File spoon-archives/marxism-international.archive/marxism-international_1997/marxism-international.9709, message 502


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



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