The Reform of the Cuban Economy, 1976–86: Organisation, Incentives and Patterns of Behaviour

¹ Castro, Fidel, ‘Let the Spirit of Militancy Be the Main Thing We Get Out of This (3rd Committees for the Defense of the Revolution – CDR) Congress’, Granma Weekly Review (5 10 1986), p. 9.

² See Fitzgerald, Frank T., ‘Politics and Social Struture in Revolutionary Cuba: From the Demise of the Old Middle Class to the Rise of the New Professionals’, PhD diss., State University of New York, 1985, ch. 4.

³ Ibid., chs. 6 and 9.

⁴ Weber, Max, ‘Bureaucracy’, in Gerth, Hans and Mills, C. Wright (eds.), From Max Weber: Essays in Sociology (New York, 1958), pp. 196–244.

⁵ For the Cuban understanding of this process, see Carnota, Orlando, ‘La profesión de administrador’, Economía y Desarrollo, no. 23 (05–06 1974), pp. 47–67; and R–os, Alejandro Armengol and Hernández, Ovidio D'Angelo, ‘Aspectos de los procesos de comunicación y participatión de los trabajadores' en la gestión de las empresas’, Economía y Desarrollo, no. 42 (07–08 1977), pp. 156–79.

⁶ Through further education, of course, old cadres can transform themselves into new professionals. In fact, in 1975 the First Party Congress promulgated a policy to encourage such transformations. Although many old cadres have become new professionals since 1970, there is much evidence, which unfortunately cannot be reviewed here, to suggest that many other old cadres have resisted transforming themselves, even as they have attempted to cling to positions in the administrative apparatus. See Fitzgerald, ‘Politics and Social Structure’, ch. 10.

⁷ See, for example, Castro, Fidel, ‘Main Report to the Third Congress of the Communist Party of Cuba’, Granma Weekly Review (16 02 1986). Although the focus here is the economy, bureaucratic centralism has been evident throughout the Cuban system, including the OPP. The most detailed and best available outside scholarly analysis of it generally agrees that the OPP, while opening up the Cuban political system to more extensive and stable popular participation, remains riddled with limitations and problems, many of a bureaucratic centralist nature. See Benglesdorf, Carolee, ‘Between Vision and Reality: Democracy in Socialist Theory and Practice’, PhD diss., Massachusetts Institute of Technology, 1985.

⁸ Granma (16 Feb. 1985), as quoted in Roca, Sergio, ‘State Enterprises in Cuba under the New System of Planning and Management (SDPE)’, Cuban Studies/Estudios Cubanos, vol. 16 (1986), pp. 161–2.

⁹ Betto, Frei, Fidel on Religion (Sydney, 1986), p. 30.

¹⁰ For example, Roca, ‘State Enterprises’.

¹¹ Quoted in Ibid., p. 172.

¹² de Planificación, Junta Central, Segunda plenaria national de chequeo de la implantación del SDPE (Havana, 1980), p. 405; and Vázquez, Julio A. Díaz, ‘La aplicación y perfeccionamiento de los mecanismos de dirección en la economía cubana’, Economía y Desarrollo, no. 78 (01–02 1984), p. 94.

¹³ Granma, (Feb. 11, 1985), as quoted in Roca, , ‘State Enterprises’, p. 174.

¹⁴ Pérez, Felino Quesada, ‘La autonomía de la empresa en Cuba y la implantación del sistema de dirección y planificación de la economía’, Cuestiones de la Economía Planificada, no. 1 (01–02 1980), p. 97.

¹⁵ Central, Junta de Planificación, Segunda plenaria, pp. 7–8.

¹⁶ Castro, Fidel, ‘Main Report’, p. 7.

¹⁷ Pérez, Quesada, ‘La autonomía’, pp. 97–8.

¹⁸ Ibid., pp. 95–6.

