By Kamran Nayeri, July 11, 2026
 |
| A supermarket in Havana |
In this essay, I will discuss the recently announced wide-ranging free market reforms in Cuba. Miguel Mario Diaz Canel (June 18, 2026), the First Secretary of the Central Committee of the Communist Party of Cuba (Partido Comunista de Cuba, PCC) and the President of Cuba, has claimed they will “advance the defense of socialism, to support and expand social justice, and to create economic wealth and distribute it equitably.”
I will argue that, if implemented, these reforms will vastly expand and solidify Cuba's status as a capitalist economy, with a capitalistically functioning labor market and a capital market to facilitate the growth of capitalist enterprises and ongoing capitalist accumulation and deepen the Cuban economy’s integration into the capitalist world economy.
Diaz Canel frames the reforms in
the context of the current aggressive U.S. administration's tightening of the
embargo, including an oil blockade. However, these reforms are indeed in
continuity with market reforms that began after the collapse of the Soviet
Union in 1991, which have already created a stratified society of haves and
have-nots in Cuba.
Take, for example, the labor
market. Between 1976 and roughly the 2010s, the Cuban state largely assumed
that private hiring of wage labor would inevitably recreate capitalist class
relations and therefore should be minimized. The 2019 Constitution implicitly
adopts a different premise: private employers can exist within socialism,
provided that the state retains command over the strategic sectors of the
economy and regulates private accumulation.
Let me detail this change in the
PCC leadership's ideology. Article 14 of
the 1976 Constitution (retained after the 1992 amendments), which stated that
the socialist economic system was based on socialist ownership of the
fundamental means of production and that it "eliminates the exploitation
of man by man" (suprime la explotación del hombre por el hombre).
In practice, self-employment
(trabajo por cuenta propia) was either prohibited or allowed only in a very
limited number of occupations. Even as self-employment expanded during the
Special Period in the 1990s, hiring wage labor remained highly restricted
because employing workers for profit was generally regarded as "exploitation.
Beginning with Raúl Castro's
reforms after 2010, the government changed course. In 2010–2011, Cuba
authorized many categories of self-employment to hire employees. The 2014 Labor
Code established legal rules governing employment relationships between private
employers and hired workers. This represented a significant departure from
previous practice. This created a constitutional tension: the Constitution
still declared that exploitation had been abolished, yet the law now permitted
private individuals to employ wage labor. As the Cuban constitutional scholar
Hugo Azcuy and later commentators observed, this was difficult to reconcile
with the constitutional language. The 2019 Constitution resolved much of this
ambiguity by explicitly recognizing private property as one of several
legitimate forms of property; recognizing the role of the market alongside
socialist planning; and no longer treating all private hiring as inherently
unconstitutional, while still affirming that the state opposes exploitation and
seeks social justice. As a result, private firms, cooperatives, and
self-employed entrepreneurs can legally hire workers under state regulation. This
constitutional evolution is one of the clearest indicators of Cuba's gradual
shift from a nearly exclusive state-employment model toward a mixed state-private
enterprise economy.
As Hope Bastian (2018, p. 46), a
supporter of the Cuban revolution who was a professor at San Geronimo College,
University of Havana, wrote:
“In recent years,
the number of Cubans who have acquired citizenship of other countries has
increased. Some of them send their children to private foreign schools in
Havana, like the Spanish School, French School, Russian School, and the
International School that only admits students with foreign passports. The
minimum tuition for these schools ranges from $12,000 to $14,000 a year.
“To appreciate the
depth of income inequality in Cuba today, we must remember that the monthly
minimum wage in Cuba is 2,100 pesos, the average salary is 4,000 pesos, and the
maximum monthly pension is 1548 pesos. Converting these figures to dollars
using the exchange rate at the time of this writing, the monthly minimum wage
is $88, the average monthly salary is $168, and the maximum monthly pension is
$64. Cubans who send their children to private foreign schools in Havana, and
the bulk of the Cuban people, belong to different social classes.
