Cuba: between the need for adjustment or slow death
For years, many experts insisted on the need for Cuban authorities to restructure the national economy seriously, deformed by monetary and exchange rate duality, lack of productivity, and generally battered by a comprehensive sanctions regime applied by the United States. But restructuring is equivalent to saying adjustment, a word largely banned in the jargon of the Cuban government as it is connected to belt-tightening policies like the applied by the “libertarian” Pink House of Javier Milei. The latter is at the antipodes of the preaching and practice of the Cuban Communist Party in power, devoted to paternalism and egalitarianism. Thus, the revolutionary Havana avoided as much as possible to advance in this direction, foreseeing a negative effect on a large part of the citizenry, generally employed in the public sector and receiving meager salaries.
However, Raul Castro's administration, which emerged from the surprise departure of his brother Fidel Castro from the country's top positions in 2006, began an interesting, quietly aborted, and mostly forgotten process of socio-economic reform which, in short, amounted to an adjustment. The keys were to seek greater rationality in spending and to free Cuba's socialist system from the hindrances to productive activity, all under the vague notion of “updating the economic model”. Although the direct influence of the historical leader of the Cuban Revolution in major decisions was sustained after 2008, when he declared that he would not accept the position of President of the Council of State in the new legislature elected that year, the approach that Raúl Castro tried to advance in the management of the government—very marked also by the call to reinforce institutionalism over personalisms—was clearly identifiable.
The logic of the younger Castro was based on a classic principle: “you cannot spend more than you have”. In the 2010 budget, Cuban congressmen set a deficit equivalent to 3.5% of Gross Domestic Product—still acceptable by standards, whereas today the fiscal deficit is estimated at 10% of GDP—but the new man at the helm was not happy. “I can affirm that there is room for improvement in all the nation's activities,” he said, immediately exemplifying how in flagship sectors for the Cuban Revolution such as health and education—whose services are essentially free to the consumer—major spending cuts could be made without compromising their development. Yet where he tried to make the most progress was in banishing the idea that in Cuba “one can live without working”, due to the wide—and costly—support network that, at least then, the State deployed, the low control of the correspondence that must exists between income received and results delivered by workers, the lack of suitability for the positions held from many of them, and the inflated payrolls.
SourceThus, with Raúl Castro, a process began whereby many workers became “available” both because of the reduction of public payrolls and because of the lack of “demonstrated suitability”. The intention was that those who became available—an euphemism for the unemployed category—would join the private sector, which still had many restrictions and was barely walking again after many years locked in the dark room, and particularly that they would turn to food production through the exploitation of usufruct lands that the State began to cede by then—an alternative that did not apply to most of them. This measure never became massive at all, and the government backed off because of the projected impact it would have on its social base of support. Moreover, since then and up to now, the necessary elimination of universal subsidies to make way for a targeted assistance policy has still not been implemented.
For example, the government continues buing commodities in the violent international market to supply—every time with less regularity and less products due to the lack of liquidity and access to credit—a basket of basic products such as rice, sugar, powdered milk, cooking oil, beans, and poultry, which it then sells at symbolic prices to the entire population regardless of their economic status. Four years ago, the country's top leadership, with Raul Castro still as Premier Secretary of the Communist Party, kicked off the biggest adjustment experiment, which involved, at first, the elimination of the dual currency and exchange rate, but it did so at the worst moment: amid the Covid-19 pandemic and with an aggressive administration in the White House—which hit the fuel procurement process, a measure active today. That was called the “Ordering Task,” which got messy and derailed by a lack of comprehensiveness in its implementation and a timorous approach to making tough decisions. In the end, everything turned the other way around, and the country ended up deeper in the ditch.
SourceBut I would like to vindicate Raul Castro's approach because, ultimately it is not right to misrepresent the state of the economy. It is not right for people to receive incomes that do not correspond to their returns in terms of productivity. It is not right, for example, that at my university, most students do not take advantage of the opportunity they have to study a coveted, top career such as computer science engineering for free—missing classes, performing dismally—while the institution spends substantial resources for food or transportation. It is not right that we don´t produce tangible goods or services in a highly profitable sector such as the software industry while the university even pays for the electricity in our residence and does not even charge us for the food we also receive for our children. It is not a matter of copying Milei's orthodox plan, which, while exhibiting achievements in macroeconomics, has many people going hungry without this dynamic being in his sights.
