As of January 1, the Cuban government has begun to implement an economic plan whose main measure is the elimination of double currency in the country: the non-convertible peso and the convertible peso, which was exchangeable for dollars at a rate of 1=1. Now there will only be a single currency that will be valued at 24 pesos per dollar, which means a mega-devaluation with strong impacts on all the other variables of the economy, especially on salaries.
By Alejandro Iturbe – January 13, 2021
The international bourgeois press applauds it as a harsh but necessary measure to “advance on the right path to capitalism”, although they still consider it as a transition from a “socialist economy”. One of these media describes it as “A paradigm shift”.
In an apparently opposite approach, the official Cuban media recognize that this is not a minor measure but a fundamental one: “These will not be superficial transformations”. But they defend the drastic measure and consider it inevitable due to the “permanent pressure of a blockade that is more than pure propaganda” and “the impact of the pandemic”. In this context, they affirm that these changes take place within the framework of the 1959 Revolution (“a Revolution for everyone’s well-being”) and, therefore, “there are reasons for optimism”. Although the word “socialism” has disappeared from the text, the whole tone of the article conveys the idea that it is a transformation within its existing parameters.
We believe that both approaches are wrong because they start from a false premise: that the Cuban economy was still “socialist” at the end of 2020. We, in the IWL, in opposition to the immense majority of the world left, have affirmed for more than two decades, that capitalism was restored in the Island. In this conceptual framework, we consider that the measures adopted as of “day zero” represent a ferocious capitalist adjustment plan applied by the government of Miguel Díaz-Canel and the Cuban Communist Party, on the workers and the Cuban people.
The revolution and it’s conquests
To sustain this assessment, it’s necessary to make a brief review of Cuban history since the 1959 Revolution, which expropriated the imperialist enterprises and the Cuban bourgeoisie (which fled en masse to Miami). Cuba thus became the first workers’ state in Latin America, in the very “backyard” of U.S. imperialism, and Fidel Castro and Che Guevara the reference for millions of fighters.
As a result of the application of the centralized and planned economy by the State, Cuba ceased to be a Yankee semi-colony, and the Cuban people achieved very important conquests, such as the elimination of hunger and misery, and of scourges such as prostitution.
There were great advances in the field of education, which was considered one of the best in the world, and the creation of an excellent public health system, with the largest number of doctors per thousand inhabitants in the world, and a pharmaceutical industry of its own, independent of the large private conglomerates of the imperialist powers.
The magnitude of this last conquest was so great that even 25 years after the capitalist restoration, and having been deteriorated, this system was able to defeat the coronavirus and will now produce its own vaccine for the entire population.
While we vindicate these great achievements of the revolution, it is necessary to say that the Cuban leadership built a bureaucratic State, without real democracy for the workers and the masses, conforming to the Stalinist model. The Cuban workers never led the Cuban State, but the bureaucracy of the Communist Party did.
Furthermore, the Castro leadership remained within the criteria of “socialism in one country” proposed by Stalinism since the second half of the 1920s, against the international socialist revolution proposed by Marxism since the 19th century. That Stalinist model ended up failing and, as anticipated by Leon Trotsky in his book The Revolution Betrayed, led to capitalist restoration not only in the former USSR, but also in Eastern Europe, China and Cuba.
Although it is not the central objective of this article, this conception of “socialism in one country” meant that it was Castroism’s own international policy that contributed to the isolation of the Revolution and the survival of imperialism. For example, when he told the Sandinista leadership, in 1979, “not to build a new Cuba in Nicaragua” but to remain within the framework of capitalism.
The special period and capitalist restoration
In 1990, the fall of the USSR and the capitalist restoration in Eastern Europe meant a hard blow for the Cuban economy, centered on the export of sugar and its exchange for oil and technology with those countries. In this context, the so-called “special period” was initiated and the Castro leadership began to develop a policy of capitalist restoration and the dismantling of the economic bases of the workers’ state.
