May 2013        

Opinion

Can we learn from Cuba?


■ A response to the article in the April issue of Socialist Voice.

Let me just state from the outset that this is a comradely reply to certain aspects of the article that I would have to question.
     The opening paragraph for me is very ambiguous in what it is trying to convey and who exactly the writer is appealing to. Of course it is no secret that Cuba has had some harsh times, especially the self-titled “special period” following the counter-revolution in the Soviet Union. The Cuban people have had to endure its own implementation of austerity, rationing, and international isolation. Its people have stood firm, side by side with its leaders, to uphold and maintain the continued existence of its socialist revolution.
     But it must be emphasised that Cuba is not a country that was given a free hand to set about the course of a planned economy along socialist lines: the US blockade on Cuba has made sure of that. That blockade, first introduced in 1962, is said to have cost the Cuban nation in the region of $100 billion. It is an unnecessary evil that has had a detrimental effect on its people on their road to development and socialism.
     When we think of Cuba as an example of a socialist state and what lessons can be learnt we must always keep in mind, as a comrade recently declared, that Cuba is a socialist state under siege by imperialism! It is also isolated, in that a socialist bloc no longer exists; and so the reforms that were brought in recently must be considered in the context of the material conditions and the political landscape Cuba finds itself in.
     Its people want to progress materially, socially, and politically, but it cannot do so with only its domestic resources and what little trade it does internationally. Who knows what might happen to Cuba if Venezuela, its main trading partner, especially for its heavy import on oil, was to take a right turn and undo the legacy built by the late great leader, Hugo Chávez?
     Whether we “European socialists” perceive the changes in Cuba as progress or a step back from socialism has little bearing on how the people on the ground will feel the changes. It is the Cuban people who will decide what path it takes, and the Cubans are fully involved in that process.
     If the Cubans need to implement reforms to first of all improve its productivity level and secondly to thaw some diplomatic relations so as to gain some trading partners, to improve the life of Cubans, then all we can do is hope they do it with a full awareness of the dangers and pitfalls such reforms bring with them. And I’m pretty sure this debate has circulated widely within the Cuban population.
     The Cuban issue is one thing, but one of the most fundamental Marxist-Leninist principles is questioned in the article, the main reason for this response: the centrally planned economy. The whole article is premised on the idea that central planning worked only in “poor, rural countries like Cuba, Bulgaria, or Romania,” and even then once a certain level of industrialisation, education, housing and health was reached it could no longer provide its citizens with the necessary material conditions that they demanded. However, I would suggest that this is more to do with imperialist aggression than any fundamental flaw in central planning.
     Let’s take a look at why the writer has come to this conclusion. The article states: “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.”
     This assessment isn’t wrong; however, it is over-simplified, and more importantly what is missing is context: two world wars, the Cold War, the arms race, the space race, and the welfare race. Scarcity is not an in-built flaw of the planned system. There was certainly no scarcity of education up to and including university level; definitely no scarcity of work, with full employment being maintained in the socialist countries.
     Workers’ rights, terms and conditions definitely weren’t scarce—so much so that the European and US governments had to engage in a welfare race, especially after the Second World War, to stem any spread of the “evil” communist ideology. It was only in the light of the Gorbachev “reforms” that shop shelves became empty, as a direct result of the dismantling of the planned economy.
     Leaving all that aside, one has to consider that the rise of fascism, which led to the Second World War, and the subsequent Cold War, made it essential to steer socialist production to the production of arms, leaving planners with a decision to either improve the material goods of its citizens and face abolition by a foreign aggressive imperialist enemy or put its best technicians, engineers, planners and everyone in between on a course to develop and produce items geared mainly for the military.
     So the lack of consumer goods and the underdevelopment of goods was partly due to wars, whether cold or hot, redirecting planning away from consumer goods. The fact still remained, however, that even though the socialist bloc was subjected to a Cold War, the vast majority of citizens were living in peace-time; but certain luxury items were being demanded that the planning authorities could not deliver, thus giving rise to the black or second economy and all that came with it.
     One may reasonably ask, Are market economies more efficient and better placed to meet the needs of their citizens—because of technological advancement and the incentive to innovate—than planned economies? Is this a valid and true argument? And if so, as the writer suggests, should we rethink our theory and strategy when it comes to economic central planning?
     On the face of it, it is very hard to deny this—probably why so many have questioned the idea of the planned economy, and possibly why well-meaning people on the left might advocate some hybrid of the planned and market economy.
     This is not an easy question to answer; but I would argue that the fact that Cuba, at this particular period in its existence, has had to change its economy to meet its particular needs is primarily because of the blockade. Therefore, Marxists should not be skewed by the unique conditions attributed to Cuba.
