The Recent Transformations in the Cuban Economy

AbstractThis article traces the origins and reasons for the 'Lineamientos de la Politica Economica y Social del Partido y la Revolucion' (Guidelines for Economic and Social Policy of the Party and the Revolution) adopted by the sixth Communist Party of Cuba Congress held in April 2011. It explains how this broad economic plan envisages a transformation of the Cuban economy utilising market mechanisms that are aimed at preserving socialism, in contrast to the former socialist countries where the reforms that were undertaken changed the system, rather than adapting it. The article uses economic data to discuss the progress made in the adoption of the principles contained in the Guidelines, analyses the problems that remain to be solved and offers some predictions as to the course of future developments. It concludes that the new reforms will allow Cuba to move gradually towards a sustainable socialist society without abandoning the principles of solidarity that characterise it, and which will compare favourably to the alternative that neoliberalism offers today.Keywords: Guidelines, economy, socialism, developmentIntroductionThe adoption of a new economic policy, as contained in the 2011 'Lineamientos de la Politica Economica y Social del Partido y la Revolucion' (Guidelines for Economic and Social Policy of the Party and the Revolution), has initiated a period of profound change in the Cuban economy (PCC 2011). This strategy represents a contemporary response, based on the accumulated experience derived from Cuba's socialist model, first adopted in 1961, to fundamental problems facing the development of the country. This is in contrast to the former socialist countries where the reforms that were undertaken changed the system, rather than adapting it as in Cuba.Recognition of the need for such changes was outlined in the speech by President Raul Castro on 26 July 2007, when he made the case for a deep examination of Cuba's economic situation, pointing out, 'There is no issue concerning national development and the conditions of life of the people that has not been responsibly dealt with and whose solution is not being worked on'. Nonetheless he went on to warn, 'I must stress however that there will be no spectacular solutions. Time is needed and above all for serious and consistent work' (Castro 2007).The Trajectory of Revolutionary DevelopmentSeeing the current economic transformation as part of a continuous process in Cuba's socialist development, it is important to recognise that during the first 30 years of the Revolution, economic policy went through various stages. There were periods when priority was given to political mobilisation, and others when special attention was paid to the use of mechanisms of economic stimulation, but whatever strategy was employed, a significant volume of external financing was indispensable to achieving the development objectives set. However, it has been argued that Cuba might have been able to rely less on external aid from socialist economies if it had organised a more efficient internal accumulation strategy (Gonzalez 1993). Moreover, in the first years of the Revolution the capacity for internal savings and investment was overestimated, resulting in unrealistic growth predictions; for example, the estimations made in the Primera Reunion Nacional de Produccion (National Production Meeting) in 1961 (Rodriguez 1990: 82-89).The need for foreign financing became particularly significant when it was clear that the country lacked the ability to generate the resources to stimulate growth internally in the short term and, at the same time, serve urgent social needs.This situation reflected the quandary of socialism in an underdeveloped country: being forced to choose between concentrating resources on economic growth, or prioritising social progress as one of the prerequisites for sustainable development in the longer term. However, even if plentiful resources had been available, the nature, scale and scope of the obstacles faced would have made a rapid improvement virtually impossible (Rodriguez 1983, 1990). …