The main milestones of the restoration were:
- The Foreign Investment Law of 1995, which created “joint ventures” managed by foreign capital. Investments were directed especially to tourism and related branches but were later extended to other sectors, pharmaceuticals and, recently, oil.
- The State’s monopoly on foreign trade, exercised until then by the Ministry of Foreign Trade, was eliminated: both State-owned and mixed enterprises can freely negotiate their exports and imports.
- The dollar became Cuba’s de facto currency, coexisting with two national currencies: one “convertible” in dollars and the other “non-convertible”.
- Production and commercialization of sugar cane was privatized, through the “basic cooperative production units” (80% of the cultivated area). Their members do not have legal ownership of the land, but share the profits obtained. In 1994, the “autonomous agricultural markets”, whose prices are determined by the market, began to operate.
What we have just analyzed had nothing to do with the NEP (New Political Economy) applied in the USSR between 1921 and 1928. It is something qualitatively different because it meant the destruction of the essence of the Cuban workers’ state: centralized state economic planning was eliminated and the Ministry that carried it out was dissolved. In its place, a new capitalist State emerged in which the economy functions according to the capitalist law of profit.
The entry of imperialism
The Cuban capitalist restoration was essentially carried out by means of foreign investments, especially those of European and Canadian imperialism which today dominate the most dynamic and strongest sectors of the economy. Cuba was losing the autonomy achieved with the construction of the workers’ state and began an accelerated process of being recolonized.
At the same time, a new “national” bourgeoisie emerged from the State apparatus and the Communist Party, basically for the control of the conglomerates of state enterprises that remained. At the center of this process was the Castro family itself. Forbes magazine estimated that, at the time of his death, Fidel had a fortune of nearly 900 million dollars.
The Cuban economic structure has changed a lot in the last decade: it stopped being based on sugar and concentrated on services which, in 2004, represented 73.6% of the country’s GDP and 51% of employment. That same year, “foreign exchange earnings associated with tourism” almost equaled the figure for exports of physical goods (more than US$2.1 billion). If medical and other revenues are added, services generate more than 60% of the foreign exchange coming into the country. Among these “services” should be included the “temporary export” of highly qualified Cuban doctors, which yielded important income to the Cuban capitalist state.
In that framework, 2016 saw the visit of then President Obama to Cuba and his interview with Raúl Castro. On the one hand, diplomatic relations between the two countries (suspended for decades) were resumed and, on the other hand, the foundations were laid to eliminate the trade and investment blockade declared by the US in 1962. This fact was presented by the defenders of the Castro-Chavista current as “a triumph of the revolution”. However, its real meaning was completely different.
In the first place, since the restoration of capitalism in Cuba, an intense debate had opened up within the US imperialist bourgeoisie. On the one hand, there was the anti-Castro bourgeoisie residing in Miami, with strong ties and a lot of weight within the Republican Party, which set two conditions for resuming relations with Cuba (and freeing trade and investment): the fall of the Castro regime and the guarantee of the return of the properties expropriated by the Revolution.
On the other hand, various sectors, mostly linked to the Democrats, but also with a voice within the Republicans (such as Cuban-born Senator Mark Rubio, who participated in the visit), saw how excellent business opportunities were being missed in a country so close geographically, in areas such as tourism, finance, agricultural production, sale of industrial products, etc. Opportunities that were being exploited by European countries (especially Spain). In fact, some were already “cheating” the legislation in force in the USA and were making investments “camouflaged” behind Canadian companies.
Secondly, the Castro regime’s project is to transform Cuba into a destination for US capital, a semi-colonial recipient of important imperialist investments a few miles off the coast of Miami. With a part of those investments dedicated to tourism and health, and another to the ” industrial duty free zone” created in the Mariel port in 2013. And that this process was done without changing the Castroist political regime and while respecting the properties of its top members, now at the service of administering a semi-colonized capitalist country.
Obama responded positively in both aspects. On the one hand he said: “We want to be partners” (and we all know what this means for imperialism). On the other hand: “Cuba’s destiny must be defined by the Cubans” and “we accept the existence of two different systems”. In other words, as long as we are guaranteed the handover of Cuba, we will not question the Castro regime.
