How to Resolve Three Key Obstacles to Cuba’s Development

Pedro Campos

HAVANA TIMES — Many are the obstacles to Cuba’s economic development set up by the country’s bureaucratic State. I’ve addressed this issue extensively in previous posts, questioning Cuba’s absurd state-command economy, the endless restrictions on free individual or collective labor and on all other relations of production inherent to this stage in our development, and other problems.

On this occasion, I will focus on three important regulations stemming from the hard-headed, bureaucratic reluctance to raise worker salaries, “until the country’s productivity is increased,” as well as the excessive centralization of foreign and domestic trade and the insistence on egalitarianism in subsidies afforded by the ration booklet.

Low productivity is invoked in connection with State wages. We know this is untrue for certain sectors, particularly those that are now emerging within the hard-currency economy, but, in order to avoid an economic discussion that can prove confusing, we could say the problem could be easily solved in the third law that was to be established following the triumph of the revolution (described in Fidel Castro’s History Will Absolve Me) which called for a law that would distribute 30% of company profits among employees.

If this regulation were applied to State companies, it would be enough to bring about a substantial increase in work productivity and production in general. It would lead workers not only to avoid misappropriating resources but to make good use of the raw materials at hand but also to become interested in the company’s expenses, in ensuring that purchases, sales and investments are done efficiently and that the company’s management remained transparent, effective and democratic.

The solution to the excessive centralization of foreign trade that stands in the way of granting companies greater autonomy would be to allow companies to control their own incomes (after paying taxes) and to decide what investments they wish to make, purchasing their raw materials, technologies and equipment at home or abroad.

As for domestic trade, the abolition of all internal market monopolies and authorization for producers to negotiate prices directly with buyers should simply be decreed.

How would we then guarantee food for school cafeterias, hospitals and other social institutions? It’s simple: by ensuring these entities have the needed budgets to purchase the food in the market and the freedom to receive direct aid from international organizations, private or public, exempt of all taxes.

Municipal control over incomes through taxation and local budget allocations must be the backbone of a democratic society, where our attention can be focused on these kinds of social issues and not on “centralized State budget allocations” which are commonly divorced from the real needs of the population.

As regards subsidies afforded by a ration booklet that offers the same quantity of low-price food products to everyone, the solution is individualizing food subsidies to aid those truly in need, be it because of their age or their inability to work, such as single mothers, the disabled, orphans, the chronically ill and others.

Eliminating this egalitarian, voluntarist and paternalistic ration booklet would free up resources of every kind (money, food, paper, offices, wages, etc.). This could well make the social assistance system more effective for those who truly need it and force many who have become used to a low level of guaranteed consumption to seek incomes, incentivizing their incorporation into the productive workforce.

These internal obstacles are of course interconnected and related to others that also ought to be eliminated. As long as we are governed by a centralized political and economic model that does not seek true participation from citizens in decision-making processes – as we long as we do not have democracy,– then it will be hard, if not impossible, to materialize these measures, as the existing structure is sustained by a bureaucratic philosophy of control by a single elite.

It’s elementary: paying workers part of the profits garnered by companies, eliminating State monopolies over domestic and foreign markets and individualizing subsidies would deprive the bureaucracy of the three fundamental pillars that sustain its ability to control society.