¹⁹ This is, in fact, one of the major mistakes of Sergio Roca, ‘State Enterprises’, who assumes that higher-level interference typically has a malign impact on enterprises. Here is an instance where a scholar sees only part of the Cuban reality because he is blinded by the elite/mass perspective characteristic of many Cubanologists. If Roca were not blinded to the fact that the direction of influence between higher authorities and enterprise managers moves in both directions, he might have seen that enterprise managers, as is discussed below, have not only sometimes bristled under malign bureaucratic centralism, but have sometimes invited benign bureaucratic centralism from those above them. On the elite/mass perspective, see Fitzgerald, Frank T., ‘The Sovietization of Cuba Thesis Revisited’, in Zimbalist, Andrew (ed.), Cuban Political Economy: Controversies in Cubanology (Boulder, Colorado, 1988), pp. 137–53.

²⁰ Castro, Fidel, ‘Speech at the 25 th Anniversary of the Committees for the Defense of the Revolution’, Cranma Weekly Review (6 10 1985), p. 4; and ‘Debates on Rectification of Errors and Negative Tendencies in Various Spheres of Society at the Deferred Session of the Third Congress of the Communist Party of Cuba’, Granma Weekly Review (4 12 1986), p. 12.

²¹ Castro, Fidel, ‘Main Report’, p. 7.Roca, , ‘State Enterprises’, pp. 162–163, cites emigré managers who claimed that price constraints on their enterprises were overly harsh in the late 1970s. Perhaps so, but the situation certainly reversed in the 1980s. As Fidel Castro correctly surmised about the extent of benign Type I bureaucratic centralism: ‘I've come to the conclusion that we've become a paternalistic state, that we've been too protective, too generous, too splendid and magnanimous.’ See ‘Fidel Castro's Speech on Administrative Irregularities in Economic Management at the National Assembly’, Granma Weekly Review (13 07, 1986), p. 9.

²² Castro, Fidel, ‘Speech to the Closing of the 9th Session of the National Assembly’, Granma Weekly Review (6 10 1986), p. 10; and ‘Fidel Castro's Speech at the 25th Anniversary of the Proclamation of the Socialist Nature of the Revolution’, Granma Weekly Review (27 04, 1986), p. 10.

²³ The importance of soft budget and price constraints has been underscored by the Hungarian economist Janos Kornai, who has put them at the centre of his comparative theory of capitalist and socialist economies. See, Kornai, Janos, Economics of Shortage (Amsterdam, 1980), ch. 13; and his Contradictions and Dilemmas (Cambridge, Mass., 1986), ch. 2.

²⁴ Of course, some enterprise members did get upset, like Silvia Marjorie Spence – now famous in Cuba – who was fired from her construction work centre for complaining about rampant corruption, in this case contracts for non-existent jobs and incredibly high monthly salaries by Cuban standards: one of 1,246 pesos, one of 1,013 pesos, four of over 900, and four of over 800. See ‘Fidel Castro's Analysis of the Economic Situation and the Essential Measures to be Taken’, Granma Weekly Review, (11 01 1987), p. 4. She was reinstated over two years later, but only after having taken her case to the national level. She has now been promoted to the status of a hero, while her former superiors have been demoted to the shop floor. See ‘New Hero: Whistle-Blower Silvia Marjorie Spence’, Cuba Update, nos. 1–2 (Spring 1987), p. 7.

For more on the problem of corruption, see the remarks of Castro, Fidel, ‘Let the Spirit of Militancy’, p. 4; and ‘Fidel Castro's Speech at the Meeting to Analyze Enterprise Management in the City and Province of Havana’, Granma Weekly Review (6 07 1986), p. 2, where he points out other sources of corruption such as the so-called free farmers' markets, which were abolished in 1986, and which, despite their importance, cannot be analysed here.

²⁵ Ríos, Armengol and Hernández, D'Angelo, ‘Aspectos de los procesos de comunicación’, pp. 156–79; Fuller, Linda, The Politics of Workers' Control in Cuba, 1959–1983: The Work Center and the National Arena, PhD, diss., University of California, Berkeley, 1986; Fuller, Linda, ‘Changes in the Relationship Among the Unions, Administration, and the Party at the Cuban Workplace’, Latin American Perspectives, vol. 13, no. 2 (Spring 1986), pp. 6–32; Harnecker, Marta, Cuba: Dictatorship or Democracy (Westport, Connecticut, 1980); Herrara, Antonio José and Rosenkranz, Hernán, ‘Political Consciousness in Cuba’, in Griffiths, John and Griffiths, Peter (eds.), Cuba: The Second Decade (London, 1979); Pérez-Stable, Marifeli, ‘Institutionalization and Workers' Response’, Cuban Studies/ Estudios Cubanos, vol. 6, no. 2 (07 1976), pp. 31–54; Pérez-Stable, Marifeli, ‘Politics and Conciencia in Revolutionary Cuba, 1959–1984’, PhD diss., State University of New York, 1985; and Zimbalist, Andrew, ‘Workers’ Participation in Cuba’, Challenge (11–12 1975), pp. 45–54.

