One Step Forward, Ten Steps Back

By Gonzalez, Gerardo | Hemisphere, Spring 1997 | Go to article overview
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One Step Forward, Ten Steps Back

Gonzalez, Gerardo, Hemisphere

Cuban society is facing a very complex economic and political situation. The events surrounding the February 24, 1996 downing of two civilian aircraft and the subsequent announcement from the Communist Party politburo of a new ideological offensive, complicated the domestic scene at a time when several factors augured a more propitious framework for a transition on the island. Such a transition pointed toward an economic and political restructuring with different characteristics from the prevailing structure.


The economic results of 1995 and a "softening" in the relations with the US were two positive factors which could pave the way for future change. While it is premature to state that the Cuban economy has entered into a phase of sustained recovery, the results thus far have demonstrated that the downward spiral has been halted. In contrast to the weak economic growth of 1994, which was basically inflationary and driven by the recovery of a few nonproductive services, the 2.5 percent growth rate achieved in 1995 was more impressive. This growth rate was largely the result of significant increases in productive sectors such as nickel (64.4 percent), tobacco (52 percent), and steel (45.7 percent). (These sectors have benefited from important doses of foreign investment.) The recovery had three other important dimensions: a significant increase in exports (20 percent); the stabilization of the exchange rate relative to the US dollar; and, the reduction of the fiscal deficit to 3.6 percent of GDP.

The transformation occurring in Cuban society is a result of a strategy to confront the impact of a crisis. These changes are incipient but in the mid- to long-term, they will signify a new economic and social restructuring of the island. The presence of foreign investment in the most dynamic sectors of the economy produced substantial changes in the way in which modes of production, distribution and consumption are organized. These changes have had grave repercussions in other sectors of the national economy, forced to seek internationally competitive levels and to acquire the same technological and organizational patterns prevalent in the mixed and private sectors. A significant impact has been felt in the productive matrix which will imply major shifts in the nature of the productive sector. First, state administrators will have to adapt to the market-oriented culture brought in by foreign investors and will have to forego state paternalism--administrators could derive a greater share of power due to their contacts with the world market. Second, labor relations in all state enterprises will also undergo a severe transformation. As a result, a contradiction has developed due to the state's requirement of high levels of capital accumulation and labor intensive technological and productivity norms.

Such a scenario inevitably implies the appearance of new conflictive areas and the shifting of power quotas to the emerging entrepreneurial elite. As a consequence, it also implies the obsolescence of many mechanisms, practices, and participation arrangements that characterized the previous paternalistic scheme. Thus, there will be a need to develop a process of adjustment and institutional development capable not only of dealing with these contradictions but also of empowering workers with mechanisms in tune with the new reality.

The adoption of market norms has implied a cardinal variation from the rules of the game that guided the Cuban economy and society for more than three decades. Under the socialist project, the state played a highly centralized role based on the notion that only the central government--possessing a national perspective of the problems and armed with vast financial assets--was capable of protecting all social interests and achieving the principal national objectives which included: creating a basic infrastructure; developing key sectors of the economy; guaranteeing social justice; and ensuring national independence.

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One Step Forward, Ten Steps Back


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