Cuba’s reforms and the danger of capitalist restoration

Cuba’s reforms and the danger of capitalist restoration

submitted by  Leslie, DeLuca and Green

this was originally submitted as a discussion document in the group Socialist Action-US.

see also: Socialist Action on Cuba’s economic reforms  — a contradictory and confused political statement

      Given the central role that solidarity with the Cuban Revolution has played in our political current, we don’t enter into this discussion lightly. We won’t pretend to offer an extensive history of Cuba here, just a few brief preliminary points. We highly recommend that comrades read Cuban history in order to understand the complex relationship between Cuba and the United States, as well as the evolution of the Cuban leadership.

       The U.S. had designs to annex Cuba early on. Southern slaveholders saw the island as a natural place to extend chattel slavery and strengthen their position in U.S. politics.

      The Cuban people have fought over the decades against colonialism and invasion. First, a relentless struggle against Spain led by Cespedes, Maceo and Marti. The U.S. invasion in 1898 was intended to preempt the revolutionary movement and insure that Cuba did not achieve its independence. U.S. domination was written into the Cuban constitution with the Platt amendment, which gave the U.S. the right to intervene in Cuban affairs. A series of pro-U.S. puppet governments would rule Cuba until Batista was overthrown by forces led by the 26th of July Movement.

      The triumph of the revolution in 1959 brought an end to Cuba’s neo-colonial status and won Cuba’s national independence. Subsequent actions of the revolutionary government in land reform, and the nationalization of industry gave the revolution an anti-capitalist dynamic.

      The revolutionary government took initiatives in education ,and the economy that favored the oppressed and exploited. The Cuban revolution presented a challenge to the world Trotskyist movement. Here was a revolutionary movement led by non-traditional forces. The pro-Moscow Popular Socialist Party (official CP) did not play a leading role, although many youth and workers from the PSP supported and participated in the revolutionary movement.

      Our tradition, the Socialist Workers Party, analyzed the Cuban revolution based on the reality on the ground and took a stance in solidarity with the Cuban Revolution . Other Trotskyist tendencies based their analysis on a dogmatic interpretation of Marxism. The new revolution didn’t conform to a formula based on their interpretation of how revolutions happen- a Leninist party, soviets,etc. A revolution led by forces from outside the traditional revolutionary Marxist movement did not fit their schema. Anti-Castro sectarians love to refer to the leadership of M26J as “middle-class and petty bourgeois” but conveniently forget the class origins of their heroes Trotsky and Lenin.

      Joseph Hansen’s conjunctural analysis informed the SWP position.and influences our long-term position. Writing in Cuba: The Acid Test, Hansen said this:

      “But no revolutionary socialists “choose” what shall be regarded as the touchstone of revolutionary politics. This is done by much bigger forces; namely, classes in conflict. Cuba and Algeria happen to be the two areas in the world where this conflict has reached revolutionary proportions at the moment. This was not determined by any decision of ours. It was determined by revolutionary mass actions. Nor did we choose the current leaderships of the colonial revolution. They are the result of objective conditions of vast sweep. What we did choose was to study the facts and, in these facts, seek openings for effective application of our program.”

      Later, in the same document he says this:

      “The analogy between the counterrevolutionary forces is thus not very close. In Spain, Franco was fighting for power. In Cuba, the native Franco, Batista, has been overthrown and the native counterrevolutionaries, as the Cubans have scornfully said many times, could be handled by the children if it were not for the US. Cuba has a revolutionary-minded leadership, which the Spanish workers and peasants lacked. This leadership came to power in revolutionary struggle, proving itself in action. It demonstrated that it had drawn correct lessons from the experiences in Guatemala and Bolivia and that it was capable of learning from the experience of the Chinese revolution. Finally, this leadership has proved its awareness of the duality of the Soviet bureaucracy as a source of material aid and as a source of political danger. When such a leadership proclaims that it has become “Marxist-Leninist,” its words must be taken with the utmost seriousness even though it may not yet measure up to our norms.”

      The SWP’s classification of the new Cuban regime as a workers state, albeit lacking the organs of socialist democracy, was the correct position. But the Cuban leadership was contradictory. They knew instinctively that the revolution could not survive without reinforcement from outside- that the revolution had to spread to the continent. They took steps to expand the socialist revolution beyond their shores. That said, the tool they used for this purpose, guerilla warfare, was insufficient for the job. Revolutionary parties of the Leninist type had to be built.

