Finding Our Bearings in the Stormy Seas of Cuba’s Food Industry (Part II)

Finding Our Bearings in the Stormy Seas of Cuba's Food Industry (Part II)
November 13, 2014
"In the market, the price of goods is the outcome of rivaling forces,
and the law of value cannot become fully functional without a completely
free market." (Ernesto "Che" Guevara, Critical Notes on Political
Economy, 2012)
Vicente Morin Aguado

HAVANA TIMES — In my previous post, I depicted the monster that our
agricultural and livestock market is today. It is naïve to think that
such an abomination could function in accordance with the universal laws
of supply and demand. We are dealing with a deliberate distortion of
this economic category, which came into being with our first
civilizations and was considered the devil himself in our efforts to
forge the saintly "New Man", the pillar of communist construction
proclaimed by Che Guevara.

Below is an opinion expressed during a seminar sponsored by the Center
for the Study of the Cuban Economy (CEEC), held on October 14 in Havana,
a gathering reported on by Reuters but passed over in silence by the
local press:

"In one way or another, our State-command culture (production and trade
organized by and for the State) will have to begin moving towards a more
open conception by and for society." (Cuban economist Jorge Mario Sanchez).

The control over monetary and trade relations also constitutes one of
the most efficient tools used by authoritarian socialism to survive its
continuous failure to meet production plans. In the book quoted above,
the guerrilla leader, paradigm of the authentic communist, added: "we
believe, but are not entirely certain, that the basic law of socialism
is the law of planning."

Before enumerating the reasons that prevent a drop in prices in Cuba's
food market, it would be advisable to recall the six components of this
complex system, outlined in part 1 of our analysis:

Rationed State Market (MRE), Parallel State Market (MPE), Hard-Currency
Stores Market (TRD), State Agricultural and Livestock Market (MAE),
Offer and Demand Market (MOD), ad Black Market (MNI).

These are the arguments:

- The dismemberment of the six components, manipulated by the
authoritarian State. There is no commercial freedom. The renowned
university professor and economist Juan Triana made the following
remarks on this issue during the CEEC seminar:
"The cost of failing to recognize the importance of competition to
development is a growth rate beneath our potential, the improper
allocation of resources, and productivity and efficiency rates below the
country's possibilities."

- To produce food means to unleash the productive forces of the
countryside. Cooperatives and individual farmers must be freed from
government intervention and State companies must be granted true autonomy.
- To get this engine (essential to all economies in critical condition)
running, the abovementioned economic actors require direct financing,
particularly in hard currency, in addition to subsidies.
The market must be conceived as a whole. The tacit interconnectedness of
its current six components is in fact evident: a product sold on the
black market cannot be sold at a price higher than that at a TRD. When
establishing prices at the MAE, the State takes those in the MOD into
consideration. Finally, all markets look to the TRD because it is the
best stocked, not only in terms of food products, but all other vital
articles as well.

- As two currencies are in circulation, the values calculated using the
stronger currency determine the whole. I should add that the problem
would persist even after the elimination of the two-currency system, as
only a piece of paper, not the economic equation, would disappear.

- General growth figures are so low that experts are speaking of "mere
reproduction." Though low, these data are questionable because of the
two-currency system and parameters than have been imposed whimsically.
The slight increase in agricultural and livestock production is being
absorbed by the wage reform, as are the increasingly large remittances
coming from abroad.
The State is playing the survival game, skillfully manipulating its
monopoly in the domestic market. Foreign trade, particularly through the
TRD, takes in the better part of the remittances without an increase in
demand.

- Self-employment directly affects market offer because there are no
wholesalers designed to supply the new businesses, many of which are
restaurants, with products. Such a "strain" will grow, considering
current plans aimed at extending cooperatives, as well as the renting of
locales to the private sector. The emerging economy is improving
services but also increasing prices.

- Cuba is far from achieving self-sufficiency in the food industry. As
it depends on foreign trade, international prices are necessarily
reflected in the domestic market. Yet another monopoly, critically
addressed at the abovementioned seminar, complicates the situation: "The
so-called State monopoly over foreign trade [imports/exports] is
probably a large obstacle in the way of diversifying the economy and
broadening exports," said Miguel Alejandro Figueras, winner of Cuba's
2007 National Economics Award.
To put it clear in Cuban parlance, "the table has been served." The food
industry continues to be hijacked by politics, under the control of a
bureaucracy that is an expert in distributing scarcity, avoiding
conflicts here and there without allowing for the free unfolding of the
market.

We are told these are the advantages of socialism, but I believe such
centralization is useful only in case of a natural catastrophe, a war or
similar event. Authority has been misused excessively and become a kind
of daily practice, ruining the efforts put into any economic undertaking.

The essence of socialism is to distribute wealth in an equitable
fashion. To achieve this, we must first give the subjects of this
equation, the producers capable of creating this wealth, the freedom to
do so.

Source: Finding Our Bearings in the Stormy Seas of Cuba's Food Industry
(Part II) - Havana Times.org - http://www.havanatimes.org/?p=107317