Workers Socialist League Index | Encyclopedia of Trotskyism | Marxists’ Internet Archive
Written: 1983 / 84.
First Published: January 1985.
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Pre-revolutionary Cuba was dogged by slow or stagnant growth (disguised to some extent by Batista's encouragement of massive US investment) and by almost exclusive reliance upon a single crop – sugar – for its income. Sugar amounted to 84% of Cuban exports, supplemented by tobacco and minerals. Even tiny fluctuations in the world market price of sugar could herald doom or boom for the Cuban economy, which depended upon imports to supply virtually all of its oil and petroleum needs, most consumer goods, and technology.
Two thirds of Cuban foreign trade was with the USA: by 1958 it had totted up a deficit of $350 million. As one of the most concentrated areas of US investment, Cuba had become heavily dependent upon, if not actually integrated with, the USA.
The limited industrial development and the declining need for labour in agriculture brought growing unemployment – which reached 16% in 1958, coupled with as much as 14% of the workforce underemployed. The six-month "dead season" in the sugar industry meant that 95% of the workforce was laid off, though some 30% of sugar workers found employment harvesting coffee.
There were enormous differences between the living standards of the Cuban bourgeoisie and the working class, and between the urban population in the big centres, particularly Havana, and the peasantry.
Virtually all these problems have been transformed if not resolved since the revolution. But Castroite economic policy, like other aspects of the regime, has evolved through a number of distinct stages to arrive at the situation we see today.
None of the leadership team of the July 26 Movement had any background in economics. Che Guevara, who helped colour policies during the first five years of the revolution, and in particular from the period of nationalisations of 1960, was a doctor. But he became head of the Industrialisation Department of the National Institute of Agrarian Reform (INRA), before taking over as head of the National Bank and eventually as Minister of Industry. Like Castro himself, Guevara brought a rather naive impatience to bear on the problems, without any serious grasp either of economics or of proletarian politics.
The early coalition government with the bourgeoisie took at first limited steps towards nationalisation, confiscating the property of fleeing Batistianos, expropriating the biggest farms and rented housing, and "intervening" in firms abandoned by their owners following Batista's abrupt departure. But as the bourgeois ministers deserted the government, the demands of the Cuban workers and peasants grew more militant, and the US pressure grew more acute, so the regime turned to more radical measures, culminating in the sweeping nationalisations of June-October 1960. By the end of that year, trade with the USA had virtually ceased, while the bulk of sugar production was going to the USSR and China.
A central planning board (JUCEPLAN) was set up, which after the nationalisations became the state's planning agency. Steps were taken to reduce the differentials in income – by stamping out almost all payment of dividends, rent and interest, while increasing the minimum wage and pensions, cutting house rents and electricity charges and expanding free health care and education.
From 1961, under advice from Soviet and Czech planners, attempts were made to institute a planned development of the economy through the establishment of central ministries or agencies for each of the various economic sectors. 1962 saw the introduction of rationing for consumer goods: but the attempts to model the new Cuban system on the heavily industrialised economy of Czechoslovakia or the bureaucratised industrialising Soviet Union of the 1930s proved complete failures. The rapid collectivisation was not matched either by the development of skilled central management bodies or by any significant mechanism of workers' control. Agrarian cooperatives were brought under centralised state administration, while in industry workers' "technical advisory councils" fell into disuse. The economy rapidly acquired all the worst aspects of the bureaucratically mismanaged and dislocated systems of post-war Stalinist states.
Sugar production, after a good harvest in 1961, slumped to disaster levels in 1963, at the same time as a catastrophic decline in production of other agricultural products. There were no compensating gains in the industrialisation of the economy. Plans for a new heavy industrial sector foundered, while existing industries, including electricity, recorded falls in output.
Factors in this were the US economic blockade (which caused a shortage of spare parts for US-supplied equipment) and the departure of skilled managers and technicians. The regime's policies partly covered up the real extent of the crisis – by guaranteeing jobs to workers in state farms and failing industries, and by freezing the official prices of scarce consumer goods – but at the same time creating an artificial labour shortage and worsening the shortfall on consumer goods.
In response to this crisis, Guevara came forward with a new approach based heavily upon the Maoist "Great Leap Forward" period of 1958-60 in China. According to this notion, subjective factors (consciousness and commitment) could overcome and transform the objective conditions of the economy – the material forces of production. By raising consciousness, Guevara believed it was possible to skip over the "socialist" stage, and leap from capitalism directly to a fully-fledged communist system, in which the laws of supply and demand had been superseded.
Accordingly, Guevara's scheme demanded a barrage of changes to establish a fully centralised and collectivised economy, the gradual eradication of money other than for accounting purposes, and the elimination of material incentives – including overtime pay and bonuses. A rigorous system of rationing and allocation of goods would replace the supply and demand of the free market.