      The Cubans were hampered politically by their relationship with the Stalinized USSR . Capable of huge feats solidarity – Che’s missions to Congo and Bolivia, support for the South African struggle against apartheid, sending doctors around the world, etc – they also made mistakes like support for the Soviet invasion of Czechoslovakia in 1968.

      In the late 70s, a new younger leadership of the SWP, led by Barnes, adapted to Castroism and junked the Trotskyist program of the party. Socialist Action’s position has continuity with the old line of the SWP.

      SA’s position on Cuba is reflected in the article, A Marxist Analysis of Cuba:

      “The Cuban revolution of 1959 profoundly changed economic and social life on the island. Within two years after the revolution, the capitalist system had been replaced by what we call a “workers state.”

      “Cuba created a planned economy, with virtually all industry, large commerce, and land holdings removed from private ownership and run for the common welfare instead of for private profit. “In selecting the terms to describe Cuba, we have consistently rejected use of the terms “deformed” or “degenerated” workers state.

      “There certainly are deformations of workers democracy in Cuba. But in our terminology the term “deformed workers state” is both descriptive and programmatic. It is politically equivalent to the view that the state is controlled by a crystallized bureaucratic caste that must be overthrown by political revolution.”

      Our last convention, while placing more emphasis on the lack of institutions of socialist democracy, repeated the previous position. We were told that “nothing has changed “ in Cuba with the “reforms” being put in place by the PCC. In our opinion, Socialist Action has underestimated the extent to which bureaucratization has acted as a brake on the Cuban economy. In our opinion, the proper designation for the class nature of the Cuban state is to say it is a workers state with bureaucratic deformations.

      Over the decades Cuba has been battered by an imperialist blockade, US sponsored terrorism, and the collapse of the USSR and its eastern bloc trading partners. Over the nearly 50 year period of the US blockade Cuba has suffered economic losses estimated at more than 100 billion USD. These losses were offset to a large degree by trade and subsidies from the so-called socialist bloc.

      One of the greatest challenges the Cubans faced was the “special period” where the economy nearly collapsed. With the sudden withdrawal of Soviet bloc trade, Cuba’s economy contracted violently by 35%. Some 90% of Cuba’s oil supply was lost. Through all of this the gains of the revolution in education, health care and the planned economy were preserved through sacrifice and solidarity. During the special period, Fidel opened Cuba to foreign investment and tourism. Small businesses were allowed and restrictions on the use of the dollar were lifted.

      In 2004, when the economic situation started to improve, in part due to increased ties to Venezuela and China, Fidel again outlawed the dollar and shut down small businesses.

      In 2006, citing ill health, Fidel stepped down as head of state and his brother Raul (Minister of Defense and head of the armed forces) took the reins of power. He officially became head of the Communist Party in April of 2011.

      After taking power, Raul moved to replace about 60% of the pro-Fidelista government ministers, including Carlos Lage and Felipe Perez Roque. Most of the new ministers are army officers and, according to the Economist “many of them are engineers by profession.” Raul has moved to make radical changes in the Cuban economy.

      Again, according to the Economist:

      “Raúl Castro, though no democrat, is clearly a more practical man than his brother. He recognises that time is running out for his island. The population is shrinking and ageing, the economy is hopelessly unproductive and the state can no longer pay for the paternalist social services of which Cuba was once proud. Meanwhile, Mr Chávez’s health and his hold on power are uncertain.

       “The changes Raúl Castro has introduced are almost certainly irreversible. Much of Cuban farming is, in effect, being privatised. In all, around a third of the country’s workforce is due to transfer by 2015 to an incipient private sector. As well as employing others, Cubans can now buy and sell houses and cars, even as the number of mobile phones and computers on the island is rising fast. This looks like a turning point similar to Deng Xiaoping’s revolution in China.” –“ The Castros, Cuba and America: On the road to capitalism”, The Economist, 24 March 2012 (Bold our emphasis)

       Since Raul Castro succeeded Fidel as President of Cuba, a series of “reforms” have been put in place. In November of 2011, the government announced that the private sale of homes would be allowed. The private sale of cars was legalized in October of 2011 and perhaps this example helps illustrate the problem.

