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By Emily Morris

Complete article here: New Left Review 88, July-August 2014


What is the verdict on Cuba’s economy, nearly a quarter of a century after the collapse of the Soviet bloc? The story generally told is a simple one, with a clear message. It describes a cyclical alternation of government policy between moments of pragmatic capitulation to market forces, which account for any progress, and periods of ideological rigidity and re-assertion of state control, which account for all economic difficulties. [1] After the dissolution of the Comecon trading bloc, us Cuba watchers were confident that the state-socialist economy faced imminent collapse. ‘Cuba needs shock therapy—a speedy shift to free markets’, they declared. The restoration of capitalism on the island was ‘inevitable’; delay would not only hamper economic performance but would inflict grave human costs and discredit Cuba’s social achievements. Given his stubborn refusal to embark on a course of liberalization and privatization, Fidel Castro’s ‘final hour’ had at last arrived. [2]

The problem with this account is that reality has conspicuously failed to comply with its predictions. Although Cuba faced exceptionally severe conditions—it suffered the worst exogenous shock of any of the Soviet-bloc members and, thanks to the long-standing us trade embargo, has confronted a uniquely hostile international environment—its economy has performed in line with the other ex-Comecon countries, ranking thirteenth out of the 27 for which the World Bank has full data.

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Conclusion: An alternative?

Raúl Castro’s second and final presidential term will end by 2018 at the latest. By 2016, when the five-year process of ‘updating’ under the current Guidelines comes to an end, the aim is for the economy to have a broader productive base and a larger private sector, while retaining universal health, education and welfare provision. To achieve this, the rate of investment will need to rise. Given Cuba’s success in cultivating official relations with new partners, including China, Brazil and Russia, the aspiration to increase the flow of foreign investment seems feasible. The trickier task will be to raise efficiency and dynamism within the domestic economy, while preventing widening income gaps and social divisions that threaten the state-socialist project.

Before writing off Cuba as a spent force, the magnitude of its achievement to date should be acknowledged. While conceding that market mechanisms can contribute to a more diversified and dynamic economy, Cuban policymakers have not swallowed the promises of full-scale privatization and liberalization, and have always been mindful of the social costs. This approach, shaped not least by exceptionally difficult international conditions, has been more successful in terms of both economic growth and social protection than Washington Consensus models would predict. Comparing Cuba’s experience with that of the former Comecon countries in Eastern Europe—or indeed with China and Vietnam—it is possible to identify some distinguishing features of its path.

First, Cuba was able to maintain a social safety-net during the crisis, in sharp contrast to the others. In the context of the island’s uniquely severe exogenous shock and hostile external environment, a commitment to universal welfare provision undoubtedly served to limit social hardship. Linked to this has been the process of extensive popular consultation, particularly at three critical moments—the onset of the crisis, the stabilization process, and the prelude to Raúl Castro’s new adjustment phase. Third, by retaining control of wages and prices during the early period of shock and recovery, it was possible to restore stability relatively quickly by restraining an inflationary spiral. Although fixed wages and prices created the conditions for a flourishing informal economy, they also served to minimize disruption and limit the income gap within the formal economy. Though the two are quite distinct, the strategy bears comparison with China’s ‘dual track’ system, in which the ‘planned’ track is maintained while a ‘market’ track develops alongside, providing opportunities for experimentation and learning. For all its inefficiencies and confusions, Cuba’s ‘bifurcation’ and ‘second economy’ played a part in adjustment to the new conditions.

Fourthly, the state retained control of the process of economic restructuring, allowing it to channel the very limited hard-currency resources to selected industries, achieving a remarkable recovery of foreign-exchange earnings relative to the amount of capital available. These enterprises also served as ‘learning opportunities’ for Cuban planners, managers and workers to think through how to adapt to altered international conditions. The export base created by this approach may be too narrow to drive sustainable growth over the long term, but it was an efficient way to restore capacity after the crisis period. Finally, Cuba’s rejection of the mainstream ‘transition-to-capitalism’ route allowed space for a process of adjustment—described by one official as ‘permanent evolution’ [57] —that has been flexible and responsive to Cuba’s changing conditions and constraints. This contrasts sharply with the more rigid recipes for liberalization and privatization pedalled by the hordes of transition consultants in other former Comecon countries. Cuba is a poor country, yet its health and education systems are beacons in the region. Its approach has shown that, despite contradictions and difficulties, it is possible to incorporate market mechanisms within a state-led development model with relatively positive results in terms of economic performance and social outcomes.

This raises the next question: why should we assume that the state will withdraw from its dominant role within the economy, or that the current approach to policy must eventually give way to a transition-to-capitalism path? A fundamental assumption of transition economics has been Kornai’s claim that ‘partial alteration of the system’ cannot succeed; efficiency and dynamism will only be maximized when the transformation from a ‘socialist planned’ economic system to a ‘capitalist market’ one is complete, because the former is too inflexible to survive over the long term. But the experience of former Comecon countries has demonstrated that success is far from guaranteed and that social costs can be high. Viewed without preconceptions, the Cuban case suggests that another way might be possible, after all.

untitledEmily Morris

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Presentations from the Bildner Center, (CUNY) “COLLOQUIUM ON THE CUBAN ECONOMY” May 2012,

On May 12, The Bildner Center at City University of New York, under the leadership of Mauricio Font organized a one-day conference analyzing the recent experience of the Cuban economy in its process of transformation.  All of the Power Point presentations from the  “COLLOQUIUM ON THE CUBAN ECONOMY” have been posted on the  Center’s Web Site. The presentations of the Cuban participants, all from the Center for the Study of the Cuban Economy, namely Omar Everleny, Pavel Vidal, Camila Piñeiro, and Armando Nova, are especially valuable and informative as they provide up-to-date and inside analyses of major issue areas. Mauricio, Mario González-Corzo, and the team are certainly to be congratulated for organizing this event

All of the presentations can be be accessed at the Bildner Web Site via the hyperlinks listed below in the form of the program of the conference.

