Cuba: Who will govern the market?

First published at La Joven Cuba. Translation by LINKS International Journal of Socialist Renewal.

Despite consensus on Cuba’s economy needing reform, the measures announced on June 25 have raised more questions than answers. They come amid a crisis combining a drop in production, a collapsing energy sector and a migration exodus, worsened by the tightening US blockade. Under these circumstances, it is impossible not to ask who will be able to accumulate wealth, what will happen to workers in the least profitable sectors, how bureaucratic privileges will be stopped from mutating into oligarchic forms, and what role the market will play.

Can this package of reforms be viewed as a simple technical adjustment to get out of this distressing crisis?

To contribute to the debate, Ariel Dacal Díaz spoke with Cuban researcher Wilder Pérez Varona, a PhD in philosophy, writer and researcher, who has analysed the reshaping of the political imagination in Cuba, particularly within the digital ecosystem. He is a postdoctoral researcher at Argentina’s National Scientific and Technical Research Council (CONICET) from the National University of Quilmes.

Wilder examines how the reform will redefine power relations, the social structure starting to take shape behind the rhetoric of “perfecting socialism”, and whether this can be sustained without transforming the political system.

Cuba is facing the most comprehensive package of reforms in the past 30 years. Are these merely technical or economic measures?

The approved package of 176 measures contains highly technical provisions — exchange rates, joint-stock companies, bankruptcy procedures — but its nature is decidedly political. These measures will not merely change the economy, but who controls the country’s wealth for decades to come.

It is true they stem from an emergency. Cuba is facing an almost unprecedented productive, energy and demographic crisis, which has been worsened by the tightening US blockade. Today, Washington restricts trade, tries to block access to loans, discourages foreign investment and hinders fuel supply — it is a deliberate strategy to close off any scope for economic recovery.

But recognising the blockade’s impact does not mean assuming that the reforms are politically neutral. Any economic reform redistributes power. The problem is not merely how to produce more, but deciding who benefits from that wealth.

The most significant change is not more market, but the redefined relationship between ownership and power. A company can still call itself socialist while workers and citizens no longer have a real say in its affairs, thereby rendering social ownership a legal fiction.

GAESA [a Cuban conglomerate owned by the Cuban Revolutionary Armed Forces] is the clearest example. Beyond recent news regarding the release of assets, under these reforms it could retain its management forms and convert companies it already runs into shareholdings. On paper, ownership will remain with the people; in practice it will be the same people making decisions as before the reform.

There is consensus that the bureaucratic statist model has run its course. Cuba needs more dynamic companies, greater managerial autonomy and new scope for economic initiative. But autonomy for whom and under what controls?

The measures seek to strengthen enterprises and new economic actors, but say little about democratising decisions regarding the wealth they generate. We are decentralising enterprises, but not necessarily power.

This also alters the socialist project’s logic. For decades, despite many contradictions, equality was the model’s starting point. As [Cuban president Miguel] Díaz-Canel stated, this sequence is apparently being reversed: first accumulate, then redistribute. Growth is no longer subordinate to social justice; social justice now depends on growth.

This represents a shift in economic philosophy. The market can be a useful tool for developing a socialist economy, but it cannot substitute for politics. If new opportunities for accumulation are not accompanied by transparency, democratic regulation and social control, we risk replacing an inefficient bureaucracy with a new economic elite closely linked to state power. The National Asset Valuation Program, without an independent judiciary or transparency regarding who is buying what, could turn managers and military officials into legal shareholders of the very companies they currently manage on the state’s behalf. This is, albeit with some nuances, largely what happened in the post-Soviet transition.

That is why the debate should not be reduced to a choice between the state and market. The fundamental question is whether these reforms will further socialise economic power or pave the way for a new structure of privileges.

What impacts can we anticipate on the socio-class structure that has taken shape in recent years?

These reforms, if implemented, will transform society as a whole. Above all, they will alter class relations.

For decades, Cuban socialism built a society that was far more egalitarian than what existed before 1959. That relative equality began to erode from the 1990s onwards, with remittances, tourism and an expanding private sector. Now, that social differentiation has ceased to be a consequence of the crisis and is instead becoming a stable component of the model.

There will be more entrepreneurs, larger companies and greater wealth concentration. Of course, every economy needs actors capable of investing, innovating and taking risks. The question is who these entrepreneurs will be: will they emerge as a result of productive labour and innovation, or from converting bureaucratic privileges into private property? The risk is that the line between managing public resources and appropriating opportunities generated by the reform may become increasingly blurred. The removal of the 100-worker cap for micro, small and medium-sized enterprises (mipyes) and the possibility for individuals to own several companies lay the foundations for capital accumulation. The conversion of state-owned enterprises into joint-stock companies, with private individuals buying shares, is the specific mechanism driving this concentration. We do not know yet whether these shares will be bought by entrepreneurs willing to risk their own capital or by managers already running the company.

