CubaBrief: Yoani Sánchez calls out internal blockade: “We Cubans do not need recipes, but freedom to produce food.” Minister of Economy and Planning says “we are a socialist country” rejects market

Hundreds of boxes of mangos rotted in the fields of Camagüey in the 2021 harvest. (14ymedio)

Cubans continue to be denied their fundamental human rights, and this includes their economic rights. This is compounded by increased scarcity and rising prices due both to communist economic practices, and rising costs for importing food.

Minister of Economy and Planning Alejandro Gil Fernández acknowledged the negative impact that the rise in prices will have on a series of foods and essential products that the Cuban dictatorship imports, reported Diario de Cuba citing official sources on March 14, 2022. The minister also stated that one of the regime’s main challenges is “to devise a mechanism, a way of working, that allows us to establish in the country a transparent and rational system of prices, without this entailing a policy of centralization by the State,” but at the same time that he advocated for “further progress in price decentralization” he also added that it had to be done  “without embracing the concepts of a market economy.”

Ministry of Economy and Planning carries out communist central planning in Cuba.

What are the “concepts of a market economy” that the Communist dictatorship in Cuba rejects? According to the American economist of the Austrian School, Murray N. Rothbard, “the Free Market is a summary term for an array of exchanges that take place in society. Each exchange is undertaken as a voluntary agreement between two people or between groups of people represented by agents.” What does this mean in practice?  Thus, when a Cuban buys vegetables from a farmer for 500 pesos, the farmer and the Cuban exchange two commodities: the Cuban gives up 500 pesos, and the farmer gives up the vegetables. It does not necessitate a government entity setting the price, but the farmer determining if he can produce the vegetable at a cost that enough Cubans want to purchase to justify his labor, investment in supplies, and the risk taken. 

Acopio, a state enterprise, fails to pick up crops in time in Cuba, and they rot. 50% is lost before it reaches consumers.Havana does not allow Cuban farmers to sell their goods directly to other Cubans. They must sell it to the state company, called Acopio. This is what led Cuban independent journalist Yoani Sanchez to write a column titled  “We Cubans Do Not Need Recipes, But Freedom To Produce Food” and she raises an important question.”Why can this cabbage that I plant in an old can on a balcony a few meters from the Ministry of Agriculture give me more hope than the ephemeral plans of the state company Acopio? Because this cabbage is freely watered. It doesn’t answer to anyone, it doesn’t have to pander to the statistics spouted by any leader strutting his stuff on a podium. It is just a cabbage and we are just people who harvest a cabbage that knows that the land can give much and more, but it does not move with ideologies, nationalization or straitjackets designed by centralism. It’s a cabbage, it doesn’t understand parties, and hungry mouths need more cabbages like this.”

This is the reason for the absence of food in Cuba, and overall scarcity. According to the Cuban Studies Institute between 1952-1958 Cuba achieved “agricultural self-sufficiency to supply the people’s market demand for food.” Despite the efforts to violently overthrow the Batista regime in the 1950s, “the Cuban food supply grew steadily to provide a highly productive system that, in daily calories consumption, ranked Cuba third in Latin America.”This ended when the Castro regime took power, seized and collectivized properties, and prohibited farmers selling their crops to non-state entities, in the early years of the revolution. Farmers no longer decided how much to produce, or what price to sell. The Communist Cuban government established production quotas and farmers were (and are) obligated to sell to the state collection agency, called Acopio. Most recent law on agriculture in Cuba ( Decreto Ley 358 de 2018) continues to prohibit private sales of agricultural products to non-state entities. The dictatorship began rationing food in 1962 as a method of control and continued the practice over the next six decades. Rationed food is not free, but sold at subsidized prices. Rationed items are not enough to feed a person.

Over six decades to the present day, between 70% and 80% of Cuba’s food has and continues to be imported. This included the years when Cuba was heavily subsidized by the Soviet Union, and was part of the East Bloc. Since 2000, much of the food purchased by Havana has been imported from the United States. Despite this, rationing continued during the peak years (2011 – 2014) when the Cuban government received massive amounts of assistance from Venezuela’s Chavez regime. What about  Cuba’s domestic agricultural production? Diario de Cuba in their February 7, 2022 article, “Cubans go hungry and Acopio leaves 22 tons of tomatoes to rot, farmers denounce,” cites Cuban agronomist Fernando Funes-Monzote who stated that “Cuban agriculture does not need to produce more food,” because “50% of what is grown today is lost before reaching the consumer.”

This is part of the “internal blockade” that thousands of Cubans have referred to, and signed a petition calling for its end.

