Experts: So far, Rauls reforms not enough to boost income
To move its economy forward, Cuba is cautiously expanding self-employment and cooperatives, but its efforts up until now have been too timid to raise living standards for the island’s 11.2 million residents.
Havana has yet to embrace the “R” word (reform) or the “P” word (privatization), preferring to use such terms as “actualization” or “non-state enterprises.” That language suggests resistance to broader adjustments needed to energize economic growth, academics said during the annual Association for the Study of the Cuban Economy (ASCE) conference in Miami.
In authorizing individuals to establish microbusinesses, for example, the Cuban government published a list of 181 activities that are allowed — rather than a list of what’s explicitly banned. “There’s still a sense of control, a mentality of distrust,” said sociologist Ted Henken of New York City’s Baruch College. “They really don’t want to let go of control.”
Henken, the newly elected president of ASCE, cited a recent study by University of Havana researcher Camila Pineiro found that 67% of those licensed as self-employed had most recently been unemployed, meaning they likely hustled in underground activities.
Pineiro’s research showed that only 17% of the self-employed had either been laid off or retired from government jobs.
That low 17% figure suggests that microbusinesses won’t easily be able to absorb the one million or more workers that the Cuban government aims to shed from state payrolls this decade.
CUBAN COOPERATIVES NEED MORE AUTONOMY
That’s especially true when the number of self-employed seems to have hit a plateau in recent months, and when bureaucrats resistant to change have been cracking down on some businesses, said Henken.
Cuban cooperatives also face limits to absorb large numbers of state workers, said agricultural economist Antonio Gayoso, former executive director of the World Council of Credit Unions.
So-called cooperatives in Cuba generally don’t meet the definition of co-ops established by the International Cooperative Alliance anyway, said Gayoso. They’re not autonomous, voluntary, jointly owned or democratically controlled. Cuban farm co-ops tend to be “state farms with a cute name,” he said.
To succeed as true co-ops, the groups need autonomy to produce what they want, sell where they want, set prices on their goods and take other decisions among their members. But the government seems unlikely to offer that autonomy for co-ops to flourish, said Gayoso, given that communist officials have already warned Cuba’s inhabitants against “accumulating wealth.”
Beyond co-ops, Cuba might consider other growth options in the sphere of the “social and solidarity economy,” which spans nonprofits, microcredit, co-ops and other forms of socially responsible enterprise, said Julia Sagebien of Canada’s Dalhousie University.
She’s been helping bring social-enterprise practitioners and experts to Cuba to share their experiences. Still, social enterprises tend to be “bottomup” ventures, which require the government to largely back out, Sagebien said. Cuba’s communist regime has been mainly "topdown” in its economic management, she said.
Cuba has a history of “bottom-up” ventures to draw from, including mutual aid societies like Centro Gallego and Centro Asturiana, which helped immigrants from their respective regions in Spain to acclimate in Cuba in pre-communist times, said University of Miami economics professor Luís Locay.
Yet “bottom-up” ventures mean trimming “top-down” control,” and both the Castro regime and its bureaucrats remain cautious about handing power over to individuals, said Felipe Manteiga, who leads FM Development Management, a Virginia consulting firm.
Henken said one indicator to watch in Cuba’s “actualization” is the extent to which the government lets the self-employed form microenterprises and then grow the ventures to small businesses and mid-sized companies.
“This is not going to work,” said Henken, “unless it’s a step in a reform process.”
Don't miss out
Become a Digital Subscriber and continue to access all the exclusive and insightful reporting you'll only find in Cuba News.Subscribe Now - Get 30 days Free