Even Cuba finally gets it: Capitalism works

Cuba's tacit admission that its communist economy is failing marks the end of an era.

It follows the eclipse of similarly stultified economies in three other lands of lingering communist persuasion – China, Vietnam, and North Korea. All have either moved, or appear to be moving, to free, market-based economies while retaining a communist structure to continue harsh political control.

Cuba may be no exception. It recently announced plans to dump hundreds of thousands of government workers into a suddenly ­authorized private sector. That doesn’t mean democracy is right around the corner. Though the brothers Castro, Fidel and Raúl, may soon be passé, some Cuba-watchers expect their successor may be a tough, but as yet unidentified, general from the powerful military who will use the Communist Party structure to maintain authoritarian rule.

So while some international critics, like the delusional Iranian President Mahmoud Ahmadinejad, continue to rant against capitalism and America, aging communist regimes seek the fruits of capitalism’s prospering systems while retaining power with communism’s political infrastructure. It is an intriguing period in history.

Signs of reform

During Fidel’s long absence for health reasons, his empowered brother Raúl has hinted at modest reforms. He has ordered the release of a number of political prisoners. He has expressed impatience with the inefficiency of the labor market and sent Cuban delegations to Russia, China, and Vietnam to study their departure from communist economic models.

In August he declared in public: “We have to erase forever the notion that Cuba is the only country in the world where one can live without working.” This was a reference to the fact that most of the population is employed by the state, and with the low wages they are paid – on average $20 a month – many people do not work very hard. There is large-scale moonlighting, dabbling in the black market, and reliance on money sent from abroad by Cuban exiles. Now Raúl is setting free about 10 percent of the state’s workforce, encouraged to launch small businesses or otherwise fend for themselves.

Meanwhile Fidel, in a interview with an Atlantic Monthly reporter, let slip his view that the Cuban economic model has failed, hastily but not credibly claiming later that he had been misunderstood.

Looking to Russia, China, and Vietnam

What the brothers Castro learned from studying Russia, China, and Vietnam is that all have supplanted the old communist economic systems with consumerism, free markets, and privatization in varying degrees, while China and Vietnam have kept the state in firm control. Even North Korea, whose communist-run economy has left many of its citizens hungry and despairing, has rehabilitated a former prime minister who was fired three years ago for promoting market-oriented reforms. Pak Pong-ju re-surfaced from obscurity in August, with restored party status, stirring speculation that economic reforms and pragmatism are in store. This suggested policy shift comes at a time when Kim Jong-il, the North Korean leader, is engineering the political succession from himself to one of his sons, the 20-something Kim Jong-un.

Vietnam, while under strict Communist Party political control, has been steadily transforming from a centrally planned economy to a ­ market-oriented one, with rapid growth stimulated by the traditional entrepreneurship of its people.

And despite the Communist Party’s tight hold on the reins of political power, China’s free-market economy has become the second largest in the world, exceeding even Japan’s. Its populace of industrious millions has built roads and high-speed railway networks and factories and whole manufacturing cities, turning out cars – and now electric cars – and electronics, machinery, and consumer goods for export and to meet the demands of its own increasingly affluent citizens.

All this freeing up of centralized economies that have proved inept is of course a step on the road to the inevitable: namely, the political freedoms that the respective regimes fear, and – ultimately – democracy. We must hope that such progress will come sooner, rather than later.

John Hughes, a former editor of the Monitor, writes a biweekly column.