The Fate of Cuba’s Micro, Small & Medium Enterprises

The Cuban legislature finally approved the legalization of MSMEs

By Benjamin Noria

HAVANA TIMES – In Cuba, the acronoym MIPYMES (MSMEs) means the micro, small and medium-sized enterprises that the Government has authorized and is interested in to drive economic growth on the island.

On the front page of Granma newspaper, on Friday October 15th, journalist German Veloz Placencia published a column under the headline: Diaz-Canel reiterates support for MSMEs. According to German, Diaz-Canel said: “We will build the best country between us all, the one we deserve…”

That said, a company is a body with capital (constant and variable), destined to produce and reproduce services and goods, on an industrial scale too, to obtain a yield or surplus that can satisfy the company owner’s needs and pay employees enough for them to recover their strength and maintain their families.

Plus, in the treatise called: The Wealth of Nations, by Scottish economist and philosopher Adam Smith, it says that the best way to use capital in production and distribute wealth is when the Government does not intervene.

According to Adam Smith, the production and exchange of goods increases, thereby increasing the population’s quality of life, if the private business owner – industrial or commercial – can act freely with minimum regulations and government control.

The Cuban Government is not going to stop intervening excessively in the development of MSMEs, because it doesn’t want anyone to one up them or have more power. They haven’t allowed this to happen in the 62-year-long history of the Revolution, and this won’t start now.

The Castros and Diaz-Canel regime promised to remove over 20 obstacles that affected the economy in 2020, but there has been no sign of this yet. 

For example, no Cuban can import goods in large quantities into the country directly, so they can then be sold. To do this, they must hire a Cuban state-led company that dedicates itself to bringing things in from other countries and they have to pay them expensive duty fees and taxes, of course.

The Cuban Communist Party’s Ideological Department still decides what can and can’t be done. The economy continues to be centrally planned, so it is hard for surplus value to exist which is the return that encourages owners to produce and increase the value of the product.

The Cuban Government fixes prices and regulates their implementation. There is legislation nowadays that bans state-led companies from hiring the self-employed and cooperatives.

The regime has enshrined in the Law which self-employment or private activities are authorized, in line with the purposes of its socialist society. 

The Government enacted Article 4 in the 2019 Cuban Constitution, which states that the socialist system that this Constitution supports is irrevocable, which means that the collective property of means of production that is state socialism, will always take precedence over private property, which was the object of scorn for many years.

It reached the point when private workers had eggs thrown at their front doors in 1988, as well as those who received remittances from the US. [Ironically, today there is a tremendous shortage of eggs in Cuba so they are no longer used in hate rallies.]

As we can see, the failure of MSMEs is pretty much a sure thing, we just must wait and add it to the other list of failures that have been piling up since the beginning of the Cuban Revolution.

Read more from Cuba here on Havana Times.