Raul Castro and the New Cuban Economy

Basil Wilson's picture

After being the principal decision-maker in Cuba since the revolution of 1959, Fidel Castro was forced to relinquish power owing to failing health in 2008.  Fidel Castro still writes for Granma, greets occasional foreign dignitaries and makes unannounced appearances.  Fidel, after a failed attempt to seize power in Cuba, at his trial gave a memorable defense of his actions, “History Will Absolve Me”.  It may be too early to place Fidel Castro’s years as President of Cuba for multi-decades in any clear perspective at this juncture.

Fidel Castro survived numerous attempts by U.S. nefarious agents to assassinate him.  He accepted the ideology of Marxist-Leninism but he was also a Cuban nationalist who sought independence from American imperialism only to fall into the clutches of the Russian Bear.

Fidel Castro and the Cuban revolutionary guerrillas had a marked impact on a segment of the Caribbean intelligentsia.  Much of that influence had to do with the search for an appropriate developmental model other than the capitalist democracy inherited from the British.

Michael Manley embraced democratic socialism, Forbes Burham articulated what he chose to call Co-operative Socialism.  Maurice Bishop and the New Jewel Movement overthrew Eric Gairy in Grenada and jettisoned the Westminster system of parliamentary democracy.

That experiment or flirtation with Marxism-Leninism by an English-speaking Caribbean country was short-lived.  The New Jewel Movement came to power in March 1979 and by October, 1983 they had devoured their own revolution in part based on pressure from the Reagan administration.  Reagan dispatched America’s military might under the pretense that American medical students studying at the Medical School in St. George’s were in grave danger.

The Cuban Revolution had far more resiliency.  Nonetheless, once Fidel left the big stage, Raul Castro has been far less ideologically inflexible than his brother.  Under Fidel Castro, the Cuban economy functioned like a Soviet style economy with centralized planning, the state was omnipresent and private property was non-existent.

In terms of the UNDP’s Human Development Index, Cuba made progress in abolishing illiteracy, expanding longevity rates, providing excellent medical care and producing an egalitarian society. The Cuban people had the basic necessities of life, but consumer goods were scarce and wealth creation was crippled by the inefficiencies of the state and far reaching subsidies.

Raul Castro in conjunction with a group of young Cuban economists has opted to move away from the straight jacket of the Soviet model.  Cuba has embarked on a new course to create and expand the private sector.  Farming to some extent has been privatized and now supplies a majority of the domestically grown foodstuff.  Cubans are now able to establish small businesses and are able to purchase and sell homes.  Over 400,000 people are currently classified vis-à-vis working in the private sector.

Raul Castro announced a couple years ago that he would shrink the bloated public sector but government has had to slow the pace to allow the privatization to take hold and absorb the surplus labor in the public sector. Communist Party economists envision that the public sector would not command more than 50 percent of the economy.

In an article published in Foreign Affairs the July/August issue of 2013, Julia E. Sweig and Michael J. Bustamante, the authors, argue that Cuba’s pivot to privatization is more challenging than the situation in China or Viet Nam.  Much of the Cuban economy is grounded in the service sector and there isn’t much of a modern productive sector. Capital re-investment in Cuba has been meager and foreign investment particularly of an industrial/manufacturing nature is essential for the further development of the Cuban economy.

The Cuban economy also suffers from a dearth of foreign exchange and the economy imports more than it exports.  One of the bright signs as the Cubans pursue this new dispensation is the new travel policy in which Cubans are allowed to migrate without draconian punishment. The Cubans in the Diaspora are already engaged in the setting up of new business and remittances of over a billion dollars play a critical role in the economy.
The rapprochement betwixt the United States and Cuba should boost the Cuban economy with expanded trade and foreign investment.  The establishment of full diplomatic relationship is in the making.  The lifting on restriction to travel to Cuba will augment the tourist industry as America’s curiosity with Cuba remains high.

These economic changes will invariable lead to changes in Cuba’s class structure.  Economic inequality will become more pronounced.  Communist Party monopoly of power will be challenged. But in the case of China and Viet-Nam, if the changes in the economic structure produce economic growth and a better life for the people of Cuba, then the Cuban Communist Party will be in a better position to preserve their monopoly of power.

This is a new dawn for the Cuban revolution.  Fidel Castro has returned metaphorically to his barracks.  Raul Castro has had the courage to forge a new course.  By 2018, Raul Castro will himself step down from the Presidency and a new generation of post-revolutionary technocrats will be in control of state power in Cuba.  For the Raul Castro experiment to work, it will require adroit leadership from this new generation of technocrats poised to assume the steering of a rocky ship of state.

*Dr. Basil Wilson is Provost Emeritus of John Jay College of Criminal Justice and Executive Director of the King Research Institute, Monroe College, Bronx, New York. He can be reached at: basilwilson@caribbean-events.com.