Winnipeg Free Press - PRINT EDITION

Castro's management of 'free' market is doomed

  • Print

According to some in Miami, Cuba remains Fidel Castro's island, its economy throttled by the all-too-visible hand of collectivist central planning. News that Cuba loaded Soviet-era missiles on a North Korean ship, apparently for repair by Kim Jong Un's regime, may reinforce that impression. In fact, since Raul Castro took over from his elder brother in 2006, he has moved to dismantle Fidel's system.

One way or another, perhaps 15 per cent to 20 per cent of Cubans now work in the private sector. More are likely to join them in all but name as their jobs move into co-operatives. Much of the spadework for a mixed economy, such as laws on taxes and banking, has been quietly carried out. Reform is about to gain pace, with state enterprises winning more autonomy and steps toward the abolition of Cuba's system of dual currencies.

But change is still being held back -- mostly by the regime's ideology, but also partly by the outside world not helping enough. Raul is determined to avoid a Soviet-style collapse into oligarchic capitalism. The leadership's mantra is that the economy must be "socialist, prosperous and sustainable" -- an impossible trinity. Although officials now accept the need for "wealth creation," they still disapprove of people getting rich. Small businesses are now officially blessed, but they are not allowed to grow into medium-sized ones. Until they are, the prosperity the leadership seeks will be unattainable.

The cautious nature of reform is generating new distortions. Farming, for instance, is supposed to be in the vanguard. Most land is now worked by individual farmers rather than state-owned enterprises, and farmers can sell some produce in the private market. But they are still hobbled by state bodies that fail to supply fertilizer, seed and other inputs. Meanwhile, the web of restrictions around the private sector creates scope for graft. Ironically, the move toward a single currency may involve several exchange rates, and thus fresh distortions and corruption.

Currency and enterprise reform are fiendishly complex and take time. They will inevitably create losers: Both unemployment and inflation will rise. That makes it all the more important to sweep away the remaining curbs on farmers, small businesses and the wholesale trade so market forces can do the work of generating jobs and keeping prices in check. The government should introduce a conditional cash-transfer program, like Brazil's Bolsa Famlia, to help the losers.

The outside world matters, too. The tempo of reform has increased since Hugo Chavez's illness and death: Cuba depends on Venezuela for around 40 per cent of its foreign exchange, provided essentially as a donation to keep the red flag flying, and the future of that aid is now uncertain. Cuba is developing new trading partners -- China, Brazil and Angola, for example -- but on capitalist terms. The missing name is America. Though the United States' economic embargo against Cuba has sprung leaks, it limits Cuban-Americans to being providers of remittances. Diasporas played a crucial role in the transition to capitalism in China and Vietnam. They could help Cuba too. Similarly, swift and clean monetary reform would be much easier if Cuba could draw on support from the International Monetary Fund and the World Bank to augment its meagre foreign-exchange reserves.

One obstacle to that is the United States, where the Helms-Burton law requires America's delegates to vote against Cuba's admission to international financial institutions. That is a pointless piece of bullying. Its only effect is to conspire with Cuba's own residual Stalinists to make the island's transition to capitalism harder and slower than it should be.

Republished from the Winnipeg Free Press print edition July 20, 2013 A17

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Your top TV picks for this week - December 8-12

View more like this

Photo Store Gallery

  • A young gosling flaps his wings after taking a bath in the duck pond at St Vital Park Tuesday morning- - Day 21– June 12, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Two Canadian geese perch themselves for a perfect view looking at the surroundings from the top of a railway bridge near Lombard Ave and Waterfront Drive in downtown Winnipeg- Standup photo- May 01, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

What's your take on the Jets so far this season?

View Results

View Related Story

Ads by Google