Cuba’s New Law on Cooperatives

Below is Phil Peters fine summary and analysis of Cuba’s new law on cooperatives. Phil is first off the mark with this. I still have not been able to download the Gazeta Oficial to see the legislation first hand.

Peters’ essay can be seen on his Blog, “The Cuban Triangle” here:The new cooperatives law.

Here is his evaluation:

What does this all mean?

I think this is a major step, even though the full definition of the policy will only come with time as cooperatives are created and as the government moves beyond the experimental phase.

Certainly from a capitalist perspective, all we see are the restrictions – first and foremost in the requirement that these businesses organize as cooperatives. But from the perspective of the Cuba of five years ago, this new law was unimaginable.

It opens the door to a much larger private sector, one involved in more substantial activities than the small entrepreneurs.  It is a second option for Cubans interested in private business activity, and a new option for friends and relatives abroad who would support them with capital.  There is nothing stopping five software designers from applying to form a business under this law; we’ll see if there is anything stopping the government from approving it.  If the sector prospers it can create efficiencies in agriculture, construction, transportation, and other sectors that will benefit Cuba’s economy and people. And the government needs the cooperatives to prosper.  Without them, it cannot meet its own goals of cutting state payrolls and generating new private sector jobs.

The pace will satisfy no one, the process will be influenced by officials with more orthodox views, and it will surely have positive and negative notes.  But there’s no denying that this law breaks new ground, with potentially large consequences.

Phil Peters

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