials.[165][166] Education was designed to glorify the fascist movement and inform students of its historical and political importance to the nation. It attempted to purge ideas that were not consistent with the beliefs of the fascist movement and to teach students to be obedient to the state.[167]


    As you can see from the foregoing excerpts, Fascism applies very well as a description of the kind of system toward which Cuba is headed under Raul Castro.

  • Fidel retired from active participation in the running of Cuba some 6 or 7 years ago. Try to keep up .
    As far as I know, Cuba retains some 51% -a controlling share – in all deals involving foreign investment ventures.
    This is eminently sensible given the rapacity of capitalists and their history of exploiting host country populations and resources.

  • You might want to Google : fascism definition and get some idea of what fascism is.
    It is NOT a term that fits Cuba at all.
    Further capitalism is a totalitarian top-down form that almost always necessitates a totalitarian governmental form to force the citizenry to accept the unfair division of wealth under capitalism .
    The U.S. spent a great deal of time and money in the last 100 years both crushing popular left movements and in enforcing capitalism on those weaker countries so your claim of political liberalization as part of capitalism is just self-serving bullshit.
    References on U.S. interventions to do what I said they did for the last 100 years at least can be found in part at the “Killing Hope” website and in the book .

  • I understand your criticism of the cynical new investment laws. However, there is nothing liberal or even capitalist about the economic reforms Raul is pushing onto Cuba. True capitalism includes economic and political liberalization. The new investment laws are neither.

    The Castro regime is leading Cuba into a system based on an alliance between a foreign corporations and state-owned monopolies, under the domination of the army. He has insisted there will be no political reforms and that the Communist Party will maintain it’s monopoly on power. The world has seen that kind of system before and it usually goes by the name of “fascism”.

    Contrary to your implication that he is having a blast, Carlos Montaner is in no way a fan of the new laws. Recently he wrote, “Cuba’s “New” Foreign Investment Law a Recycled Ploy by Castro to Bilk Foreign Investor to Support Its Oppressive Policies”

  • Pedro, you give the Castros far too much credit. This is not a struggle between differing views on the path to socialist utopia. The Castros don’t give a crap about socialism, capitalism or any other -isms! They care only about maintaining the status quo and consolidating wealth and power within a small circle of family and close cohorts. The contempt the Castros have for capitalism could not be more apparent than what is presented through the foreign investment reforms. They plan to milk investment capital from the remaining few ‘useful idiots’ who will choose to invest in Cuba. Then, once Cuba is back on its feet, the plan seems to push these investors out and take control of the businesses that the investment capital created. This is a pattern repeated over and over again by the Castros and will likely continued as long as it works for them.

  • A superb piece.
    It would appear that Cuba’s ossified and undemocratic leadership is selling out, at least in part, to the capitalist exploitation of Cuban workers which certainly was one cause of the Cuban Revolution.
    It’s the slippery slope scenario that Cuba is facing and it had best be careful or Cuba will become another Russia or China and totalitarian not only in government but right across the economy.
    I believe this to be not a deliberate jump back into capitalism but bad decisions by the leadership in how to preserve the revolution : bad decisions that would be best resolved by more democratic inclusion of the Cuban masses. in the decision making process. and especially at the workplace level.
    Again. Pedro, thanks for that right-on-the-money analysis .

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