      According to the Havana Times:

       “As of this Saturday, buying a used car in Cuba is no big deal, as long as you have the money to do so. Selling a car had been previously limited to pre 1959 revolution vehicles. The new regulations also allow Cubans living on the island as well as foreign permanent residents to own more than one vehicle.

        “Cars can change hands by donation, inheritance or sale between individuals. Both the seller and buyer will play a flat 4% tax (on the sale price) as part of the streamlined vehicle legalization process.” “Cuba Opens Car Sales to Individuals” Havana Times ,30 September ,2011

       Some of the problems with the new /used car sales question are written about in the Havana Times in a later issue.

       “Last year the government approved the selling of cars, but it established three categories of citizens: those who are entitled to purchase a brand new vehicle, others who can only aim to pick up a used one from a rental company, and those who will only be able to buy one from another Cuban individual.

       “A trumpeter for a salsa group is entitled to buy a new car, but a campesino who works all day under the blazing tropical sun can only buy an old car from another Cuban. The same thing happens with doctors, though in their cases they’ve earned their dollars by saving lives in the African bush.

      “With the network of prohibitions that was established, one didn’t have to be Nostradamus to guess that some bureaucrats were going to engage in parallel business activities. The government created a captive market saying it would issue more than 2,000 letters authorizing the purchase of modern used cars.”

       Later in the same article, the writer shows how corruption functions in the car market.

       “…you needn’t get discouraged, the bureaucrats are there to pluck you out of the mire. If you want to buy a “demobilized” rental-company car more quickly, you simply have to reward the employee who — “at great personal risk” — will facilitate the transaction. The rates are very flexible, depending on the resources of the “client” and the price of the car. But in the selling of a car, where I was present only by chance, I observed that the “thanks” expressed to the attentive state employee took the form of $500 (USD). “Taking that figure as the average, I multiplied it by the number of cars sold each week and discovered that these people are pocketing more than $40,000 (USD) a month, not an insignificant bonus, even if they have to split it with their bosses and other fellow workers.” — “Cars, Cubans and Parasites”, Havana Times, 31 May ,2012 (all bold our emphasis)

      (Below you will note numbers in parentheses . These indicate the number in the guidelines that correspond to the point. The guidlines can be found here )

       “In the economic policy that is proposed, socialism is equality of rights and opportunities for the citizens, not egalitarianism. Work is both a right and a duty; [it is] the personal responsibility of every citizen and must be remunerated according to its quantity and quality.” (PCC guidelines)

       The reforms enacted by the Communist Party (PCC) mean the layoff of 1 million Cubans from the nationalized state sector and their relocation to either small businesses, cooperatives or agricultural work. Approximately 30% of Cuban farming is now being done by small private farmers.

       The guidelines allow for the growth of small business and for Cuban businesses to employ workers directly. Wages are now linked to productivity (19,156) and social services are going to be means tested and not universal. (165) The ration card, which provides a minimal level of nutrition is to be phased out. (162) Workplace canteens are no longer to be subsidized. (164) The guidelines project an increase in foreign direct investment (89-100) and the increase in mixed private-state enterprises. (2) The socialized sector of the economy is being downsized (6,16,32) and the plan will co-exist with market forces.

      The guidelines are a deliberate and direct step towards a “market-socialist” reform along the lines seen in Vietnam or China. It is no secret that Raul is an admirer of the “Chinese road,” but the use of capitalist methods can only result in an increase in social inequality, a breakdown in solidarity and increases in crime, prostitution and black market activity.

      The black market already plays a major role in the lives of Cubans, where every Cuban has to engage in some illegal activity daily in order to survive.

       “A raft of economic changes introduced over the past year by President Raul Castro, including the right to work for oneself in 178 approved jobs, has been billed as a wide new opening for entrepreneurship, on an island of 11 million people where the state employs more than four in five workers and controls virtually all means of production.

