Since Raul Castro became Cuba’s president, the Cuban government has announced a range of reforms to the country’s post-capitalist economic system. This has resulted in much speculation in the Western corporate media that under Raul’s leadership Cuba is abandoning its commitment to socialism.
Raul Castro, who had served as Cuba’s vice-president since 1976, assumed the responsibilities of president in July 2006, when his elder brother, Fidel, who had served as president since 1976, was suffering from an undisclosed digestive illness. On February 19 this year, five days before his mandate was to expire, Fidel announced he would neither seek nor accept a new term as Cuba’s president.
On February 24, Cuba’s National Assembly elected Raul to succeed Fidel as the country’s president. Since then, the Cuban government has put electrical goods such as mobile phones, personal computers, microwave ovens and electric scooters on sale in state stores, now that the electricity generation and distribution system has been upgraded and millions of energy-efficient appliances have been distributed to Cuban households in an “energy revolution”.
The government has also lifted the ban on Cubans staying in tourist hotels and has given state enterprises until August to implement a new wages system that ties payment to productivity and eliminates the upper limit on what workers can earn.
The most far-reaching changes are being felt in the countryside. Cuba has more than enough arable land to feed its 11 million inhabitants and the two million tourists who visit the Caribbean island each year. Despite its flourishing urban organic farms, Cuba still imports some 80% of the food sold to the population at heavily subsidised prices, at a time of soaring oil and food prices on the world market. Meanwhile, half the country’s farmland lies idle or under-utilised, much of it overrun with the farmer’s nightmare, a thorny tropical weed known as the marabu bush that is very difficult to eradicate.
Now, the most productive agricultural cooperatives and private farmers are being allowed to grow crops and raise livestock on idle state-owned farmland. In an effort to boost production, the state has more than doubled the price it pays farmers for milk and meat, and is encouraging dairy farmers to sell milk directly to schools, hospitals and work centres in the country’s 169 municipalities. Previously, farmers had to sell to a centralised, and inefficient, state distribution network. Farmers can now buy seed, tools and supplies directly from state stores rather than being assigned these goods centrally by the state.
In another move towards administrative decentralisation of Cuba’s highly centralised planned economy, decisions about which crops are grown where will no longer be made at the agriculture ministry’s head office in Havana, but at the municipal level in consultation with local farmers and municpal authorities. Cuba will also seek more foreign investment in agriculture through joint ventures between the Cuban socialist state and foreign investors.
An article on these reforms in the June 13 London Independent was headlined: “The end of Communism? Cuba sweeps away egalitarian wages”. Writing from Washington, DC, former Independent foreign editor Leonard Doyle noted that the decision to scrap what he termed “one of the fundamental pillars of socialism” was announced in an article in the June 12 Granma, the daily paper of the Communist Party of Cuba (PCC). Granma reported that deputy labour minister Carlos Mateu Pereira had announced a new wages policy that would enable Cuba to conform to “the socialist principle of distribution will be achieved wherein everyone earns in accordance with his contribution, in other words, pay in accordance with quality and quantity”.
Mateu said the new “salary system should be seen as a tool to help obtain better results in output and services. Generally, there has been a tendency for people to earn the same, and that egalitarianism is not helpful. That is something that we have to fix ... because if it is harmful to pay workers less than they deserve, it also is harmful to pay them what they have not earned.”
Reporting these remarks, Doyle wrote that the new salary system “will be astonishing to generations who have grown up on a diet of hardline Communist Party doctrine” because marks a move away from “Fidel Castro’s creaky egalitarian model” that has “kept surgeons and taxi drivers on much the same salaries for the past 50 years”.
However it is Doyle, not the PCC leadership, who equates socialism with the attempt to administratively suppress social inequalities in a society that has abolished capitalism but is still very far from having created a socialist society of shared wealth and social equality amid material plenty.
The British Guardian daily made similar false claims in a June 13 article headed “Cuban workers to get bonuses for extra effort”, followed by the kickers “Government abandons egalitarian wage system” and “Pillar of socialism ditched in a bid to revive economy”. In a letter to the Guardian published on June 20, Dr Helen Yaffe – a postdoctoral fellow at the University of London’s Institute for the Study of the Americas and author of Ernesto Che Guevara: The Economics of Revolution – pointed out that there has never been an “egalitarian” wages system (where every worker is paid the same amount) in Cuba.
Yaffe wrote: “Che Guevara himself devised a new salary scale, introduced in 1964, with 24 different basic wage levels, plus a 15% bonus for over-completion. This scale – which I studied during my research in Cuba on Che’s work as minister of industries – linked wages to qualifications, creating an incentive to training, which was vital given the exodus of professionals and low educational level of Cuba’s workers.”
Yaffe notes that, like Karl Marx, Guevara recognised that during the period of transition from capitalism to socialism every able-bodied adult is obliged to work, and those who contribute more to society should receive more from society. “Cuba”, Yaffe noted, “has never claimed to be communist and therefore has never embraced the principle ‘from each according to his ability, to each according to his needs’, which expresses the attainment of communist society.”