²⁶ Second Congress of the Communist Party of Cuba, Documents and Speeches (Havana, 1981), p. 387. In addition, see Castro, Hector Anala, ‘Transformation de propiedad en el período 1964–1980’, Economía y Desarrollo, no. 68 (05–06 1982), pp. 23–4; and Vázquez, Díaz, ‘La aplicación’, pp. 92–3.

²⁷ Castro, Fidel, ‘Main Report’, p. 7.

²⁸ Calling the Cuban labour market ’tight’ docs not imply that there is an absolute labour shortage in Cuba. First, as Kornai, , Economics, pp. 30–6 and 254–7, has fully explained, a tight labour market goes hand in hand with a labour surplus within enterprises, or what is sometimes called ‘unemployment on the job’. Secondly, while there is a relative labour shortage in most of Cuba, according to Fidel Castro, there is ‘a certain labour surplus’ in the East. See ‘Fidel Castro's Analysis of the Economic Situation’, p. 4. Interestingly enough, he had complained several months before about the difficulties of a new textile mill in Santiago, that is, in the labour-surplus East, in attracting workers, because it did not have the housing, recreational, educational and other facilities that workers demanded. See ‘Fidel Castro's Speech on the 25th Anniversary of the Proclamation’, pp. 10–11. In between these two statements, Castro explained that many workers on temporary lay-off were reluctant to go elsewhere for work, because they were receiving 70 percent of their salary while not working. See ‘Cuban Television Broadcasts Key Parts of Fidel's Remarks at 2nd Central Committee Plenum’, Granma Weekly Review (3 08 1986), p. 5. Together, these statements suggest that in Cuba the labour market remained tight, even where a labour surplus existed, because of the high level at which the state guaranteed the livelihood of workers.

²⁹ Castro, Fidel, ‘Closing Speech at the Close of the Deferred Session of the Third Congress of the Communist Party of Cuba’, Granma Weekly Review (4 12 1986), p. 12.

³⁰ It is notable that, in the mind of one party member, the managerial behaviour that is about to be discussed stemmed from the fact that ‘people in authority do not want problems and some are afraid of workers’. See the remarks of Marsilli, Reinaldo, as reported in ‘Debates on Rectification’, p. 3. It is perhaps also notable that the workers interviewed by Fuller, , The Politics, pp. 423–5, felt they had the power to have work centre managers removed, if necessary.

³¹ See Fidel Castro's remark about ‘the increase in the ambition for money, the spirit of profit that was invading our working class’. ‘ Fidel Castro's Speech at the Meeting to Analyze Enterprise Management’, p. 2.

³² As Fidel Castro, Ibid., p. 3, admitted in 1986: ‘We abused the principle [of pay according to work] by paying for work not done.’

³³ Jiménez, Alexis Codina, ‘Los estímulos materiales y morales en el socialismo’, Eonomia y Desarrollo, no. 56 (03–04 1980), pp. 60–1.

³⁴ According to one economist, technical norms ‘are not limited to passively reflecting the costs of work and the results that should be expected from each post of work, brigade, etc., but should exercise an active influence in the transformation of the general conditions and organization of work’. See Ibid., p. 61.