The Castro regime continues to call the United States economic embargo on Cuba a “blockade.” This is not true as the State Department (and U.S. – Cuba trade statistics over the past 22 years) demonstrate. The United States does not have a “blockade” on Cuba, but porous economic sanctions with a focus on cutting off funds to the military that controls most of the Cuban economy. The United States in 2020 was the third largest exporter of agricultural goods and supplies to Cuba. Remittances continue to flood Cuba from the Cuban exile community in South Florida, but now also in Euros due to new restrictions imposed by the Castro regime on June 21, 2021 against the dollar.

Agence France Presse (AFP) reported on February 6, 2022 that Cuba on February 5, 2022 announced a new 10 per cent tax on retail food sales, as the country endures economic woes marked by rampant inflation. The levy took effect on February 7, 2022 targeting self-employed people and small- and medium-sized companies in the retail food sector. These sales were only allowed starting in August 2021 as part of reforms in the communist-run island. Cuban economist Pedro Monreal wrote on Twitter that the new tax will probably have two effects: “higher food prices and more inequality among the Cuban people.”

This blog has described this internal blockade, examined various aspects of it over the past year, and how the Cuban dictatorship continues to tighten it.

This first one to be examined was the claim that “the embargo does not prohibit fishermen in Cuba from fishing, the dictatorship does.” This was explored in a July 29th CubaBrief that was mentioned in a column by Mary Anastasia O’Grady in the September 7, 2021 print edition of The Wall Street Journal titled “A Sanction Worth Lifting in Cuba.” It is Havana that limits Cubans ability to fish, and to buy quality fish.

The second to be examined is the claim that “the embargo does not confiscate what farmers harvest, the dictatorship does.” Explored how the regime’s communist agricultural policies destroyed domestic production, and how Cuba was no longer able to feed itself due to these policies.

Former U.S. President Barack Obama shakes hands with Saul Berenthal at the Entrepreneurship Summit at La Cervecería in Havana, Cuba, on March 21, 2016. Credit: Official White House Photo by Pete Souza.

The third to be examined was the claim that “the embargo does not prohibit Cubans on the island from doing business freely, the dictatorship does.” Highlighted the case of Saul Berenthal who attempted to open a tractor factory in Cuba, and when he regained his Cuban citizenship, the deal was killed by Havana, because Cubans are not allowed to engage in those kind of investments in Cuba, foreigners can, in partnership with the dictatorship.

Meanwhile, Cubans are eating chicken and fresh fruit exported from the United States to Cuba, as the Castro regime continues its internal blockade impoverishing Cubans while blaming the United States for all its troubles, and too many fall for this false narrative.

Paradoxically, the Obama thaw with Cuba coincided with the expansion of military control of the Cuban economy. Liberalization of the Cuban agricultural sector occurred during times of crisis, for example the “free farmers’ markets in the 1980s, and the free agricultural markets after 1994” during the Special Period, and were repealed when the emergency passed.Low domestic production in Cuba today is due to the Cuban government and its failed communist agrarian policies that punish farmers. Message to Havana: If you want food self sufficiency in Cuba then let Cuban farmers farm and take their harvest to market.

14ymedio, March 11, 2022

We Cubans Do Not Need Recipes, But Freedom To Produce Food

Why can this cabbage that I plant in an old can on a balcony a few meters from the Ministry of Agriculture give me more hope than the ephemeral plans of Acopio? (Yoani Sanchez)

By Yoani Sánchez

14ymedio, Yoani Sánchez, Generation y, Havana, 11 March 2022 — The “experts” arrive, like the Brazilian Frei Betto, to tell us how we have to do it… but we already know. We have known it for centuries since the first ones who made cassava on this Island, passing through my grandparents who made thick corn “tayuyos” like those that could not be eaten in one sitting; to the “strained” peas that we gave our young children to make them grow despite their skinny legs and diminutive size… we already know.

It’s called “freedom” and it’s the main ingredient in every dish, every crop, every harvest.

Why can this cabbage that I plant in an old can on a balcony a few meters from the Ministry of Agriculture give me more hope than the ephemeral plans of the state company Acopio? Because this cabbage is freely watered. It doesn’t answer to anyone, it doesn’t have to pander to the statistics spouted by any leader strutting his stuff on a podium.

