Cuban Capitalism is Coming

Fidel can call it whatever he likes, but the word is capitalism. The Cuban dictator may not admit it, but capitalism is the force that puts food on the table, a roof over one's head and a little money in the bank. He can continue his failing experiment in Marxist madness till he dies. But after he's gone, the US is likely to end the embargo of Cuba and thereby start a capitalist revolution on the island. That might bring McDonalds to Havana, but it will also bring Cubans everything they've lived without for 50 years. For example, common US products such as house paint. And cars built after the 1950s.

Remarkably, Obama is positioned to defeat Cuban communism by simply declaring an end to the US embargo. By putting Cuba on the same footing as China, the Cuban government would crumble as American tourists and opportunists swarmed over the island, making it impossible for Castro to police the economic activities inside his national prison. Even though Obama has the opportunity to win a war with a pen rather than a sword, he is doing nothing.


Cuba Resets the Revolution

Cuba allows private enterprise, but on a very restricted scale.

September 18, 2010

For first-time visitors, one of the most striking things about Cuba is the lack of advertising on the landscape. The Socialist government has billboards bearing Fidel Castro’s likeness and his most quotable quotations. But one does not see roadside signs pitching much else.

Could the Cuba of the not-too-distant future feature signs touting “Joel’s Moving Company,” “Dayana’s Furniture Repair,” “Julio’s Boutique”?

Probably. And there will be other changes, bigger and more wrenching, if harder to see. On a scale not known for half a century, Cubans will be hiring other Cubans for small-scale enterprises, creating boss-employee relationships without the direct involvement of the Communist Party. The idea of receiving a paycheck whether one loafs, sleeps or shows up at all will be under a new challenge. And it is possible that creating a cadre of quasi-capitalists could unleash forces that the Castros or their successors will prove unable to control.

But is Cuba approaching a transformation of the kind that swept Russia and China? It is tempting to imagine so, if only because the news about a move to private employment seems so startling.

Nevertheless, experts on Cuba warn against reading any such far-reaching expectations into last week’s announcement, no matter how ambitious a task it seems to recondition Cubans for a system that will require some to sink or swim.

Yes, the Castro government is acknowledging a deep problem. But it has also always linked its core ideology to its fear and disdain of the United States and the American economic system. So its ferocious pursuit of independence from American economic influence — even as it denounces Washington’s embargo on trade — would make a radical shift to joining the global free-trade system that the United States dominates particularly difficult to explain.

A Cuban sociologist, Haroldo Dilla, predicts that in the end the new system will not enable Cubans to rise too far out of poverty, and that the government will resist a true economic opening with the world.

Which is not to say that the leadership wants no change at all. Over the two decades since Communism collapsed in the Soviet Union, Cuban officials have visited Russia, Vietnam and China and undoubtedly have taken some lessons from each. President Raúl Castro has made it plain that he views Mikhail Gorbachev’s efforts to reinvigorate the Soviet political system, which led to Communism’s collapse, as a cautionary tale. The mix of consumerism and authoritarianism that one finds in Vietnam and China is presumably a more palatable model — privatization, but with the state in firm control.

Still, the plan announced so far is much more modest than what the Asian countries have done. Instead, it seems designed simply to boost Cuba’s economic productivity in small-scale enterprises and thus loosen up a state-run economy and work force that have been sputtering for more than a decade. That goal is in line with what Raúl Castro himself said last month: “We have to erase forever the notion that Cuba is the only country in the world where one can live without working.”

The announcement of layoffs also does not represent the first time that Cuba has experimented with privatization. A host of small-scale occupations is already allowed on the island, including pizza deliverymen and party clowns. And Cubans can, if they jump through enough bureaucratic hoops, open restaurants in their homes or house guests in spare bedrooms.

