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Academic

: Law at the End of the Day

Cuba Responds to Globalizationand Reorganizes its Political Economy: Revolution, Retrenchment or Small Steps Towards Market Engagement Within a Marxist Framework Under the Leadership of a Vanguard Party Apparatus

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For years now the writing has been on the wall. Over the last decade two great factions within the Cuban governing elite have been debating the future course of Cuban economic development. On the one side stood the governing apparatus of traditionalists tied to the old Soviet model of development. This group assumed there was no flaw in the Soviet model and they were determined to show that they could succeed where the Soviet sphere failed. On the other stood progressives, with significant elements in the Fuerzas Armadas Revolucionarias, that increasingly looked to East Asian models of development as a means of preserving the political system while modifying the economic system to preserve political stability and the legitimacy of the leadership role of the Party. See Larry Catá Backer, On the Anniversary of the Attack on the Moncada Barracks: Cuba Moves Forward towards its Chinese Future, Law at the End of the Day, July 27, 2007. One side was supported by Fidel Castro. The other side was supported by Raúl Castro.

The battle between the two sectors of the governing elite appeared to tip in favor of the Raulistas at the beginning of September, 2010, when in a carefully staged interview, Fidel Castro appeared to concede the point. "It was a casual remark over a lunch of salad, fish and red wine but future historians are likely to parse and ponder every word: 'The Cuban model doesn't even work for us any more.'" Rory Carroll, Fidel Castro says his economic system is failing: Former Cuban president says state-run model 'doesn't even work for us' in offhand remark to US journalist Jeffrey Goldberg, The Guardian (UK), Sept. 9, 2010 ("Towards the end of a long, relaxed lunch in Havana, Jeffrey Goldberg, a national correspondent for the Atlantic magazine, asked Castro if Cuba's economic system was still worth exporting. The reply left him dumbfounded. "Did the leader of the revolution just say, in essence, 'Never mind'?" Goldberg wrote on his blog." Id.).

The interview, of course, was meant to confuse the West, whose analysts would predictably misread the meaning and effect of the "admission." "Fidel Castro's nine-word confession, dropped into conversation with a visiting US journalist and policy analyst, undercuts half a century of thundering revolutionary certitude about Cuban socialism." Rory Carroll, Fidel Castro says his economic system is failing, supra. Westerners and the enemies of the regime tended to over-read the statement--finding it too difficult to resist the urge to read into the statement their own hopes, desires and long term perspectives.

"He is either crazy or senile. This certainly does not sound like something Castro would say," said Jaime Suchlicki, a long-time Castro observer and head of the University of Miami's Research Institute for Cuban Studies. "But if he was quoted accurately, then I guess he's come to the realization, like everyone else, that Marxist-Leninist governments do not function. So the real question is, what is he going to do about it now? Is he going to bring about change in Cuba since the Cuba model doesn't work?" Jim Wyss and Liusa Yanez, Fidel Castro says Cuba's economy is broken, McClatchy, Sept. 9, 2010.

Yet the evidence of its effect within Cuban conversations about the future of economic organization was not hidden. "Raúl Castro has been saying the same thing in public and private since succeeding his older brother two years ago." Rory Carroll, Fidel Castro says his economic system is failing, supra.

The remark should not, however, be interpreted as a condemnation of socialism, added Wilkinson. "That is clearly not what he means, but it is an acknowledgement that the way in which the Cuban system is organised has to change. It is an implicit indication also that he has abdicated governing entirely to Raúl, who has argued this position for some time. We can now expect a lot more changes and perhaps more rapid changes as a consequence." Id.

And so it is important to ask, at this point, what the Cuban elite is permitting to be said about this change. For that purpose, a recent article in the Communist Party paper may be of help. Leticia Martínez Hernández, Mucho más que una alternativa, Granma, Sept. 24, 2010.

Martínez Hernńández starts with an indirect admission that it is Raúl and not Fidel who is now asserting the leadership role with respect to economic issues. Rather than refer to Fidel's observation, she starts with Raúl's address to the National Assembly at the start of August, a month before the carefully staged interview with Fidel, describing plans to reduce public employment. "El pasado primero de agosto el General de Ejército Raúl Castro Ruz anunció en la Asamblea Nacional la decisión de ampliar el ejercicio del trabajo por cuenta propia, y utilizarlo como una alternativa más de empleo para los trabajadores que queden disponibles luego del proceso de reducción de plantillas infladas que deberá asumir el país." Id. Raúl also indicated a substantial revision of the legal impediments to private economic activity, at least at the lowest levels of such activity. "En la reunión parlamentaria se conoció, además, que se eliminarían varias de las prohibiciones vigentes para el otorgamiento de nuevas licencias y la comercialización de algunos productos, además de flexibilizar la posibilidad de contratar fuerza de trabajo en determinadas actividades." Id. See also, Raúl Castro No Reform But Cuba Economy Control to Ease, BBC News Online, Aug. 2, 2010 ("Cuban President Raul Castro has ruled out large-scale market reforms to revive the communist island's struggling economy. But Mr Castro said the role of the state would be reduced in some areas, with more workers allowed to be self-employed or to set up small businesses." Id.).