Yet to implement such a model required an ideological offensive aimed at creating a "New Man" (and woman) who would be motivated by moral incentives, solidarity and patriotism to carry out unpaid voluntary labour and other duties for the state. Counterposed to Guevara's idealistic and over-ambitious theories came the more "orthodox" Soviet line, advocated by the old-guard Stalinists, headed by Carlos Rafael Rodriguez, then head of INRA. This view, based on the concept of "market socialism", was more clearly rooted in the reality of the Cuban economy, and chimed in with the limited economic reforms made under Khruschev and later under Brezhnev in the USSR in the 1960s. According to this system, the various branches and enterprises within the economy should be given considerable autonomy in relating to a central plan, with an obligation to borrow the money they need at interest from state banks, and to show a return on investment, while working within the guidelines of supply and demand.
The Rodriguez line had the twin advantages of being more in line with the material reality of Cuba and of being the line favoured by those who actually held the purse strings in the Kremlin. In 1965 a new five-year economic trade agreement was signed with the Soviet Union: it was plainly linked to the adoption of economic programmes and economic incentives which were opposed to the Guevara model and more along Soviet lines. The industrialisation was effectively abandoned and, particularly with the rise in sugar prices of 1964, there was a turn back towards sugar production. 1965 was proclaimed the "year of agriculture". Guevara disappeared from the Cuban political scene, as he resigned as Minister of Industry and embarked in March 1965 upon a tour of Africa, to be followed by his ill-starred exploits in Bolivia.
Elements of Guevara's approach were not forgotten, however. As Castro's regime reached its extreme point of independence from the Soviet bureaucracy – beginning in the summer of 1965 – Castro embraced a Guevara-style approach to the further collectivisation of agriculture. But in place of the complex mechanism of ministries and planning agencies envisaged by Guevara, the key decisions on allocation of resources and development were to be taken by Castro and the elite political leadership. The "annual plan" was subordinated or abandoned all together.
Castro's ideological offensive set out to replace material incentives – which were increasingly difficult to deliver in a shortage-wracked economy – with cheaper moral imperatives. Early in 1967, agricultural workers were deprived of their private plots of land on state farms, and in 1968 sales from farmers to individuals were banned. Also in 1968 factory workers agreed to give up their bonuses for overtime, and other material rewards (refrigerators, etc.) were phased out. In the Spring of 1968 the "Revolutionary Offensive" brought the expropriation of some 56,000 small private sector concerns ranging from shops and restaurants to hot dog stands, as the regime set out to close off individualistic escape routes from its new system of moral incentives, and implemented an institutionalised speed-up of production. The results however did not emerge as expected.
Consumption certainly fell back – but so too did the productivity of capital and labour as wages and work quotas became disconnected and production bonuses were held down. Shortages of consumer goods ran alongside inflation of the currency. While material incentives were stripped away, Fidel embarked upon a Guevarist attempt to promote moral incentives, the targets of complete elimination of wage differentials and the communist principle of distribution according to needs rather than according to work, were announced.
"Just as books are distributed now to those who need them, just as medicines and medical services are distributed to those who need them, education to those who need it, so we shall progressively reach the day when food will be distributed in the necessary amounts to those who need it, clothing and shoes will be distributed to those who need them."
(Fidel Castro, July 26, 1968)
This was the period in which Fidel Castro announced, and pinned great hopes upon achieving, the "Ten Million Tons" production target for sugar by 1970. Instead, while a chaotic and increasingly inefficient industrial sector went to rack and ruin – with production, with few exceptions, declining after 1967 – the sugar plan proved a costly and embarrassing failure. Between 1966-69 the cumulative shortfall of Cuban sugar deliveries had amounted to 10 million tons – much of this due to horrendous weather difficulties, but also to the general disorganisation of the production effort. As a result, debts to the USSR and Eastern Europe, which the increased sugar production was supposed to help repay, had built up to staggering totals: $2,200 million exclusive of arms supplies by the end of 1970. The failure to achieve the 10 million target in 1970 (the eventual result was a record 8.535 million tons) in this respect marked far more than merely a one-off setback. It signalled the need for a larger scale rethink of economic policy and orientation. Castro's own self-criticism on July 26 1970 listed some of the consequences of the overconcentration of energies and resources on the sugar harvest in terms of a massive fall-off in other sections of production. Milk output was down 25% in 1960; steel bar output was down 38%; cement 23%; fertiliser 32%; tyres 50%; batteries 33% and soap and detergents 32%. There had been a fall in production of poultry, vegetables and fresh fruit.
