Friday, April 22, 2016

Socialist state enterprise?

Socialist state enterprise?
FERNANDO DÁMASO | La Habana | 20 Abr 2016 - 1:34 pm.

In the years of the Republic, in Cuba there was a large number of small,
medium-sized and large businesses that produced some 10,000 different
products and articles, covering a large portion of domestic demand,
thereby averting the need for many imports. 85% of these companies were
in Cuban hands and only 15% belonged to foreigners, or these partnered
with Cubans.

During the many expropriations and nationalizations carried out in the
1960s, however, they all fell into the hands of the State, becoming
"socialist state enterprises." After being miserably managed, their
necessary maintenance being neglected, and new investments not made to
ensure their technological modernization, they fell apart. The few that
remain operate using substandard facilities featuring obsolete
machinery, having been operated for 60 or 80 years or more. A few,
benefitting from foreign investment and operated as joint ventures, look

Several years ago, facing the dismissal of about 400,000 state workers
in order to reduce inflated payrolls, Cuba authorized so-called
"self-employment," which is nothing more than entrepreneurship cloaked
in another name. However, it was authorized only for a few trades,
barring professionals from exercising their professions, and with
excessive and absurd regulations that limit growth and development, in
accordance with the concept that it should be "a way to survive, but not
to get rich," as the authorities often repeat.

Given the difficult economic situation, the Cuban authorities today are
crying out desperately for foreign investment, essential to develop the
country and boost its Gross Domestic Product (GDP). This means
cutting-edge technology, productive modernity, the meeting of needs,
replacing imports, quality, and access to global markets. Its
advertising gimmick has been called the Mariel Special Development Zone.
However, thus far the results have not been what was expected: there
have been many visits, and lots of talk, but little investment. There
are two problems hampering investment: the legal security of the capital
invested is not clear enough, and workers cannot be hired directly by
the investor, but only through state agencies.

In this problematic context, the authorities repeat incessantly that the
"socialist state enterprise" is and will be the cornerstone of the Cuban
economy, to develop "a prosperous and sustainable socialism," adding
that for this purpose it will be necessary to improve efficiency, boost
the quality of management, follow through on plans, and enjoy good
economic health – something that has never been achieved during its 55
years in Cuba, or in the former Soviet Union, or in the remaining
socialist countries. In fact, the main features of the "socialist state
enterprise," wherever it has been implemented, have been administrative
disorganization, unrealized plans, low productivity, technological
backwardness, and poor production quality. Apparently our authorities
like to stumble on the same stones. Over and over. The "socialist state
enterprise" and, even worse, the "great socialist state enterprise" are
nothing more than totally unworkable, pie-in-the-sky dreams. Expecting
from them efficiency, profitability, high productivity, quality and
profits is like asking seeking water from a stone.

Foreign investment (which will never be socialist, although the
authorities continue to repeat that it entails no modification of the
existing system), in addition to investments by Cubans, outside and
inside the country, (today still officially banned and challenged, but
which should come to the fore in their own right), along with the
progress of the self-employed (without limitations or absurd regulations
so that they can grow and develop their businesses) will ultimately
prove the real forces driving new small, medium-sized and large
enterprises that will ensure development and jobs so that young people
do not have to leave the country, in addition to creating and
consolidating the powerful middle class that the Cuban authorities
dread, and that the country direly needs.

Source: Socialist state enterprise? | Diario de Cuba -

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