Building socialism
In his 1875 Critique of the Gotha Program, Marx explained that while the ultimate goal of the socialist revolution is to do away with “work for money” and “the compulsion to work for wages” and thus the “rationing” of goods and services according to each person’s contribution to social labour, these are unavoidable in a society that is at the beginning of the transition from capitalism to communism. Such a post-capitalist transitional society, Marx wrote, will be “in every respect, economically, morally, and intellectually, still stamped with the birthmark of the old society from whose womb it emerges”.
While the socialist revolution establishes social ownership of the key economic resources and abolishes or severely curtails capitalist exploitation, society is not yet rich enough to liberate the working people from the compulsion to work for wages. Most consumer goods are still commodities, available only to those with the money to pay for them.
During the transition to socialism, the direct allocation of resources according state plans to meet social needs expands at the expense of commodity production, i.e., the production of goods for sale. Beginning with social services such as health care and education and basic goods such as food and clothing, the free distribution of goods and services according to people’s rational needs (not the irrational wants stimulated by capitalist advertising and profit-seeking) gradually displaces money wages as social wealth grows.
Ever-higher levels of labour productivity allow for a steady reduction in required working hours, making it possible for everyone to have greater amounts of non-working time, including time to voluntarily participate in discussions and decision-making in the management of their workplaces and in the public administration in general. Full socialism (communism) is achieved when, on the one hand, society is so rich that it is no longer necessary to “ration” the goods people need according to the individual’s labour contribution to society and, on the other hand, work is no longer a social compulsion but has become the voluntary creative practice of free men and women imbued with a communist consciousness.
Che’s contribution
In his famous essay “Socialism and Man in Cuba”, penned in March 1965 when he was minister of industry in Cuba’s revolutionary government, Che Guevara grappled with the difficult problem of how to achieve higher levels of productivity while simultaneously cultivating communist consciousness.
Guevara contrasts this communist consciousness with the selfish individualism of capitalist society. The convulsive forces which drive capitalism “are blind and are invisible to ordinary people, act[ing] upon the individual without he or she being aware of it. One sees only the vastness of a seemingly infinite horizon ahead... The reward is seen in the distance; the way is lonely. Furthermore, it is a contest among wolves. One can win only at the cost of the failure of others.”
To forge a communist consciousness, “on the one hand [the revolutionary] society acts through direct and indirect education; on the other, the individual submits to a conscious process of self-education. The new society in formation has to compete fiercely with the past. This past makes itself felt not only in one’s consciousness – in which the residue of an education systematically oriented toward isolating the individual still weighs heavily – but also through the very character of this transition period in which commodity relations [i.e., money, wages] still persist. The commodity is the economic cell of capitalist society. So long as it exists its effects will make themselves felt in the organization of production and, consequently, in consciousness.”
Che warned that, confronted with the misery and backwardness inherited from centuries of colonial rule and six decades of imperialist exploitation, in underdeveloped countries, “the temptation is very great to follow the beaten track of material interest as the lever with which to accelerate development. There is the danger that the forest will not be seen for the trees. The pipe dream that socialism can be achieved with the help of the dull instruments left to us by capitalism (the commodity as the economic cell, profitability, individual material interest as a lever, etc.) can lead into a blind alley.
Meanwhile, the economic foundation that has been laid has done its work of undermining the development of consciousness. To build communism it is necessary, simultaneous with the new material foundations, to build the new man and woman.”
While Guevera is often dismissed as a romantic idealist, he did not reject the use of material incentives (higher monetary remuneration for producing more and better goods). While he emphasised the importance of cultivating a communist consciousness through the use of moral incentives (such as social recognition for outstanding effort and volunteer work brigades), he believed that moral incentives must be used “without neglecting, however, a correct use of the material incentive – especially of a social [i.e., collective] character”. In essence, Che called for a balanced combination of moral and material incentives.
The ‘Special Period’
The collapse of the Soviet Union at the beginning of the 1990s plunged Cuba into a profound economic crisis known as the Special Period. The government’s top priority was to avoid mass starvation and to ensure that the hardships caused by the loss of trade with and aid from the Soviet Union were shared as equitably as possible. It did this by extending the ration book system first introduced in the early 1960s at the beginning of the US economic blockade, which is still in place almost 50 years later.
Through the ration book system Cubans purchased a monthly quota of basic goods at highly subsidised prices. In the early ’90s this system was expanded to cover almost all available consumer goods.
Faced with the loss of 80% of its imports and a 35% decline in its GDP, instead of throwing millions out of work, the Cuban state continued to pay people 60% of their wages while factories lay idle for lack of fuel or raw materials. As supplies of imported goods slowed to a trickle and the stores selling non-rationed goods emptied, the Cuban peso became almost worthless, declining from a black market rate of seven pesos to the US dollar in 1989-90 to a low of 120 pesos in 1994.
The material incentive to work had collapsed, yet the great majority of Cubans heeded the PCC leadership’s appeals to keep working. No schools or hospitals were closed and no-one was left destitute. The sense of solidarity with which most Cubans responded to the crisis revealed that the political awareness and ethical values sown by three decades of socialist revolution had taken deep root in Cuban society.