“To appreciate the
depth of income inequality in Cuba today, we must remember that the monthly
minimum wage is 2,100 pesos, the average salary is 4,000 pesos, and the maximum
monthly pension is 1,548 pesos. Converting these figures to dollars at the
exchange rate as of this writing, the monthly minimum wage is $88, the average
monthly salary is $168, and the maximum monthly pension is $64. Cubans who send
their children to private foreign schools in Havana, and the bulk of the Cuban
people, belong to different social classes.”
Class divisions in Cuba have
deepened since. In a revealing article, Boobbyer (June 24, 2026) argues that
the problem of food access for Cubans today is not a supply issue but rather
the relatively high prices of food relative to the wages Cuban working people
earn. She gives an example of a college
graduate, Tania Rodríguez, whose monthly income working at a foreign-managed
hotel was a mere 6,000 CUP (US$10) [CUP is convertible pesos to dollars as of
this writing—ed.] When she turned to the government for work she was offered a
job in a hospital for $5 a month, which she declined.
“Later, cleaning
work at a beach hotel emerged, but it meant sleeping on-site—not possible with
elderly parents and a young child. Rodríguez cooks on her patio with charcoal—a
20-liter bottle of gas on the black market is unaffordable at 60,000 pesos (US$90).
She’s emotional as she relates how she sells clothes, shoes, sheets of wood
lying around the house; she’s contemplating selling a fridge and water tank to
buy food. ‘We are going downhill without any brakes,’ she says. She credits her
family’s survival to a friend, a Canadian tourist she met years ago, who tops
up her bank card.” (ibid.)
The question now is: how would
further liberalization of the Cuban economy help the Cuban working people
facing such a dire situation? How could it “support socialism”? If
liberalization of the Cuban economy is good medicine, why has the Cuban economy
declined so much over the past four decades despite ongoing market
liberalization following the collapse of the Soviet Union?
Intensified US aggression
The decades-old imperialist
aggression against the 1959 revolution of 1959, and the regime that ensued from
it has intensified after the Trump administration’s military intervention in
Venezuela, abducting its president, Nicolas Maduro, and his wife on January 3,
2026. The surprisingly easy reversal of what
the Venezuela regime and its supporters, including the Cuban government, called
the Bolivarian Revolution, and bringing its government under Washington's
control, also ended the oil shipments to Cuba. Today’s New York Times has a front-page
article describing how Marco Rubio, U.S. Secretary of State, is running
Venezuela from his office in Washington. On 29 January 2026, Trump declared a
purported national emergency and authorized tariffs on any country exporting
oil to Cuba.
Senior U.S. officials have
indicated that the goal of these policies is to bring about political and
economic liberalization in Cuba, including the potential removal of President
Díaz-Canel from power. “‘Cuba has an economy that doesn’t work and a political
and governmental system that can’t fix it. So, they have to change
dramatically,’ said U.S. Secretary of State Marco Rubio on March 17. ‘They’ve
got some big decisions to make over there.’” (Council on Foreign Relations,
March 31, 2026).
On May 20, 2026, the Justice
Department indicted Raúl Castro, the former defense minister of Cuba, the
former First Secretary of the Central Committee of the Communist Party, and the
former president of Cuba, on murder and conspiracy in the deaths of four Brothers
to the Rescue in 1996. The leader of Brothers to the Rescue was a former CIA
operative, and the group campaigned for the overthrow of the Cuban government. Raul
Castro was charged along with five others in the case, threatening U.S.
intervention in Cuba to abduct them (Nayeri, May 30, 2026).
Meanwhile, the capitalist press
revealed secret negotiations between the United States and Cuba, which the
Cuban government later acknowledged. (McDonnell et.al., March 13, 2026).
On June 12, 2026, Miguel
Díaz-Canel, First Secretary of the Central Committee of the Communist Party and
President of Cuba, announced that the government would introduce a broad
package of structural economic reforms. On
June 17, 2026, the Extraordinary Plenary Session of the Central Committee of
the Communist Party was held at the Palace of the Revolution, where it approved
the measures. On June 18, 2026, the reforms were formally adopted by the
National Assembly of People's Power. Prime Minister Manuel Marrero Cruz
unveiled 176 reform measures, representing the most extensive liberalization of
the Cuban economy.
