Private Entrepreneurship in Cuba: Hard Way of Capitalism

It has been a long time when the social democracy leader Felipe Gonzáles, a former Spanish prime minister announced to the press, not without a reason, something what makes you think: “The capitalism is the best of the bad systems which exist.” After two decades, in Cuba of Castro brothers, it seems that somebody recognizes it. The God and the FMI, hear it. It is not because of the market economy – how the capitalism is called in a gentle form nowadays – appears good, but because in overall, in one or another aspect, it resolves actual economic problems, generates wealth and liberates the proletariat much better than socialism, which is full of nice words but brings catastrophic results. Ask the poor Cubans who walk on the island.

Half a century later, the Cuban socialism still does not generate wealth. What it has created, is the unlimited power of the new and small leading class. After losing the needed help of the Soviet Union in 1991, Cuba found itself on a junction and decided to head towards China. There was the same intention towards the European Union, and since 1999 Cuba has received massive energetic support from Hugo Chávez´s Venezuela. Cuba does not pay with financial means, but with thousands of doctors and teachers.

For the country has been still without economic aid from the Eastern Europe for 20 years, the new regime´s leader Raúl Castro now tries to introduce private entrepreneurship. What does this mean in reality? Etymologic explanation of so called “Cuentapropismo” means to work for one´s account “por cuenta propia,” or privately, not for other´s account. It also means not to work for the state. It is the self-employment and private initiative, but limited to what the communist country wants. At current situation in Cuba, when an economic subject feels unprotected by the state, it makes more sense to start turning wheels of own work and enter private business with all its risks.

The economic power of the Cuba regime determined 178 activities which are supposed to feed a significant part of the labor sector without “hurting” the principles of The Cuban Socialism. Anyway, following sectors remain excluded from private activities: works directly connected to the production of sugar cane which is still weak since the harvests of more than seven million tons, these are still reduced to almost one million two hundred thousand tons, last years. Also, extraction and refinery of carbohydrates are excluded, the future which is going to start, taking advantage of the reserves which are surely located on the seabed of the north coast of the provinces Pinar del Río, La Habana and Matanzas. These activities will remain controlled by the holy state as well as the refineries in La Habana, Santiago, Sancti Spiritus and Cienfuegos.

Also, the mining activities on the island are excluded. These are very productive in collaboration with Canadian companies such as Sherrit Co., which together with the Cuban state enterprises exploit nickel, cobalt, and chrome in the north coast of La Habana. These minerals turned to be the most exported materials from Cuba, even more exported than traditional sugar, of which Cuba was recently the biggest world producer. Cuba lost this position with its separation from its natural market, and closing the central sugar factories.

In the last place, tourism of big hotels does not enter the private entrepreneurship. This industry brings fat benefits to the country economy and aids to balance its budget. Privately, one can hire rooms and private houses and provide services of yet famous “paladares” with a maximum of twelve seats (not more to prevent excessive enrichment) on private properties. Other important country income where private sector does not have its place is reception of package from residents living abroad due to political or economic emigration. The private entrepreneurs do not have much to do with these incomes of millions. Or, if the private sector was able to generate wealth and keep it for those who helped to gain it, the country structures would decide that it will be used only to keep on feet the one and half million of citizens without work, not permitting them to be further than the regime wants.

Anyway, private business is not a new thing in Cuba, it has been touching the socialist economy for decades. It has been here since the market economy disappeared, but now, it is legal. Or, the ones who will do the legal business did it illegally before, but with tolerance. Also, there were cases, when a person was a state employee during the official working time and then he was a private entrepreneur in the free time of evenings and nights. What reduces the possibilities workplaces is partly the fact that the places have been occupied for decades. In reality, the private business will be here to cover a big part of tertiary sphere: the services, which are so limited in Cuba. This private entrepreneurship appeared massively in Cuba after the catastrophe of the sugar cane harvest of the ten million in 1970, which resulted in eight point five million tons.

The private business will serve together with other reforms to prevent privatization of the big production means. This would bring the end of communism and of the new leading dominant class who has the economic, politic and of course also military power. Anyway, there are joint ventures which exist in the oil sector and mining industry and which are 51% controlled by the Cuban state shares. This state will never permit massive entry of 100% capital from the UE, Arab states, or the USA to develop the country. In such case they would lose the power and the country would turn into something what the Communist Party or the nomenclatura will not have capacity to control. It is evident that the market economy is not a medicine for everything. The crisis which is present in the world nowadays shows that it is not so. It has significant defects and generates inequality. Anyway, the system as it is, satisfies much better the necessity of almost everything, above all, it allows a democratic process where a citizen does not fear to disagree.

The private business may be a basis for a future democratic capitalism and it can work as a pike which breaks the fear of presence of the international global capital. I wish the democratic process and tolerance returned to Cuba; that the repression and death penalty disappeared; that the dissidents needs were respected; that the people had an unlimited access to the internet, that there appeared the diversity of positive and constructive ideas and that the new leading class left the ghost of exploiting capitalism and an imperial and hegemonic country did not threaten us and let us develop; I wish the repressive structure fell down. It is the turn for the ones who live in the island. To the ones who are outside, once liberated internally, we can give them and accelerate this transition to democracy and the knowledge market, contacts, investments of acquired capital. I wish this happened one day.