This is no revolution, even judged by Chinese or Vietnamese standards. Rather, the focus is not on the aggregation of capital, or even of labor, for the production of goods or services. Rather, the focus of the changes are on the sole proprietor. Large scale economic activity remains the sole province of the state. The state has been careful to limit the sorts of occupations or economic activities to which liberalization applies. About 178 occupations are listed. "Admi Valhuerdi Cepero, viceministra primera del Ministerio de Trabajo y Seguridad Social, explicó que podrá realizarse el trabajo por cuenta propia en 178 actividades, de las cuales 83 podrán contratar fuerza de trabajo sin necesidad de que sean convivientes o familiares del titular." Leticia Martínez Hernández, Mucho más que una alternativa, Granma, Sept. 24, 2010. The state emphasizes the extent to which this listing liberalizes a number of activities traditionally beyond the reach of the individual. Valhuerdi Cepero is quoted as saying, "'Se concederán nuevas autorizaciones en 29 actividades que, si bien se ejercen en la actualidad, no se otorgaban nuevas autorizaciones desde hacía varios ańos'." Id. However, a careful reading suggests a focus on the lowest level of economic activity--that is on activity with respect to which aggregation of labor or capital is not required.

Beyond these activities, and certainly with respect to activities that might be undertaken jointly with foreign capital--the state retains a monopoly. And within the state, it is the military that serves as the most potent corporate entrepreneur. Larry Catá Backer, Empresas en Perfeccionamiento and the Sinification of the Cuban Economy, Law at the End of the Day, Aug. 30, 2007. Moreover, nothing in the new changes modifies the state based internationalism of Cuban commercial activities undertaken through ALBA. See, e.g., Larry Catá Backer, Globalization and the Socialist Multinational: Cuba and ALBA?s Grannacional Projects at the Intersection of Business and Human Rights (August 1, 2010). There is good reason for this within traditional Cuban Marxist Leninism. Unlike the Chines who overcame this fundamental problem of socialist economies in the victory of Deng Xiaoping in 1979, the Cubans continue to view juridical persons other than the state, or state controlled entities, as a fundamental threat to the Party as the sole representative of the people.

Leticia Martínez Hernández, Mucho más que una alternativa, Granma, Sept. 24, 2010.

The small local sole entrepreneur, then, is the model that is to be cultivated at the heart fo the reformation of the political economy of Cuba. One can view this either as bottom up development or as the necessary bifurcation of the economy, with a market based local sector and a state sector for everything else.

Desde entonces muchos han quedado a la espera de una solución que, alejada de la improvisación y lo efímero, posibilitará el incremento de la oferta de bienes y servicios, a la vez que asegurará ingresos a aquellos que decidan ejercerla. Contribuirá, también, a que el Estado se sacuda una buena parte de la carga de subsidios excesivos, mientras deja en manos no estatales ofertas que durante ańos asumió a pesar de la difícil coyuntura económica.
La medida de flexibilizar el trabajo por cuenta propia es una de las decisiones que el país toma en el rediseńo de su política económica, para incrementar niveles de productividad y eficiencia. Se trata, además, de brindar al trabajador una forma más de sentirse útil con su esfuerzo personal, y de alejarnos de aquellas concepciones que condenaron el trabajo por cuenta propia casi a la extinción y a estigmatizar a quienes decidieron sumarse a él, legalmente, en la década de los noventa. Leticia Martínez Hernández, Mucho más que una alternativa, Granma, Sept. 24, 2010.

Internal documents also suggest that a limited amount of aggregation will be permitted--cooperatives of individuals but not corporations. "The document obtained by AP - which is dated Aug. 24 and laid out like a PowerPoint presentation with bullet points and large headlines - said many laid-off workers will be urged to form private cooperatives. Others will be pushed into jobs at foreign-run companies and joint ventures. Still more will need to set up small business - particularly in the areas of transportation, food and house rental. . . . But it warned that many of the fledgling businesses won't get off the ground because laid-off workers often lack the experience, skill or initiative to make it on their own." Paul Haven and Andrea Rodriguez, Document charts Cuba's path to economic reform, Miami Herald, Sept. 14, 2010.