      “In reality, many of the new jobs, everything from food vendor to wedding photographer, manicurist to construction worker, have existed for years in the informal economy, and many of those seeking work licenses were already offering the same services under the table. “And while the black market in developed countries might be dominated by drugs, bootleg DVDs and prostitution, in Cuba it literally can cover anything…” “Cuba’s Black Market Thrives Despite Raul Castro’s New Market Reforms” Huffington Post

       “Everyone with a job robs something,” said Marki, a chain-smoking 44-year-old transportation specialist. “The guy who works in the sugar industry steals sugar so he can resell it. The women who work with textiles steal thread so they can make their own clothes.”

       “Marki makes his living as a “mule,” ferrying clothes from Europe to Havana for sale at three underground stores, and has spent time in jail for his activities. Like several of the people interviewed for this article, he agreed to speak on condition he not be further identified for fear he could get into trouble.

      “Merchandise flows into the informal market from overseas, but also from the river of goods that disappear in pockets, backpacks, even trucks from state-owned warehouses, factories, supermarkets and offices.

       “There are no official government statistics on how much is stolen each year, though petty thievery is routinely denounced in the official press. On June 21, Communist party newspaper Granma reported that efforts to stop theft at state-run enterprises in the capital had “taken a step back” in recent months. It blamed managers for lax oversight after an initial surge of compliance with Castro’s exhortations to stop the pilfering.” Cuba’s Black Market Thrives Despite Raul Castro’s New Market Reforms” Huffington Post (all bold our emphasis)

      This corruption and self-enrichment reaches into the apparatus of the party/state.

      Writing in an article, “Corruption: the true counter revolution?,” Esteban Morales wrote: “When we closely observe Cuba’s internal situation today, we can have no doubt that the counter-revolution, little by little, is taking positions at certain levels of the State and Government.

      “Without a doubt, it is becoming evident that there are people in positions of government and state who are girding themselves financially for when the Revolution falls, and others may have everything almost ready to transfer state-owned assets to private hands, as happened in the old USSR…

      “Fidel said that we ourselves could put an end to the Revolution and I tend to think that, among other concerns, the Commander in Chief was referring to the questions relative to corruption. Because this phenomenon, already present, has continued to appear in force. If not, see what has happened with the distribution of lands in usufruct in some municipalities around the country: fraud, illegalities, favoritism, bureaucratic slowness, etc.

      “In reality, corruption is a lot more dangerous than the so-called domestic dissidence. The latter is still isolated; it lacks an alternative program, has no real leaders, no masses. But corruption turns out to be the true counter-revolution, which can do the most damage because it is within the government and the state apparatus, which really manage the country’s resources.”     (Morales was expelled from the Communist Party for writing this article.)

       In both China and the USSR , black market activity played a dual role. It undermined the planned economy and created the basis for a new bourgeoisie. The black market or “second economy” is a reality in Cuba.. A great many Cubans are engaged in some sort of economic activity outside of the legal channels because it’s necessary in order to eat. As Brezhnev said in the old USSR, “No one lives by wages alone.”

      The second economy played a destructive role in the USSR in two ways. It was a drag on the planned economy and it laid the basis for the creation of a new petty bourgeoisie. In the book, Socialism Betrayed: Behind the Collapse of the Soviet Union, authors Keeran and Kenny describe the size and scope of the second economy.

       “Illegal activity eventually assumed an astounding array of forms, eventually penetrating all aspects of Soviet life…The most common form of criminal activity took the form of stealing from the state, that is, from workplaces and public organizations. Grossman said, ‘The peasant steals fodder from the kolkhoz to maintain his animals, the worker steals materials and tools with which to ply his trade ‘on the side, the physician medicines, the driver steals gasoline….Private production even took the form of full-blown capitalists in the full sense of the word. — investing capital, organizing production on a large scale, hiring and exploiting workers and selling commodities on the black market.”

Socialism Betrayed: Behind the Collapse of the Soviet Union

       Quite often these private firms operating underground in the USSR got their raw materials through theft in the planned economy. According to Keeran and Kenny , the amount of accumulated wealth derived from the second economy accounted for 20-25 percent of all wealth in the Soviet Union. About 30 percent of all income in urban areas was gained through illegal activity. The petty bourgeois layer in Soviet society , which penetrated into the bureaucracy (and family members of the bureaucracy) and prepared the ground for restoration of capitalism.

       Both China and Russia have experienced gangsterism and corruption as new capitalist classes created themselves. The attraction for the Chinese “model” for some Cuban officials is undeniable.

