Friday, December 31, 2010

Translation: Economy of commands or earnings? (2)

Here is part two of the Juventud Rebelde interview with one of Cuba's leading economists, Joaquin Infante. Part 1 is here. You've got to admire the character of this revolutionary economist who has seen it all:
I don't regret anything, because life is a theatre performance with a single act and no rehearsals. I'm an optimist, at least I feel happy that before I leave this world, we're going to take the right path.

Economy of commands or earnings? (Part 2)      

Capitalism is an old chameleon, with centuries of experience, that looks for ways to emerge from its many relapses and sustain itself. Socialism, with such noble ideals, is too young and inexperienced. It must pay a high price to achieve economic efficiency...

These are complex matters that transcend generations. We used to think that we could change everything in a short time-frame. In 1967, when we stopped accounting for [economic] costs and ignored many economic laws, we thought we were going to create the New Man. Yet man with small letters must be stimulated [materially] to work. We forgot about the socialist law of distribution [i.e., of the transition period between capitalism and communism: "to each according to their work" — translator's note]. Socialism is equality of rights and opportunities, not egalitarianism. This standardisation [of incomes] causes loss of [work] motivation and breeds mediocrity.

There are leftist theoreticians who believe they're seeing the end of socialism in Cuba, and characterise the process of updating [of Cuba's economic model] as pure "economism". How would you respond?

These theoreticians, who have spent 70 years discussing how to build socialism without having done anything for this system, are dangerous. Now they begin theorising that we're deviating ... blah, blah, blah. It's one thing to play the guitar and another the violin. It's very easy to express an opinion and not put it into practice in a country with a critical financial situation, blockaded by the greatest power in the midst of a global economic crisis. Is it about talking, or is it about resolving the concrete problems of a country? I'm a practical theorist. Nobody has managed to construct an ideal socialism. Here we do things in our own style, for more socialism. And chico, what is socialism, if not to give wellbeing to the people and redistribute the resources in the best way possible?

What is the difference between a socialist [state] enterprise and a capitalist enterprise? Both must produce profitably and be cost-effective, self-financing. But in the capitalist firm the riches end up in the pockets of the owners, while in the socialist enterprise they are the property of the country and the people. Moreover, for the latter to be efficient, we must eliminate many unnecessary restrictions.

One example of these restrictions is the excessive centralisation in which the socialist enterprise functions
— or barely functions: all its earnings end up in the state coffers. And while in the end the fruits of production are redistributed globally, this hardly motivates the work collectives and the enterprise management's hands are tied when it comes to stimulating the workers.

It's very clear in the [Draft Economic and Social Policy] Guidelines that the state enterprises must be overhauled. The workers must receive incomes linked to their results. And the enterprise, after having complied with its commitments to the country, must be able to set aside part of its earnings for investments and worker incentives, including hard currency given that we have not achieved convertibility with the [regular] peso.

There is much talk about the sense of ownership. Because a very serious problem, with fatal ideological connotations, is that the worker does not feel as if he's the owner [of the enterprise].

If in the work collectives the incomes depend on the results (of the individual, the work collective and the enterprise as a whole) then everything will work towards this, because in the end they will receive a part of the earnings. For this, the workers need to be able to discuss and participate in decision-making. The plan must be discussed down there with the worker.

And the problems of accounting, of costs, incomes and payments; when the enterprises have the power and we remove their straightjacket, they're going to solve these problems, because now you're struggling for efficiency. The firms with losses will go bankrupt, and this will affect everyone: workers and [managerial] cadres. This means things must function, even if they're not going to be perfect. But in this way we'll advance, improve.       

The much-discussed decentralisation also applies to the territories, [granting them] the necessary horizontality. How can the potential of the municipalities be unleashed?

We're moving towards another kind of relationship between the state enterprise and the municipality in which it is located, such that the enterprise, with its earnings, will sprinkle the municipality with its [tax] contributions. The municipalities will be able to take many initiatives, including the establishment of industries with local resources. And this will resolve many problems there at the base; this is going to give a lot of life to the municipality.

