Cuba: The drive for efficiency within socialism

Cuba's president, Raul Castro.

[For more analysis and discussion on the economic changes in Cuba, click HERE.]

By Helen Yaffe

Accordingly, the individual producer receives back from society – after deductions have been made – exactly what he gives to it -- Karl Marx, 1875

Wages today are clearly insufficient to satisfy all needs and have thus ceased to play a role in ensuring the socialist principle that each should contribute according to their capacity and receive according to their work…the Party and government have been studying these and other complex and difficult problems in depth, problems which must be addressed comprehensibly and through a differentiated approach in each concrete case. -- Raul Castro, 2007

[We have] the dream of everyone being able to live on their salary or on their adequate pension… -- Fidel Castro, 2005

September 22, 2010 -- The announcement by the Cuban Trade Union Confederation on September 13, 2010, about plans to reduce the state-sector workforce by half a million was greeted by jeering headlines from journalists outside the island. Cuba is rarely of interest to the bourgeois press unless they believe there is some crisis to celebrate or that new measures can be interpreted as evidence of a shift from socialism to capitalism. Their reports have been based on a set of misleading assertions that:

1) This is an urgent measure to deal with a flailing economy;

2) Workers will be "laid off", abandoned by the Cuban state as it moves from paternalism to market efficiency under President Raul Castro;

3) The changes confirm the failure of the socialist "model" under the idealist Fidel Castro.

In reality, workers are not being made unemployed they are being moved from unproductive surplus posts in the state sector to productive ones in the cooperative and self-employed sector as part of the drive for efficiency within the socialist system.

The current measure is part of a process underway since the mid-2000s to improve the efficiency of Cuban socialism, undermined by economic and political pressures generated during the "special period" of economic crisis in the 1990s. This resulted from the collapse of the Soviet bloc, Cuba’s principal trading partner, and leading to the fall of Cuban GDP by one-third. Since material recovery from the early 2000s a number of significant measures have been introduced in this process: the recentralisation of finances, de-dollarisation, the raising of salaries and pensions, an energy efficiency campaign, the nationwide implementation of an enterprise management system to improve efficiency, the distribution of idle land in usufruct (rent-free loan) and the reduction in imports. The type of major adjustment currently proposed in the employment structure could not be risked in a period of vulnerability.

Since 2007, the Cuban government has promoted debate and discussion in the effort to achieve national consensus about the need for such changes. Cuba’s recovery has slowed since 2008, with growth below 2%, reflecting the global economic crisis and the cost of three devastating hurricanes which struck in late 2008. However, rather than a knee-jerk reaction to economic problems, it is likely that employment changes were in fact postponed until the present period in which prospects are improving and certain preconditions have been established.

Cuba’s workforce is around 5.2 million, of whom 800,000, or 15.4%, already work in the non-state sector. Most of these are in agricultural cooperatives whose production features in the central plan; they sell a proportion to the state. Just 140,000 Cubans, or 2.7% of the total workforce, are self-employed. Official unemployment is low at 1.7%, but this figure excludes those who work in the informal economy, where earnings are often higher and no tax is paid, and those who have no work to do but remain on payrolls, receiving a reduced salary.

The CTC statement said:

It is known that there are more than one million people working in surplus posts in the budgeted and enterprise sectors. Our state cannot and should not continue maintaining enterprises, productive, service and budgeted entities, with inflated payrolls, and losses that hurt the economy.

The first stage of restructuring will take place within government ministries. Trade union representatives are meeting with management to determine which posts are expendable. In some areas, where there are labour shortages, no workers will be removed. The 500,000 workers who will be transferred from the state sector by March 2011 will be given various options: take up employment in agriculture, construction or industry, join cooperatives or enter self-employment. One hundred and eighteen activities have been identified for self-employment. They include musical instrument tuners, arts and crafts, electricians, plumbers, spectacle repairs. The revolutionary government’s commitment to extend free access to university education has generated shortages in numerous skilled and semi-skilled trades.

However, for all the talk about the market economy, a minority of these workers are likely to become self-employed. They will be heavily taxed and carefully regulated. The result will be to increase provision of goods and services in certain areas leading to price reductions and falling incomes for those operating in the informal sector. This, along with a continued rise in state-sector salaries, will reduce the relative benefit for individuals operating outside the formal sector. Accompanying the employment changes is a restructuring of the education system to decrease the number of university students and increase technical training.

While the intention is to forge the concept of work as a social duty, the government will not abandon those unable to contribute. In August 2010, Raul Castro announced:

No-one will be abandoned to their luck. The socialist state will offer the support necessary for a dignified life through a system of social assistance to those who really are not able to work... We have to eradicate forever the notion that Cuba is the only country in the world in which you can live without working.

The principal complaint from Cubans during the popular consultation of 2007 was the existence of the dual currency and its impact on society. However, this cannot be resolved without an increase in domestic production, productivity and efficiency. These are also the precondition to reducing imports, improving the balance of payments and foreign debt, raising salaries, controlling inflation and reducing dependence on the "ration book" (a basic basket of goods provided to all Cubans by the state at highly subsidised prices), which is a major drain on government resources.

These developments cannot be understood from a purely ideological or political perspective. They have to be understood as pragmatic measures introduced by the revolutionary leadership as part of its search for the solution to the problem of building socialism from a position of underdevelopment, in a trade-dependent island, blockaded and attacked by US imperialism. They are not disguised as theoretical advances or political improvements.

The move towards greater efficiency was articulated in an important speech by Fidel Castro, then-president of the Council of State, back in November 2005. Analysing that speech we said:

There is a complex, multifaceted and fascinating process underway in Cuba. Revolution is a process and a socialist society must be self-consciously constructed by those who live within it. There are many issues to resolve: the balance of responsibility for provision between the individual and the state; how such class antagonisms as remain under socialism are mediated; ensuring discipline with resources and at work; how the wealth of socialist society should be distributed; how much control and centralisation is appropriate; whether the socialist revolution is reversible. These questions are being addressed in Cuba in the face of a brutal blockade and terrorist attacks…Capitalism uses fear of unemployment to control workers. Under socialism, only a highly-developed collective consciousness can prevent self-interest jeopardising the social project. Creating this consciousness is the challenge of the present "revolution" in Cuba.

 [Helen Yaffe writes for Fight Racism! Fight Imperialism!, newspaper of the Revolutionary Communist Group.]