From: "Joseph Green" <comvox-AT-flash.net> Date: Thu, 25 Sep 1997 23:18:55 +0000 Subject: M-I: Castro embraces the state-capitalist model (part one of 3) Cuba's economic system of the 1970s and early 80s: CUBAN "SOCIALISM" ADOPTS THE SOVIET STATE-CAPITALIST MODEL (part one of three) The following article by Mark of the Communist Voice Organization appeared originally in CV, vol. 3, #1, March 1, 1997 (issue #12). *Below is a list of the subheads in Mark's article:* (part one) -The 1970s: state-capitalism solidifies under the banner of a "retreat to socialism" -Market methods within the state sector: "self-financed" enterprises (part two) Creating greater wage disparities and unemployment -Treating state property as private property -Private interests in the state economy undermine planning -Expanding the private sector -Government "parallel markets" mimic private markets (part three) -Expansion of small private manufacture and services -Division of cooperative farms between rich and poor -Further integration into the Soviet bloc -Influence of the market capitalist countries on Cuba -Revolutionary communism or Cuban revisionism? *And now for the text of the article:* The revolution of 1959 brought much progressive change to Cuba. A major land reform was carried out and the conditions of the poor were improved through extensive social reform. Within a few years after toppling the tyrannical, U.S.-backed Batista regime, the Castro government nationalized the U.S. and other foreign capitalist holdings as well as the large businesses and farms of the Cuban bourgeoisie. In the midst of this transformation, in the early 60s Castro declared that Cuba was building socialism, created a new allegedly "communist" party and tied the country closely to the supposedly communist Soviet Union. The view that socialism was being built in Cuba spread widely among the left in the U.S. and elsewhere. But, as the old saying goes, appearances can be deceptive. The Soviet Union had long ago degenerated into a state-capitalist order. The Castro regime, despite going off on a few of its own (non-Marxist) tangents, largely fell under the sway of the phony revisionist "communism" of the Soviet leaders. Thus, a state-capitalist order began to be set up in Cuba. These days, the capitalist nature of Cuba is becoming ever more clear. With the collapse of the Soviet Union and the other revisionist (phony communist) regimes of Eastern Europe, Cuba has been in a severe crisis. True, Castro holds on to power and still talks about socialism. But the regime's way out of the crisis is to offer up the state sector for privatization, legalize the extensive capitalist black market, and bank on foreign capitalist investment to save the day. State-capitalism is evolving into private capitalism. Crises bring to the fore things that are hidden beneath surface appearances in ordinary times. They can strip away hypocritical veils. But though the recent methods taken up by the Cuban leaders has helped expose the true nature of the state- capitalist course they have taken, it is fashionable in the left today to shut one's eyes to what has been going on. For some, if Cuba still has something left of its social safety net, that is reason enough to fawn over the Cuban social system. For the pseudo-Marxist trends that come out of the Soviet revisionist or trotskyite tradition, if state property still exists, that is all the proof needed that Cuba is socialist or at least some kind of workers' state. Yes, some among these just-mentioned trends have all sorts of criticisms of Castro's reign. Nonetheless, by obscuring the class nature of the Cuban social system they confound proletarian socialism with state-capitalist oppression. Our trend, anti-revisionist communism, opposes these approaches. Mere recognition that the remnants of certain social programs still exist cannot justify defense of the Cuban system when the last revolutionary measures ended decades ago and a new system of exploitation weighs down on the masses. Nor does clinging to the myth of Cuban socialism do any good for those who seek to attain the real thing. What is useful to those who aspire to the liberation of the workers is not comforting fairy tales, but a genuinely Marxist perspective of the socialist and communist future. The revolutionary activists need to understand that standing with the Cuban workers today is not simply a matter of condemning U.S. bullying of Cuba, but of supporting the development of revolutionary working class politics in Cuba *in opposition to* the Castro regime and the state-capitalist order. To this end, Communist Voice has been carrying a series of articles examining the evolution of the state-capitalist economic system in Cuba and its more recent partial evolution towards private capitalism. The policy followed by the Cuban leaders goes through certain phases. In the first couple of years after the revolution, the Castro regime carried out some radical social reforms and, whatever its original intentions, the government wound up with the former property of U.S. and other foreign imperialists and the larger Cuban capitalists in its hands. In the remainder of the 1960s, the Cuban leadership experimented with various types of economic models. By the end of the 60s, the dominant model was one which gave a section of the bureaucratic elite more centralized power over the economy so that they could better carry out some arbitrary and ill-fated development schemes. When the dust of the 60s settled, the Cuban hierarchy settled down into the state-capitalist model based on the type of policies then prevalent in the Soviet Union and Eastern Europe. From the 70s on, the state-capitalist order has gone through periods where the mix of market reforms and bureaucratic controls changes, with the bureaucratic controls portrayed as defending socialism or as communist measures. But in fact the government controls did not stop the general development of private interests, and gradually adopted themselves to it. Although certain left trends promote that the Castro regime was following a wonderful new path, this basic pattern is similar to what went on in the Soviet Union. The late 80s is a period when the Cuban leadership, under phony "communist" rhetoric, cracks down on some private market openings but doesn't bring about any basic change. Then there is the period following the collapse of the Soviet Union and the Eastern European revisionist states, which devastates the Cuban economy. To cope with this, Castro turns to the market and foreign capitalist investment. Once again, just as the growth of private interests under state-capitalism paved the way for private capitalism in the former Soviet Union, so Cuba is embarking on a similar course. A previous article in Communist Voice chronicled the capitalist-type measures taken by the Castro government since the economic ruination in the wake of the collapse of the Soviet bloc. Two other articles focused on puncturing the hoax that in the mid- 80s, the Cuban rulers began to carry out a "rectification" that fundamentally challenged the system of state-capitalist economic organization that held sway from the early 70s.