Cuba: Revolution, Communism and Happiness

It takes less than 60 minutes to fly from Miami to go back to a world of 60 years ago in Havana, Cuba. It is a world that is truly unique, dominated by 60 years of revolutionary ideology.

Miami is a city which displays the full spectrum of American life. It celebrates the country’s diversity, great strengths, culture, dynamism, violence, drug culture and rampant materialism. How, I mused, would Karl Marx and Vladimir Lenin have reacted to the contrast between Miami and the last state to have stuck to its embrace of the Marxist-Lenninist economic model for so long? Would they think their theories a success or a failure?

Cuba has had an unfortunate history. Twenty years after the arrival of Colombus in 1492, the Spanish colonised the country. Even by the standards of the Spanish, the colonisation was a brutal affair, effectively wiping out the indigenous Indian population and instituting a savage system of slavery which was only abolished in 1886. In 1762 the British briefly kicked out the Spanish, but shortly after this swapped Cuba for Spanish controlled Florida.

In 1868 a number of Cubans of Spanish descent began a long and extremely bloody campaign for independence. The death toll and destruction over several decades was substantial and it culminated in 1902, when American intervention saw Cuba nominally gain independence. Nominal because the Americans did not involve the Cubans in the 1898 Peace Treaty in Paris which led up to Independence. And they conveniently inserted into the Cuban constitution clauses giving them the right to intervene in Cuba whenever they saw fit and a lease to establish a naval base in Guantanamo Bay.

At the time of independence Cuba essentially had a two tier economy – a small, landed gentry, mostly of Spanish origin, whose wealth was largely founded on sugar, tobacco and coffee and on display in magnificent homes in Havana and elsewhere, and a much exploited peasant class.

In 1952 Batista, formerly a military officer who during his first four year stint as elected president in 1940, instituted some reasonable reforms, staged a comeback via a military  coup. He suspended the Constitution and revoked most political liberties. He received recognition and support from the USA, aligned with the wealthiest landowners, which increasingly became dominated by US interests and cut a deal with the American Mafia who controlled the drug, gambling and prostitution business.  Growing dissent and riots against the gross inequality that was being created by this corrupt system, were met with increasing repression and ultimately the execution of thousands of people.

In turn this created a ripe environment for a young radical, Fidel Castro, supported by his younger brother Raul and the famous Che Guevara to foment a revolution. The revolution began unpromisingly, low in numbers and suffering many devastating defeats. Through a combination of luck, determination, charisma, better mobilisation of the increasingly restive rural population  and improving military tactics, Castro ultimately prevailed in 1959.

Once in power,  advocates of Marxist-Leninism were appointed to senior government and military positions. Most notably, Che Guevara became Governor of the Central Bank and then Minister of Industries as well as being responsible for the trials and firing squads which dealt with alleged war criminals. This was a set of powers which no other central banker has ever had, but every one of them may wish for.  Businesses, private property and land were nationalised and given to peasants to use.  Within two years the economy was facing the first of many crises, with productivity slumping.

However, this did not stop the move towards full fledged communism, which was spurred in part by US attempts to undermine the Castro regime. In particular, US President Eisenhower secretly authorised the CIA  to ally with the Mafia and disgruntled Cuban exiles to overthrow Castro’s government.  Supported by his successor President Kennedy, the attempted invasion of this motley coalition via the Bay of Pigs in 1961, was a fiasco, with Castro leading the army to rout the invaders.

With the onset of the Cold War, Cuba ended up firmly in the Soviet orbit and became a one party state, heavily dependent on its relationship with the USSR. Castro became the first foreigner to be awarded the Order of Lenin. In the fashion of Mao and Lenin, Castro sought to increase revolutionary zeal domestically, while cracking down harshly on dissent. And he did his best to promote revolution in various other parts of the world, most notably in South America and Africa, where Cuban soldiers were used in many civil wars. He backed Che Guevera who returned to being a revolutionary, travelling through South America and Africa, before being killed by CIA trained troops in Bolivia in 1967. Will there ever again be a central banker with such a colourful resume?

Influenced by China’s Great Leap Forward, in 1968 Castro proclaimed his own Great Revolutionary Offensive, closing all remaining privately owned shops and businesses and denouncing their owners as capitalist counter-revolutionaries. All of these measures caused the economy to go into a further slump and then stagnate with a massive loss of financial reserves. Soviet help was critical in preventing a disaster.

On a positive front, Castro was able to use Soviet aid to implement important social projects.  Major emphasis was placed on education, and under the first 30 months of Castro’s government, more classrooms were opened than in the previous 30 years.  Health care was nationalized and expanded, with rural health centers and urban polyclinics opening up across the island, offering free medical aid.  A third aspect of the social programs was the construction of infrastructure; including substantial road, water and sanitation programs. Fourthly, all Cubans were, and continue to be,  supplied with a basic amount of food free of charge.

But the Cuban economy was critically dependent on the USSR for trade, technology, armaments and foreign investment. By the mid 1980s, over 80% of its trade was with the USSR, which paid 11 times the market price for Cuban sugar.  This system started to come under pressure though with Mikhail Gorbachev’s political and economic reforms beginning in the 1980s and completely disappeared in 1991 when Boris Yeltsin abolished the Communist Party, introduced a capitalist multiparty democracy and officially dismantled the USSR.  This led Castro to declare a ‘Special Period’ – code for extreme economic austerity, including dramatically reducing petrol rations, importing Chinese bicycles to replace cars, shutting down factories not producing essential goods, using oxen to replace tractors, firewood for cooking and electricity cuts that could last for 16 hours a day.  By 1992, the Cuban economy had declined by over 40% in under two years, with major food shortages, widespread malnutrition and a lack of basic goods.

This forced Castro to moderate his policies somewhat.  He ceased support for foreign militants, legalised free farmers’ markets and small-scale private enterprises, eased certain restrictions on emigration, allowing more discontented Cuban citizens to move to the United States.

The Special Period came to an end with the election of the left wing Hugo Chavez to the Venezuelan Presidency in 1999.  This led to an agreement whereby Cuba would send over 200,000 workers, including teachers and some tens of thousands of  medics to Venezuela, in return for receiving subsidised oil.  Cuba also provided military intelligence and other support to help prop up the Chavez regime.  The alliance helped to boost the Cuban economy, albeit at the expense of the teachers and medics – the latter were paid about $US20 a month and began in increasing numbers to flee to the US via Columbia.  The decline of oil prices and death of Chavez have undermined the economic value of this alliance during the past decade.