It clearly emerges that the principal objectives of the state are to convert workers from cost items to revenue generators. The hope is that as a result people will have a larger assortment of goods and services available and the state will not be burdened with the subsidies necessary to provide these items. Work flexibility is taken to redesign the political economy of the Island to increase individual productivity and efficiency as well as to provide a means through which workers can feel more useful, change popular conceptions of work, and to reduce its stigma. And the revenue generated is not merely available to the producers but also to the state in the form of taxes. "El primero de agosto se hacía pública también la aprobación de un régimen tributario para el trabajo por cuenta propia que responde al nuevo escenario económico del país. Que aporte más quien más reciba es el principio del nuevo régimen tributario que ayudará a incrementar las fuentes de ingresos al presupuesto del Estado, y a lograr una adecuada redistribución de estos a escala social." Leticia Martínez Hernández, Mucho más que una alternativa, Granma, Sept. 24, 2010. This income is meant to fund state activity in ways unavailable today. And so these private operators fo commercial actvity will be taxed if they mean to enjoy all of the social benefits provided byt he state.

Cuando entren en vigor las nuevas regulaciones, los que están afiliados al trabajo por cuenta propia, y quienes se incorporen a él, tendrán la obligación de pagar impuestos sobre los ingresos personales, sobre las ventas, los servicios públicos, y por la utilización de fuerza de trabajo, además de contribuir a la Seguridad Social. Id.

But that leaves a number of specific questions about the form of liberalization that the Communist Party publication, Granma, seeks to answer. "Pero, żcómo se ampliará el trabajo por cuenta propia? żCuáles actividades se incluyen en él? żQué prohibiciones se derogan? żCómo se organizará y se controlará? żQué impuestos se pagarán? Tras estas y otras interrogantes anduvo Granma, y consultó a especialistas de los Ministerios de Economía y Planificación, Finanzas y Precios, y Trabajo y Seguridad Social, quienes alistan las regulaciones del trabajo por cuenta propia, que deberán comenzar a aplicarse a partir de octubre. " Id. Martínez Hernández devotes the rest of the article to providing a set of basic answers to these questions.

In addition to strict controls on the sorts of occupations subject to liberalization, the State will tightly control the economic activities with respect to which private markets will be permitted. "Alhuerdi explicó igualmente que el otorgamiento de nuevas autorizaciones para el ejercicio del trabajo por cuenta propia se mantiene limitado por ahora en nueve actividades, porque no existe un mercado lícito para adquirir la materia prima, aunque se estudian alternativas que lo viabilicen." Id. Markets control is indirect--it is focused not on the markets for activities permitted, but rather focuses on markets for materials necessary to conduct business in a wide variety of activities that might otherwise have been permitted. Access to these markets will be carefully controlled and changes made slowly over the course of 2011 and beyond.

Del necesario mercado para estas actividades, explicó Marino Murillo Jorge, vicepresidente del Consejo de Ministros y titular de Economía, que "estamos diseńando en el plan de la economía del ańo próximo qué debemos incorporar teniendo en cuenta las nuevas transformaciones que demandarán ferreterías, exigirán de equipamientos gastronómicos que hoy no se venden. Tenemos que conducir el plan para lograr coherencia con lo hecho. Lo óptimo es un mercado mayorista con precios diferentes para ellos. Pero eso no lo vamos a poder hacer en los próximos ańos. Ahora tenemos que lograr un mercado donde ellos puedan comprar lo necesario aunque sin diferenciar los precios minoristas".Id.

At its base, these secondary markets will be treated as part of the controlled sector. And space for private market activities, especially in foodstuffs will be expanded a little. "Valhuerdi comentó que, cuando entre en vigor la resolución, podrán utilizarse hasta 20 plazas en las "paladares", donde antes se podían tener 12; que se permitirá comercializar en ellas productos alimenticios elaborados a base de papa, mariscos y carne de res. Se prescinde, además, del requisito de ser jubilado o tener algún vínculo laboral para acceder a esta forma de empleo." Id.

These changes are not treated so much as a deviation from prior practice as a return to the practices of the early post revolutionary period. The fig leaf for this opening of economic activity are the regulations that grandfathered professionals in the practice of their profession entered into before 1964.