Two obstacles: Trump and the pandemic
That was the reality and the dynamics in 2016. From then until today, two obstacles interfered with the Castro regime’s plan. The first one was the triumph of Donald Trump, who in order to maintain the alliance with the anti-Castro bourgeoisie living in Miami, reversed the policy promoted by Obama… and everything froze.
On the other hand, the pandemic and the restrictions on international travel meant a halt in the flow of dollars entering the island through foreign tourism. With this, the whole economy suffered a blow, which in a deep analysis, was already working with the dollar as the real currency. For example, a BBC analysis of the recent measures states: “Specialists believe that Cuba is undergoing a process of devaluation of its currency that accentuates an increasingly frequent behavior among Cubans: the desperate search for dollars”.
This is the real underlying reason for the “day zero” plan: the temporary strangulation of a project of surrendering the country to imperialism due to a shortage of dollars. The US blockade is a real but secondary element in this reality. It is an understandable crisis, typical of a semi-colonial capitalist country, and not of a “socialist fortress under siege” as the defenders of the Castro regime argue.
An adjustment in the works for many years
With this framework we can understand much better the meaning of the plan of measures launched at the beginning of this year. We have described it as a “fierce capitalist adjustment plan”. But before analyzing it, it seems important to point out that this is not the first adjustment plan applied by the Castro regime since the restoration.
For example, in 2011 it began the application of a massive layoff plan for State employees: at that time, it was estimated that it could reach 1,300,000 people. For several years now, the number of beneficiaries of the so-called “supply booklet”, through which Cubans could purchase basic products at subsidized prices, has been restricted. Products that, without the booklet, could only be acquired in the black market at much higher prices.
This last point was essential, since in fact, Cuban workers were divided into three segments based on the way in which they received their salaries. The majority of state workers (and a whole section of workers in small enterprises and private businesses) received non-convertible pesos: they were the most disadvantaged, because the prices in the “free markets” were fixed in dollars. They managed to survive thanks to the supply book.
A minority sector of state workers were paid in convertible pesos and thus had easier access to the black market. Many, such as a sector of doctors, supplemented their income with services “under the table” to foreigners who came to the island for treatment. Finally, workers linked to international tourism (such as hotels and certain restaurants) were able to receive dollars directly from foreign visitors.
The truth is that within the framework of a wage structure legally differentiated into 32 levels, the Cuban National Statistics Office itself reported that the official minimum wage, until these measures, was less than 20 dollars and the average wage in the country was 37 dollars.
The situation of the working class and the Cuban people as a whole has deteriorated dramatically since the capitalist restoration. Anyone who has traveled and seen reality without “ideological blinders” could verify this. Among other capitalist scourges, prostitution has returned.
It is also reflected in Cuban literature itself. Leonardo Padura, who became world famous for his book The Man Who Loved Dogs, had previously written a saga of novels starring a former policeman now dedicated to buying and selling books. In them, behind their specific plots, this social degradation can be perceived as a framework.
The central measure of this new plan is the monetary unification and the legalization of the complete dollarization of the economy. As we said, the new currency (now convertible) starts with a rate of 24 pesos per dollar. At the same time, an increase in the minimum wage is established, which would set it, as a starting point, at an equivalent of almost 85 dollars.
But this, which might seem a small but real increase, is not so. On the one hand, the complete liquidation of the ” supply book”, that is, the unification in a single free market of all basic products, has already been announced. With this, the relief that this book represented for many popular sectors will come to an end. The argument for such measure could come from any Finance Minister of a neo-liberal bourgeois government: “It is very difficult to subsidize 100% of the population because in this way you protect those who contribute and those who do not”, said one of the officials who announced the plan.
On the other hand, specialists agree that these measures will provoke an inflation of 160%, which will not only have an impact on the purchasing power of wages but, inevitably, on the value of the dollar . With that inflation and a devaluation to cover it, the minimum wage will quickly fall back to less than 34 dollars, now without subsidies on food and basic products.
