Thursday, November 27, 2014

Cuba’s “Twelve Apostles” of Economic Growth

Cuba's "Twelve Apostles" of Economic Growth
November 26, 2014
Erasmo Calzadilla

HAVANA TIMES — Why has the Cuban economy slowed down? This is the thorny
question at the heart of the interview with twelve Cuban economists
conducted by Ariel Terrero.

Some of the causes of this deceleration the experts mention is Cuba's
excessive centralization, erratic investment policy, lack of control
mechanisms, low domestic demand, measly salaries, scant participation of
workers in decision-making processes, lack of transparency, the absence
of a wholesale market, the nation's de-capitalization, the two-currency
system, the restrictions applied on State companies by the bureaucracy
and the timid development of the private sector, which continues to stay
short of freeing the country's productive forces.

Since every expert mentions a different factor, Terrero titled his
interview Doce economistas en pugna ("Twelve divergent economists"). I,
however, fail to notice any real disagreement. What I see, rather, is an
extremely high level of agreement.

All of them, including the journalist, start off from an implicit
certainty: the normal, healthy, positive and longed-for thing is
exponential growth, the more the better. To grow only a little bit, as
happened this year, seems to them something alarming, worthy of a
profound analysis and the symptom that something isn't heading in the
right direction. One of them even said emphatically: "0.6 % isn't growth
at all!". Another called it an "anemic result", and yet another stated:
"stagnation is in no way good!"

I expected something more than an overview of our problems through the
lens of 20th century capitalist economics from such renowned experts.

All of the variants of the capitalist economy reduced men and women to
human resources (the term used by the twelve "apostles") and led to to
the current deterioration of our environment. The theoretical corpus
that sustains this praxis stems from a dangerous and false axiom: the
inexhaustibility of our resources and dumpsites.

A More Detailed Analysis

The excess of centralization, the inadequacy of Cuba's investment policy
and the other obstacles mentioned by the experts consulted can slow down
economic development, but I don't believe that is the gist of the
matter. Just as a child cannot grow without food, a nation's GDP cannot
grow without energy.

The graph below, prepared by the International Energy Agency (IEA),
represents the world's energy consumption versus its GDP. As we can
appreciate, the relationship between eating and growing, in addition to
being obvious, is direct.

That is to say, it would suffice to look at a country's energy
consumption to get a good idea of the metabolic state of its economy.
Let us sneak a peek at how our oil diet has evolved over time:

Looking at this data, is it any surprise the Cuban economy came to a
sudden halt? No, what's surprising is that it hasn't plummeted more

I am suggesting the GDP hasn't grown much because we haven't "eaten"
much, but it is quite possible it's the other way around. It's possible
it hasn't grown much because of the problems mentioned by the "apostles"
and as an indirect consequence of low consumption. Without denying the
importance of this last point, the data below lead me to think that the
lack of "grub" is more important than economists are willing to admit.

Domestic oil and natural gas production has been stagnated for years and
investors haven't yet taken the bait.

With the serious problems it faces, Venezuela is unable to satisfy the
exponentially growing energy demands of a country whose governing elite
wants to see growth at breakneck speed.

Put differently: even if we were to eliminate all of the obstacles
mentioned by the "apostles", we would still be unable to grow as the god
of Capital demands. The main reason for this is the shortage of fuel.
Something similar is happening with sugar and nickel. The economists
give us sophisticated explanations as to why these sectors aren't
growing without paying enough attention to the most important reason:
the soils and mines are dry after years of intensive, short-sighted
exploitation in search of economic growth.


The experts interviewed by Terrero differ on certain issues but agree on
one, essential point: we need to grow and we need to grow a lot. If we
do things right, they assure us, the Cuban economy will "take off with
force, like a plane."

These respected authorities would tackle the present with the cognitive
tools of the past and the past tells them that growth is the way. They
do not understand the world is finite and cannot take it anymore, that
it isn't possible to continue to grow without destroying ourselves. They
are unable to see the danger of joining the race towards the abyss, a
race that will be suddenly cut short, because of inertia or their
colonialist mentality.

They should devote their mental efforts to think of the way in which we
are going to confront the coming crisis and the lack of fuels and do so
seriously, without fantasizing about renewable sources of energy.

If the experts Raul Castro consults to make decisions are anything like
these "apostles", then our failure is guaranteed.

Source: Cuba's "Twelve Apostles" of Economic Growth - Havana -

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