It would be far more difficult for either Fidel or Raúl Castro to emulate their neighbors in the Caribbean, without challenging the basic precepts of the Cuban revolution. For decades now, many of those countries have been taking advantage of their ties to the West and the United States to diversify their economies. Cuba, instead, continued to rely on one export commodity — sugar — which the Soviet Union bought at subsidized prices. Only relatively recently has it invited some European partners for joint ventures; for example, in tourism.

But a broad opening to new manufacturing, for example, would be different. That would presumably mean welcoming an influx of private capital from abroad to produce export goods on Cuban soil. It would also probably require normalizing trade and diplomatic relations with the world’s biggest consumer market, the United States. And it might even invite efforts to return to Cuba by exiles who still have claims on industrial enterprises they left — or were forced to leave — as enemies of the revolution.

What’s more, in China and Vietnam the path toward a modern economy was carefully coordinated with a series of steps toward normalization of relations with the United States. Could Cuba’s new economic strategy be a signal of readiness for such a package? That would be difficult to say this early. Some Cuba-watchers suggest that a mass release of political prisoners from Cuban jails in recent months is such a signal. But the history of Cuban-American communication since 1958 is rife with the misreading of oblique signals, even if the prisoner release qualifies as one.

Of course, Cuba and the United States are more linked than government officials in both capitals like to admit — through family bonds, for example.

“If fully carried out, a major expansion of Cuba’s private sector will benefit many thousands of Cuban families and give Cuban-Americans opportunities through remittances to help relatives in Cuba who will be working on their own,” Philip Peters, who follows economic matters in Cuba for the security- and free-market-oriented Lexington Institute in Arlington, Va., wrote in a post on his blog, the Cuban Triangle, on Thursday.

Ted Henken, a professor at Baruch College who studies private enterprise in Cuba, epitomizes the ambivalence with which prudent Cuba-watchers are assessing the latest news. He said he was thrilled by it, but was hedging his bets on how transformative the change would be.

“This is the beginning of what we’ve all been waiting for,” he said. “It’s a major change in the way the Cuban economic system will work. It will be felt by every Cuban.” But, he added, “they still want to maintain state control. We’ll see how this plays out.”

The real test of Cuba’s latest experiment will be in how it is implemented and whether work will have a correlation with wealth, Professor Henken and other experts said. Under previous privatization campaigns, he said, “people were so hobbled by regulations that self-employment was rife with illegality and corruption because that’s the only way people could make their businesses float.”

They also had to keep wary, as all Cubans do, of the secret police, given the regime’s attitude toward private property and enterprise in general. Yoani Sánchez, a dissident Cuban blogger, cited this when she wrote the other day: “Under the strict canons of the socialist economy — planned, centralized and subsidized — self-employment has always been seen as an undesirable species of pest that periodically needs to be abated and occasionally even exterminated.”

The result has been the development of a singularly Cuban style of being enterprising — somewhere between furtive and legitimate, with the real object being to simply get along. Ms. Sánchez described one man who runs a restaurant in his house and had outlawed items on his menu. He tried to persuade his daughter to marry a top chef, the blogger wrote, to get around a rule that employees must be family members.

Earlier this month, when Jeffrey Goldberg interviewed Fidel Castro for The Atlantic magazine, one comment — hinting that the Cuban system wasn’t working for Cubans any more — drew the most attention. The former president later said that he had been misinterpreted, but within days came the announcement of the layoffs and the opening toward private employment.

Still, none of the power brokers in Cuba were calling this capitalism, and most close observers don’t expect them to use that word, whatever other changes unfold. “Overhauling their model does not necessarily mean they are importing ours,” was the way Julia Sweig, a Cuba expert at the Council on Foreign Relations who was at the interview, interpreted Mr. Castro’s comments.

Which brings us back to the matter of public relations, and those billboards: Even their presence could raise issues that Cuba’s economic planners probably have not fully thought through: Is a billboard company legal in the new Cuba? Would residents living along highways be able to rent out the land alongside their home for such advertising?

And, above all, could a privately run restaurant advertise that its rice and beans were better than those offered down the street by the state-run competition?