Viernes, 21 de Octubre de 2016
01:29 CEST.

Socialist state enterprise?

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 better.

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.