Fidel Castro's Cuba failed economically – but he had little choice in the matter

Cuba had bought into the Soviet Union’s economic system, but like the European satellites, it could only stop its people from choosing the West’s economic system by forcing them to stay

Hamish McRae
Saturday 26 November 2016 17:41
Castro holds court
Castro holds court

Fidel Castro’s economic legacy will be one of failure – but not perhaps quite as catastrophic a failure as his many detractors would insist. The Cuba of the 1950s was not some sort of golden age, for though officially the country was as rich as Italy in terms of GDP per head, that wealth was unevenly distributed and some 40 per cent of the population did not have proper jobs. For the rich it might indeed have seemed a paradise, but for the majority public services such as health and education were poor or non-existent and life was extremely tough. That, after all, was why Castro’s revolution had such popular support.

When he took power in 1959, Fidel Castro chose, or was pushed, into conflict with its largest export market, the United States. The distant Soviet Union could buy Cuba’s principal export, sugar, at guaranteed prices. It could give other forms of economic and technical aid. But it also helped seduce the fledgling revolutionary leaders into imposing a command economy rather than a market-driven one.

In reality Cuba had little choice but to follow the economic model of its new benefactor, and to reject that of the West. In the context of the Cold War this did not seem as odd a course as it does now. Many economists at the time believed that the Soviet command economy could at least be a match for Western market economies in terms of overall growth, and had the further advantage of a fairer distribution of income. It was after all another 30 years before the Soviet Union itself collapsed, and its economic system with it.

Cubans around the world react to death of Fidel Castro

In the 1960s and 1970s Cuba seemed, on the face of it, to be making good progress. Universal education was brought in, the famous health service became a beacon for the region, and living standards for the majority of the population crept upwards. Cuba remained one of the richest countries in the Caribbean. But a dark cloud hung over these achievements. Cubans wanted, in their thousands, to leave. Many died attempting to do so. Cuba had bought into the Soviet Union’s economic system, but like the European satellites, it could only stop its people from choosing the West’s economic system by forcing them to stay.

Defending Fidel Castro’s economic management became even harder after the collapse of the Soviet empire at the end of the 1980s. Subsidies stopped. Russia no long took the sugar crop at guaranteed prices. GDP fell by one-third in the early 1990s. There was famine – though there is a debate as to just how desperate that was. The response of the regime was to liberalise the economy in modest ways. US dollars became legal tender for a while. Farmers were allowed to sell any surplus over and above their official quotas. Tourism was encouraged. Some modern foreign cars were imported, enabling the battered 1950s American vehicles to be retired.

Things recovered a bit. Fidel Castro himself acknowledged that there had been mistakes. But – and this shows his narrowness of vision – as the economy improved through the late 1990s and early 2000s, many controls were re-imposed. Pursuing the revolutionary purity of a command economy was more important than allowing people to have higher living standards.

Since he stepped aside for health reasons, allowing his brother Raúl Castro to take charge, there has been a gradual loosening of economic controls. From 2008 ordinary people were allowed to have mobile phones. For anyone outside Cuba it seems amazing that people did not have mobiles before that.

As a result of the reforms led by Raúl Castro, the economy has boomed. And that, in a way, points to the saddest element of his brother’s economic legacy. You can understand in the context of the revolution and the US response that Cuba would head down the command economy path. But to persist after the collapse of communism in an economic system that was proven not to work, to make reforms then reverse them, shows not only a lack of any comprehension about economics but huge arrogance in the face of hard evidence. It took the quiet orderly approach of Raúl Castro to demonstrate the failings of his more charismatic brother.

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