The reform package is organized
into 23 critical areas. Among the most significant measures are the
following. Creating much greater scope
for the development of the capital market through greater autonomy to state
enterprises so they can set salaries and prices based on market conditions, and
the removal of the 100-employee cap on businesses; permission for individuals
to own multiple private businesses; the scrapping of the requirement for
foreign investors to partner with state-owned companies; and the ability for
domestic and foreign investors — including Cubans residing abroad — to acquire
stakes in state enterprises. The reforms also include allowing private banks,
freer foreign trade, opening real estate to private ownership and investment,
and investment by Cubans living abroad and foreign entities.
The reforms also further extend the
creation of a capitalist labor market by abandoning the socialized welfare
state program, including discontinuing the universal state-provided basic goods
basket — the libreta — which has been in place since 1962, and replacing
it with targeted subsidies for a much smaller subpopulation deemed needy by the
state, and privatizing the state-owned old age homes. In brief, socialized welfare programs will be
dismantled or reduced to a targeted subpopulation deemed needy by the state.
Taken together, these free-market
reforms will create private or semi-private markets for production and
consumption, abandoning one of the cornerstones of Cuba’s socialized economy.
The leadership of the PCC looks to China and Vietnam as models,
which they call “market socialism.” However, both China and Vietnam have
economies that include major capitalist features: Most employment is now
outside the traditional state sector, private businesses operate for profit and
hire wage labor, domestic and foreign capital invest extensively, and markets
determine wages and most prices, competition, bankruptcy, and profit play
central roles in allocating resources, both countries are deeply integrated
into global capitalism through trade, investment, and manufacturing. By these
criteria, many economists describe them as capitalist economies, albeit with
unusually large state sectors.
Official explanations for the reforms
Diaz-Cancel (June 18, 2026) framed these
reforms in the context of unprecedented aggression by the United States
government, including its oil blockade and ideological and political offensive,
which he said have sown confusion among the Cuban people. He has argued that
Trump aims to generate mass protests to set a pretext for military intervention
in Cuba (June 6, 2026). Analysts predict the Cuban economy will shrink in
2026. According to the Economic
Commission for Latin America and the Caribbean (ECLAC), Cuba ranks last among
27 countries in Latin America and the Caribbean in terms of macroeconomic
management, and economist Elías Amor estimates Cuba's GDP is expected to drop
by 6.5% this year, marking the most significant decline in the region (Mendosa,
2026).
The leadership of the PCC has presented
these reforms as progressive in terms of maintaining “socialism.”
I will discuss below why their arguments
regarding the reforms' progressive nature to “support socialism” are
questionable.
Prime Minister Marrero, who has
been in office since 2019, told the National Assembly of People’s Power that
the measures recognize that the market is “an instrument for the efficient
allocation of resources.” This claim
represents a major theoretical and ideological shift in the island’s economic
model since the 1959 revolution, as I will discuss below.
Marrero, a leader of the Communist
Party, does not mention that the claim that the market is “the instrument
for the efficient allocation of resources” is contrary to the Marxist view and
has always been advanced by bourgeois economists since Adam Smith, but since
the latter part of the 1800s by Neoclassical, and in the 1940s by Friedrich
Hayek and Austrian economists and for the capitalist economy! Indeed, it was Hayek, an opponent of
socialism and central planning, who, in The Road to Serfdom (1944),
warned of the danger of tyranny that inevitably results from government control
of economic decisions.[1]
It is also the claim disputed by no
other than John Maynard Keynes (1936) in The General Theory of Employment,
Interest and Money.[2]
Marrero also seems unfamiliar with Marx’s
labor theory of value (Law of Value) in his magnum opus Capital. Did not Marx explain in Volume Two of Capital
that crises of underconsumption/over production and disproportionality between
Department 1 (capital goods) and Department 2 (consumer goods) will occur in
capitalist economies? Did not Marx outline the secular, longer-cycle crisis
caused by the tendency of the average rate of profit to fall in Volume 3 of
Capital? Do capitalist economies not experience
cyclical crises and longer, deeper depressions, such as those in the 1930s and,
more recently, the Great Recession of 2008-11?