³⁵ In addition to the resistance of managers and workers, there are other reasons that account for the fact that work norms in Cuba have been elemental and low. While in 1986 there were about 3 million work norms and about 20 thousand norm setters – that is, about 150 norms per norm setter – these latter often lacked proper training or experience, or often did other work (perhaps as directed by work centre managers). See the remarks of the President of the State Committee for Labour and Social Security, Linares, Francisco, ‘Debates on Rectification’, p. 2. Of course, even with thoroughly trained and cooperative personnel, establishing and keeping this many norms up to date in the face of a complex division of labour and changing technology, work organisation, and worker performance is an enormous task. In this regard, the Cuban problem with norms is not unique, but has existed throughout the socialist, as well as the capitalist world, whenever work norms have been used. Unfortunately, the myriad technical problems involved in setting norms for work cannot be discussed here.

³⁶ As early as 1972, the then Minister of Labour Jorge Risquet announced that elemental norming would be complete by the end of 197) and massive technical norming would commence. See ‘Primer encuentro nacional de organización y normación del trabajo’, Economía y Desarrollo, no. 11 (05–06 1972), p. 200. But in 1981 almost 28% of the appropriate work posts remained without norms of any kind. See Casamayor, Barbara Flores, ‘Breve análisis del sistema salarial, en los marcos de la Reforma General de Salarios’, Economía y Desarrollo (01–02 1984), p. 119. In 1982, 77% of all existing norms remained elemental, 23% were somewhat in between, and practically none were technical. See Grau, María Díaz Corral y Xionmara Vásquez, ‘Algunas consideraciones para la aplicación de reglamento de normación del trabajo’, Economía y Desarrollo, no. 85 (03–04 1985), p. 227. This situation had not substantially improved by 1986. See the remarks of Castro, Fidel, ‘Main Report’, p. 6.

³⁷ Castro, Raül, ‘Three Speeches Against Bureaucracy’, in Taber, Michael (ed.), Fidel Castro Speeches, Volume II: Our Power Belongs to the Working People (New York, 1983), pp. 295–6. For a report of similar manipulations, see ‘Debates on Rectification,’ p. 3.

³⁸ See ‘Fidel Castro's Speech on Administrative Irregularities’, p. 9. One study of 85 enterprises in the province of Ciego de Avila discovered 2,442 workers being overpaid and attributed this to the low norm found in 32 enterprises, in 28 of which workers were producing at the rate of more than 130 percent of their norms. See ‘Aporta importantes elementos en normas y salarios inspectión a 85 empresas avilenas,’ Granma Weekly Review (8 08 1986), p. 1.

³⁹ Raúl García Peláez, Untitled speech at the closing of the II Reunión Nacional de Chequeo y Control de la vinculación del salario a la norma, Economía y Desarrollo, no. 36 (07–08 1976), p. 208.

⁴⁰ ‘Fidel Castro's Speech at the 25th Anniversary of the Proclamation’, p. 10.

⁴¹ ‘Report on the Meeting to Analyze Enterprise Management’, p. 2.

⁴² Peláez, García, Untitled speech, pp. 202, 207–208; and Pérez, Humberto, ‘La obtención de la mayor eficiencia posible en el uso de nuestros recursos’, Economía y Dcsarrollo, no. 46 (03–04 1978), p. 188.

⁴³ ‘Debates on Rectification’, p. 3.