At the same time, the world of labour will also change. State employees, which until a few years ago were relatively homogeneous, will be replaced by a workforce with vastly different conditions depending on the sector, access to foreign currency, remittances or links to private and foreign companies. The so-called “muro de la divisa” (foreign currency wall) may become entrenched as the main faultline in Cuban society, this time by design.

Inequality will also be defined by race, region and family background, because those with start-up capital, relatives abroad or better economic networks will have clear advantages over those depending exclusively on a salary paid in pesos. This is seen most starkly at the regional level, as decentralisation to municipalities lacking an industrial base or tourist appeal will mainly redistribute deficits rather than autonomy. Social differences will be reproduced from generation to generation if the state does not intervene to address them.

An equally important change is the often-announced shift from universal policies to targeted subsidies, altering the relationship between citizens and the state. A proposed new framework classifies people as “vulnerable” in order to decide who receives support. Workers in profitable companies will somehow be integrated into the new economic circuits; those in so-called “zombie” companies will be left exposed to bankruptcy or liquidation. Equality is no longer understood as a right, and “vulnerability” – that is, poverty – will be treated as a permanent reality. The risk is that the state will stop preventing inequality and instead confine itself to managing its consequences.

The problem is not merely growing inequality, but the kind of power this will generate. As is well known, when wealth becomes concentrated, the ability to influence public decisions also tends to become concentrated.

So, it is not enough to ask whether a new capitalist class will consolidate itself. The crucial question is whether Cuba will have sufficiently democratic institutions to prevent economic power from ultimately capturing political power. The reforms redistribute much more than just income; they redistribute power. This new distribution of power, rather than the economic measures themselves, will ultimately define Cuba’s future.

Why do you say that the proposed model presupposes inequality as a permanent condition of its functioning?

It is not because the government has decided inequality is an objective, but because the new model ultimately makes it a prerequisite for boosting the economy.

This is probably the most profound change these reforms introduce, which, whatever anyone says, departs from previously approved guiding documents.

We can trace, measure by measure, how the logic of organised production according to principles of egalitarian distribution is being reversed in the technical design. The setting of wages has now been decentralised and is subject to each company’s “economic and financial capacity”. This will condemn workers in less profitable sectors to precariousness while allowing for unregulated wages in the dynamic sector. Bankruptcy procedures, with severance pay of barely three to six months’ wages, will turn job insecurity into yet another mechanism of market discipline, even within the state sector. Partial dollarisation creates a stratified system of consumption, even for previously free services; those who can afford it are charged, while there is only a precarious level of protection for the rest. These mechanisms are parts of a single design that requires inequality to function, because inequality generates the market incentive that the state can no longer generate alone.

The risk that wealth may stem from privileged access to information, political connections or control over public resources exists because the reform expands opportunities for accumulation without proposing mechanisms for transparency and social control. This opening up may consolidate an oligarchy born from the state itself. Once that risk becomes real, it is very hard to return as this new capitalist class consolidates its assets — through the National Asset Valuation Program or share purchases. Reversing this concentration would entail a political cost that no actor with veto power will be willing to bear. Inequality, to put it another way, does not dissipate with growth; but tends to become entrenched.

That is why I am worried the debate is reduced to how much GDP grows or how much investment flows into the country. An economy can grow while also losing social cohesion. It can increase productivity while reducing society’s ability to exercise democratic control over the wealth produced.

The crucial question is not how much market an economy can accommodate, but who governs that market. If concentrating wealth ends up also concentrating political power, the problem will no longer be merely inequality, but the formation of a new dominant bloc.

If, in 10 years’ time, Cuba is a more prosperous country but also more oligarchic, we will have changed the economic model without resolving the historical problem of our ailing socialism.

Will these economic reforms be viable without adjustments to the political system?

I have serious doubts. Not because every economic reform automatically requires changing the political system, but because no transformation of this magnitude can be sustained without democratising power. By democratisation, I mean who controls the fundamental economic decisions and the institutions through which society oversees them.

The reform transfers enormous power to companies, banks, investors and new private actors. That may be needed to revive the economy. What is difficult to grasp is why this decentralisation is not accompanied by a corresponding expansion of public oversight.

We are creating more autonomous enterprises, but not necessarily more democratic ones.

This has, precisely, been one of Cuban socialism’s major problems. For too long, we have confused state ownership with social ownership. But a company does not truly belong to society simply because a document says so. It belongs to society when those who produce its wealth and those who depend on it understand how it operates, participate in its decision making and hold its managers accountable.