More surprisingly, nobody in the
Central Committee of the PCC or in the National Assembly of People’s Power
raised any objection to Marrero's uncritical support for the capitalist market
as the best regulator for the Cuban economy, which the PCC leadership claims will
support “socialism!”
Miguel Mario Díaz-Canel similarly offered
the following explanation for the reforms adopted.
“The
transformations we are proposing are intended to advance the defense of
socialism, to support and expand social justice, and to create economic wealth
and distribute it equitably. Without wealth, there is nothing to distribute; we
would be speaking of social justice in the abstract. Social justice as
conceived by the Revolution—with its humanistic mission to help the most
disadvantaged, generally through free welfare programs and projects—does not
cost the people anything, but it does cost the State. And to carry it out, to
deepen it, to sustain it, and to maintain it, the State needs wealth—and we
must produce that wealth ourselves. If there is no wealth, there is no social
justice, and everything else is a fairy tale—everything else is a fairy tale!
Either we produce under these conditions, create wealth, and then distribute it
with social justice and equity—not egalitarianism. That is the challenge!
“We need to
unleash the productive forces, to have more production rather than more
restrictions, because it has been proven that control without supply merely
drives operations into the informal market.”
Thus, Diaz Canel claims that the
free-market reforms will “advance the defense of socialism, to support and
expand social justice, and to create economic wealth and distribute it
equitably!” However, it is hard to believe that allowing the formation of a new
class of capitalists, protected by law, will protect “socialism,” or that
wealth created capitalistically can be distributed equitably. Did not Marx
argue that capitalist economies tend to concentrate and centralize capital in
fewer hands? Is it not true that in Western countries today, income inequality
is a major problem, and that affordability is a concern, especially in
countries where less-regulated markets are the norm, such as the United States?
In both China and Vietnam, the
models the PCC aims to follow have brought growing income inequality. In China,
the Gini coefficient[3], a common measure of
income inequality, has shown fluctuations, indicating rising inequality,
particularly between urban and rural areas. Recent data suggests a Gini
coefficient around 0.47, reflecting substantial disparities. Similarly, Vietnam
has experienced increasing income inequality, with a Gini coefficient estimated
at approximately 0.35. This reflects a growing divide, especially in urban
versus rural income levels.
What is called Market Socialism in
China and Vietnam is a market economy overseen by the Communist Party. However,
China's success in modernizing and industrializing has not been replicated in
Vietnam, and, in each case, appeasing U.S. imperialism has been necessary to
allow foreign direct investment and export-led industrialization.
Does the PCC likewise aim to
appease Washington to ensure its proposed reforms could work? As a New York
Times article discussing the reforms wrote, “the Cuban government has a serious
credibility problem, experts say. Officials have announced economic changes
before, only to pull them back without explanation. Cuba lacks the rule of law
and a separation of powers and often fails to pay its bills. It’s a notoriously
risky business environment.” (Robles and Adams, June 24, 2026).
The problem of low labor
productivity
Diaz Canel admits that Cuba faces a
problem with increasing labor productivity and that socialism without
increasing wealth is impossible. Thus,
Diaz-Cancel admits that Cuba has not created sufficient wealth to develop
socialism 65 years after Fidel Castro declared socialism the goal of the Cuban
revolution. The question for Diaz-Cancel and PCC leadership is why they have
been unable to increase labor productivity to create more wealth to support the
transition to socialism.
