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The New Cooperativism in Cuba
by William Waterman, Jr.

Copyright (c)
1995, 1998 by William Waterman, Jr.

With the collapse of Communist regimes in Eastern Europe, many of us looked hopefully to worker ownership and self-management as obvious key elements of a process which, while retaining the egalitarianism of the past decades, could transform those countries into genuinely democratic societies.We were disappointed.

In a most interesting development, however, the Communist government of Cuba has since 1993 been taking significant steps towards worker ownership and self-management in the form of a massive conversion of a major portion of its economy to a cooperative basis.

As part of a delegation of North American philosophers and social scientists I participated in two university conferences in Cuba during June 1995, where these developments were discussed, and visited some cooperatives.

Cuba's cooperative program is thus far restricted almost exclusively to agriculture.It appears that cooperatives have now become the dominant form of agricultural enterprise in terms of land area farmed. The cooperative program is part of a generalized effort begun in the early 1990's to stimulate the economy by moving away from a system consisting almost entirely of centrally directed state enterprises and promoting more autonomy.

State farms were dominant in Cuban agriculture for decades (although there always remained a large number of small private farms).Under the new model there are three basic types of agricultural enterprise, namely 1.) state farms, some of which will remain, 2.) two new types of agricultural production cooperatives, and 3.) small private farms.

While available statistics are not altogether clear, it appears cooperatives now farm about 52 per cent of Cuba's agricultural land, with state farms holding about 33 per cent and private farms 15 percent.

In Cuba today two types of agricultural production cooperatives are in operation:

  1. The Agricultural-Livestock Production Cooperatives ("CPA" in the Spanish abbreviation).Cooperatives of this type, established during the 1980's, are made up largely of small formerly private farmers who have been brought together, pooling land and resources to achieve higher productivity and returns.The CPA's own their entire means of production, including not only their buildings and equipment but their land as well.The CPAs' relative success appears to have influenced the Cuban leadership in embarking upon the much larger cooperative program involving the state farms, described below.
  2. The "Basic Unit of Cooperative Production" (or "UBPC" in Spanish abbreviation) is the new form into which most of the state farms, in response to their poor performance, have been converted.Unlike the CPA's, UBPC's do not own their land, which is leased to them by the state, but do own the rest of their means of production, i.e. buildings, equipment. etc.Furthermore they own the products of their work.Each worker in the UBPC is a member, with an equal vote at elections of officers and directors and at meetings.

While there is some variation in governance between different UBPC's, at the UBPC I visited with other members of the delegation the board included five directors elected by the membership, others serving on the board by reason of offices they held in the coop, including the president and an economist, and still others representing different segments of the work force on the farm, i.e. tractor drivers, planters and pickers, mechanics, etc.

The workers there were compensated according to their jobs, some by piecework, others by the hour.If they exceeded their quotas they earned more.Each worker received a regular payment described as a "down payment" (apparently similar to the "anticipio" at Mondragon) against his or her compensation for the year.

A UBPC's profits are by law divided at the end of the year into two equal segments, one for reinvestment and other needs of the coop, the other for distribution to the members proportionate to the salary they received during the year.At the UBPC we visited we were told the distribution for the fiscal year ended June 30, 1995 would come to several thousand pesos per member, and that the average member was earning between 500 and 600 pesos per month, as compared to the 300 to 350 pesos per month earned by a professional or university professor in Havana.If these figures were correct they were quite high; average earnings of UBPC members have elsewhere been reported at about 200 pesos per month.

Problems Faced by Cuban Cooperatives: A basic problem of Cuban cooperatives thus far is their limited independence.Each UBPC, though cooperatively owned, is still associated with one of the state enterprises.Sugar cane coops, moreover, can sell their product only to the State, affecting not only their independence but their income and financial condition.Because non-sugar coops can sell some of their produce on the free market they can often obtain more than the State's price and are thus generally in better financial shape.Reflecting this fact one Cuban opined at one of the conference sessions that "too much democracy" could not be allowed in sugar cooperatives, because if the members could choose freely they would all switch to more profitable crops.But because sugar is so crucial as Cuba's principal export this could never be permitted.

Another key difficulty is with the concept of ownership itself.It was openly noted as a problem by some of our Cuban colleagues that the state enterprises still considered themselves the owners of the coops and that conversely members of the new cooperatives had difficulty conceiving of themselves as owners.Given Cuba's decades of nearly exclusive state ownership and the attitudes reflected by the conferee who feared "too much democracy," this is not surprising.

In addition to these problems I should like to make some further observations.First cooperativization in Cuba is almost entirely limited to agriculture.Second the process of cooperativization itself, like all significant developments in Cuba, is very much under close state and Communist Party control.

I asked a Cuban colleague why there had been no significant effort to establish cooperatives in services and manufacturing.She responded that the government simply hadn't done that yet, although there was interest and indeed some modest steps had already been taken to establish coops in transportation.

I then asked why it should be necessary to wait for the government to act, suggesting that people should be able to act on their own.Why, for example, couldn't some individuals with skills in the building trades organize themselves into a coop to do building repairs (for which there is a crying need in Cuba) and simply file documents with the government to register the enterprise as a legal entity?

I was told simply that this could not be done.Besides, the professor asked, how would they get financing?Where would they buy their tools and materials?Many of these items are not made in Cuba and hard currency would be necessary to buy them abroad.

I asked why the National Bank or some other institution could not lend them money, noting also that in many countries with foreign exchange problems enterprises could apply to the authorities for release of foreign exchange to buy necessary items abroad; why not in Cuba?

My friend rolled her eyes and said these might be good ideas and they could be proposed, but it would be a long time, if ever, before they could be implemented.

This exchange and others, as well as the presentations and discussions of Cuban colleagues throughout several days of conferences, indicated to me how profoundly centralistic and government-referent the Cuban mentality is in dealing with matters of practical importance.The focus of all discussion is what government seeks to do and how the government's program is to be carried out.New ideas must pass a detailed and lengthy process of study by the Party and government before they can be implemented.Nowhere, it seems, is there scope for those who have an idea to simply try it on their own and see how it works.

But these are problems to be expected in a country with Cuba's history of almost exclusive state ownership of enterprise and highly centralized control.The stakes are high, perhaps Cuba's very survival as an egalitarian society, reinforcing a reluctance to move too rapidly.Greater scope for grass roots initiative might indeed lead dangerous initiatives to develop, given the corruption lurking offshore.

Upon reflection it seemed to me a paradox might be in the making.The still powerful and legitimate government and Party were promoting decentralization and worker ownership and seeking carefully to guide the process ahead, unlike the governments in Eastern Europe which simply collapsed when the time seemed ripe for such developments there.Could it be that the very support by this Party and government, long associated with centralized state ownership and even now shepherding the new plan in a centralized, controlled manner, might offer the best hope for successful transformation of a state-based economy into one of autonomous worker-owned enterprises, egalitarian and democratic?

Recent events have clouded such prospects.The Fifth Congress of the Communist Party of Cuba this past October came down strongly against further economic autonomy.History is, however, cyclical: economic results will influence further policy developments, and if the state sectors continue stagnant, Cuba may need to move forward once again towards further autonomy.Stay tuned!

William Waterman, Jr., is an attorney practicing in New York City. He wishes to thank Professor Carmen Diana Deere of the Department of Economics at the University of Massachusetts, Amherst, for reading and commenting upon this article. The author recommends that those wishing to pursue this subject further read Professor Deere's excellent article, "Reforming Cuban Agriculture," appearing in the October 1997 edition of Development and Change, vol. 28, pp. 649-69, from which some of the statistical and other factual material in the present article has been drawn.

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