
The most important thing is the comprehensiveness of the reform (+Español)
Important economists have written different proposals for changes in the Cuban economy. If we examine them, we can see that there is a significant level of agreement between them; that is, as time has advanced and the crises and complexity of the Cuban economy have become more severe, the level of consensus among economists, mainly those located in academic institutions in the country, about the need for changes and the nature of these has also grown.
I mention academics because at the economic level, dialogue with the authorities on the one hand and the more conservative sectors on the other continues to be difficult, although there are important agreements regarding the historical principles of the Cuban national and revolutionary project, that is: national sovereignty, social justice and economic and democratic development, however, with notable differences about how to make it advance in the current national and international circumstances.
An essential point on which we have permanently insisted is the integral and systemic nature of the reform. Now being more emphatic, we think it is necessary to clarify that without this there is no possible progress—specific, disconnected and sectoral measures have a short trajectory and limited life, if not negative or questionable results.
As we have said before, the most obvious examples of this have been the monetary order of January 2021 and more recently the banking system, which we have questioned, not for their objectives, undoubtedly necessary, but for their errors in sequence, connection, contexts and conditions for their successful execution, in addition to some points of their own conception. To these examples we could also add the measures established for agriculture: in themselves and seen separately they are not negative, many are even common sense, but they do not address the problem comprehensively or in its essence, therefore, there are the results.
Taking into account the difficulty of the situation, it has been rightly pointed out that there are important things and others that are urgent. Our point is that we share that criterion, but we must act, above all, trying to preserve the comprehensiveness of what is done, even when urgent matters such as the current inflation and the social crisis are addressed immediately.
In this text we have been asked to express in a synthetic manner and as a contribution to the debate, what we consider should be done, however, this very conception of comprehensiveness makes it difficult to define only a list of measures without sacrificing the issue of the sequence and the systemic and comprehensive nature of the reform that we consider the national economy needs, and on which we have insisted in everything we have written for years.
Having noted this point, we will try to briefly, as we have been asked, express what we consider to be essential components of the reform.
Obviously, the problem of macroeconomic balance, inflation control and reduction of the budget deficit is fundamental; it is very difficult to successfully pilot the change under the current turbulence. It is also essential to take control of the exchange market.
We should add an even more active reaction to the problem of the country’s external debt, which is increasingly pressing and impeding both trade and investment. Several economists have proposed, and we agree, that some formulas for exchanging debt for certain assets should be analyzed. It is a decision that must be carefully reviewed, but there do not seem to be other options at hand given the magnitude of the problem. Cuba is the object of different demands for this reason. Now, all this connects directly with what we consider the two cores of the reform: the profound transformation of the agricultural production subsystem and the reform of the state enterprise, as part of the country’s business system.
Agricultural production is under obsolete forms of production and marketing that should be transformed, from the size of the private production units, which are those that produce the most food in the country, to the way the so-called collection and marketing mechanism works.
In agriculture there is a problem of structures, incentives and also very low levels of investment that prevent having the minimum conditions necessary to produce more: water, machinery, fuel, fertilizer, herbicides, etc. It is true that there is a strong shortage of foreign currency, affected by, among other factors, the American blockade, however, national investment remains strongly concentrated in other sectors such as tourism, which is clearly inappropriate when food production remains depressed. We have always expressed that food production also involves a national security problem, which takes on even greater importance at the gates of a new American administration that will most likely increase the level of hostility and aggression against the country.
The other heart of the reform is the transformation of the state enterprise, currently affected by inefficiency or very low levels of profitability that, among other things, limit its contributions not only to production, but also to state income and therefore prevent improving the deficit, which in turn prevents effective action on inflation, etc.
On the subject of business reform we have written extensively and we have always expressed that it is about transforming it so that it stops being inefficient, not so that it stops being public.
The transformation of the business system must give rise to a complex fabric that covers all the activities that a modern economy requires and under different forms of ownership and management, public, cooperative and private, preserving the prevalence of the public enterprise, but with levels of efficiency that allow it to exercise that leadership authentically.
Companies must be companies that operate in the markets and not administrative units subject to central decisions and the supervision of Ministries and other intermediate structures such as OSDEs, whose need is often not justified – although there are exceptions – and without being subject to bureaucratic planning, the nature of which must change towards a more financial and strategic planning. This presupposes, of course, the existence of essential exceptions corresponding to certain companies, very limited by the nature and scope of the function they perform.
The failure of centralized and bureaucratic planning was more than demonstrated by the experience of European socialism, and surpassed by the successful experiences of Vietnam and China.
This presupposes markets that must be consciously constructed and that function with transparency, information and adequate regulations, including those of the means of production and money, with strong financial restrictions, with a law on companies and a law on bankruptcy; all as part of a system that must function integrally. The participation of public companies in the money market is essential; the segmentation and monetary chaos that exists today is incompatible with the well-articulated functioning of the economy and without this, growth is chimerical.
In other words, all these markets must be attended by all economic actors, public, cooperative and private without distinction. The private sector must have all the conditions and essential regulations for it to function both with order and with initiatives.
Essential elements are the adequate management of fundamental tools of economic policy. We have already referred to the exchange rate, which is valid for fiscal policy, customs policy, credit policy, industrial policy, investment policy and of course, and increasingly important, social policy.
The different sectors also need specific decisions, as is the case, for example, of the energy sector, which is currently in crisis, whose matrix must be changed by a greater weight of alternative energies.
On the other hand, the reform, which is increasingly urgent, must define clearly defined stages and goals to move Cuba’s economic model from where it is, whose exhaustion has been more than evident for years, to a new one that allows it to recover dynamism, efficiency, capacity for growth and a more favorable international insertion, despite the fact that we must continue to suffer, resist and condemn the policy of blockade and aggression. As I have expressed on various occasions, time runs fast and is a critical variable; the coherent advance of the reform must be now, without pause, with order and with haste.