April 19, 2013
Socialism With Cuban
Characteristics: Part II
William M. LeoGrande
The real test of Cuba’s reform process under President Raul Castro will come in
the state sector, which still employs most of the labor force and produces more
than 80 percent of GDP. The goal is to modernize the sector to make it more
efficient. But the government’s political will to follow through on reforms, and
the social and political consequences they may have, remain open questions.
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Socialism With Cuban
Characteristics: Part II
William M. LeoGrande
19 Apr 2013
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Editor’s note: This is the second of a t wo-part series on Cuba’s economic reforms. Part I looked
at the reforms to date. Part II examines the challenges facing f uture ef forts.
Cuba’s economic reform -- or “updating” of the economy, as the Cubans prefer to call it -- is aimed
at introducing market mechanisms to boost Cuba’s anemic productivity. “We have to erase forever
the notion that Cuba is the only countr y in the world in which people can live without working,”
President Raul Castro told the National Assembly in August 2010.
So far, the changes being car ried out in the agricultural and small business sectors demonstrate
that Cuba’s leaders are serious. For all intents and pur poses, agriculture is undergoing de facto
privatization, and the incipient private sector is expected to become a major contributor to GDP.
However, the real test of the reform process will come in the state sector, which still employs
most of the Cuban labor force and produces more than 80 percent of GDP. The government’s goal
is not to privatize the state sector but to modernize it so that it produces efficiently. The “perfeccionamiento empresarial” (business improvement) model is the same one Raul Castro introduced
in defense industries in the 1980s. Enter prises will have to adopt standard accounting practices
and become profitable. Control over business decisions will devolve from central ministries to
enter prise managers, who will have the power to lay off unnecessar y labor. By the government’s
own estimate, as many as a million workers in the state sector hold jobs that should be eliminated.
State enter prises that fail to become profitable will be at risk of closure.
Two big question marks loom over this updating of the Cuban model. First, will the government
have the political will to push such a major reorganization of the economy through to completion?
There is already evidence that conservatives ensconced in the state and par ty bureaucracies are
resisting change by slow-walking the reforms. This is nothing new, especially in the state sector,
where the business improvement reforms date back to 1998, but had reached fewer than a third of
state enter prises by the time Raul became president in 2006.
In 2011, Raul warned recalcitrant bureaucrats that he would not tolerate inaction: “We shall be
patient but also perservering in the face of resistance to change, whether conscious or unconscious.
I warn that any bureaucratic resistance to the strict fulfillment of the [economic guidelines], massively suppor ted by the people, is useless.” To be cer tain that these policies would not become
a dead letter like so many earlier ones, Raul created an implementation commission, headed by
Vice President Marino Murillo, former minister of economy and planning, to repor t regularly on
progress.
The second question facing the reform process is what social and political consequences it will
have. Castro has promised that he will not subject Cuba to “shock therapy” and that “no one will
be left behind.” But if market forces are given free rein, Cuba’s income disparities are sure to
increase even more than they have in the past two decades. There will be winners and losers. Those
who are well-educated, live in cities where economic development is more dynamic and have acWPR BRIEFING | WWW.WORLDPOLITICSREVIEW.COM
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The government pledges to maintain the collective welfare system of which the revolution is most
proud, including free health care, free education and social security. But other state subsidies for
consumers are already being phased out, including the ration card, which Raul called “an unbearable burden” on state finances. Instead of subsidizing ever yone’s consumption, the government
plans to subsidize only the poor.
As the availability of jobs in the private sector grows, the government plans to lay off up to a
million state sector workers, or 20 percent of the labor force. But an initial plan in 2010 to lay off
500,000 in just six months was indefinitely postponed because there was no place for them to go.
Concern about the social dislocation that will inevitably accompany such a radical economic shift
is clearly on the minds of Cuba’s leaders. The pace of change will be slow and steady, “in order
not to er r,” Raul has said. “To those [who] are encouraging us to move faster, we say that we will
continue without haste, but in a measured way, with our feet planted firmly on the ground.” A measured pace will also allow for recalibration of the reforms if political circumstances demand it.
The revolution itself is at stake in this process. The founders of the regime (“los historicos”), are
gradually passing from the scene. Having announced his intention to step down as president at the
end of his cur rent term in 2018, Raul is determined to repair the economy before handing the baton
to the next generation of Cuban leaders. Until now, the older generation has been reluctant to cede
the stage to their successors, with the result that few of the younger generation have experience
at the highest level of decisionmaking -- or the visibility and political savvy that comes with it. The reform process has generated a new feeling of hope among many Cubans, as well as some
anxiety. If it stalls or fails, popular disillusionment will be enormous, dealing a severe blow to
the regime’s legitimacy just as new, untested leaders are taking over. But even success will bring
a new challenge for the next generation: In an economy driven as much by the market’s demand
for efficiency as by the ideals of the revolution’s founders, can Cuba maintain the values of social
justice that motivated the revolution in 1959 and have been at its ideological core ever since? □
William M. LeoGrande is professor in the Department of Government, School of Public Af fairs at
American Universit y in Washington, D.C.
Photo: Street in Havana, Cuba, Apr. 26, 20 07 (photo by Flickr user darkroomillusions licensed
under the Creative Commons Attribution 2. 0 Generic license).
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cess to hard cur rency will be well-positioned to thrive in a freer economic environment. Those
who are low-skilled or elderly, live in r ural areas, have no relatives abroad to send remittances and
suffer from racial discrimination are at risk.