Cuba initiates an adjustment plan opening a new period of misery for workers

13 December, 2020

Raul Castro and Díaz Canel present the «Task of Reordering» last thursday.

Day after day, the Cuban press is publishing lists of basic foods that are said to be guaranteed, official retail prices and educational comments on the list of regulations that have been appearing this week in special issues of the official gazette. These are the first consequences of the Reorganization Task, the official name of the process of general reconversion of the Cuban economy officially begun last Thursday with the announcement of currency unification around its market value from next January 1st. The movement, justly mentioned by the international press, was presented by President Díaz Canel and the head of the army, Raúl Castro.

The bet of the century

Raúl Castro and Díaz Canel visited yesterday a Vietnamese diaper factory in the Mariel Special Economic Zone.

Although in 2018 the ascent of Díaz Canel as president was presented as the handing over of power to a civilian, the reality is that the army controls, according to Bloomberg, between 50 and 80% of the meager Cuban GDP. During the last two decades, the Cuban state bourgeoisie has entrenched itself and placed its main assets in militarized or militarizable enterprises, assuring itself an even tighter authoritarian control over workers than the already suffocating control exercised by the civilian state apparatus.

This extraordinary concentration of power reveals by itself the inability of the Cuban state bourgeoisie to overcome the forms of a military dictatorship. It has, however, a deeper meaning than bureaucracy’s fear of losing the reins of social control. If today Díaz Canel staged normality and optimism while walking among Vietnamese diapers in Mariel’s Special Economic Zone it is because the model towards which the sector of the state that he and Castro represent wants to move is an imitation of the one China undertook from 1989: to attract international capital, to sell the availability of cheap labor and to promote an accelerated reindustrialization oriented towards producing low cost for the friendly countries of South America, Europe, Russia and Mexico.

Repairing a sugar mill in Camagüey. The machinery of the main sugar mills is more than 40 years old.

But in order to generate the conditions for the possibility of such a restructuring, that is, to make themselves attractive to international capital, they needed to undertake at least three major internal transformations:

1To enable the fluidity not only of entry but also of exit of both capitals and the income generated by them. Hence the heavy process of legal reforms that was symbolized and promoted by the approval of a new Constitution in February 2019. The present moment, which begins precisely by assuring foreign capital a convertible currency and therefore prices set by the international markets, wants to be the final phase of this process of normalization of the conditions of foreign capital.

2Improve logistic infrastructures and fixed capital in order to have a starting point serving as a shuttle for new operations. This is unattainable in the whole island with the current resources of Cuban capital. That is why the creation of special economic zones linked to ports. This is the Chinese recipe. But in spite of China’s relatively backward state enterprises, it also had the resources to bring them up to date… and had a massive internal market which foreign capital aspired to reach and on which it was willing to bet.

3Creating a stable framework of trade and capital movement agreements. Cuba’s appeal to international capital, a country with just over eleven million inhabitants, lies solely in its ability to function as an off-shore platform on which to produce at low cost and from which to export. And in order to export, not only ports are needed, but also increasingly, the capacity to reach trade agreements. That is, preferential relations with some of the competing imperialisms in the region. This is why the regime placed all its bets on détente with the United States during the Obama administration, and then invited the main Spanish business groups to advise it during the Trump era – a movement that later expanded to France and Germany – and why the relationship with China and Russia is now stronger than during the sixties. In itself, this axis is in contradiction with the model it intended to follow: China was able to obtain massive investments for the export industry without lowering its tariff defenses because it was offering access to its domestic market to those who would settle. It did not have to worry about winning new markets because it did so at a time when global tariffs were being dismantled to make it easier for large international capital to relocate its production chains. Cuba depends on whoever invests to open its own markets and the development of its internal market is little more than pocket money in international terms.

In 1994, Fidel Castro met with a then-young Hugo Chávez, whose attempted coup in 1992 had failed but who was already preparing to run for the presidential elections.

Summarizing, the bet of the century, the re-accommodation of Cuba in the global map of capital after the special period, seemed to depend on a capital that it lacked, on a destroyed exporting capacity and on the access to markets that had no special interest in the island.

But from its very origins and as a result of them, the Cuban state bourgeoisie has been among the most capable in the world in making its imperialist policy profitable. From the apparently less profitable part, the investment for decades in the Latin American left, came the big prize, the secret card that dealt a hand to the Cuban bureaucracy at the beginning of the century and helped it get out of the special period. On October 30th, 2000, a few months after Chávez became president, he signed the famous agreements of integral cooperation with Cuba. The agreements imply in practice a permanent and fluid donation of capital, in the form of oil, which will last for more than fifteen years.

After the Venezuelan collapse

Official portrait of Raul Castro at the May 1, 2017 parade in Havana.

