April 2013        


Can we learn from Cuba?
(or where to go from here?)

The replacement of a failed centralised planning system in Cuba with market socialism caused flutterings in the dovecotes of the infantile left, for whom “market socialism” is a contradiction in terms. Cuba has deserted the Marxist camp, to initiate a return to capitalism. Mass redundancies in the state sector, expansion of the private sector and reductions in welfare hand-outs enabled the capitalist press to trumpet the glad tidings that Cuba was on the way back to capitalist “normality.” Yet another proof that communism doesn’t work, they said, seeing the latter as being synonymous inevitably with repressive control of economic life by centralised planning regimes.
     Cuban leaders, from President Raúl Castro down, are adamant, however, that the pragmatic socio-economic changes instituted by Cuba are necessary to further develop socialism there and to safeguard the egalitarian achievements of the continuing Cuban Revolution, especially in the areas of health, education, and general social well-being.
     What are European socialists to make of this consideration? Can the Cuban experience change the way we theorise and advance a socialist project that languishes in the context of a massively hegemonising capitalism that subverts all possibility of radical change?
     “After the revolution . . .” prefaces many a fond leftist wish-list. Such cant cuts no ice with workers, to whom such a vague happening is incredible, especially when we cannot show how such a revolution is to occur, what form it is to take, and how the transition from such a undefined scenario to a just and credible post-revolutionary order is to be achieved.
     For Marx, socialism was to be the product of the dialectic of history, not of the vendors of visions. Furthermore, defining post-revolutionary institutions bespeaks a top-down technocratic elitism that stifles the creative revolutionary impulse. Utopian visions, embodying the notion that history has a final destination, where social conflict and politics will disappear, are self-marginalising leftist fantasies, pie in the sky for workers.
     Instead, a future scenario showing concrete measures leading out of the maze of the status quo is urgently needed. Once such a transition has been accomplished, society can decide on subsequent moves. This transition must aim to create a new order in which common ownership of all productive infrastructure lays a solid basis for further radical change.
     Unless the present system can be effaced by a such a credible and workable alternative it will sputter on, collapsing finally into human and environmental chaos, riven by its own internal contradictions.
     Does the purist leftist vision of an immediate stateless, marketless world—and thus no money, wages, or prices, in which goods are freely produced and exchanged, where the economy is governed by the maxim “from each according to his abilities, to each according to his needs”—offer such a credible, alternative vision? And if not, why not?
     Consider the complexity of our electronic era, in which millions participate in the production of a single computer, for example. Each individual performs, under orders, only the tiniest number of the millions of tasks involved. How do bosses know how much plastic, for example, to produce? How many electronic components? The number of such issues is almost infinite in the modern world economy, with millions of different products and billions of workers and consumers. Hence the issue of economic calculation arises, facing us with two logical possibilities.
     In a market economy, prices systematically inform firms how much of a thing people are willing to forgo to get another thing. In this way, quantitative information is generated about how people value those things. Only by knowing how people value millions of different things can producers make rational decisions about what they are going to produce.
     A decentralised system could never continually generate and disseminate so much information without the use of prices in some form. Alternatively, in a centrally planned economy, society’s production decisions would be delegated to computerised central planners, who would assemble all the necessary information before calculating social needs.
     But something must perform the economic calculation function that prices perform for a market system and planners perform for a centrally planned system. An economic calculation mechanism is essential to any realistic future scenario.
     Why not a centrally planned economy, then? Centrally planned economies succeeded when communism came to poor, rural countries like Cuba, Bulgaria, or Romania. They industrialised quickly, wiped out illiteracy, raised educational levels, promoted equality between men and women, ensuring that the majority were housed and had health care. Beyond that, the system faltered.
     Citizens of socialist countries felt the scarcity, shoddiness and uniformity of their goods to be inconveniences, and violations of their basic socialist rights. To compensate for failures of the system to deliver, black economies developed, so that ever-increasing areas of economic activity spun out of social accountability. Criminality and quasi-criminality, corruption and parasitism flourished in this milieu, along with social discontent. Cuba and the eastern European economies had economic calculation mechanisms. But they failed to live up to expectations. Why?
     The better ability of market economies to avoid the problems plaguing centrally planned systems is instructive. It arises from one fact: within legal limits, firms freely enter markets, choose their products and production methods, and interact with other firms and individuals. They may close down if they cannot succeed on their own resources; or they may obtain access to autonomous sources of capital in order to test and implement new production procedures, untrammelled by planning restrictions.
     Greater scope for improved products and processes, and constant technological improvement and growth in productivity, ensue. Such firms adapt their output to customers’ needs. Customers choose between the output of different producers: no agency defines production goals. Centralised agencies, however, can never define every desired characteristic of every product. So, they fail to satisfy the demands of consumers.
     Firms cannot be truly autonomous without a capital market, as demonstrated by the failure of Hungary’s market-oriented reforms. Constant state support of loss-making firms to prevent bankruptcies made inefficiency systemic. Firms operated without budget constraints, exerting limitless demand for materials and capital goods, thus producing shortages and production bottlenecks. Constant bail-outs were the price the Hungarian leadership paid to avoid such failures.