The Great Debate (1963-65)
and after
Diaz Canel and no one else in PCC leadership seems to recall the relevance of the Great Debate of 1963-65 in Cuba, which was conducted publicly and involved internationally renowned Marxist theoreticians like Ernest Mandel and Charles Bettheheim. On the Cuban side, the principal contributions came from Ernesto Che Guevara and leaders of the Partido Socialista Popular (PSP), the pro-Moscow party. Following the lead of the Soviet Union, PSP leaders argued that the transition to socialism must rely on material incentives, proposing the Soviet Auto-Finance System (AFS), in which firms financed their investments by borrowing from banks at interest. This is now the position of PCC leadership in proposing free-market reforms, allegedly to support socialism.
A central participant was Che
Guevara, who served as president of the National Bank and, from 1961-65, as
head of the Department of Industrialization and Minister of Industries. Guevara
opened the debate by publishing an article in the first issue of Our Industry,
the Ministry of Industry's magazine, criticizing the Soviet Union's view of
socialist development. In opposition to
the Soviet Auto-Finance System (AFS), in which firms financed their investments
by borrowing from banks at interest, Guevara proposed what he later called the
Budgetary Finance System (BFS), in which enterprises are financed by the state
budget (for details see Nayeri, May 1, 2024).
The Auto-Finance System relied on a fundamental revision of Marx's
theory by Stalin (1951), who asserted that the law of value can and must be used for
the transition to socialism. This position mirrors Eduard Bernstein's (1899)
revisionism, which held that the law of value would enable a peaceful
transition to socialism through reforms to the capitalist system.
This view was later “theorized” in the
Manual of Political Economy, published by the Economics Institute of the
Academy of Sciences of the U.S.S.R., 1954.
Guevara’s critique of “socialism”
in the Soviet Union and Eastern Europe was summarized by Yaffe;
“While the Soviets
and the Czechs claimed to have passed this first stage [socialism], in
Guevara’s view, that was objectively false because of the continued existence
of private property in both countries. The mistake, said Guevara, was that a
new political economy had not yet been completed, nor had the process been
studied. Consequently, the workings of the USSR had been presented as the
presumed laws of socialist society (Yaffe, 2009, p. 236, emphasis added)."
In November 1960, Guevara led a
two-month trade mission to the Soviet Union, East Germany, Czechoslovakia,
China, and North Korea. While in the Soviet Union, he visited a model factory.
He remarked to the members of his delegation: “This is a capitalist factory
like those in Cuba before nationalization” (Thaibo II 1997, p. 387). He also
told them, “The Soviet Union was going down a blind alley economically and was
dominated by bureaucracy (ibid.). At the same time, Guevara believed that the
Soviet Union and the Soviet Bloc were “socialist.”
What is not generally known is that
Guevara’s view of the Soviet Union and Eastern European countries was
diametrically opposed to Fidel Castro’s. In 2006, Castro still believed that
the Soviet Union and Eastern Europe were socialist and superior to the
capitalist West (Nayeri, April 19, 2024).
There was no searching discussion of the collapse of the Soviet Union in
the PCC. The official view was that it was caused by a leadership mistake and
by imperialist intervention.
Following the formation of the
Communist Party in 1965, the former leaders of the PSP took key leadership
roles in the government and the PCC. In 1972, Cuba joined COMECON, and the
Soviet Model was officially adopted in 1975.
At the party's third congress in
1986, Fidel Castro admitted that the Soviet model Cuba followed had resulted in
corruption and the demoralization of workers. He called the Soviet Union model
"worse than capitalism." The same Congress called for a return to
Guevara's theory of transition to socialism, but nothing came of it.
The following year, Carlos
Tablada's book on Guevara's theory of the transition to socialism was published
and won the Casa de las Américas Prize. By 1991, the Soviet Union had collapsed,
and Cuba sank into an economic depression. The PCC adopted market liberalization
policies during what they called the Special Period in the Time of Peace. Initially,
as deemed an emergency to return to the vision prescribed by the 1986 congress,
the slide toward a capitalist economy has continued ever since. The current
reforms signify a major step toward solidifying this direction by developing a
legally sanctioned capitalist labor and capital markets and opening the Cuban
economy to the dynamics of the capitalist world economy. This is the road of
former “socialist” states elsewhere in the world (I set aside North Korea,
which most socialists do not consider a socialist).