Also very important is the separation of state and enterprise functions. If you're the government, you don't administer. The government regulates, it doesn't administer. The enterprise is the enterprise. The government regulates, establishes norms and supervises; but it cannot administer the economy.

With all these changes which are coming, do you believe that the choke of bureaucratism will be cornered?

When you put an end to administrative tutelage, and you are ruled by economic-financial results, you will be cornering bureaucratism. The priority is to change our conception of the economy, for more and better socialism. Planning to take precedence over the market, but spaces for the market. The fundamental resources managed and assigned according to the plan. But, having complied with the plan in the peasant agricultural sector with a list of certain products, for example, mechanisms of supply and demand will take over.

Of all these planned transformations, which in your opinion is going to be the most complicated?

The implementation of each one. And in particular the elimination of currency duality. Note that we have one type of one-to-one exchange for the enterprise sector, and another of 25:1 for the population. This peso in the enterprise sector is currently overvalued, and undervalued in the population sector. Because of this we must begin with the enterprise sector, so that we help it to boost the economy and strive for efficiency; and then, little by little, raise the value of the [non-convertible] peso to benefit the population.

When you look back on your life, don't you feel annoyed that many thing in which you've participated have been abandoned?

Yes, I feel nostalgia for the things we've tried to do and later were not achieved. I remember everything that Carlos Rafael Rodriguez did in the National Institute of Agrarian Reform, when I was director of Finances and Prices. We managed to make this institute cost-effective in 1965. So many things that were begun and later made no sense, that we've had to go back and rectify. But I don't regret anything, because life is a theatre performance with a single act and no rehearsals. I'm an optimist, at least I feel happy that, before I leave this world, we're going to take the right path. What I have left to live will be for this.   

Translation: Economy of commands or earnings? (1)

Coinciding with the beginning of the three-month-long public debate on the Draft Economic and Social Policy Guidelines of the Party and Revolution, the following two-page interview with one of Cuba's veteran economists appeared in Juventud Rebelde. It's a fascinating and revealing interview.

Jose Alejandro Rodriguez, like Luis Sexto, is a popular and fearless critic in the Cuban press. As well as critical commentaries and interviews, he compiles the section of the paper dedicated to reader's complains about official incompetence and corruption.  

Due to its length I'll post this translation in two parts.  

Economy of commands or earnings?

By Jose Alejandro Rodriguez

Juventud Rebelde, December 12, 2010

Translated by Marce Cameron

Dr Joaquin Infante, a wise and realistic man, recipient of the National Economics Prize, reflects for Juventud Rebelde on one of the key urgencies of the country: that the economy shifts from a crippling administrativism to an analysis of financial management.

Pushing 85 years, he has the neurons of a prodigal young university student; as if half a century devoted to the Cuban economy, from the manager's desk as well as research and teaching in academia, were not enough: two worlds that hardly ever converge. Generous, because he has always believed in the potential efficacy of socialism despite the lurches and the ups and downs it may have given us. Loyal, with that authentic loyalty of those who speak up and defend their views.

Joaquin Infante, Doctor of Economic Sciences, answered the questions of this reporter, feeling himself to be judge and jury of the rugged paths of the Cuban economy to date, and of its challenges and destiny henceforth.

Cuba looks at itself in the mirror through the analysis of the Draft [Economic and Social Policy] Guidelines of the [6th Communist] Party Congress. What are the implications of a shift from administrative management to financial management of the economy?   

Administrative management of the economy has a long history, from when we inserted ourselves into the "actually existing socialism" of the USSR: the cult of plans for material output, not of monetary values, of financial balances. We became accustomed — the country as a whole, enterprises and citizens — to always covering deficits and deficiencies whether or not results were obtained.

Finances smacked of capitalism to us, and this led to an extreme centralisation of planning and economic decision-making. With this rigidity and inflexibility, finances cannot function. This is reflected in the fact that we still have a monetary exchange in which convertible Cuban pesos are exchanged one-to-one with regular Cuban pesos in the state sector of the economy. The decision to export or import doesn't take into account the true value of the currency, nor does it allow us to know the true costs of production, of what is exported and imported.