⁴⁴ Although there is a vast literature on socialist economies which deals with the types of problems analysed in this article, I find Kornai's work most useful because, in my opinion, it presents the most impressive and systematic model of the operation of socialist economies that is available. The analysis of this article, however, differs from Kornai's in several respects. First, for the reason explained earlier in the text, this analysis uses the term ‘bureaucratic centralism’ to refer to what Kornai calls ‘paternalism’. Second, this analysis distinguishes between ‘malign’ and ‘benign’ paternalism or bureaucratic centralism, whereas Kornai's work does not distinguish the two, and in fact deals almost solely with the benign type Third, this analysis uses the terms ‘systemic’ and ‘socio-historical’ factors to refer respectively to what Kornai, Economics, pp. 62–3, calls ‘general’ and ‘special’ factors. Kornai's terminology creates confusion, because it can easily be seen that the special factors that he alludes to and the socio-historical ones that I invoke here have existed ‘generally’, that is, in most, perhaps all, existing socialist economies at one time or another, even though they have not arisen systemically from the structure or operation of these economies. Fourth, and most important, this analysis differs from Kornai's in its level of abstraction. Kornai theorises primarily at a higher level of abstraction suitable to his overriding purpose of comparing capitalist and socialist economies, the essential difference between which he locates in the relationship, typically paternalist in socialist economies and typically nonpaternalist in capitalist economies, between the state and the enterprise. Although his theoretical project is obviously moving in this direction, in his writings so far he has been only minimally interested in comparing the degree of paternalism or bureaucratic centralism in different socialist economies, at different points in time, and among different categories of economic actors. His theory in this respect is still incomplete and in flux. In his Economics, chap. 22, he theorises that the degree of paternalism or bureaucratic centralism will be higher in pre-reform than in post-reform socialist economies. Yet he later offers counterfactual evidence in his Contradictions, pp. 81–123, where he suggests that the very extensive reforms in Hungary have not appreciably reduced paternalism or bureaucratic centralism in that country's economy. In treating the particular case of Cuba between 1976 and 1986, the analysis of this article necessarily operates at a much lower level of abstraction, which accounts for its central difference from Kornai's analysis. Obviously, at the lower level of abstraction where a particular case is being analysed, special or socio-historical factors, such as the peculiarities of the different categories of economic actors invoked in this analysis, have to be called upon. In addition, I would suggest that, if Kornai is to develop fully a theory of degrees of parternalism or bureaucratic centralism in different existing socialist economies and among different types of economic actors at different times, he will have to take into consideration not just general or systemic, but also special or socio-historical factors.

⁴⁵ Kornai, , Economics, p. 566.

⁴⁶ Kornai, , Economics, p. 62. In Kornai's view, this is an important general systemic factor behind bureaucratic centralism, but, unlike state ownership of the major means of production, it extends in its generality to ‘every [that is, capitalist and socialist] modern, achievement-oriented society’. See his Contradictions, p. 70.

⁴⁷ Castro, Raúl, ‘Three Speeches’, p. 291.

⁴⁸ The full range of evidence supporting this analysis of socio-historical factors is too extensive and complex to present here.

⁴⁹ Pérez, Humberto, Sobre las dificultades objectivas de la Revolución: lo que el pueblo debe saber (Havana, 1979), p. 14.

⁵⁰ Kornai, , Economics, pp. 566–7.

⁵¹ For example, see ‘An Interview with Carlos Rafael Rodriguez’, in Taber, , Fidel Castro Speeches, pp. 316–321.

⁵² ‘Fidel Castro's Closing Remarks at the 53rd Plenary Meeting of the National Council of the Central Organization of Cuban Trade Unions’, Granma Weekly Review (1 02 1987), pp. 2–4.

⁵³ This, at least, is the reasonable conclusion to draw from Fidel Castro's insistence that Cuba could not expect to solve its economic problems with further assistance from the socialist countries, but instead had to improve the overall efficiency of its economy. See ‘Fidel Castro's Closing Remarks at the Meeting of the Provincial Committee of the Party’, Granma Weekly Review (25 01 1987), p. 2.

⁵⁴ ‘Fidel Castro's Closing Remarks at the 53rd Plenary’, pp. 2–4.

⁵⁵ For a brief overview of Cuba's economic problems in the mid-1980s, see Castro, Fidel, ‘Speech to the 3rd Congress of the Committees for the Defense of the Revolution’, Granma Weekly Review (12 10 1986), p. 3.

⁵⁶ For example, it was recognised that the provision of housing was falling behind need more rapidly than before, especially in the city of Havana. In addition, for the first time since the revolutionary triumph of 1959, the infant mortality rate rose in 1985. See Granma Weekly Review (1 02 1987), p. 1.

⁵⁷ See the remarks of Acosta, José M. at the ‘Meeting of Basic Industry Enterprise Directors’, Granma Weekly Review (1; 02 1987), pp. 4–5.

⁵⁸ ‘Fidel Castro's Closing Remarks at the 53rd Plenary’, p. 2; and his remarks in ‘ Debates on Rectification’, p. 2.

⁵⁹ ‘Fidel Castro's Closing Remarks at the 53rd Plenary’, p. 4.

⁶⁰ Castro, Fidel, ‘Speech to the 3rd Congress’, p. 4.

