The Cuban Economy

Cuban Economy, The
Skinner, Curtis

Ritter, Archibald R. M. (ed.). The Cuban Economy. Pittsburgh, PA:
University of Pittsburgh Press, 2004. 248 pp.

Whither the Cuban economy? Astonishing almost every observer, the island
weathered the brutally abrupt collapse of its favorable trade relations
with the socialist bloc in the early 1990s and has gone on to develop
dynamic new industries in tourism and other services and post growth
rates exceeding the Latin American average over the past decade. The
Cubans have managed this while introducing only modest market
liberalization of the state-dominated economy and maintaining a strong
commitment to meeting the basic needs of the whole population. Is a
Cuban version of "socialism in one island" coherent and sustainable? The
question must fascinate every student of political economy.

Archibald R. M. Ritter's edited volume on the Cuban economy disappoints
on balance. Apart from Brian H. Pollitt's excellent essay on problems in
the sugar industry and Ritter's analysis of microenterprise taxation,
contributors offer scant fresh empirical evidence or original analysis
for the specialist. It is unfair to expect an edited book of conference
proceedings to be comprehensive, but The Cuban Economy devotes little to
no attention to some of the most important, interesting (and admittedly
difficult) problems in contemporary Cuban political economy:
diversifying exports, increasing state firm efficiency, and ameliorating
rising inequality. Not a single contributor makes a case for the
continued viability of some form of Cuban socialism, challenging the
conventional market-deepening advocacy that suffuses the book. Several
essays, finally, are marred by turgid writing or egregious errors. These
shortcomings make the book a less than optimal choice for the student or
general reader seeking a primer on the contemporary Cuban economy.

The volume derives from a 1999 conference held at Carleton University
and includes contributions from well-known students of the Cuban economy
(Ritter, Pollitt, Carmelo Mesa-Lago, Jorge Pérez-López) and several
Cuban-origin scholars pursuing graduate study at Carleton, among others.
Ritter provides a succinct and well-written introductory summary of
recent Cuban economic problems, policy and prospects that is one of the
strengths of the book. Ritter's somewhat technical essay on the taxation
of selfemployment (or microenterprise, as he terms it) is also
interesting. He argues that entry barriers and high taxes depress
potential output and employment in this sector, inflate prices, drive
marginal producers into the black market and reduce potential tax
revenues. All this may be true, but Ritter's critique fails to engage
the Castro government's policy objective: to stimulate a supply of goods
and services complementary to state production while preventing private
exploitation of wage labor and striving to limit self-enrichment.
Rightly or wrongly, Cuban policymakers aim to tightly restrict the scope
of self-employment lest it drain productive resources from the state
sector, and they appear willing to accept the cost in foregone private
output. In a footnote, Ritter states that he interviewed
microentrepreneurs while preparing the chapter but offers no details on
the size, composition or time-frame of his sample and no direct quotes
or even paraphrases from his sources; perhaps he intends to use this
potentially valuable primary data elsewhere.

Pollitt's chapter on Cuba's efforts to cope with collapsing sugar
production and prices after 1989 is the outstanding contribution to the
volume. Informed by his many years of expertise in Cuban sugar and
recent fieldwork on the island, the author offers a nuanced and
insightful discussion of various policy measures intended to restructure
and revitalize this important export industry, crippled by a dearth of
imported inputs and ruinously low world prices. Particularly
illuminating is his analysis of the generally disappointing performance
of the Unidades Básicas de Cooperación Agrícola (UBPCs), producer
cooperatives created by breaking up the large state sugar farms in the
early 1990s. The expected gains in labor productivity were hindered in
part by low state-paid sugar prices, premature harvesting, high labor
turnover and the practice of sub-contracting manual harvesting to
outside workers. Noting the poor world sugar market prospects and
enormous investment required to restore Cuban production to 1980s
levels, Pollitt judges the government's recent radical downsizing of the
industry sound policy. But he acknowledges the large costs in the
displacement of labor and part of Cuba's diversified, downstream
sugar-based industries painstakingly built up over decades.

The volume is marred by Pérez-López's misleading chapter on "Corruption
and the Cuban Transition." The author culls anecdotes from Cuban exile
sources to infer the existence of a Cuban "nomenklatura" abusing
material privileges, ignoring the mainstream view that the upper echelon
of the Castro government in fact lives quite modestly and administrates
honestly. Bizarrely, Pérez-López suggests that the sociedades anonimas
(state-owned economic entities given independent legal standing) formed
in the 1990s illegally appropriated state assets to enrich their
managers. In fact, there is nothing sinister or illegal about the
sociedades anónimas, which are regulated by law and are intended to
facilitate international transactions and limit Cuban governmental legal
liability. As in other state-owned firms, managers receive a salary and
a bonus linked to audited profits and may be removed for mismanagement,
as was the head of the big tourism industry conglomerate Cubanacán in 2003.

The Cuban Economy includes additional contributions on monetary policy,
export processing zones, foreign investment, food production and
distribution, the software industry, workforce development and social
security financing. It must be noted that the book suffers from an
inattention to proofreading surprising for a major publisher of Latin
American research. Sources are omitted, names misspelled and accent
marks misplaced in many chapters.

Curtis Skinner Pelliparius Consulting, Brooklyn, NY

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