Con estas regulaciones se ratifica la continuidad del ejercicio por cuenta propia a los profesionales universitarios y técnicos graduados con anterioridad al ańo 1964. Se respeta así el ejercicio que desde hace más de cuatro décadas viene ejerciendo un pequeńo número de personas, quienes están inscritos en el Registro de Contribuyentes
Y en la flexibilización del trabajo por cuenta propia se tuvo en cuenta la ampliación de la actividad de arrendamiento de viviendas, la cual elimina ańejas prohibiciones tras las que se lían un entramado "bien visible" de ilegalidades. Tales negativas, que en un momento cumplieron su función, constituyen hoy un obstáculo al difícil problema de la vivienda.

There is an additional benefit--the conversion of illegal into legal activities and the consequent reduction in the need for State Security to enforce laws that were increasingly ignored. Id. This is especially the case with respect to markets in real estate. "Entonces, se autoriza el arrendamiento a las personas que tienen autorización para residir en el extranjero (PRE) o a aquellos que, viviendo en Cuba, salgan del país por más de tres meses. Igualmente, y para apoyar el trabajo por cuenta propia, se concede la posibilidad de alquilar viviendas, habitaciones y espacios para su ejercicio." Id. With appropriate licenses from the State (the costs of which will likely be seen both as an impediment to an exuberant market and as a source of revenue to the state--and sadly possibly also a source of graft for front line officials) a limited market in rentals will be tolerated, available for the most part to those who receive permission to leave the country for a minimum amount of time.

Es oportuno seńalar que el dueńo de la vivienda puede designar a un representante para pedir una licencia de arrendamiento, lo cual viabilizará la gestión a quienes no estén en el país y deseen alquilar su domicilio. La aprobación será, en todos los casos, del director municipal de Vivienda. Igual sucederá con los transportistas que decidan afiliarse al trabajo por cuenta propia. Los que tengan autorización para residir en el exterior o viajen por más de tres meses, también pueden nombrar un representante para arrendar sus vehículos.Id.

A careful review, then suggests that the great changes to the Cuban political economy assumes a coherent shape that is hardly revolutionary or that otherwise points to a rejection of its current framework. This is change at the margins, even if understood as significant within the framework of Cuban political thinking. As such, control remains the key, and the avoidance of the creaiton of potential challengers to state-Party power critical. The State controls private economic activity in three ways: First it does not permit aggregations of economic power by individuals. Second, the State limits the occupations with respect to which private activity is permitted. And third, the state tightly controls markets open to private activity however it is described. The great opening, so emotively received in the West, in actuality provides a very tightly regulated set of activities within sectors that would not compete with the state for financial power, or otherwise threaten to open society to the possibility of aggregations of private individuals other than through the Communist Party or state approved (and controlled) organs.

Martínez Hernández ends with an explicit reminder of the framework within which these changes are made--one in which a small non state sector is tolerated at the level of individual basic needs, but which does not otherwise affect the power of the state to command rthe economy at the macro level and in its dealings with global actors. "Como dijera el General de Ejército en el Tercer Periodo Ordinario de Sesiones de la VII Legislatura del Parlamento, el primero de agosto de 2009, el fin es defender, mantener y continuar perfeccionando el socialismo, no destruirlo. Por esos caminos sigue desandando nuestra Cuba." Id.

For all that, it is not clear that those who continue to defend the traditional control economy model have given up. The newspapers in Miami reinforce this point:

An internal Communist Party document envisions a radically revamped Cuban economy, with a new tax code, freshly legalized private cooperatives and a state payroll no longer shackled by the need to support at least a half-million idle or unproductive workers.
The document - obtained Tuesday by The Associated Press - also offers a cold dose of reality for those who think reforming one of the last bastions of Soviet-style communism will be easy: It warns that many of the new businesses will be shuttered within a year.

Paul Haven and Andrea Rodriguez, Document charts Cuba's path to economic reform, Miami Herald, Sept. 14, 2010. The real danger for Cuba is that these reforms, like the lukewarm reforms of the 1990s--which also followed the familiar pattern of opening at the bottom to a limited number of individual entrepreneurs--will not produce the self sustaining local economic market oriented enterprises at the core of Chinese-style progress. For an excellent analysis of the failures of the 1990s reforms, see Roger R. Betancourt, "Cuba's Economic 'Reforms': Waiting for Fidel on the Eve of the Twenty-First Century," IX ASCE Proceedings 278 (1999).

This outcome is not an accident, but the result of a conscious attempt by the Cuban leadership to maintain absolute political control. It seems to have two basic policies in the economic realm. One is adopting economic mechanisms that yield control of foreign exchange for the leadership, which allows them to buy the support of the elite that makes up its power base and throw some crumbs to the rest (in dissident circles the crumbs are known as la jabita, la merienda and la propina). The other one is rejecting mechanisms that provide permanent and independent access to wealth creation for anyone who is not a member of the nomenklatura, and even to some who think they are members. Id., at 280-81.