The Venezuelan collapse arrived too soon, as they lamented in Havana. By 2019, the practical destruction of the Venezuelan oil industry had literally left the Cuban bourgeoisie without fuel: further energy cuts, new rationings and the paralysis of transports warmed the social environment and made evident to foreign capitals the fragility of the Cuban offer. All that remained was to flee forward.

Currency and exchange rate unification are not a magical solution to all our financial problems, but they should lead to a raise in labor productivity and a more efficient performance of the productive forces.

Díaz Canel, president of Cuba in statements collected by Granma

Despite the well-known promises of leaving no one behind and that the new plan -a shock plan- will not include shock therapies, Díaz Canel was explicit in the goal of such a Reorganization: to increase work productivity with whatever is available. That is to say, to increase exploitation in absolute terms. With a new minimum wage, the most common, of just under 80 euros per month for 40 weekly hours of work and the end of a good part of the subsidies to essential production, the temporary maintenance of ration books is the only grip against the famine that looms and whose battering ram will be inflation. Inflation that the government itself admits in its own documents will be greater than that predicted. Pensions, the first victim, will increase nominally 5.24 times… which means that, measures in CUCs (one of the two current currency types) will lose more than half of their purchasing power. And this is not going to stop…

Confession and paradox

Workers in the Roberto Suárez Jr. factory in Cuba

The rationale behind the Reorganization as well as its means are the same as those of any typical cyclical adjustment plan in any semicolonial country. There is no difference between Díaz Canel’s speech today, those of the Francoist 1959 stabilization plan -which made the peseta convertible- or that of Duhalde revoking after the corralito the menemist one by one convertibility.

The export sector is favored by receiving higher CUP income from exported products. Price correction is encouraged, allowing national goods, if produced efficiently, to be less expensive than imported goods. It creates incentives to increase efficiency and competitiveness in the business sector. It favors import substitution and productive linkages in an efficient manner and allows for greater transparency in accounting

The problem is that national goods, with obsolete fixed capital and no available markets to sell them, cannot be produced efficiently without starving the workers who produce them, that the new incentives are precisely those of even more extreme scarcity, and that imports, without alternative production, are irreplaceable in basic consumption. Is not this absurd then, for the sake of greater transparency in accounting? Díaz Canel himself explains clearly what this costly transparency refers to and why it is crucial for Cuban capital:

The adequate cost and price structure significantly facilitates the evaluation of foreign direct investment projects and creates the conditions for establishing comparisons based on international parameters

A clearer confession could not be expected. Lacking the financing that Venezuelan aid provided, Cuban capital is accelerating the pace and multiplying the costs to the workers in order to attract foreign capital.

In the nucleus of this Reorganization, there lies the end of the obligation of Cuban majority participation in sectors such as tourism, biotechnology and wholesale trade. The Cuban bourgeoisie renounces to the lion’s share in the profits of foreign capital and opens a new portfolio of 503 projects to foreign investment.

The paradox? The measure is dressed, as always, in socialist rhetoric and pageants to national independence. But it is no more than the umpteenth verification that state capitalism has nothing to do with socialism and that, after sixty-one years, its Cuban version has not achieved an independent development of the national capital in its charge; which, on the other hand, was impossible in the current phase of capitalism.


Appendix

Under the Cuban crisis and the lies of Cuban socialism, the crisis of capitalism

In the end, capitalism, whatever its garb or rhetoric, is about the same thing for all national bourgeoisies, it appropriates and organizes the work of others under some legal and political forms or others: reproducing exploitation –capital– in a continuously expanded way –accumulation– participating in the global result of the exploitation of the whole of the labor force through the capital markets. Capital markets in which the most efficient applications of capital obtain, in proportion to their volume, additional capital in order to further develop their own accumulation and contribute more to the whole.

The struggle of the Cuban bourgeoisie for access to the international capital markets, currently in the open, always clandestinely in tax havens, obviously has nothing to do with socialism. It is, in the first place, its negation, the economic expression of a structure organized around the mercantile exploitation of labor. And by the way, it is the ultimate confession of the impossibility of the national independence it preaches. Today there is no national capital independent of global capital because the global market does not have the demand to make profitable all applications of capital and therefore to make use of all the unused capital seeking a profitable placement. Reorganizing in an ultra-concentrated manner, in a stalinist style like Cuba or under any other model, does not and will not solve the problem. Opening up to receive idle capital from abroad will not solve the problem either: in order to succeed they must first increase exploitation in absolute terms.

But let’s imagine that they manage to attract capital and increase the physical productivity of labor, that is, what is produced in material terms during an average working hour. Productive capacities will have been gained, but whether this improvement will produce an improvement in living conditions will depend on the increase in productivity in terms of profit, that is, the profit produced by an average hour of work on invested capital. But that, as we see even in the countries with the strongest capital, is increasingly difficult. And it is so because there is a lack of markets in which to place production gains, so improvements in productivity tend to turn into unemployment, precariousness, and lower wages, not into an increase in human needs that are met by the market.