It is a matter of adopting all those measures that once and for all order the economic-social relations—in which right now there is no better ally for the Government than the national private sector—without compromising the social approach of the Cuban Revolution, but on the contrary. It is possible to move forward by appealing to consensus with producers, private actors who have funds to import, and with the academy that says enough is enough of putting money into the tourism infrastructure—in an investment scheme that increasingly resembles a speculative real estate bet of foreign chains with the connivance of Cuban authorities—which has long not yielded what is expected, with very low occupancy rates. All this is under the understanding that the U.S. policy towards the island will remain unchanged or even more aggressive and targeted, which will limit any Cuban effort, even if it is very well designed and implemented.
Trump travel ban: ‘no exceptions’ for #Cubans , #Venezuelans. Other islands may join Haiti on list. W/@Jacquiecharleshttps://t.co/SWBHtcmTGi
March 13, 2025— Nora Gámez Torres (@ngameztorres)
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It is a testament to your courage and rationality you aver that correspondence of productivity to supply of civilian needs must apply, despite the many decades of state management of incomes and economic participation of individuals. The market is inexorable, implacable, and shielding individuals from it's voracious maw creates insuperable expectations and marked misunderstanding of the necessity of that correspondence from the sheltered.
Sadly, the universal application of the state to all civilians creates a universal dependence on it, and only when the entire population suffers intolerably is it's insufficiency no longer obfuscable. Given the lack of understanding the population accustomed to dependence on the state, and their unfamiliarity with market forces on a personal level, when that eventuality is forced upon them by malignant external economic pressures, as Cuba certainly is confronted with today, the people have no grasp of the means by which to surmount their suffering by virtue of the productive merit, as there has not been any correspondence between their economic productivity and their economic expenditures, those metrics being the sole province of the state in a Communist government.
Cuba thus faces a dire deficit of understanding of capital and it's application, particularly as capital is not money, but actual wealth which is primarily the beneficial relationships of love and affection that binds society, but also comprises the goods and services necessary to humanity civil society avails. In a state of nature, trees expend their capital of sugar and nutrients in the spring when producing new leaves in seasonal climes where winter is unproductive of sunlight - something Cuba isn't as affected by - to profit from photosynthesis in the summer. This understanding of capital outside of financial metrics reveals that centralization, not capitalism, is the actual defect of financialization that Communism affects to solve, and that informs understanding of potential solutions the Cuban people can undertake to resolve the inability of the government to overcome the financial warfare waged against Cuba by the US.
Such understanding is outside even overtly Capitalist polities, as profiteers obscure understanding of their herds from which they derive their sybaritic wealth, lest that population on which they parasitically depend apply sound understanding and apply it to themselves retain the benefits of their productivity and reduce the flow of wealth to their overlords. The advance of technology today ubiquitously occurs by decentralizing means of production, which disenfranchises centralization by all economic metrics, including financial. Given the economic reality that nature is capitalism in action, as living organisms invest in physical features like teeth and claws to profit in the form of protein and carbohydrates by consuming their prey, the people of Cuba might better gain understanding of the utility of decentralized means of production to their economic plight if productivity is decoupled from financial means, but considered from more natural flows of nutrients, habitat, and the resources necessary to species in natural ecosystems.
As these are the ultimate necessities that human beings actually need, being unable to live in piles of money, to eat piles of money, or wear money to insulate them from the rain or morning chill, and government being focused on financial metrics, perhaps approaching economic realities might be more rapidly attained and real wealth necessary to living in the real world become realized by the people of Cuba from the perspective of ecology, rather than finance.
Thanks!
I find your understanding of what capital is very interesting and sound, naturally connected with your vision of how we need to be more proactive in securing our sources of consumption to gain true independence. Incidentally, this week a student here presented to colleagues a proposal on the development of solutions based on the use of 3D printers for the Cuban context. I remembered your guidance on this issue.
Thanks for your always helpful feedback.