State enterprises, the backbone of Cuba’s socialist economy, are being overhauled.
Perfeccionamiento empresarial, the policy of state enterprise reform, has no exact analogy in capitalist economies and is not borrowed from other socialist countries’ models of reform.
Perfeccionamiento empresarial is not capitalism, and it is certainly not privatization, although many in Cuba call it a superior alternative to the privatizations that swept Latin America in recent years. It is an initiative to improve the socialist state enterprise, but the official guidelines to the process define its “socialist principle” as, “From each according to his ability, to each according to his work.”
Cuba’s enterprise reform is a search for profitability, efficiency, and quality that features intense selfevaluation and in theory opens the door to re-engineering at all levels of the business. It comes at a time when state enterprises, which number over 3,000, are going without subsidies and must sink or swim on their own by producing to satisfy market demand. It requires Cuban workers and managers to have skills and outlooks radically different from the previous generation’s; they must operate on their own in markets, not merely as subordinate units of government ministries. It intends to shear layers of bureaucracy from everyday economic decision making – so much so that it represents the death knell for Soviet-style state planning. It seeks to create a chain of profitable, autonomous, agile state enterprises.
To a capitalist, however reformed these enterprises are, they will always lack the crucial ingredients of private ownership and complete freedom from government guidance. To the contrary, Cuban officials say this is a crucial advantage. State ownership preserves the enterprises’ socialist essence. But there’s a big “if” hanging over all the foregoing. The farreaching effects of enterprise reform will only come about if it is implemented fully, and its implementation is only now beginning. There is no sign that Cuba’s government is wavering in its commitment, but the process is moving slowly and cautiously. As in any process of change, one can imagine sources of opposition – in this case, from government or Communist party officials whose authority is passing to executives in individual enterprises. Inertia could stall this reform. Layoffs and unemployment could render it politically unpalatable.
Therefore, this paper does not attempt to deliver a verdict on perfeccionamiento empresarial. Rather, it offers a snapshot of the process in its early stages and discusses its implications for the rest of Cuba’s economy.
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