New Contradictions in Cuba with the Development of Cooperatives

December 29, 2012 | Print Print |

Vincent Morin Aguado

Photo: Irina Echarry

HAVANA TIMES — Cooperatives are now being formed in Cuba in the service sector, which includes transportation, plus some productive sectors such as fishing and construction. Agriculture was the traditional area in which cooperatives existed, and now even these have greater autonomy from government control.

However contradictions are beginning to emerge between cooperatives and the small private companies of “self-employed workers” that were created months ago in the area of food services and other retail activities.

What’s on the horizon is an apparent struggle over market shares between these two competing forms of organizing work.

Individual self-employed workers are today experiencing the “adventures” of cafés, restaurants, small shops with various retail goods, stands where they sell a whole host of difficult to imagine articles and even the many mobile street-vending operations, with traders planted behind their push-carts.

These risk-taking business people pay high taxes, including those related to their income and their own retirement, along with those of any employees they might have. They improvise because their only assets are their homes, the sites authorized by municipal authorities for them to sell their goods, or the mode of transportation they might use to get around the city every day hawking their wares.

Now, the emerging cooperative system will be based on the leasing of premises that were previously sites of generally economically inefficient state-owned businesses, which were also highly criticized for the poor quality of services they provided.

The difference between these facilities and those of the self-employed is that these are properties that have been in existence for a long time (most of which were built before the revolution), are well located, and the quality of their construction meets commercial standards – though many look bad at first sight.

It’s naive to believe that these retail cooperatives won’t have financing for their activities. The cooperatives will be, preferably, people who previously worked in those establishments, although arrangements will be made to find financiers if one doesn’t exist among themselves or their families.

Such family members could include the over a million Cubans who live abroad, many of them established there for years, especially in the United States. Several thousand dollars or euros isn’t too much on the other side of those borders and here those funds could serve to renovate those business sites, buy merchandise and initiate a next stage of work.

Also, Western Union allows the direct and insured transfer of dollars from the US. Likewise, there’s no shortage of banking connections between the island and Europe to perform similar transfers of funds, not forgetting family visits or the well-known “mulas” (mules).

It will ultimately be safer to invest in a cooperative. These will be situated where there were previously a small state-owned cafeteria, for example, rather than one run out of one’s own living room, sacrificing the family’s living space, in addition to the difficulties in adapting one’s home to so-called “marketing requirements.”

Particularly in food services, the products for selling are similar for cooperatives and self-employed workers (with the differences explained above, obviously favoring cooperatives).

It will be impossible for the government to ignore the hundreds of thousands of workers who will transition into cooperatives, though for years they were its faithful and stoic workers paid extremely low wages. In fact, today many of them are close to the retirement age.

What will the current Ministry of Domestic Trade do with the substantial allocation of centralized resources, generally wasted so far, that were supposed to go to those establishments that will soon host cooperatives?

It’s evident that many of the current “self-employed workers” will go under in the competition with this new form of economic partnership. Those who will prevail are the ones who have the advantages of good locations and facilities where they live, financing and of course creativity as business operators.

In the end we will have many people winding up disappointed, closing their small businesses after having started them with so much effort and hope.

How will the socialist state respond? The prevailing situation and its consequences are the result of government policy over the past fifty years. Don’t forget that this is a system that has not given up on seeing itself as the representative of all workers, with a single party aiming to act as a guarantor of the political organization of society.

We’re talking about hundreds of thousands of private self-employed workers with the number of cooperative members that will exceed those by twice the number.

The expansion of autonomous and collective production associations as a new economic sector is a necessity given the failed state management of small and medium-sized enterprises for over four decades. This step forward is inevitable – as are the contradictions that will emerge.
—–
To contact Vincent Morin Aguado, write: morfamily@correodecuba.cu


What's your opinion?

  • Grady Ross Daugherty

    Good article, Vincent.

    I think many of the self-employed workers of whom you speak would do well to become cooperative entrepreneurs. That is, by using their guts and expertise to organize industrial and commercial cooperatives, and compete effectively thereby for “market share.” It is not necessary for one person to own every small enterprise, hoping to make an enormous living while others just scrape by.

    There are always “contradictions” in a competitive marketplace. And there will be a great deal of disappointment for those who are forced under, both individuals and cooperatives. But what should be appreciated is the loosening of the grip of state monopoly ownership, and how this loosening can give birth ultimately to a “state co-ownership” form of socialism. It is this form, which to date is only theoretical, that is the hope of human kind.

    • Griffin

      I would expand that and say there are always contradictions in any economy, but in a market economy the contradictions are generally visible and tend to resolve themselves. In a State-run economy the contradictions are invisible and tend to ossify into inefficient, corrupt and decaying systems.

      What Vincent is writing about isn’t so much a contradiction as it is the economic “competition” between individual self-employed and co-operative enterprises. The future success or failure of these two sectors of the economy will depend upon the degree of autonomy and authority they each have for making the business decisions they will have to work with.

      • Moses

        Good point. I find that socialists see competition as a negative in macroeconomic theory so as a result they fail to see the benefits that competition between worker-coops and self-employed will bring. Of course, this competition also demainds that there will be some businesses that fail just as there are successful businesses that will expand. In the end, by virtue of competition, Cubans will benefit through more well-managed businesses that will employ Cubans and produce a product or service Cubans can be proud of.

        • Grady Ross Daugherty

          Moses and Griffin, I think our standpoints are similar in this regard, that we despise state monopoly enterprise and see private property and the trading market as potentially beneficial. Where we differ perhaps is that I believe these two institutions are the basis of authentic socialism, in Cuba, the US, and China, et cetera;
          whereas–correct me if I’m wrong–you gentlemen support the state monopoly capitalism of the banks and military-industrialists of the present-day, and believe you are patriots for doing so.

          I believe in private property rights, and a free, but conditioned, trading market. You two seem to counterpoise the state monopoly socialism of Cuba to a Libertarian-type idea of a free market capitalism that does not exist and probably has never existed.

          • Griffin

            You are mistaken in your characterization of my political and economic beliefs and values. Politically I support the liberal democratic system expressed as a constitutional republic. I believe in human rights and freedoms. Economically, I support private property and free enterprise, within the reasonable limits and regulations imposed by a democratically elected government and consistent with constitutionally protected rights and freedoms.

            Your pet project, as best as I can make out, is an ideocentric hodge-podge of notions, buzzwords and crackpot economic theories. You seem like a nice fellow, but I cannot see any reason to take your philosophy seriously.