Fidel Castro – a counterrevolutionary?


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Free marketeers have received support from an unlikely ally. During a press conference in Cuba, the Máximo Líder Fidel Castro publicly admitted that the Cuban model no longer works.



It is hard to disagree with the Comandante on this one, although one wonders what he means by “no longer”. During the fifty-year period of Castro’s (official) reign, the Cuban economy has never done better than in recent years. This is true in terms of annual growth rates, absolute levels, and relative performance vis-à-vis Latin America’s most obvious counter model (see graph).



Taking the ex-dictator at his word, Castro effectively confessed to having trapped his country in a state of underdevelopment for half a century. These are tough times for old-school socialists in the West. Even their old icons are no longer fully reliable.



Real GDP per capita in Cuba and Chile, 1959-2008 (100 = Cuban level in 1959) – data from Maddison.



 





Thanks to subsidies in kind from the Soviet Union, Cuba enjoyed some modest growth during the 1970s and 1980s. When the Soviet Union went under, so did Cuba’s economy. When things got really desperate in the mid-1990s, the authorities adopted some unexpected measures: they liberalised foreign tourism (only incoming, of course), and permitted small-scale self-employment for a limited number of professions. Cubans were allowed to own US dollars. Farmers were permitted to own small plots of land, where they could grow food privately and sell it on agromercados at unregulated prices. Under very restrictive conditions, even joint ventures between foreign investors and domestic state-owned enterprises were permitted. This is the origin of Cuba’s weird system of parallel economies, in which waiters can earn more (through tips) than university professors.



When the changes started to prove effective and even popular, Cuba’s authorities tried to turn back the clock. Ownership of dollars was prohibited again, and the number of licences granted for self-employment was cut. But, just like Goethe’s Sorcerer’s Apprentice, they found themselves unable to regain control over the spirits they had unleashed.



The attempt to re-Stalinise the economy occurred while Fidel Castro himself was still in office. So even by his own standards, his recent admissions come a bit late.





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