     I would counter the writer’s argument and would put forward the case for central planning: that the law of the plan, rather than the law of value—the market—has been and can be just as efficient and innovative as any market system. On the contrary, any hybrid system (as discussed below) can help, and did help in the eastern European socialist bloc, to lead to the demise of socialism, by allowing the embryo of capitalism, commodity production, to gain precedence over planning in economic productive relations.
     By today’s standards, the Soviet economy had good growth rates. (For some insight into how well it fared compared with the capitalist world see A Reassessment of the Soviet Industrial Revolution by Prof. Robert Allen of the University of Oxford.¹)
     Some would argue that large-scale industrialisation and post-war rebuilding could account for most of this, especially up to and after the Second World War. But how can a system work so well for a number of decades in building a modern industrialised country and all of a sudden falter when it comes to meeting some of the needs of its citizens for material goods? Does a centrally planned economy stifle the production of goods? Are central planners too far removed to deal with the ever-changing demands of their citizens?
     Taking inspiration from a paper by Joseph Ball,² I would argue not. The Soviet Union up to 1953 based the production of the means of production—i.e. the production of factories, raw materials, infrastructure, etc.—on the law of planning: it was not done on the basis of profit-making but on the basis of allocation (not selling) by the central authorities to the various enterprises; and also they remained state property.
     Only consumer goods were based on the law of value—were sold as commodities. “The reason for this distinction between consumer goods and means of production is that there were two basic forms of production in the Soviet Union. One form took place in the collective farm sector and the other in the state industrial enterprise sector.”² The difference was that the collective farms, once they reached their quota, could sell their surplus as commodities and distribute the proceeds among themselves, while the state industrial sector could not.
     For an economy to continually grow but at a constant level (once it has reached its steady state) its industries need to be able to innovate and advance technologically. (You can only build so many factories before the costs outweigh the benefits.) In the Soviet case before 1953 a mechanism whereby enterprises had an incentive to innovate and advance came in the form of state subsidies, which, put simply, paid for the initial high start-up cost of research and development that would otherwise only come from the ability to make a profit in a market economy.
     These subsidies were not industry-wide but were implemented in high-priority areas, such as heavy industries—in the Soviet case—by the central authority. The priority area for subsidising would depend on the relative development of an economy. This means that the law of the plan can be fully adhered to without the need to ensure that an industry is fully profitable but may be socially necessary.
     Prices can be controlled, and in the case of lighter industries the costs can be reduced by controlling the price of energy, fuel, and transport. The primacy of planning can be maintained, and therefore the conscious productive activity of human beings to develop and advance socialist theory need not be distorted or revised.
     What changed in the Soviet Union after 1953 was that reforms were implemented that did away with the state subsidies system (competition between firms obviously not factoring here). In effect, “when subsidies were ended, start-up costs became included in the cost of new products. New products became less profitable to produce than old products,” and so the incentive to innovate was removed.²
     What took its place was a system of “temporary prices.” Essentially, new products were supposed to be given an initial higher price once introduced and were then reduced. In practice this failed to work, as the planning system was not designed to act like a market. So costs were lowered but prices remained high, leading to a “disincentive to innovation.”
     Flowing from this, economic stagnation set in as the means of production now came to be influenced by the ability to make profit, restoring the law of value, and hence being sold as commodities. The black market and second economy began to flourish, while corruption began to filter through the state apparatus, giving rise to a new class of owners, who now had private interests at stake.
     The primacy of planning had been overtaken by the primacy of profit—not overnight, it must be stressed, but culminating in the Gorbachev “reforms” in the late 1980s. The planning system was dismantled, leading to the eventual restoration of the capitalist system in the eastern European and Soviet socialist bloc.
     The implications of allowing market forces and commodity production back to the forefront in a socialist economy can never be underestimated or go unnoticed. Just because a country might be able to socialise the means of production, if firms continue to be beholden to market forces, especially for finance, then we are left with ineffective central planning and inefficient competition. It is too early to tell if this will be the case in Cuba.
     Once you remove the primacy of central planning of the conscious efforts of society to direct the economic trajectory and replace it with market forces, however socialised they may be, you may well end up losing the socialist character and restoring capitalism, as did happen in the socialist bloc.
     To answer the writer’s question, “Can we learn from Cuba (or where to go from here)?”—yes, we have many lessons to learn from Cuba; but do we abandon our principles and welcome reforms with open arms that in the past have helped lead to the downfall of socialism? To this I would answer with a resounding No! Leave that to the opportunists, the revisionists, and the reformists, and tackle it wherever it presents itself.
[EON]

1. Robert Allen, A Reassessment of the Soviet Industrial Revolution (2003); available on line at www.politicaleconomy.ie.
2. Joseph Ball, The Need for Planning: The Restoration of Capitalism in the Soviet Union in the 1950s and the Decline of the Soviet Economy (2010); available on line at clogic.eserver.org/2010/Ball.pdf and www.politicaleconomy.ie.

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