⁶¹ ‘Fidel Castro's Closing Remarks at the 53rd Plenary’, p. 2.

⁶² ‘Fidel Castro's Closing Remarks at the Meeting of the Provincial Committee’, p. 2.

⁶³ ‘Fidel Castro's Closing Remarks at the 53rd Plenary’, p. 2.

⁶⁴ Castro, Fidel, ‘Closing Speech at the 2nd National Meeting of Agricultural Production Cooperatives’, Granma Weekly Review (1 06 1986), pp. 3–4.

⁶⁵ ‘Fidel Castro's Analysis of the Economic Situation’, pp. 2–5.

⁶⁶ ‘Fidel Castro's Closing Remarks at the 53rd Plenary’, p. 4.

⁶⁷ Ibid., p. 2.

⁶⁸ ‘Fidel Castro's Closing Remarks at the Meeting of the Provincial Committee’, p. 4.

⁶⁹ ‘Fidel Castro's Closing Remarks at the 53rd Plenary’, p. 4.

⁷⁰ Ibid., p. 2.

⁷¹ Castro, Fidel, ‘Speech to the 3rd Congress’, p. 4; and ‘Fidel Castro's Analysis of the Economic Situation’, p. 4.

⁷² ‘Fidel Castro's Closing Remarks at the Meeting of the Provincial Committee’, p. 2.

⁷³ ‘National Meeting of Party's Economic Departments’, Granma Weekly Review (15 02 1987), p. 1.

⁷⁴ Granma Weekly Review (6 07 1986), p. 2.

⁷⁵ Castro, Fidel, ‘Speech at the Close of the Deferred Session of the Third Congress of the Communist Party of Cuba,’ Granma Weekly Review (14 12 1986), p. 13.

⁷⁶ Specifically, the construction microbrigades. See ‘Fidel Castro's Speech at the Opening of the Julio Trigo Hospital,’ Granma Weekly Review (20 09 1987), p. 4.

⁷⁷ Dorticós, Osvaldo, ‘Formación de cuadros económicos-administrativos en las industria ligera’, Economia y Desarrollo, no. 4 (10–12 1970), p. 17.

⁷⁸ ‘Fidel Castro's Speech at the 25th Anniversary of the Proclamation’, p. 10.

⁷⁹ Castro, Fidel, ‘Closing Speech at the 2nd National Meeting’, p. 4.

⁸⁰ ‘Fidel Castro's Closing Remarks at the 53rd Plenary’, p. 4.

⁸¹ Moreno, José A. López, ‘Report on the Fulfillment of the 1985 Plan for Economic and Social Development and the Objectives Set for 1986’, Granma Weekly Review (12 01 1986), p. 4.

⁸² In 1981, 19 such brigades were introduced in the agricultural sector. By 1986, their number had grown to 2,055. See Colina, Cino, ‘The New Type Brigades’, Granma Weekly Review (9 02 1986), p. 5.

⁸³ ‘Debates on Rectification’, pp. 8–9.

⁸⁴ See Fitzgerald, Politics and Social Structure, ch. 10.

⁸⁵ ‘Fidel Castro's Remarks at the 2nd Meeting of Havana Enterprises’, Granma Weekly Review (5 07 1987), p. 5.

⁸⁶ Ibid.

⁸⁷ ‘5 th Congress of the Communist Youth League (UJC)’, Granma Weekly Review (12 04 1987), p. 5; see also the ‘Deferred Session of the 5th Central Committee Plenum’ Granma Weekly Review (4 10 1987), p. 5. Although Castro pointed directly to such practices in the agricultural sector, the study of the Nicaro Nickel plant that revealed that of its 184 engineers, only 6 percent were utilised in ‘a satisfactory manner’, 70% were ‘underutilised’, and the rest were ‘poorly’ used, probably indicates that such practices were more widespread. See ‘Meeting of the Enterprise Directors of the Ministry of Basic Industry’, Granma Weekly Review (15 02 1987), p. 5.

⁸⁸ Castro, Fidel, ‘Speech on the 3 5 th Anniversary of the Attack on the Moncada’, Granma Weekly Review (7 08 1988), p. 4.