Cuba Flirts with Economic Reform

Cuba is planning to layoff 500,000 state employees and push them into private enterprise. But will this attempt to modernize work?

The announcement that Cuba is laying off something like 500, 000 state employees begs the question if the system is about to change?

While it’s a revolutionary proposal – alien to the essence of authoritarian socialism - it’s too early to read much into the decision. And it hasn’t happened yet -- more a declaration of intent than hard fact.

With Fidel Castro’s younger brother Raul now president of Cuba, it means changes to its communist methodology may be in the works but . . . then again . . . maybe not.

Cuba has been an economic basket case ever since Castro’s 1959 revolution.

Over the years, Cuban socialism has changed and modified, just as Castro’s patron, the now-defunct Soviet Union, changed. Cuba turns a blind eye to some entrepreneurial endeavors.

Over the last 30 or more years it has specialized in luring Westerners to its beach resorts, modestly priced by our standards and run by Cubans for foreigners, but barred to ordinary Cubans.

Where rationing and shortages prevailed in Havana, beach resorts were resplendent with varieties of food for every taste. The contrasts bothered some tourists, but what the hell, it was a cheap holiday so enjoy…

American money has long been accepted. Even taxis in Havana charge a higher rate at hotels for foreigners than on the street for citizens.

Cuba remained in the economic doldrums, even though the U.S. embargo should have resulted in a bonanza for other countries to do business with Cuba.  There was no competition from U.S. firms. Canadian cooperative ventures prospered.

The 500,000 state employees laid off (supposedly about 10% of the state’s work force) – are said to be the least productive workers -- the ones coasting on the job, secure in the knowledge that although poorly paid, they have job security in a Workers’ Paradise. The core of socialism, Marxist-style.

Here’s where the fun comes in.

What are these 500,000 laid off workers supposed to do now? Well, according to the new “revolutionary” approach, they can go into private enterprise. That’s a direct contradiction to the way most of us think a capitalistic, democratic free-enterprise society works.

We tend to think that go-getters and self-starters are the ones who benefit from the private sector -- not those seeking the warmth of the collective with guaranteed pay and security with a minimum amount of work.

The “new” Cuba will (it says)  reward productivity.

That, too, is a switch from the past. In the 1960s, the Soviet economist Evsei Liberman was lionized for inventing the “profit motive” for Soviet industry. He felt raises and bonuses should not be automatic, but linked to how well the product sold. The more sales, the greater the profit, the better the bonuses.

This sounds pretty routine for a western democracy, but was radical thinking in the Soviet Union (and Cuba, China, Albania or any communist state) where bonuses were accorded on the volume produced, not on the amounts actually sold. The USSR tried with limited results to implement Liberman’s “discovery.” But the bureaucracy fought back. Factories continued to distribute bonuses to workers who churned out only right-handed gloves, or built apartments with balconies that had no entrances.

Will Cuba’s attempt to modernize and streamline work? Maybe, but only when it ceases being a dictatorship and lets its people off the lease.