Monday, December 20, 2010

Is Cuba Heading Towards Capitalism or Will It Create Its Own Hybrid System?

Is Cuba Heading Towards Capitalism or Will It Create Its Own Hybrid System?
December 20, 2010 12:11 PM

The former beacon of socialist revolution and rebellion is now facing
one of the most complex moments in its history. Raul Castro, who
inherited the presidency from his brother Fidel, told legislators that
as a result of the country's economy woes, there would be some major
changes next year, including a move toward more capitalist ventures that
will help to bolster the socialist nation. Part of this plan includes
laying off half a million government employees by March 2011. Laid off
government employees will be encouraged to start businesses for
themselves in hopes of boosting the country's productivity.

No doubt that the most important issue for Cuba right now is the future
of its economy, but in what direction should it go and more importantly,
after being the lone wolf of communism, will capitalism be Cuba's saving

The Cuban population is nearly one-third larger than it was at the time
of the 1959 revolution; however, its economy—which has been devastated
by U.S. trade embargoes, economic blockades,and the fall of the Soviet
Union and other former socialist countries—has failed to exceed the
prosperity it achieved in 1960. Since then, wages have been inadequate,
housing and transportation have deteriorated, and high unemployment has
destabilized the country both economically and politically.

Cuba has instituted many reforms to create material and wage incentives
for workers, who have long been conditioned to solely rely on the
government. Increased tourism—thanks to the recent decision of the U.S.
to to lift some travel restrictions for students and artists—hasn't hurt
either, but to what extent will these reforms impact the country's
long-standing history of providing free public services and subsidies,
as well as impact Cuba's fundamental principles of social equality?

It may seem contradictory to promote both socialism and capitalism, but
countries throughout Europe have done just that—promoted the virtues of
making money and building wealth, while providing universal services
such as free healthcare and education. Then there is of course China,
which once stood as the powerhouse of communism, but now has did a
complete 180 and is enjoying a rather fruitful capitalist economy. It
should come as no surprise that both Castro brothers have referenced
China's progress and has even renewed trade agreements and deals with
the country.

However, Cuba is not in the same political and economic position as
China was after the Cold War. As all indicators suggest, a China-style
reform may be ill suited for an island nation of 11 million with a
relatively small agricultural sector, a heavy reliance on service
industry jobs, and the misfortune of being too close in proximity to one
of the world's largest economies.

Truthfully, it's hard to say for certain which direction Cuba will go
in. But it will certainly be interesting to see how Cuba evolves and if
it will fully embrace America's system or try to model itself after
other European nations.

Charing Ball is the author of the blog People, Places & Things.

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