Popular discontent was reflected in various ways, including a wave of absenteeism amounting in effect to an undeclared strike, as workers recognised that even their diminished pay packets were sufficient to purchase all they could actually obtain of scarce commodities. In September 1970, Fidel attempted to canalise opposition from the working class by conceding local elections for union leaderships – who had hitherto been appointed. (Conspicuously, however, he stressed at the same time that the function of each elected leader would be to use the "moral authority of . . . election" so that "when the Revolution establishes a line he will go all out to defend and fight for that line").
Castro's "moral incentives", together with the full-scale commitment of the forces and resources of the armed forces, and five years of sustained political mobilisation had failed to achieve the desired 10 million ton target: from now on the more sober, calculating methods of the Soviet bureaucracy would become dominant in the reshaping of the Cuban economy.
As an outcome of this, a number of changes began, most conspicuously after 1972 – a year which saw Cuba join Comecon and sign trade agreements with the USSR for 1973-75, preparatory to a 5-year plan for 1976-80. As part of this package, the accumulated Cuban debt with the USSR was postponed for payment until 1986, and interest on it was cancelled. Additional credits were forthcoming for the 1970s, however, which have further added to the burden of debts, now due in theory for repayment in only one year's time.
The Soviet economic model has been adopted, involving a partial retreat from the restrictions on small scale private enterprise by peasant farmers, repairers and other individual purveyors of services. Also involved is the reinstitution of central planning, accounting techniques, and material incentives, along with the decentralisation of state enterprises. State budgets were reintroduced in 1978 after ten years of disuse, and efforts have been made to control inflation. 1975 also saw a limited turn back towards industrialisation, with particular focus on production of exchange-earning nickel, and building materials, including cement. External circumstances also helped put the regime into some form of working order, as rising sugar prices from 1971-74 wiped out the trade deficit with the capitalist countries built up in the mid 1960s – before a new fall helped build up a new backlog of debts once more.
The egalitarian ideals of Guevarism were surreptitiously subordinated to material incentives. A number of free social services were restricted or scrapped; and price mechanisms as a means of curtailing demand for scarce commodities have helped to reintroduce differentials in income.
It is interesting to look at the role in the Cuban economy of military expenditures, particularly in the 1970s, when the main function of such spending was no longer – as in the 1960s – the immediate defence of the island against imperialist attack, but to finance the Cuban intervention in Africa.
In the early 1960s the armed forces had risen to 350,000, but by the early 1970s this began to decline – to a low of 150,000 in 1974. Yet in 1973 began a process of increasing the military budget at a far more rapid rate than the growth of the economy. By 1978 the Armed Forces had increased to over 200,000, with military spending rising to 7.8% of GMP. In 1979, spending on the armed forces had reached four times the 1963 level, and the following year Castro's budget allocated no less than 10% of its total either directly to military purposes or to broad headings which would be made available to the armed forces. These increased Cuban allocations were matched by increased Soviet backing. By 1978 Soviet trade subsidies to Cuba are estimated to have risen to 3½ times their 1975 levels. The total Soviet subsidy is thought to have reached an annual rate of over $2.5 billion as against $550 million in the early 1970s.
But on top of the cash involved, calculations should include the broader economic impact of sustaining overseas forces totalling as many as 40,000 in Africa alone. Back-up facilities in Cuba tie down thousands more workers. And coupled with this overtly military involvement, Cuba's foreign policies involve the stationing abroad of nearly 13,000 non-military personnel: teachers, construction workers, medical teams, skilled technicians and experts on various questions of trade and administration. This represents a heavy drain on Cuba's domestic economy, diverting able people from any productive role in industry or social services, and also requiring material back-up in Cuba. The dispatch by sea of thousands of troops to Angola, for example, appears to have had detrimental spin-off effects on the fishing industry, part of whose fleet was commandeered for troop transport and munitions work.
The almost unrelieved deficits of the Cuban economy have left Cuba tied ever closer to the Soviet Union and its bureaucratic leaders – and dependent therefore also on Soviet technology, with all its limitations. Significantly, in the mid 1970s, when a temporary rise in sugar prices gave Cuba a windfall of extra foreign exchange and credit with the capitalist countries, there was an immediate and rapid expansion of imports from the West and a corresponding reduction of goods bought in the Stalinist states particularly in the fields of transport, machinery and manufactured goods. An extravagant spate of borrowing in this same period led to a sky-rocketing debt to the West of $1.3 billion by 1976. By 1979 these and other debts to the West had risen to $1.8 billion, much of it in short-term credit at a staggering 19% interest or more. In total, the Cuban foreign debts to the East and West combined were conservatively estimated at $6.2 billion – nearly 20 times the figure in 1959. Cuban foreign debts in 1980 were the highest per capita debt in Latin America.
