The Future of Cuba

In July, many Cubans thought Fidel Castro was dead. The former Cuban president hadn’t appeared on live television since 2006, after undergoing intestinal surgery which later forced him to pass on his presidency to his brother, Raúl. This August Fidel spent 11 minutes sharing his concerns about a nuclear war between Iran and America. He has been in the limelight more frequently since August, speaking on events pertaining to foreign policy. Raúl, on the other hand, has been more concerned with domestic issues, saying in a speech that “Cuba will no longer be known as the only country in the world where you do not have to work to live.” In line with this statement half a million Cubans are to be laid off from government jobs in the coming months so private businesses can take over.

The announcement is shocking even though there has been speculation since Raúl took over that the Communist Party will relax its grip on the Cuban economy. In the long-term, privatization, along with other measures, will benefit Cubans. In the short-term, however, this measure is likely to produce a considerable amount of hardship as the transition is made from communism to a partially privatized economy.

Fidel Castro took control of Cuba in 1959 following a revolution in concert with Ernesto “Che” Guevara, Raúl Castro and Camilo Cienfuegos. Cuba became a client-state of the Soviet Union who aided them in building up the second largest military in Latin America by 1961. The military buildup enabled Cuba to defend itself during the Bay of Pigs Invasion, a coup attempt by Cuban exiles supported by America. The following year the Cuban Missile Crisis began. During this event Castro requested that Nikita Khrushchev, then Premier of the Soviet Union, order the nuclear bombing of America.

These events led to the strain in Cuban-American relations that continues, as well as Cuba’s dependence on Soviet subsidies. After the Soviet Union collapsed the Cuban government was forced to look elsewhere for aid. Fidel Castro eventually found a friend in Hugo Chávez, the current President of Venezuela. During the period between Soviet and Venezuelan aid Castro was forced to privatize some small businesses and allow foreign investment, but the arrival of Chávez enabled him to slow down this change.

Cuba’s history, and Fidel’s principle role in it, illustrates the strangeness of his comment regarding the Cuban model. Fidel is usually seen as a defender of the revolution and its principles — in some respects one of its remaining supporters. Raúl, on the other hand, is considered more pragmatic. When he took over from Fidel it was thought that the American embargo would soon be lifted because Raúl would make efforts to improve Cuban-American relations. That this hasn’t happened can be attributed to different factors, but a likely one is that Fidel still has a large influence.

To come full circle, the announcement that Cuba would be laying off half a million workers, thereby privatizing many industries, now appears in line with Raúl’s pragmatism and Fidel’s recent remarks. Despite backing away from his earlier claim, Fidel obviously knew at the time of the interview that the layoff announcement was imminent.

The Castro brothers are in many respects disparate. In the early years of the revolution Fidel was famous for his excessively long speeches, which sometimes went past five hours. Raúl, who was the vice-president and defense minister before he took over as president from Fidel, is much less energetic. Raúl’s lack of flamboyancy means that when Fidel dies there won’t be a strong leader to push the revolution, so perhaps the changes are in anticipation of this. The Cuban government has decided that half a million to a million workers are unproductive. By laying them off they will be left to fend for themselves, either by starting their own businesses (barber shops were privatized this year) or working for other private businesses.

If the privatization trend continues Cuba will eventually switch from communism to capitalism. The Cuban government has stated that this is not the goal, but it is worthwhile to consider the impact the changes will have. In other Latin American countries poverty has steadily been decreasing. A correlation exists between the decrease of poverty and the increase of democracy and anti-protectionist policies. The United Nations Economic Commission for Latin America and the Caribbean estimates that about 40 million Latin Americans were raised out of poverty from 2002 to 2008. Trade and foreign investment of the type Fidel instituted in the 1990s would provide jobs to those who will soon be laid off.

Cuba is still far from being a democracy. Foreign investors need to know that their money will be returned — a centralized government, even with the stability of Cuba’s, is unlikely to produce the growth necessary to stimulate investment. Democracy is preferable because of efficiency (free markets, while not implied by a democratic system, are found most often where democracies exist). A bottom-up system is preferable to a top-down model because the market can respond to need faster than a government can. Further, when people are motivated by the need to support themselves (as well as the desire for autonomy) the needs and wants of others will be fulfilled much faster. This doesn’t mean the welfare state is abolished — many countries, including Canada, have a safety net to catch those who fall below a certain level — but the more open the market when it comes to trade and investment, the better it is for the people.

The other argument for the democratic, open market concept is self-determination. People ought to have control over their lives. In a market system there are limitations (not everyone can be a professional athlete), but these limitations are still less than a command economy without democracy. The Cuban government sets quotas for each job and trains citizens from a young age to become proficient in them — once someone starts a job it is unlikely that they will change during their lifetime. The choices of the government can’t be changed, short of a coup. Citizens should have a say in the way their country is run.

The benefits will show through in the long run. Short-term, Cubans are likely to experience many bumps as the country transfers to its new system, whatever that might entail. Without jobs to go to, or the opportunity for entrepreneurship, the laid-off Cubans are going to suffer. After all, they have been in one industry for their entire lives. Even if the American embargo is lifted, causing U.S. industry to pour into the country, it will take a long time before Cubans become comfortable with the freedom the privatization of industry brings.

In the wake of the Great Recession, many people have become suspicious of open markets. The concern is whether the highs are worth the market crashes and with the recent success of China, which is also communist, the thought is that democracy and open markets aren’t worth it. Yet, China’s success is tied to relaxing its control over the market, not strengthening it. Russia is much the same, although many of its successes from the 1990s have been lost.

Some countries in Latin America, like Brazil, are turning into global powerhouses. Others, like Mexico 200 years after its freedom from Spain, are having difficulty because of economics and drugs. Cuba is the last hold out of a number of countries who tried to implement socialist or communist ideas in the 20th century. In many cases these were justified responses to injustices. Now, communism is holding Cuba back.

1 comment

Leave a comment

Your email address will not be published.