What is Cuba's stage of economic development and is its government trying to establish a market economy? If so, what is the policy or policies the country is pursuing to achieve it?
The 1959 revolution that overthrew the dictatorship of Fulgencio Batista and replaced it with a dictatorship under Fidel Castro, his brother, Raul, and their 26th of July Movement, was accompanied by the introduction of an economic system modeled on the Marxist-Leninist policies advanced by the Soviet Union and its European satellites, but was also influenced by the experiences of Latin American progressives and socialists. The new regime initiated a series of reforms intended to redress old grievances among Cuba’s poor.
While Castro’s government did implement social reforms, it also imposed a very repressive political system on the Cuban people, including the imposition of a vast system of controls on the nation’s economy. Combined with the economic sanctions imposed on Cuba by the United States, decades of economic mismanagement – the effects of which were minimized during the Cold War by virtue of the economic and technical assistance provided by the Soviet Bloc – kept the Cuban economy mired in depression. Castro’s opposition to free market policies and brutal enforcement of his dictates prevented economic growth and kept the economy firmly in the hands of the State.
The dissolution of the Soviet Union marked the end of economic subsidies for Cuba. While the oil-rich nation of Venezuela, especially during the reign of the recently deceased Hugo Chavez, compensated for the loss of Soviet-era subsidies, it was increasingly apparent to many in Cuba that their country was being left behind. Cuba’s bloated government sector, which existed as much to provide jobs as to manage the country, had become too serious a drain on its limited resources.
As Fidel aged and suffered from debilitating illnesses, his political authority weakened, with his brother Raul filling the vacuum. This has created an opportunity for economic reforms to be implemented. With regard to the excessive cost of socialist economics – particularly with regard to the chimera of employment provided through bloated government payrolls – Raul announced on August 1, 2010: “We have to erase forever the notion that Cuba is the only country in the world where one can live without working.” By laying off government workers who served no function, the government saved money, albeit at the expense of the country’s employment level. Raul understood that, to address Cuba’s economic woes, business had to have freedom to operate, including the opportunity to make profits. Toward that end, he initiated policies intended to attract foreign investment, and to allow private businesses to function.
As has been the case with China and Vietnam, Cuba’s government knows that economic reforms – including permitting the existence of private enterprise – entail risks for the ruling party’s ability to retain absolute control on power. Whether its reforms succeed is dependent upon how far the government goes in allowing free enterprise to prosper. The experiences of Cuba’s friends in China and Vietnam, with whom it retains close relationships, provide it hope of being able to facilitate economic growth without sacrificing political power. As with China and Vietnam, however, finding and maintaining the proper balance between economic and social freedoms on the one hand and preserving Communist Party rule on the other hand will remain a difficult struggle for years to come.