Given the urgency of increasing exports and substituting imports, there must be a true exchange, not this fallacy of one [regular Cuban] peso, one dollar. In this way, exports will be stimulated and imports will become more costly. In a decentralised fashion, the enterprise analyses and decides on the basis of its real costs, and the exchange rate has a bearing on the firm's analysis because this is the starting point for measuring its real costs.        

How does the cult of the material economy, to the detriment of financial accounting, result in inefficiency?     

Look, when I was the director of the state budget, in the 1980s, at least we only subsidised the products sold to the population at prices below their cost. But later on this deteriorated, and the budget began to subsidise thousands of products and productive activities. [The budget] was a rationed goods store. If you subsidise all production, nobody knows the cost of anything. So one of the key changes is that losses will no longer be subsidised. Thus, the enterprise will be obliged to become more efficient. Now you'll see how the director of the firm wants accounting that provides him with rigorous data to obsessively keep track of the costs.     

But this implies a decentralisation of power towards the enterprise system. If your hands are tied so that you can't reward work excellence and quality; if [some] funds from earnings cannot be kept in the enterprise, as has been the case up to now, and everything goes up [to the ministerial level]...

This is the path of updating the [economic] model. Because until now, with the extreme centralisation, everything up to hard currency was included [in centralised planning]. Gross income was centralised, not net income. This would not even guarantee you simple reproduction of the costs you incur. This is just comfortable inertia. Will we now be prepared for such changes, after so many years of being padded by a centralised economic set-up?

The change of mentality is complex, if you were accustomed to them demanding that you measure production in physical units. Why, then, does the peasant, without knowing anything about economics, not suffer losses, and is profitable? When you delegate powers and measure by earnings, by efficiency and efficacy, the producer responds.

One sphere in which we need to be more flexible is wholesale pricing. It's inevitable that if I cannot have losses, I have to adjust these prices, which must be agreed to between firms. If I must be profitable and so must you, then we'll have to come up with a price that benefits both of us. Why must so many prices be decided by the Ministry of Finances and Prices?

But this implies that retail prices must also be flexible...

This is another matter. The transformations will be by successive approximations. First we have to change the type of exchange in the state sector, because the material economy continues to be: I assign you so many tons of fuel, even though you may not be efficient. Now, the price of fuel must be felt by the enterprise.

There needs to be flexibility in the prices, I repeat; but first the costs must be known. And the prices will need to change, this is life. But it's clear that the process of change will not be overnight.

Everything seems to indicate that we are moving towards a more rational socialist economic model. But in the immediate period ahead, until this process bears fruit, won't the updating involve difficulties and sacrifices?

We communists must be prepared to explain the situation that is brewing to the population, with sincerity. My understanding is that there will be an impact in 2011 and part of 2012. But we have no alternative but to straighten out so many things. If we don't do it, then we'll lose the socialism that has cost us so much and that we have given so much for. But in 2013 we'll start to see the benefits, of this I have no doubt.

Logically, with an economy that doesn't prosper, how can the social programs be sustained?

This is what happened in the last few years: much attention was given to the non-productive sector while the productive sector was abandoned.

You are one of the economists and accountants called upon by the Party and the National Association of Economists and Accountants to assist with the debates on the Economic Guidelines. Tell me, concretely, something that concerns you with regard to the old perception that predominates among many people.   

Precisely this material conception of the economy. If they talk about productivity, they do so in physical units per worker. This is one of the most serious problems: we have not been taking into account financial values, which are those that reveal the health of an economy. It's not the same when sugar is six [US] cents [per pound] on the international market as when it's 30. It's not the same for a country to sell sugar of the highest quality, as to search for a buyer for second or third-grade sugar.

