By Pedro Campos
HAVANA TIMES — The Cuban government has just put into effect two classic capitalist economic measures: Imposing taxes on public sector worker salaries and freezing teacher salaries. However, it hasn’t just taken these measures; it has also made cuts to the social security, health and education budgets.
If this isn’t neoliberalism… then somebody tell me what I should call it.
Why does this happens in a socialist, neo-capitalist state in true Stalin style but adapted to the interests and circumstances of Fidelism?
Because the Cuban state’s economy continues to feed off of poorly paid salaried workers, geared towards gaining profits for the all-possessive and extremely high spending government, resulting in what is essentially a capitalist style economy, the only difference being that it isn’t private but belongs to the government and is a monopoly.
In capitalist countries, when economies are based on salaried work, when the government’s bureaucratic mechanism demands resources and needs money, the means they have of getting them are precisely these: raising taxes, freezing or reducing public sector salaries and social sector expenditures.
While salaries exist, they can be frozen and reduced, just like in capitalism. When profits are distributed among workers, no government will be able to reduce salaries. If we had a society where free, private, partner, self-managing, co-operative workers were dominant, the one that democrat socialists in Cuba have been proposing, the government’s involvement would be minimal and it would need very little to keep running and it wouldn’t have the role of being an all-powerful government in a socialist state.
There are countries where the capitalist system prevails, but where many companies of all different kinds function in line with free, private or associated labor laws. These companies also have to pay more tax, however, their own internal system doesn’t run on the same capitalist salaried foundations and therefore they aren’t forced to lay off workers or reduce salaries. They have other mechanisms to avoid laying off staff and implementing significant cuts in salaries.
Many of these companies work together with the communities where they work in a variety of ways and the contributions they make, which are generally converted into indirect benefits for their own workers, don’t have to pay taxes because of their social nature. Thus their assets and profits aren’t taxed as heavily.
Generally speaking, as these are companies where the owner-workers determine their own incomes, the government can’t directly tax them or when they do, they resort to pension funds, aid money, credits, personal use cooperatives, cutting back on investments and other mechanisms they have to try and not significantly alter its workers’ quality of life.
This is one of Capitalism’s concrete advantages that we can appreciate today, which applies to free working companies and not companies who exploit salaried work, many of which are obligated to create corporate social responsibility initiatives in the area where they work. The bigger the investment these companies make in social commitment initiatives (this can be looking after the environment, contributing to social plans within the area such as education and leisure, helping the poor, donating to Churches, to NGOs and others) the less they end up paying in taxes.
In Cuba, this doesn’t happen as nearly everything belongs to the State, the paid public sector worker is forced to comply with government decisions and has no other choice, or defense mechanisms as labor unions answer to the party-state-government, as you already know. The few private businesses that exist, or cooperatives which are allowed, are generally taxed an awful lot which almost all of them are forced to commit tax evasion.
When capitalism is a monopoly State, bureaucracy has better conditions to impose its neoliberal tax and salary policies than it does under private capitalism, where there are many owners. This is why we’re dealing with the worst kind of capitalism, which in Cuba has allowed those who control all of the country’s finances to make and unmake at their whim and violate the International Labor Organization’s laws. They don’t pay their work force what is rightfully due and they impede foreign companies from directly contacting workers. They appropriate the majority share of what Cuban professionals earn who offer their professional services in other countries and maintain the payrolls inflated so that they can internationally proclaim that “there isn’t unemployment” in Cuba, precisely at the expense of driving down the wages they earn.
And this is one of the direct economic reasons why the Socialist State model has failed, which is only socialist in name: they don’t pay their workforce. By not paying their workforce, there is no way to guarantee that capital will constantly reproduce itself in an efficient manner, nor the workforce, as real salaries are constantly being reduced, prices of goods are increasing, production is declining and people end up fleeing to better paid sectors, or emigrating.
And not paying your workforce is the first great violation of our universal human rights, which impoverishes workers who are unable to support their families, their homes, or their property and have less and less money in their pockets to try and create a self-managing independent company that will free them from salaried work.
While workers are unable to create their own associated, cooperative or particular companies by themselves, or with government or private credit, there will never be a way to encourage development of a post-capitalist society, which is truly democratic, human and encompasses a wide range of social issues. Name it however you please.
In any developed or middle-income capitalist country, the possibilities of progressing and creating this kind of society are much greater than they are here in Cuba because of the State’s grip on capitalism and their opposition to developing independent, particular or associated work.
Solution: a change in government, since Fidel’s devotees have demonstrated their incapacity, and which will open the possibility to democratize politics and socialize the Cuban economy greatly.