Economic democratisation is not a luxury reserved for better times, but a prerequisite to remain socialist. This means more than just making enterprises efficient; it needs transparency over the use of public resources, accountability, institutions capable of preventing conflicts of interest, and genuine forums where workers and citizens can have a say in major economic decisions. Otherwise, company autonomy may simply mean autonomy from society.

There is another equally important aspect. If the reform creates new entrepreneurs, new labour relations and new forms of ownership, they must strengthen workers’ organising capacity. A country that profoundly transforms its economy without expanding labour’s participation risks further unbalancing the relationship between capital and society.

All this is even more important given the exceptional conditions imposed by the US blockade. Precisely because Cuba faces extraordinary external pressure, it needs to strengthen internal cohesion. Sherritt [a major Canadian mining and energy company], after more than three decades operating in Moa, withdrew due to sanctions that threatened to block its access to the international banking system. It ended up carrying out a forced sale, under liquidation terms, to a fund linked to a former Trump administration adviser. It is worth remembering that, while Cuba needs foreign currency for the private banking sector and the foreign exchange market to function, whoever controls that flow of capital makes any relief conditional on a political transformation that the government has declared off the table. The market can only be decoupled from the system in a rhetorical sense.

But that internal cohesion, which used to rest on the historical legitimacy of our social project, needs to be built on new forms of participation, transparency and public trust. The margin for error has become very narrow. If, when universal subsidies are phased out, there is no Social Protection Fund already operating, the gap between austerity and direct aid could fuel the same social unrest that erupted in July 2021.

The reform will only bring stability if the majority feels that they not only share in their benefits, but also in making the decisions.

Once again, the challenge lies in preventing the economy’s modernisation from leading to a renewed concentration of power, this time under market-based forms. If socialism remains the long-term goal — despite being virtually absent from the measures announced — then political and economic democratisation cannot come after the reform. They must be part of the reform from day one.

What models, formulas or concepts do you think should have been considered?

The debate has been framed incorrectly from the start. We have been led to believe that there are only two paths: either preserve a failed bureaucratic statism or move to an economy increasingly governed by the market. But the problem has never been a choice between the state and market; it is a question of deciding who exercises power over the economy.

If the Cuban experience has demonstrated anything, it is that state ownership, in itself, does not guarantee socialism. A company can be formally state-owned yet operate with its back turned to society. Similarly, allowing for markets does not necessarily mean abandoning a socialist vision. What matters is whether wealth is subject to democratic control or ends up becoming the property of a minority, whether bureaucratic or private.

For example, if state-owned enterprises are granted autonomy, they should also secure worker participation and effective mechanisms for accountability. If the private sector grows, the state must prevent economic success from turning into political power through progressive taxation, anti-monopoly regulations and strict rules against conflicts of interest. If foreign investment plays a greater role, society has the right to know which national priorities that investment intends to serve.

In other words, without democratic checks and balances, the market ceases to be a tool for the country’s development and becomes a mechanism for concentrating wealth and influence.

I would also have placed far greater emphasis on genuinely social forms of ownership, such as cooperatives, worker-managed enterprises, local development initiatives and spaces where communities have a say over the wealth they generate. I am thinking, specifically, of networks of cooperative banks and locally managed municipal development funds, capable of channeling remittances and reinvesting them in the community, rather than channeling them towards private wealth accumulated by a handful of actors. Not because these initiatives replace the state or market, but because they distribute power. Ultimately, that is what socialism is all about: stopping economic power being concentrated in a few hands.

There is also a lesson that Cuba should not lose sight of. All economic transitions give rise to new social classes. While this may be unavoidable, steps should be taken to prevent a new economic elite gradually taking over the state. That risk is even greater in a country where a significant part of the economy has historically been managed by highly concentrated state and corporate structures. Transparency, oversight of government institutions at all levels, a free media and citizen participation are mechanisms for safeguarding the public nature of the nation’s wealth.

Of course, none of these discussions can take place while ignoring the US blockade. Cuba needs to grow under extraordinarily adverse conditions and has the right to seek the economic tools it needs to survive. But precisely because it faces this external pressure, it is even more important to preserve what historically distinguishes the socialist project: the idea that development should serve the majority and not a new privileged minority.

Ultimately, I believe that the real debate is not whether Cuba should resemble China, Vietnam or any other model. The task at hand is how to build an economy capable of generating wealth without abandoning the democratisation of power.

The future of Cuban socialism will not depend solely on how much the economy grows. It will depend on whether those who produce wealth also have a say in decisions about its use. If reforms merely modernise mechanisms of accumulation, but leave existing power relations intact or even reinforce them, they will have changed the economy without transforming what, from a socialist perspective, really matters: who governs the collective wealth and on whose behalf.