       “Interest in the Chinese model was also strong in the few remaining state-socialist ies, especially Vietnam and Cuba. After all with the collapse of the Soviet system, Cuba suffered a serious economic shock…Cuban economists as well as the Cuban government were naturally impressed by China’s sustained economic growth , and even more so by its increasingly successful efforts to attract FDI (Foreign Direct Investments) and generate manufactured exports. “ China and Socialism: Market Reforms and Class Struggle, Hart-Landsberg and Burkett, Monthly Review Press

      “The reticence of the Cuban Government to officially acknowledge China as a model is certainly understandable, given that China’s reform process has worked to strengthen market forces and capitalist social relations at the expense of socialism.” China and Socialism: Market Reforms and Class Struggle, Hart-Landsberg and Burkett, Monthly Review Press (bold our emphasis) “…China’s market reforms have led not to socialist renewal but rather to full-fledged capitalist restoration, including growing foreign economic domination. Significantly, this outcome was driven by more than simple greed or class interests. Once the path of pro-market reforms was embarked upon, each subsequent step in the reform process was largely driven by tensions and contradictions generated by the reforms themselves. The weakening of central planning led to ever more reliance on market and profit incentives, which in turn encouraged the privileging of private enterprises over state enterprises and, increasingly, of foreign enterprises and markets over domestic ones.” China and Socialism: Market Reforms and Class Struggle, Hart-Landsberg and Burkett, Monthly Review Press (bold our emphasis)


      While the near collapse of the Cuban economy makes changes necessary, we should not have illusions that these “reforms” mean that “nothing has changed.”

       In fact, the reforms put in place by the PCC indicate that a process of capitalist restoration that shares some features of the market reforms in China and Vietnam is taking place.

      A USSR type collapse would be catastrophic; and quite possibly lead to civil war and imperialist intervention. What the PCC prefers is a more gradual transition of the type seen in China and Vietnam which remain under the tight control of the party/state — a hybrid state where capitalist relations co-exist with the rule of a bureaucratic regime.

      Is the nature of the Cuban state or the PCC leadership something immutable? We think not. The PCC has unleashed an austerity program aimed at trimming down the gains of the revolution. The growing inequality in Cuban society can only have a corrosive effect on what remains of the revolutionary spirit of the Cuban people.

      Dialectical materialism teaches us that no social formation remains static. Reality is always in flux. The same must be said of Cuba. Joseph Hansen rightly taught our movement that an analysis must flow from facts. It is in this spirit that the meaning of the changes in Cuba must be carefully considered.

       Leading comrades may dismiss our conclusion that capitalist restoration is now underway. We ask, what does a process of capitalist restoration look like? Is it necessarily the same in every post-capitalist country? Every revolution is different, so why expect restoration to unfold in the same way every time? What we cannot do is accept at face value the protestations of PCC leaders that the reforms represent the preservation of Cuba’s socialist road. Indeed, every Stalinist capitalist roader from Gorbachev to Deng has begun by claiming to save the existing “socialist” system by instituting reforms.

       Trotsky rightly concluded that you can’t build socialism in one country. This is especially true of a small island with few natural resources. Lenin and Trotsky knew that the future of the Russian Revolution depended on the socialist revolution in Europe’s more developed countries. The same can be said of Cuba.

      The future of Cuban workers and farmers lies in their ability to link up with struggling masses in Europe, Africa, Asia and the Americas — in making the world socialist revolution. The PCC, to the extent to which it continues austerity programs and capitalist restoration, has become an obstacle to the defense of the gains of the revolution.

      Chances of reforming or rectifying the PCC are slim. The best hope for the Cuban Revolution is regrouping the best fighters in the PCC, the CTC, and the mass of workers , farmers and students into a new revolutionary party based on a Leninist program. This new party would necessarily have to lead a political revolution in order to preserve the gains of the revolution and the fight for workers’ power and socialist democracy.

      While we call for a new revolutionary party and for a political revolution, we continue to defend the Cuban workers’ state unconditionally against any and all imperialist intervention. We call for the ending of the destructive blockade of Cuba. We call for an end to all support for US based terrorist groups, and the immediate freedom of the Cuban Five.

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