Reportage. The approved reform is potentially the first step towards a mixed economy, in which, together with the state sector, private entrepreneurs and cooperatives operate with the same structural importance.

Cuba dramatically expands private work, allowing up to 2,000 activities

“Good news in these difficult pandemic times,” says Arquimedes Torres, a craftsman who makes furniture from bejuco, a kind of wicker. Until Friday, his business was semi-clandestine, like part of that of his neighbor Ramiro, who grows and sells medicinal and ornamental plants. On that date, the government announced a substantial increase in the scope of activities of Trabajadores por cuenta propria (‘independent workers,’ TPCs), a euphemism behind which private enterprise is often disguised. This is a long-awaited step, because from the 127 activities that were previously allowed for TPCs, the number of productive sectors in which private individuals can operate has risen to 2,000. This includes Arquimedes and Ramiro.

According to Labor Minister Marta Elena Feitó, the measure “will favor the economic and social development” of the island. Development and increased productivity, especially in the agricultural sector, are the basis of the socialist government’s policy to deal with the devastating effects (an 11% drop in GDP last year) produced by the policy of economic suffocation of the island adopted by former President Trump, as well as COVID-19, whose second wave is hitting Cuba hard. The 617,000 independent workers represent 13% of the total workforce.

But if one also takes the number of workers employed in the private entrepreneurship sector (1,600,300 in 2018) as a measure, the proportion rises to 38% of all employment that produces goods and services. If the private sector has achieved this with a drastic limitation to 127 activities (and with other obstacles such as the lack of a wholesale market), it is clear that it is by no means a marginal phenomenon.

Thus, the approved reform is potentially the first step towards a mixed economy, in which, together with the state sector, private entrepreneurs and cooperatives operate with the same structural importance. One hundred twenty-four activities, not yet specified by the government, will remain excluded from the TPC system. But they will presumably concern the “sensitive” sectors: defense, media, healthcare and basic energy.

Although an economic measure, the decision to open up to the private sector—or not—has always had a political significance in Cuba after Castro’s revolution. In 2013, after the Sixth Congress of the Cuban Communist Party had given the green light to a series of economic-social reforms (the so-called Lineamentos), Raúl Castro publicly argued for the need to change “the political vision” that existed towards TCPs, eliminating prejudices towards private entrepreneurs.

Since the end of the last century, both the issue of foreign investment and independent work were seen as “a necessary evil” to tackle the economic crisis. An “evil” that was never fully stomached by the orthodox wing of the Communist Party, which saw the TCPs as a kind of “Trojan horse of capitalism.”

So they proceeded with steps forward and steps back, according to the balance of the political leadership: with liberalizations subsequently limited by restrictions and trabas (obstacles) aimed at locking private individuals into the uncomfortable role of “fellow travelers.”

The decision to extend the space granted to the TCPs, and in such a significant way, confirms that “if we want to move towards the future” (Raúl Castro), the private sector, like foreign investment, must be considered “strategic” for the island’s economic development, while maintaining the goal of “prosperous and sustainable socialism.”

The new measure adopted by the government also goes in the direction outlined by the Tarea ordenamiento economico, which came into force on 1 January. The reform provides not only for the elimination of dual currency circulation and a fixed exchange rate of the Cuban peso with the US dollar (one dollar for 24 pesos), but also a progressive autonomy of state enterprises—which will have to be active or close down—and an important role for the provinces and municipalities.

These will decide on the granting of new licenses to private individuals, after examining their proposals. The ability and intelligence of local administrators to “facilitate” the process of creating new TPCs will be a factor on which the prosperity of their territories will partly depend: improved economic revenues for families, more employment, better services, etc. According to economist Triana Condovì, opening up to the private sector would also serve to reduce the current trend of emigration of the high-skilled workforce to other countries that offer better earnings.

The next step in the “new socialist economic model,” according to economist Juan Valdés Paz, should provide a legally defined space for the private sector: essentially a law for micro and small businesses (Mpymes). The development strategy should adapt to this new ownership structure, while maintaining the predominant role of the state form of production.

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