(1) These articles show that even in countries where the means of production are predominantly state-owned, the state sector and economy as a whole does not necessarily operate on socialist principles. This article will further illustrate this point with a brief look at some of the main features of the system established in the early 70s. It will attempt to illustrate how this system allowed capitalist methods to be consolidated in the state sector while giving wide play to the private sector of the Cuban economy. THE 1970S: STATE-CAPITALISM SOLIDIFIES UNDER THE BANNER OF A "RETREAT TO SOCIALISM" The policies adopted in the 1970s were portrayed by the Cuban rulers as a retreat back to socialism, a period that creates the conditions for communism, from an attempt to leap directly to the higher stage of communism. If that was what was going on, this period would have been a reasonable retreat necessary to continue on a revolutionary course. But under the mantle of "retreating to socialism" something quite different was happening. Let's review what socialism is, so as to judge whether the policies of the 70s were bringing it closer. Socialism entails the abolition of the private ownership of all the means of production and the direction of the economic system as a whole by the working masses. Such control over the economy goes beyond each group of workers running their own particular factories, or peasants their individual or collective farms. It means that each factory and farm is subject to the direction of the working masses as a whole. The new revolutionary state power established by the working class following the overthrow of the bourgeoisie is the means by which the masses can have such overall control. But the building of this new society can't happen overnight because, at its birth, the new society will still have a number of features and habits left over from capitalism. The achievement of socialism requires a whole process whereby the masses organize themselves, learn how to run the affairs of state and administer the economy. Nationalizing the means of production can be done with relative ease, but the achievement of real workers' administration and control is a protracted task. In the process of doing this, money and using various types of financial accounting and incentives will be necessary for a time. As well, the state can take over large enterprises rather quickly, but the voluntary socialization of small farming and other petty production is a protracted process and initially it can only be regulated. But progress toward socialism can only be measured by the ability to overcome these leftovers from the old social order. Building socialism requires working toward the elimination of a separate management stratum. Society can only advance toward socialism if the motivations necessary for disciplined production can move beyond relying on direct financial reward for oneself or one's workplace. Only in this way can the new society work toward eliminating all class distinctions and inequalities. In Cuba, despite periodic rhetorical bows toward achieving these goals, quite something else happened. In the 70s, a separate bureaucratic stratum, detached from and lording over the masses, had its rule formalized. Each and every problem was supposed to be solved by finding just the right financial incentive while the workers simply waited for the next scheme to be pronounced from on high. The policy shifts revolved around how to best to build an economy based on competing private interests, and basing the economy on overall societal interests and planning became impossible. Likewise, the idea of working to overcome wage inequalities faded away. And when it turned out that all the material incentives promised the workers wouldn't provide much for them, the ruling elite offered the alternative of extending the private sector where some more goods are available but are largely unaffordable. No matter how much opening the private capitalist forces were given, the substantial black market stood as a constant sign of the inability to establish real overall planning, much less socialism. The model applied universally in the 70s had already been tried for several years in the 60s in the agriculture and foreign trade sectors. But in the later 60s, all sectors of the economy were incorporated into a plan that was supposedly going to bring Cuba quickly to the higher stage of communism. For instance, there was supposed to be communist principles of distribution of society's production. A type of distribution characteristic of the higher stage of communism would have meant that everyone was free to take from the social product what they needed regardless of what they contributed through their labor. But none of the conditions existed for this type of distribution in Cuba. Among other things, a society would have to have an abundance of goods and services available while, in reality, scarcity was prevalent in the weak Cuban economy. Nor could one seriously talk about communist distribution when the society was based on class divisions with a bureaucratic elite on top. Not surprisingly, a distribution system characteristic of the higher communist stage did not really come into existence. Actually, the distribution system of this time was the rationing of this general