Cuba's Capitalism

The misty-eyed support for Castro's Cuba would not be so worrying were it confined to the ranks of Stalinists; however, its tendrils reach well beyond them to many Scots. The US trade embargo established in 1960 — the world’s longest-running trade sanctions — continue to squeeze Cuba’s finances, targeting foreign companies that do business with Havana for huge fines. But what has changed in recent years is that Raul Castro now publicly acknowledges that the island’s most nagging economic problems are mainly the result of bureaucracy and excessive state control.

The Castro regime has proven remarkably resilient and has maintained a tight control over the economy. At times, this has meant a heavy hand. None of this has abolished the commodity nature of production, nor the wages system. Generous subsidies from Moscow kept the island’s economy afloat until 1991, when the aid was cut off by the Soviet collapse. A period of painful austerity set in that Cuba has never really recovered from. The collapse of the Soviet Union, and the loss of Cuba’s export markets as well as the convenient supply of oil for industrial purposes led to the economy undergoing serious recession. Since then, the government has been trying to re-orientate the economy. President Raul Castro has been making headlines with easing travel restrictions and modifying agriculture land use rules. It's a cautious, free-market experiment meant to help streamline an inefficient economy. Since about 70 percent of Cuba’s food is imported. Castro has made boosting local agricultural production a priority of the reform effort, handing over 3 million acres of state-owned land to private farmers and cooperatives. But farmers still face massive red tape and restrictions on where they can sell their produce. Nor can they buy tractors, trucks or other key farming equipment without government permission.  New rules allow farmers to re-lease up to 165 acres of fallow government land. The change allows farmers to build homes on the land, which was previously prohibited. In the case of disability or death, a farmer's properties will be transferred to the surviving family. However they cannot buy tractors, trucks or other key farming equipment without government permission. In Cuba, 85% of the population is employed by the state but a pilot program will convert 222 state-owned companies into worker-run cooperatives. The government will maintain ownership of the company’s physical property and charge rent to the cooperative, but members will determine their own hours, pay and management.