As they stop talking to deceive the workers and the Cuban people, Castro’s high officials begin to tell the truth about the “zero day”: “the increase in pensions and social assistance must be carried out maintaining a minimum of macroeconomic equilibrium” and just like any orthodox capitalist economist: “the greatest risk of financing a budget deficit is that of inflation, because money that was not created by the real economy is put out on the street” .
We have said that “Day zero” was a ferocious adjustment plan launched by the Díaz-Canel government with the same objective as those applied by other bourgeois governments: to unload the cost of the crisis on the backs of the workers. But it is necessary to advance even further in this analysis: like those governments, it wants to lay more strategic bases for its project of consolidating a new and deeper level of exploitation of the workers, at the service of imperialist colonization.
The Cuban government gives all the guarantees to the imperialist companies to exploit the island’s resources, it offers them the possibility of hiring highly qualified labor paying the lowest wages on the continent and, along with that, the State guarantees those companies that workers will not strike or make claims because they are forbidden to organize outside the CP or the official unions. A paradise for imperialist investments, which the Castro regime expects to resume after the pandemic and to be extended to the U.S. bourgeoisie, in the perspective that Joe Biden will resume Obama’s policy.
What should be the program for Cuba?
We have tried to show for more than two decades that Cuba has been a capitalist state in an accelerated process of semi-colonization. In that framework, its regime must be defined as a capitalist dictatorship, without democratic freedoms for the workers and the people and with repression of the different opposition manifestations.
In the face of this reality there are basically three programs. That of imperialism is, as we have seen, “to advance along the good road of [colonized] capitalism”. In that sense, there is no hurry to remove the current Castro regime, and the fortunes accumulated by its top cadres will be respected. In that framework, especially European imperialism, asks them to open some ” relief valves” to prevent the boiler from exploding.
The second program is that of the defenders of the fable of the subsistence of Cuba as the “last bastion of socialism”. The conclusion is the unconditional defense of everything the Castro regime does, both of this ferocious adjustment plan and of the repression of all opposition demonstrations with the accusation that they are ” imperialist provocations”.
The third program is the one that we socialist revolutionaries must raise. It is impossible to develop it here in all its depth but we believe that, basically, it arises from the combination of answers to three central problems: the living conditions of the working class, imperialist colonization, and the dictatorial character of the regime.
If the analysis we have developed is correct (that is, if Cuba has been transformed into a capitalist country in the process of economic colonization), the strategic axis of the program should be the need for a new workers’ and socialist revolution to develop in the country, to rebuild the bases of the workers’ state destroyed by Castroism. Within this program, the struggle against imperialist domination, the concrete measures applied to facilitate it and its consequences on the standard of living of the workers and the people of Cuba are of central importance.
Today, as in 1959, the real task is to free ourselves from imperialism. The Cuban independence achieved with the workers’ state has been lost. To recover that independence, it is necessary to carry out a new social revolution that expropriates the European and Canadian enterprises and capitals (and to prevent the massive irruption of the Americans), in the same way that, to achieve it, it was necessary to expropriate Yankee imperialism and the “worms”. The profound difference with the process initiated in 1959 is that today this means fighting against the policies of the Castro regime.
Closely related to this, it is necessary to raise the rejection of the adjustment plan contained in the “zero day” and the demand for a minimum wage that covers, in its equivalence in dollars, the real cost of the necessary basket of goods for a working family. And closely linked to this issue, there is also the need for the right of workers to form independent unions and the right to strike.
Both processes lead us to clash head on and fight against the Castro regime and the Díaz-Canel government. We defend the right to form political parties other than the CP. In this, we include not only the right for revolutionary parties, such as those that make up the LIT-CI, but also for reformist organizations such as Podemos or Syriza. For those who accuse us of defending liberties also for the bourgeoisie, we reply that the imperialist bourgeoisie already has and will have all the rights to exploit the Cuban workers and to obtain great profits in the country, because of the agreements made by the Castro government. We defend freedoms for all, so that the workers can better fight against this capitalist exploitation and against the Castro dictatorship. This struggle can only be carried to the end with the overthrow of the Castro regime, which absolutely prevents them.