Part 2

Translation: The geometry of democracy

Luis Sexto is one of Cuba's finest and most respected journalists. The 2009 recipient of the prestigious Jose Martí National Journalism Award, he is a professor of journalism at Havana University and has a regular Friday column in the Communist Youth daily Juventud RebeldeSexto exemplifies what could be called the critical renovationist current within the Cuban Revolution. Asked by Orestes Martí and Manual Alberto Rami in 2009 about his expectations for the Revolution in the next few years, he replied: 
The worst misfortune that could occur to Cubans as a people would be the collapse of the Revolution ... We know from our own experience and from the prophetic vision of some of our most illustrious leaders that the Revolution can perish, poisoned from within ... I see Cuba in revolution, but renovated, without the chains of dogma, trusting in the loyalty of its people and granting the people the means to defend and define their future. The future begins tomorrow. Time is short.
The geometry of democracy

By Luis Sexto, Juventud Rebelde, August 19, 2010

Translation: Marce Cameron

Returning from a break, I find a letter that obliges me to return to the topic of this judgment, or rather the lure of a delicate provocation: "Socialism cannot be built without popular control". I agree. And perhaps, as the reader who sent me the letter acknowledges, I could explain in greater depth what is meant by "the horizontality of socialist democracy", a phrase with which I concluded, promising to elaborate, in my July 15 commentary titled "Quicksand".

And moveable is, by chance, the theme of democracy, whose Greek roots speak of the people and their participation in the government and public life. In other countries — as we know — the people are only a factor in elections, which have become the strict synonym for democracy. Let's refer, therefore, to our democracy, of socialist intentions. And this goes beyond the classic definition of "government of the people, for the people and by the people". Because in socialism, as well as being the recipient of complaints and suggestions and the executor of decisions —subject and object — democracy implies that the people control and supervise governance. It is this role to which I refer when, in geometric terms, I allude to democratic horizontality as opposed to verticality.

According to a certain practice, verticalist methods reduce the effectiveness of socialist democracy. We could cite the [People's Power municipal government] accountability assemblies. Not a few have drifted into hurried exchanges of complaints and responses, which sometimes aren't really responses. And here and there the delegate, who submits to the judgement of the electors, considers, however, that he has to demand explanations from those who express needs that cannot be resolved for the time being. One may, of course, avoid sweeping judgements, absolute, but we can't ignore the loss of effectiveness of some of these assemblies — which are very characteristic of our Cuban political system — whose protagonist role has to engage the electors, not as a kind of wailing wall, but as the public square where imperfections in the community are addressed and explained.

Extending the analysis, we could ask if in the Municipal Assemblies of People's Power the delegates are aware of their mandate and power. Do they perhaps notice that this collective and democratic form of government arose as a guarantee that they cannot squander, distort, violate measures and laws without the electors pointing out, warning, criticising, in time, and condemning errors and deviations?

Faced with these deficiencies and inconsistencies, the correct approach would be, in my view, to recover the fullness  of these democratic spaces. In the present circumstances, in which the search for formulas that impel Cuban society towards the values of efficiency and effectiveness has been officially declared, it does not seem opportune to look for other options when, in reality, those that have been put in place are not being fully utilised.

And because I don't consider inevitable a fight between horizontality and verticality, I am for the welding together in solidarity of these planes. Both need to be sustained. A vertical line that is not cut horizontally in the middle implies the loss of equilibrium, like a knife blade that falls for lack of support. And the inverse, horizontality without verticality, floats in the air as if cut adrift.

This is, in geometric metaphors, the dilemma, which not only demands a response from the institutions of administration and government, but also in productive and labour relations. What did the assemblies of production and services really achieve? My experience suggests that not all of them functioned as a means of popular control, nor of trade union control, which is a variant of this; they remained, in general, half measures.

As usual, one voice above all others dictated what could be said and what should be silenced, in an administrative conception that exalted verticality and bureaucratic distance. Meanwhile, paradoxically, our mediocre mentality, conditioned by the rigidity of certain structures and concepts, showed itself to be not well suited to combining the different but complementary geometric lines and forms of popular control. It will have to be given, then, special consideration.

Wednesday, December 29, 2010

Comment: Understanding Cuba

Understanding Cuba is hard. Really hard. It takes a lifetime, if not two or three lifetimes, even for Cubans who live there. For the rest of us it's even harder. 