It is just a cabbage and we are just people who harvest a cabbage that knows that the land can give much and more, but it does not move with ideologies, nationalization or straitjackets designed by centralism. It’s a cabbage, it doesn’t understand parties, and hungry mouths need more cabbages like this.

https://translatingcuba.com/we-cubans-do-not-need-recipes-but-freedom-to-produce-food/

Diario de Cuba,  March 14, 2022

PRICES 

The War in Ukraine, Another Blow to Cuba’s Food Supply and Household Economies 

The regime says it seeks ‘socialist and just solutions’ to deal with the rising prices of food and the essential products it imports.

Meeting of the Ministry of Finance and Prices in Havana. ACN

The Cuban government admitted on Thursday that Russia’s invasion of Ukraine and the war that has ensued will have an even greater impact on the island’s food and household economies, explaining that it is seeking “socialist solutions” to deal with the inflation on international markets.

Minister of Economy and Planning Alejandro Gil Fernández acknowledged the negative impact that the rise in prices will have on a series of foods and essential products that the Government imports, reported the Cuban News Agency (ACN).

Summing up a working meeting of the Ministry of Finance and Prices (MFP), Gil Fernandez said that the cost of a barrel of petrol, a ton of oil, and of wheat and soy flour, among other items, including ship charter, has risen significantly.

Some of these products and services had already seen a rise in prices during the pandemic and hit the failed Cuban economy hard, as it must turn abroad to buy between 60% and 70% of the food consumed on the island.

According to Gil Fernández, “we must resolutely face the international inflationary trend, which seems to have no end in sight, and could very well get even worse.”

“Focusing on socialist, administrative and just solutions,” he added.

In the words of the minister, cited by the official newspaper Granma, the priorities are “attention to people in vulnerable situations, from the logic of subsidizing people and not products; the rigorous implementation of measures to strengthen accounting; as well as the ability to identify the competencies and powers of municipalities with the use of public resources.”

The deputy prime minister also stated that one of the Government’s main challenges is “to devise a mechanism, a way of working, that allows us to establish in the country a transparent and rational system of prices, without this entailing a policy of centralization by the State.”

He called for “further progress in price decentralization, but without embracing the concepts of a market economy.”

“We cannot forget that we are a socialist country, and that solutions must be centered on favoring society,” he said.

International sanctions against Russia for its invasion of Ukraine and the war that has ensued are torpedoing the island’s economic recovery plans, and will very likely impact the state and private sectors, in addition to the informal market, which many families rely on for their subsistence.

https://diariodecuba.com/economia/1647274739_38084.html

CubaDecide, January 13, 2022

There is no embargo, nor is it to blame for the problems of Cubans

The economic, commercial and financial embargo imposed by the US on Cuba has evolved over more than 60 years. It began with the cancellation of the Cuban sugar quota in the U.S. market in June 1959, and became official on February 7, 1962, when Section 620a of the Foreign Aid Act was applied. In turn, this act was being enforced since September 1961, once president John F. Kennedy totally banned the importation of goods of Cuban origin. Later, other prohibitions were added. Over the years, these sanctions became a means of pressuring Cuba to respect human rights and allow the establishment of a democratically elected government.

Historically, the Cuban government has referred to these economic sanctions by the name of “blockade.” The truth is that there is no such “blockade,” only a partial embargo, a completely different issue. While a blockade would cause the United States to prevent the movement of goods and people to and from Cuba, the U.S. laws that constitute the embargo only limit what U.S. citizens and businesses can do relative to Cuba.

The only time there was a U.S. blockade of Cuba was in 1962, when Fidel Castro placed Soviet nuclear weapons on the Island. Then, a fleet of U.S. and Latin American ships blocked Cuba for thirteen days, until the missiles were positively withdrawn.

In fact, Cuba trades with the whole world, including the United States. The most recent data shows that in 2020 the United States exported $177 million of goods to Cuba and imported $15 million of goods. And, in the first five months of 2021, the United States has already exported $134 million in goods to Cuba.

The United States is the largest food exporter to Cuba, with frozen chicken being the main export product. Food and many other items, such as medical products and humanitarian aid, are exempt from the embargo.

Furthermore, ending the U.S. embargo would not make a big difference for Cuba, because the country’s main problem is its dictatorship, and the failure of the economic model imposed by the regime. Before the seizure of power by the communist dictatorship, the largest Cuban export to the United States was sugar and the second export was coffee. Both sectors have been destroyed by the Castro administration.

The regime has generated a narrative as if it were a complete blockade, when it is really an economic and financial embargo. The Island has close cooperation and trade ties with countries such as Venezuela, China, Spain, Canada, Russia, Mexico, the Netherlands, Italy, France, Germany and the United States, according to figures of 2019 from the Cuban National Office of Statistics and Information.