     In 1989, faced with the failure of the country’s centrally planned economy, Poland’s leading economists concluded that socialism would be saved by making publicly owned firms autonomous and cohesive with a socialised capital market. The absence of the latter to ease snags caused by the budget constraints of a market system was critical. When capitalist spending exceeds income, lenders and investors make good the shortfall. Without a capital market, that option doesn’t exist.
     The Polish vision was of autonomous firms, financed by autonomous banks or investment funds, all competing and interacting in a market—but all socially owned. This would have entailed a fundamental reorganisation of the political economies of eastern Europe—and of most traditional notions of socialism. However, the swift replacement of eastern European Soviet-style central planning with free-market capitalism cancelled that evolution.
     In Cuba, though, high levels of democratic participation and popular support for socialist revolution were alloyed with the empirical understanding that the latter could be advanced only by the development of autonomous firms operating within a fully socialised market.
     Profit, the Marxist “motor of the system,” is integral to the picture. Profits relay information to capitalist firms and entrepreneurs about satisfying society’s needs most efficiently. Hunger for profits leads firms to maximise their socially desired outputs while economising on their use of inputs. Thus considered, profits are an ideal co-ordinating device.
     This holds as long as an item’s market value measures its social value. Capitalism distorts prices for crucial goods that don’t relate to their actual social value, natural resources, interest rates, luxury items, wages, etc. However, the prices of most of the millions of commodities function as reliable guides to their relative social values. Profit-seeking makes capitalists produce things people desire in the most efficient way possible. Wrongly valued commodities—labour, nature, information, finance, risk, etc.—produce the irrationality of profit. Capitalist firms maximise profitability by efficiently producing things people want—but also by impoverishing workers, ravaging environments, defrauding consumers. Such is capitalism!
     But how can a profit-maximising system enforce the profit-repressing norms needed to promote the common welfare—in other words, transform into a system that allows autonomous firms to produce and trade goods for the market, making surpluses that cannot be appropriated by capitalists? Could profits be socialised—i.e. be efficiency indicators, rather than a motive force?
     The precondition of such a system is the socialisation of the means of production, structured so as to include the existence of a socialised capital market. How would such collective financing work in a notional post-capitalist transitional situation?
     A public common fund would “buy” all privately owned financial assets at their market price, payment being credited to the “bought-out” party’s bank account. The public common fund would then own all formerly privately owned financial assets, while all the financial wealth of individuals would be converted into bank deposits (the banks now being in common ownership, the PCF now owning all their shares). No-one has lost wealth: they have simply cashed in their financial assets. But “casino capitalism” has been abolished at a stroke.
     The consequences are revolutionary. Society’s means of production and credit are now PCF assets; individuals’ financial wealth balances are now its liabilities. The PCF can now re-establish a socialised capital market, with socialised banks and investment funds owning and allocating capital among the means of production. So, revolutionary transformation to a more egalitarian system would not have to be apocalyptic, nor involve total collapse of the old order and its replacement with something entirely unrecognisable.
     Firms are now owned by society as a whole, along with any surplus they generate. As firms still buy and sell in the market, they still generate surpluses (or deficits) that measure their efficacy. As no individual owner actually pockets these surpluses, no-one is interested in exploiting the profit-driven false valuation of goods that is endemic to capitalism.
     The accrual of interest to individuals’ bank deposits can be capped at a certain threshold of wealth. The social surplus could be paid out to everyone as a social dividend. Individuals would be free to start businesses; once their firms reached a certain size, age and importance they would have to be sold by their owners into the socialised capital market.
     Such firms could be workers’ co-operatives, as in Cuba, collecting their entire net income, after paying for the use of capital; or they might be “owned” by part of the socialised capital market, with a management selected by that entity, counterbalanced by worker participation. Managers and “owners” could be evaluated on the firm’s surplus, but they would have no claim on profits. Future performance could thus be “objectively” predicted, by the socialised capital market.
     Such arrangements deny the priority of profit over social needs, and do not rule out further change in humans’ interaction with each other and the environment. They describe an evolution from the present capitalist order to a new status quo, with essential similarities to the new socialist economy evolving in Cuba, as it grows from a jettisoned central-planning phase to a fully realised social market.
     The steps towards such a socialist economy could only be the expression of the will of a sovereign people. Ireland differs from sovereign, independent Cuba in that it is a member of a dogmatically neo-liberal European Union, to which it has surrendered most of its economic sovereignty. A European Union of Sovereign Socialist Republics is nowhere in sight, even on the most distant political horizon!
     Ireland could only develop its own socialised market outside the euro zone and the EU itself. The ability to delineate a sovereign national territory as a domain of political action is fundamental, because only citizens of a particular nation-state can acquire power. This understanding must inform the immediate agenda of Irish socialists. But a genuinely serious socialist programme must also describe a credible transition to a socialised market economy, for which that national sovereignty is a necessary precondition.

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