Like an onion, Cuba reveals itself in layers. Each layer exposes more complexity, subtlety and contradiction. Just when you think you've grasped it you realise there's more to it, that the apparently smooth surface is creased and dimpled like the face of an old cigar-chomping tobacco farmer from Pinar del Rio. The Revolution is enigmatic, idiosyncratic and constantly in motion. 

According to capitalist ideology, objectivity requires the renunciation of partisanship. From leafy academia professional Cubanologists pronounce Cuba's revolution to be an anachronism, a failed experiment, a departure from the rationality of the "free" market. Yet such detachment from reality is itself an ideological stance whose partisanship serves to prop up an obsolete social order: global capitalism.

You have to be something of a revolutionary yourself to really understand the Cuban Revolution. You have to strive to live a life consistent with its principles. Only then, as a partisan of the wider struggle for a socialist world, can you embrace Cuba's revolution as our own. Only then can we fully identify with its dreams, hopes, and illusions; frustrations and disappointments; achievements and failures.

So partisanship is necessary, but something else is also required: study. Like anything else, Cuba has to be studied in depth in order to be understood, and there's no substitute for this. For us in the English-speaking world the biggest obstacle is the language barrier. The most important contributions to the debate on how to renew Cuba's socialist course are, naturally, those of Cubans living in Cuba. These are not only the most influential contributions, since it will be Cubans living on the island who decide the Revolution's fate, they are also the most grounded contributions.

For decades critical views, apart from those of Fidel and a few other revolutionary leaders, and debates within the Revolution were hidden behind a veil of censorship and self-censorship. This is changing, for two reasons. One is Raul Castro's repeated calls for more public criticism and debate and his pointing out the harm done by excessive official secrecy, false unanimity and the stifling of differences. During the past few years there has been a gradual opening up of institutional spaces for ongoing debate and the Revolution's culture of debate has been maturing. 

The other reason is technological. With most Cubans able to access Cuba's intranet, a restricted version of the internet, and a relatively small but growing number able to access the full internet, the debate in Cuba is increasingly reflected online. The instantaneous and horizontal nature of the internet not only makes for a richer exchange of views among the participants, it also makes this debate more accessible to the outside world.

While Fidel's speeches, and those of other Cuban leaders on occasion, are translated into half a dozen languages, the English-language versions of Cuban publications such as Granma and Juventud Rebelde only scratch the surface. Many of the most interesting articles and commentaries, such as Granma letters to the editor and Luis Sexto's commentaries in Juventud Rebelde, are not translated. The aim of this blog is to make selected documents, commentaries and letters to the editor accessible to those who don't read Spanish.

Important as these are, to understand Cuba we need to read widely, beyond the official Cuban media. While they play a vital role in the revolutionary process, and are the obvious starting point, they do not and cannot — given Cuba's acute material limitations and the state of siege imposed by imperialism — reflect the diversity of opinion within the Revolution. Cuba's revolutionary opinionscape is like the electromagnetic spectrum: you don't want to limit yourself to what can be seen in visible light. Engagement with the full spectrum of opinion, of subjectivity, is needed to build up a balanced and nuanced understanding.

For example, the Havana Times website publishes what it calls "open-minded writing from Cuba". It translates commentaries and reflections on daily life by a small number of mostly young Cubans who are disillusioned with the Revolution but not, for the most part, hostile towards it, and who have been recruited as contributors, on a voluntary basis I presume, by the website's editors who live outside Cuba. Their criticisms — typically strident, whining and tinged with utopianism or cynical resignation, often both — are more or less from the left. As dissident leftists, they should not be confused with the real counter-revolutionaries such as Yoani Sanchez and her ilk.

These are intelligent and sensitive youth that the Revolution must try to win over through the renovation process. I can imagine some of them working through their frustrations by contributing to one of the new urban cooperatives that are to be established, perhaps a little cafeteria with a Bohemian ambience somewhere in the back streets of Old Havana. We might not like what they say, and we may disagree. It may hurt us to know that some Cubans think and feel the way they do, but to cast the young writers for Havana Times into the camp of the counter-revolution would be a grotesque error of judgement. It would be fall into the very intolerance that the Revolution has been striving to overcome. Theirs are voices that deserve to be heard.