With respect to the anti-dictatorial struggle and for democratic freedoms for the workers and the masses, we can say that the Cuban situation is similar to the struggle against other capitalist dictatorships. For us, the fall of this regime through the action of the masses would be a step forward and would open better conditions for the strategic struggle for the workers’ and socialist revolution.
Those freedoms will not come from the hand of imperialism which, ultimately, prefers for now to operate and negotiate with the Castro regime. Much less from the “gusanera” of Miami, expelled with the 1959 revolution. It is a struggle that must be intimately linked to the construction of a new Cuban workers’ state, and with it, the recovery of the conquests that were lost or are being lost. In this task, the Castro regime (Díaz-Canel included) is the immediate enemy to fight.
This proposal leads us to the need for unity of action with middle sectors that also fight for democratic freedoms. For example, the one we carried out a few years ago with plastic artist Tania Bruguera, persecuted by the regime . Or our solidarity with what has been recently known as ” The applause revolution” . For us, these are not counterrevolutionary sectors but a progressive democratic claim of middle sectors, intellectuals and young people.
Some final considerations
These conclusions and proposals may be shocking for the vast majority of leftist militants, educated in the vindication and defense of what was the only workers’ state in Latin America, and of the just prestige that the Castro brothers (especially Fidel) had earned for leading that revolution. We were part of that generation and great admirers and defenders of the Cuban revolution. But, as Marxists, we cannot base our analyses and characterizations or elaborate our policy based on sentimental reasons but on the facts of reality, however crude they may be.
We prefer to base ourselves on two elements present in Trotsky. The first is his elaborations in The Revolution Betrayed to which we have already referred, which allow us to understand what is happening in Cuba. The other is the criterion expressed in the “Transitional Program”: “To tell the truth to the masses, however bitter it may be”.
 Sobre este tema, ver la transcripción del debate realizado en el Foro Social Mundial de Porto Alegre, en 2001, entre la dirección de la LIT-CI y dirigentes cubanos en: https://litci.org/es/debate-de-la-lit-ci-con-los-dirigentes-cubanos-2001/
 On this subject, see, among many other materials, the magazine Correo Internacional 48, July 1990 (first epoch) and the magazine Correo Internacional 20(third epoch), July 2018.
7] The data are taken from the article cited in note 3.
8] In 2005, there were 258 companies associated with foreign capital. The countries with the largest presence are Spain (77 companies), Canada (41) and Italy (40). Data extracted from the article Foreign Companies in Cuba, by journalist Nelson Rubio.
10] In 2006, foreign trade and income from tourism and services amounted to some 10 billion dollars, almost a third of the country’s economy (data from the Central Bank of Cuba).
11] See article in note 4 and https://litci.org/es/menu/especial/autores/medicos-cubanos-una-conquista-de-la-revolucion-del-59/.
12] On this subject, see: https://litci.org/es/sobre-la-visita-de-obama-a-cuba/.
14] https://www.bbc.com/portuguese/internacional-55516428.amp, source in Portuguese, translated by us.
16] Data extracted from https://www.dw.com/es/cuba-quintuplicar%C3%A1-el-salario-m%C3%ADnimo-como-parte-de-su-reforma-monetaria/a-55913122#:~:text=The%20ministry%20establishes%2032%20scales,state%20Office%20National%20of%20State%20C3%ADsticas.
17] We recommend reading, in particular, his tetralogy The Four Seasons and other works such as The Mist of Yesterday.
18] See note 1.
21] See various articles in https://litci.org/es/?s=tania+bruguera.
22] On this subject see, among other press articles: https://www.periodismodebarrio.org/2020/12/la-revolucion-de-los-aplausos/ and https://www.lavanguardia.com/internacional/20210103/6163004/revolucion-aplausos.html