Cuba had no choice but to reintroduce elements of capitalism and concessions to market mechanisms – more joint ventures between the Cuban socialist state and foreign investors, legalising the possession of US dollars, a free market in agricultural products, the expansion of self-employment, self-financing of state enterprises and a tourism-led recovery – in order to save the socialist revolution.
The building of socialism would have to be put on hold for the duration of the Special Period, and the revolution would have to walk a precarious tightrope between economic stagnation and the tendency of the market forces to lead to growing social inequality, the corrosion of socialist values and the restoration of capitalism.
While the expansion of market mechanisms had the desired effect of stimulating economic output – leading to a gradual recovery during the second half of the 1990s – it also led to a sharp rise in income inequality as a “new rich” sector emerged among the more successful self-employed entrepreneurs. Others amassed small fortunes by plundering state property to sell on the thriving black market, while still others received substantial dollar remittances from relatives living in the US.
A social divide opened up between the minority who had access to US dollars and those who didn’t, undermining the ethical foundations of the socialist project. The social pyramid was inverted. That a hotel waiter could earn more in tips from Western tourists in a single night than a state-employed heart surgeon earned in a month became an insoluble ethical dilemma.
Linking income to work
As Cuba emerges from the Special Period, it must reassert the principle that those who contribute more to society should receive more from society, as explained by Central Bank president and PCC central committee member Francisco Soberon in a speech to the National Assembly in December 2005. “Under capitalism”, Soberon noted, “absolute insecurity about the future and the threat of being literally crushed by that fierce and inhuman system forces persons to use all their physical and intellectual resources not only to obtain a daily survival but also to try to create a monetary reserve that could free them, at least partially, from this distressing insecurity.
“In our socialist system, this climate of uncertainty disappears and man is guaranteed a large part of his basic necessities, regardless of his contribution to society. Comrade Fidel once said that the Revolution would not achieve its highest moral values until we are capable of producing more as free men than as slaves. I believe that ... we have not yet achieved those high values. Under these circumstances, it is of utmost importance that the distribution of goods and services is clearly and directly linked to the standard of living with the effort of each from the position he occupies in our economic structure.”
Soberon explained that with the emergence of a “new rich” sector during the Special Period, the rationing system and other state subsidies were subsidising the “new rich”, allowing them to pay next to nothing for food, housing, utilities and transportation.
“Paradoxically”, Soberon said, “the present system of highly subsidised distribution aimed at guaranteeing the basic needs to those who live from their salary ... also benefits a rather large number of persons who receive incomes in foreign currency or higher salaries in national currency to such an extent that they can cover the subsidized products and services for a year for a fraction of their incomes.” This situation is not only economically untenable, “it is ethically and morally unacceptable that someone of working age can live comfortably without the need to work”.
The worker who relies solely on his wage, salary or pension “finds himself in a difficult situation because the money he earns may be more than he needs for” rationed products, said Soberon. “However, it is not enough to buy products that are also necessary but which are sold at market prices” in the convertible currency stores.
All these factors contributed to a situation “where the salary no longer truly motivates” a person to work. He or she may keep working “for a number of reasons, some honourable ones such as self-esteem and a sentiment of revolutionary duty; but others do not feel the same things”. But some kept their jobs as cover “for criminal activities”, and this was particularly harmful when a worker “has authority over important material wealth, becoming a primary factor [in] corruption and fraud”.
Soberon gave the example of “a thief who has stolen ten sacks of sugar, taking advantage of his position in the distribution chain of [rationed] products for his criminal purposes”.
The solution, according to Soberon, was to raise prices (as has been done with electricity) and increase wages and salaries “according to the social importance of each person in his work”. This would, he argued, gradually close the income inequality divide that opened up during the Special Period and re-establish the correspondence between income and the labour individuals contributed to society.
This is the solution that is today being implemented by the Cuban revolutionaries. It will undoubtedly pose new challenges. Anticipating these, in his July 26 speech last year, Raul Castro observed that it “is the duty of each and every one of us, of party cadres especially, not to allow ourselves be overwhelmed by any difficulty, no matter how great or insurmountable it may seem to us at a given moment. We must remember how, despite the initial confusion and discouragement, we managed to face up to the first, harsh years of the Special Period early the last decade, and how we managed to move forward. What we said then we can more justifiably repeat today: Yes, we can do it!
“In response to bigger problems or challenges, more organisation, more systematic and effective work, more studies and predictions on the basis of plans where our priorities are clearly established and no one attempts to solve their problems at any cost or at the expense of others. We must also work with a critical and creative spirit, avoiding stagnation and schematics. We must never fall prey to the idea that what we do is perfect but rather examine it again. The one thing a Cuban revolutionary will never question is our unwavering decision to build socialism.”
[Marce Cameron is a member of the national executive of the Revolutionary Socialist Party and an activist in the Sydney branch of the Australia-Cuba Friendship Society.]