Marx’s vision of the socialist
revolution
Before I close this essay, it is
important to recall Marx and Engels in The Communist
Manifesto (1848) envisioned socialism as a
process in which the proletariat as a class will “wrest by degrees all capital
from the bourgeoisie” to “centralize all instruments of production in the hands
of the [workers’] state,” which it controls and uses them to increase the total
of productive forces as rapidly as possible.” The workers’ state will abolish
property on land property and nationalize the property of those who flee the
revolution or revolt against it. Other enterprises will be gradually transferred
to the workers’ state. The goal is a producers’ association in which “the
free development of each is the condition for the free development of all.”
Thus, socialist democracy and individual freedom are the cornerstones of a
socialist revolution.
For Marx, progressive steps taken in
the capitalist society, such as progressive taxation, nationalization of
enterprises and industries preferably under workers’ control, social welfare,
socialized health care, free universal education, free cultural venues,
humanization of work through labor legislation and workers’ control, help
prepare for the transition to socialism.
In the workers’ state, the
professional army will be replaced by a working people’s militia; measures will
be taken to achieve equality for the underprivileged and eventually equality of
conditions of life for everyone.
Key to this process are the
self-organization and self-activity of the working people to wither away all
forms of alienation, subordination, and exploitation (Marx 1844, 1864; Fromm, 1961; Draper, 1971).
In Critique of the Gotha Program (1875), Marx
envisions a lower and a higher phase of communism. The lower phase begins with
the conquest of state power by the proletariat (not by a
vanguard such as the party or a guerrilla movement). At the same time, the
emerging society still lacks its economic foundation. The higher stage of
communism begins with the disappearance of the “enslaving subordination of the
individual to the division of labor.” In this stage, goods and services are
distributed according to the bourgeois principle of “to each according to
his/her contribution.” When such division of labor and “the antithesis between
mental and physical labor” disappear, then goods and services will be
distributed according to the socialist principle of “to each according to
his/her need.” Most socialists have identified the first stage of communism as
socialism.
That is how Marx envisioned the transition
of the bourgeois society after a successful socialist revolution led by the
proletariat toward socialism.
Marx anticipated that the socialist
revolution would begin in Western Europe, then the most industrially advanced region
of the world. As we know, Marx’s prediction did not materialize in good measure
because of the rise of labor aristocracy and bureaucracy that benefited from
the status quo.
Instead, the newly formed and
relatively small proletariat in Russia's predominantly peasant society came to
power in the October 1917 revolution. The seizure of power by the soviets of
workers’, peasants’, and soldiers’ deputies led by the Bolshevik Party opened
the way to the socialist revolution.
The leadership of the PCC holds that
Cuba is socialist. It is instructive that Lenin described the Soviet Republic
as state capitalist in several contexts between 1918 and 1922.[4]
The Russian revolutions of 1917 were
made by the soviets, in the case of the October Revolution, led by the
Bolshevik Party. Soviets were elective political organizations that evolved rapidly
from organs of revolutionary democracy into organs of state power and local
governments (Smirnov, 1997, in Acton, Cherniaev, and Rosenberg eds., 1997, pp.
429-456).
The Cuban revolution of 1959 was a
national democratic revolution, not a socialist one, led by Fidel Castro’s July
26 Movement and backed largely by the Cuban peasantry. The working class, with
small sections organized in unions led by the Stalinist PSP, joined the
revolution when victory over Batista was almost at hand. As a triumphant movement led by Fidel Castro attempted
to implement its program presented in his courtroom defense speech, published
as “History
Will Absolve Me (1953), they were forced to nationalize landholding and capitalist
enterprise, some of which were owned by U.S. companies. The U.S. imperialist hostility
began with cutting off trade with Cuba and imposing the embargo that was
tightened over the years, resulting in the Bay of Pigs invasion on April 17,
1961, by Cuban counterrevolutionaries armed by the U.S. government and their
defeat in 48 hours. On May 1, 1961,
Fidel Castro announced the socialist direction of the revolution in recognition
of the new ties Cuba was forging with the Soviet Union and Eastern Europe.