And, indeed, the fear of operation in corporate form, in aggregations of people and capital that appear autonomous of the state (something permitted in China) may do more to reduce the success of this opening than any machination of Cuba's external enemies. Sometimes a mania for control may prove fatally counterproductive to the maintenance of that control The Chinese Communist Party understood this in 1978 (though it took a generation to produce results); it is not clear that the Cuban Communist Party is willing to open itself to that lesson.

PERMITTED ECONOMIC ACTIVITIES (Actividades autorizadas para el ejercicio del trabajo por cuenta propia)

No.

ACTIVIDADES

Afinador y reparador de instrumentos musicales.

Aguador.

Albańil.

Alquiler de animales.

Alquiler de trajes.

Amolador.

Animador de fiestas, payasos o magos.

Arriero.

Artesano.

10.

Aserrador.

11.

Asistente infantil para el cuidado de nińos.

12.

Barbero.

13.

Bordadora- tejedora.

14.

Boyero o carretero.

15.

Cantero.

16.

Carpintero.

17.

Carretillero.

18.

Cerrajero.

19.

Chapistero de bienes muebles.

20.

Cobrador pagador.

21.

Servicio de coche de uso infantil tirado por animales.

22.

Comprador vendedor de discos.

23.

Comprador vendedor de libros de uso.

24.

Constructor vendedor o montador de antenas de radio y televisión.

25.

Constructor vendedor o reparador de artículos de mimbre.

26.

Criador vendedor de animales afectivos.

27.

Cristalero.

28.

Cuidador de animales.

29.

Cuidador de bańos públicos.

30.

Cuidador de enfermos, personas con discapacidad y ancianos.

31.

Cuidador de parques.

32.

Curtidor de pieles, (excepto cuero de ganado mayor).

33.

Decorador.

34.

Desmochador de palmas.

35.

Elaborador vendedor de alimentos y bebidas mediante servicio gastronómico. (Paladares). Ejerce la actividad en su domicilio mediante el uso de mesas, sillas banquetas o similares hasta 20 capacidades.

36.

Elaborador vendedor de alimentos y bebidas no alcohólicas a domicilio.

37.

Elaborador vendedor de alimentos y bebidas no alcohólicas al detalle, en su domicilio o de forma ambulatoria.

38.

Elaborador vendedor de alimentos y bebidas no alcohólicas al detalle en punto fijo de venta. (Cafetería).

39.

Elaborador vendedor de carbón.

40.

Elaborador vendedor de vinos.

41.

Elaborador vendedor de yugos, frontiles y sogas.

42.

Electricista.

43.

Electricista automotriz.

44.

Encargado, limpiador y turbinero de inmuebles.

45.

Encuadernador de libros.

46.

Enrollador de motores, bobinas y otros equipos.

47.

Entrenador de animales.

48.

Fabricante vendedor de coronas y flores.

49.

Forrador de botones.

50.

Fotógrafo.

51.

Fregador engrasador de equipos automotores.

52.

Gestor de viajeros.

53.

Grabador cifrador de objetos.

54.

Herrador de animales ó productor vendedor de herraduras y clavos.

55.

Hojalatero.

56.

Instructor de automovilismo.

57.

Instructor de prácticas deportivas (excepto las artes marciales).

58.

Jardinero.

59.

Lavandero o planchador.

60.

Leńador.

61.

Limpiabotas.

62.

Limpiador y comprobador de bujías.

63.

Limpiador y reparador de fosas.

64.

Manicura.

65.

Maquillista.

66.

Masajista.

67.

Masillero.

68.

Mecánico de equipos de refrigeración.

69.

Mecanógrafo.

70.

Mensajero.

71.

Modista o sastre.

72.

Molinero.

73.

Operador de audio.

74.

Operador de compresor de aire, ponchero ó reparador de neumáticos.

75.

Operador de equipos de recreación infantil.

76.

Parqueador, cuidador de equipos automotores, ciclos y triciclos.

77.

Peluquera.

78.

Peluquero de animales domésticos.

79.

Personal doméstico.

80.

Pintor automotriz.

81.

Pintor de bienes muebles ó barnizador.

82.

Pintor de inmuebles.

83.

Pintor rotulista.

84.

Piscicultor.

85.

Plasticador.

86.

Plomero.

87.

Pocero.

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