scarcity among the masses while high party and state officials lived in relative splendor. The workers were expected to do more work without further direct compensation. But the distribution to them along communist lines did not occur. Instead the workers faced scarcer rations while they were expected to work longer and harder by the bureaucrat-capitalist rulers. Given this reality, expecting the mass of workers to labor indefinitely along the lines of this decidedly un-communist distribution system proved impossible. As the workers' conditions grew harsher in the late 60s, their work effort declined and absenteeism became a major problem. Along with this, the black market flourished as a source for goods the government failed to supply. The workers' dissent was a manifestation of the severe economic crisis that engulfed the Cuban economy as the 1970s approached. This crisis burst the pipedream that Cuba was entering "communism." As far back as 1970, Castro announced that the previous economic policy could not continue, and he spent the next several years touting the new system. The new system was largely based on the market reform model adopted by the state-capitalist Soviet Union in the mid-60s. In the mid-70s, the system of market reforms of the state sector was formalized as the System of Economic Management and Planning (SDPE). The adoption of this system and the consolidation of the state-capitalist order that took place under it, was what the Cuban revisionist leaders fraudulently called the "retreat to socialism." The Cuban leadership was avowedly *not* Marxist-Leninist when it took power in 1959, and when it suddenly declared itself "communist" in the early 60s, its alleged communist principles were really a hodgepodge of Soviet revisionism and various types of petty-bourgeois radicalism. It was the Soviet revisionist tradition of pawning off state-capitalist methods as the heart of socialism that took hold. Even though there was to be considerable state ownership, the economy remained divided between competing enterprises driven by the profit motive. Even though eventually certain central planning took place, it could never overcome the anarchy inherent in the economic system and was often tossed aside by both the enterprise managers and the top party and state bureaucrats. Despite the fact that the gross inequities of the old capitalist order were abolished and the old exploiters expropriated, a new type of capitalist class structure developed with the ruling bureaucrats on top controlling the economy and living in a style that the masses could only dream about. Socialism would never arrive, much less the higher stage of communism. MARKET METHODS WITHIN THE STATE SECTOR: SELF-FINANCED" ENTERPRISES A more detailed look at the measures that encompassed the economy in the 70s reveals they encompassed many of the well-known features of capitalism. These market reforms were based on the plans formulated by the Soviet revisionist economist E.G. Liberman, which had influence in the Soviet Union in the early 60s. A central feature of Liberman's proposals consisted of a new version of an old Soviet policy of self-financing of state enterprises. Self-financing was taken up in Cuba, where the state enterprises were the dominant sector of the economy. Under the self-financing methods, the government would provide the original funding, but thereafter, enterprises were to survive on their own resources. Initially profitability was officially declared the number one criterion on which enterprises were to be judged successful while other times it was only considered one indicator of success. In any case, the underlying profit-making orientation remained. As originally conceived, unprofitable enterprises would be shut down, although in practice, certain measures were apparently taken to help bail out enterprises running deficits.(2) On the other hand, failure to run a profitable enterprise could end the career of an enterprise manager. In such a system the private interests of each enterprise are bound to grow. Thus, even though the state owns the enterprise, in effect it is run as if it were private property. Even though the top managers of the enterprise do not own the enterprise, their fate is tied to the enterprise. To succeed they must behave like the managers who run capitalist enterprises anywhere. Cuban enterprise managers are a privileged class over the workers: they, not the workers, have control over how the enterprise operates. And if they are good enough at squeezing profits out of the workers, they can keep themselves in posts which entitle them to a better lifestyle. Of course, the managers of individual enterprises are not the only ones who run the economy. The high party and state officials oversee the system of private interests they created and they live in comparatively grand style off the labor of the workers. The official basic wage scale has provided high government officials with earnings as much as 10 times higher than some workers. But that is only part of the story. The ruling elite also has such things as access to the best housing, their own vacation resorts, access to luxury goods denied the general population, and are in a position to enrich themselves through corruption. The class stratification between top officials and the masses pre-dates the 70s reforms. But the system of privileges for the elite was reinforced in this period. to be continued NOTES: [1] The articles referred to are "The imperialist Helms-Burton law and the myth of Cuban socialism" found in Communist Voice,vol.2, #5, October 15, 1996 and the articles "Did Castro steer Cuba towards socialism in the late 1980s?" and "How the SWP whitewashes the Castro regime" found in CV, vol.2, #6, December 15, 1996. <The first two of these articles have been posted recently on the Lenin List, LL09013-15 and LL09080-83.> [2] Mesa-Lago, Carmelo; The economy of socialist Cuba: a two- decade appraisal, p.21; University of New Mexico Press; 1981. e-mail: comvoice-AT-flash.net For other articles on the Cuban economy, see the Communist Voice web page: http://www.flash.net/~comvoice --- from list marxism-international-AT-lists.village.virginia.edu ---
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