Towards the end of 1979 – twenty years after the revolution – the Castro leadership admitted that the country was locked in a dire economic crisis. Raul Castro stated that without Soviet assistance, Cuba would be facing "economic disaster and bankruptcy" with a "sequel of starving people and hundreds of thousands unemployed". Raul's warning came after a record sugar harvest in 1979 – second only to the 1970 figure and in spite of a rising price for sugar on the world market.
The Cuban economy had of course run foul of the world economy, inflation, and of crop diseases. But Raul singled out also Cuban failings such as "indiscipline, lack of control, irresponsibility, complacency, negligence and personal favouritism", which were not only preventing the resolution of problems but also causing "justified irritation on the part of broad sections of the population". Many people he added were helping to exacerbate the problems by working only four to six hours a day.
Crisis measures were taken in advance of the Second Congress of the Cuban CP. In an effort to spur on productivity, wages were increased for all sectors of workers for the first time since 1963, and maximum wages were increased for some categories of workers. Job security was relaxed as managerial authority was increased, and bonuses were increased for output. Small farmers were permitted to sell privately their surplus product above the quotas they supplied to the state.
In December 1980, Fidel reported to the Second Congress that only 66% of the target of 6% annual growth rate had been achieved over the period of the 1976-80 5-year plan. The next 5-year plan included a provision for a 30% increase in trade with the Comecon countries, with loans forthcoming from them reaching double the figure loaned during the previous plan. Castro also announced a focus in the new Plan upon increasing personal consumption by more than 4% per year, with special reference to supplies of food, clothing, telephones, TV sets, cars and air conditioning.
The economy however has remained stubbornly sluggish, and the closing months of 1983 have seen Cuba join the growing queue of countries seeking to re-schedule debts to the Western bankers. These debts now add up to $3 billion, owed to banks and creditors in France, West Germany, Japan and Britain as well as some governments. The request for rescheduling applies to $810 million in short and medium-term loans. The Cuban economy is thus not only in hock to the Kremlin leadership and its cronies – but it is still in the grip of the imperialist bankers.
This of course is not to deny that the post-revolutionary Cuban economy has brought real benefits to the workers and peasants of Cuba. They have gained in social services and in massively expanded educational opportunities; pre-revolutionary social inequalities have been to a large degree wiped out. Life expectancy has risen by 20 years – from 53 years in 1959 to 73 in 1984. Though rationing of food and clothing remains, unemployment has been ended (though largely by cosmetic means). Cuba is no longer milked and exploited to anything like the previous scale by the imperialist bankers: on the contrary its very dependence upon the Soviet Union is a measure of the extent to which it is now the beneficiary of aid and grants worth billions of dollars since the revolution. The Soviet Union, unlike the US bourgeoisie, does not own factories or other means of production in Cuba. Though its aid carries strings into the bargain it is a very different relationship from that under imperialism.
It seems that the bulk of the subsidies and loans extended by the USSR have been consumed in sustaining the expanded social services of which Castro's regime is so proud. If much of the $10 billion or so pumped into the Cuban economy from the Soviet Union and Eastern Europe had been wisely and effectively invested in productive resources it is hard to see why Cuba should have remained to such a large extent an importer of manufactured goods.
Perhaps the most damaging aspect of all is the fact that the USSR has exported to an already chaotic and disorganised, backward Cuban economy its own defective model of a bureaucratically deformed and mismanaged economy. Despite tokenistic mechanisms of "workers' control" in the implementation of central planning decisions, Cuban workers enjoy no more real control over the economy than do their brothers and sisters in the Soviet Union or in Poland after the crushing of Solidarnosc.
Can anyone doubt that, were Cuban workers in their thousands to begin now to organise themselves after the model of Solidarnosc, to demand a real and independent role in the planning and control of the economy, they would be met by repression? The fact is that Cuban workers are part of a Stalinist economy, headed by a Stalinist party and a Stalinist state machine.
According to Amnesty International in 1983, five Cuban workers faced severe sentences for "sabotage" – while their actual "crime" was agitating for an independent trade union. Certainly Fidel's hostility to Solidarnosc, and the blank political cheque he extended to the Jaruzelski regime to crush that ten million-strong workers' movement and reassert bureaucratic police control, is an indicator of his likely response to any comparable movement in Cuba.
And even were Fidel himself to prove unexpectedly reluctant to step in and crush such an opposition, we can scarcely expect those who hold the purse strings in the Kremlin to look kindly upon any evidence of liberalism or workers democracy in Cuba. Those who pay the piper so lavishly would expect – as in Poland – to call the tune.
Workers Socialist League Index | Encyclopedia of Trotskyism | Marxists’ Internet Archive