Session #1: Cuban Updates on Actualización

1. Cuentapropismo y ajuste estructural
Omar Everleny, University of Havana

2. Microfinanzas en Cuba
Pavel Vidal, University of Havana

3. Non-state Enterprises in Cuba: Current Situation and Prospects
Camila Piñeiro, University of Havana

4. Impacto de los Lineamientos de la Política Económico y Social en la producción nacional de alimento
Armando Nova, University of Havana

Moderator: Mauricio Font, Bildner Center for Western Hemisphere Studies

Session # 2: Strategic Initiatives: Agriculture

1. Measuring Cuba’s Agricultural Transformations: Preliminary Findings
Mario González-Corzo, Lehman College, CUNY

2. U.S. Food and Agricultural Exports to Cuba – Uncertain Times Ahead
Bill Messina, University of Florida

Moderator: Emily Morris, Economist Intelligence Unit in London

Session # 3: Revamping Socialism: Perspectives and Prospects

1. Actualización in Perspective
Mauricio Font, Bildner Center for Western Hemisphere Studies

2. Cuban Restructuring: Economic Risks
Emily Morris, Economist Intelligence Unit in London

3. Prospects in a Changing Geo-Economic Environment Archibald Ritter, Carleton University, Canada

ROUNDTABLE: Implications and Future Agenda

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A three-day international symposium held under the auspices of the Bildner Center at City University of New York. and spearheaded by its Director Mauricio Font, was held in March 2011. It was entitled Cuba Futures: Past and Present, and focused on the dynamics of change in contemporary Cuba—the politics, culture, economy.

A selection of the papers on the Cuban economy have been published on the web by the Bildner Centre.  The are all hyperlinked here: Political Economy of Change in Cuba, Bildner Center, CUNY New York. A Table of Contents is presented below. Of special interest are the essays by the analysts from the Centro de Estudios sobre la Economia Cubana, Armando Nova, Camila Piñeiro, Pavel Vidal Alejandro and Omar Everleny Pérez .

Table of Contents

Preface                                                                                                                                   xi

1 La actualización del modelo económico cubano, Omar Everleny Pérez Villanueva

2 Forecasting Cuba’s Economy: 2, 5, and 20 Years, Emily Morris*    10

3 Las restricciones de divisas en la economía cubana, 2010, Pavel Vidal Alejandro 19

4 New Forms of Enterprise in Cuba’s Changing Economy, Camila Piñeiro Harnecker    43

5 Valoración del impacto de las medidas más recientes en los resultados de la agricultura en Cuba, Armando Nova González     63

6 Las nuevas transformaciones en la agricultura cubana: éxitos y desafíos, Reynaldo Jiménez Guethón           81

7 Cuba y el turismo norteamericano. Analisis de potencialidades y de impactos en la región caribeña, Gerardo González Núñez and Roberto Orro Fernández         9

78 Tourism in Cuba: Barriers to Economic Growth and Development Hilary Becker     117

9 Cuba: A Services-Centered Survival and Development Pattern, Alberto Gabriele        133

10 Theoretical Foundations of a Future Privatization in Cuba: The Property and Ownership Paradigm, Frank-Christian Hansel   155

11 Globalization and the Socialist Multinational: Cuba and ALBA’s Grannacional Projects at the Intersection of Business and Human Rights, Larry Catá Backer         183

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CARMELO MESA-LAGO, La paradoja económica cubana, El Pais, 12 July 2009;

Oscar Espinosa Chepe, “CUBA ANTE UN FUTURO INCIERTO”, Cuba in Transition, ASCE, 2008


Emily Morris, Cuba’s Economy: Prospects for Change, (Power Point Presentation) Center for Strategic and International, Studies, Washington, December 2nd, 2008

Archibald R. M. Ritter, Cuba: Current Challenges and Alternate Economic Futures, (Power Point Presentation) Center for Strategic and International, Studies Washington D.C., December 2, 2008

ASCE, 2008

Stephen Baranyi and Ann Weston, Editors, Policy Forum on the Cuban Economy: Challenges and Options, A Report, September 20, 2007, The North-South Institute, Ottawa, Canada

Reinaldo Escobar, “Una familia cubana concluye el 2006, Estudio sobre la economía doméstica de una familia cubana,” Consenso; Desde Cuba, Numero 01, 2007

Carmelo Mesa-Lago, “Problemas sociales y económicos en Cuba durante la crisis y la recuperación”, Revista de la CEPAL, 86, Agosto, 2005

, ASCE 2005

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