However, Cuba never experienced a
socialist revolution in Marx’s sense, led by the proletariat and its
self-organization and self-mobilization. The revolution has remained a national
democratic revolution, led eventually by the Communist Party of Cuba
established in 1965.
That is why the PCC leadership always refers
to “Revolution” with the capital “R” referring to the leadership of it beginning
with Fidel Castro. Castro himself mistook
Stalinism of the PSP as “Marxism-Leninism,” believing the Soviet Union under
Stalin was socialist. In 2006, in his interview with the Spanish Ignacio
Ramont, Editor-in-Chief of Le Monde Diplomatique, Castro asks himself:
"…What is Marxism? What is socialism?" He then replies: "They
have no clear definition (Castro & Ramonet, 2006, p. 389)."
I have argued that the Cuban
revolution, as well as all other successful revolutions led by Stalinist
parties since the October 1917 revolution in Russia, China, Vietnam, North
Korea, and Yugoslavia, have been national democratic revolutions resulting in
one-party states that aimed to secure independence, economic development, and
industrialization. These leaders have used “socialism” as a mobilizing vision
to motivate the working people to engage in their programs and policies. They
also provided to varying degrees “socialist” welfare measures for the same
reason.
However, there are three ways to ensure
working people participate in such plans: through the market (as in capitalist
countries), through the state (which the Stalinist leadership has done,
including forced collectivization under Stalin), or through socialist
democracy. Ernest Mandel, in a four-hour meeting with Che Guevara, tried to
convince him of the absolute need for socialist democracy. Che Guevara was not
moved (Toussaint, January 12, 2024). That remained the most crucial weakness in
his theory of transition to socialism (Nayeri, July 3, 2011).
Since its inception in 1965, the PCC has used the Stalinist theory of transition to socialism, using both the state bureaucracy and market
forces to organize the Cuban economy and society. However, it has never attempted to
provide space for self-organization and self-mobilization of the Cuban working
people. From its inception, the PCC was organized after the Stalinist model with no room
for the formation of political tendencies or, if necessary, temporary factions.
The current reforms focus on market liberalizations, but the PCC leadership would
not allow the development of socialist democracy. It is only the power of the working people that can resist imperialism and forge a society and economy that could lead in the direction of socialism.
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[1] I have disputed the claim
that central planning is, by its nature, doomed to fail. See Nayeri, 2004.
[2] Keynes argued that the
classical claim called Say’s Law that supply creates its own demand does not
always hold; he further argued that total spending in the economy (aggregate
demand) drives economic activity, not just supply. Keynes also argued that if businesses
and consumers lose confidence, they cut spending simultaneously creating a
shortage of demand, hence an unemployment and over-production crisis. Thus, the
market is not an efficient allocator of resources. He also argued wages and
prices are sticky (they do not readily change to accommodate market changes
necessary for efficient resource allocation.
Market choices are not driven by perfect, rational calculations, but by
"animal spirits"—waves of human emotion, optimism, and pessimism (the
animal spirit). In times of deep uncertainty, investors hoard cash rather than
putting it into productive investments. This hoarding behavior misallocates
capital and starves the economy of necessary economic activity. Finally, Keynes
argued that during severe crises, interest rates can drop near zero, yet
businesses and consumers still refuse to borrow or spend. In this
"liquidity trap," private markets completely fail to stimulate demand
or allocate resources effectively.
[3] The Gini coefficient
measures inequality on a scale from 0 to 1, where higher values indicate higher
inequality. This can sometimes be shown as a percentage from 0 to 100%, called
the “Gini Index.” A value of 0 indicates perfect equality: everyone has the
same income. A value of 1 indicates perfect inequality, where one person
receives all the income, and everyone else receives nothing.
[4] "The Immediate Tasks
of the Soviet Government" (April 1918), "Left-Wing Childishness and
the Petty-Bourgeois Mentality" (May 1918), “The Tax in Kind” (1921), and “Political
Report to the Eleventh Party Congress” (March 1922).
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