The real blockade in Cuba is the one imposed by the Cuban State, led by the Communist Party, against the Cuban people. Cubans are blocked in their rights and in many other activities: they are prevented from speaking freely, from participating in peaceful protests and from performing artistic activities not approved by the State. After the recent massive protests, the Cuban state blocked all Internet access. Also, many Cubans have been banned from leaving their own country.

Likewise, Cubans are banned from producing food and it is the State the only entity that holds the monopoly on production. Nevertheless, Cuba could put an end to the U.S. embargo. All they need to do is legalize all political activity, allow freedom of the press, independent unions, respect internationally recognized human rights, and commit to free, fair and plural elections, in a transition to representative democracy.

It is time for a change.

It is time to enjoy our right to have rights.

https://cubadecide.org/there-is-no-embargo-nor-is-it-to-blame-for-the-problems-of-cubans/?lang=en&gclid=CjwKCAjw8sCRBhA6EiwA6_IF4b8q4B53CEC3hr2dTsQ3Jp8_rKb5lES_1vqEvjHg4-KFVIdGn6n0SxoClgwQAvD_BwE

From the archives

Mises Daily Articles, November 4, 2019

What Is the Free Market?

By Murray N. Rothbard

The Free Market is a summary term for an array of exchanges that take place in society. Each exchange is undertaken as a voluntary agreement between two people or between groups of people represented by agents. These two individuals (or agents) exchange two economic goods, either tangible commodities or nontangible services. Thus, when I buy a newspaper from a news dealer for fifty cents, the news dealer and I exchange two commodities: I give up fifty cents, and the news dealer gives up the newspaper. Or if I work for a corporation, I exchange my labor services, in a mutually agreed way, for a monetary salary; here the corporation is represented by a manager (an agent) with the authority to hire.

Both parties undertake the exchange because each expects to gain from it. Also, each will repeat the exchange next time (or refuse to) because his expectation has proved correct (or incorrect) in the recent past. Trade, or exchange, is engaged in precisely because both parties benefit; if they did not expect to gain, they would not agree to the exchange.

This simple reasoning refutes the argument against free trade typical of the “mercantilist” period of sixteenth- to eighteenth-century Europe, and classically expounded by the famed sixteenth-century French essayist Montaigne. The mercantilists argued that in any trade, one party can benefit only at the expense of the other, that in every transaction there is a winner and a loser, an “exploiter” and an “exploited.” We can immediately see the fallacy in this still-popular viewpoint: the willingness and even eagerness to trade means that both parties benefit. In modern game-theory jargon, trade is a win-win situation, a “positive-sum” rather than a “zero-sum” or “negative-sum” game.

How can both parties benefit from an exchange? Each one values the two goods or services differently, and these differences set the scene for an exchange. I, for example, am walking along with money in my pocket but no newspaper; the news dealer, on the other hand, has plenty of newspapers but is anxious to acquire money. And so, finding each other, we strike a deal.

Two factors determine the terms of any agreement: how much each participant values each good in question, and each participant’s bargaining skills. How many cents will exchange for one newspaper, or how many Mickey Mantle baseball cards will swap for a Babe Ruth, depends on all the participants in the newspaper market or the baseball card market — on how much each one values the cards as compared to the other goods he could buy. These terms of exchange, called “prices” (of newspapers in terms of money, or of Babe Ruth cards in terms of Mickey Mantles), are ultimately determined by how many newspapers, or baseball cards, are available on the market in relation to how favorably buyers evaluate these goods. In shorthand, by the interaction of their supply with the demand for them.

Given the supply of a good, an increase in its value in the minds of the buyers will raise the demand for the good, more money will be bid for it, and its price will rise. The reverse occurs if the value, and therefore the demand, for the good falls. On the other hand, given the buyers’ evaluation, or demand, for a good, if the supply increases, each unit of supply — each baseball card or loaf of bread — will fall in value, and therefore, the price of the good will fall. The reverse occurs if the supply of the good decreases.

The market, then, is not simply an array, but a highly complex, interacting latticework of exchanges. In primitive societies, exchanges are all barter or direct exchange. Two people trade two directly useful goods, such as horses for cows or Mickey Mantles for Babe Ruths. But as a society develops, a step-by-step process of mutual benefit creates a situation in which one or two broadly useful and valuable commodities are chosen on the market as a medium of indirect exchange. This money-commodity, generally but not always gold or silver, is then demanded not only for its own sake, but even more to facilitate a re-exchange for another desired commodity. It is much easier to pay steelworkers not in steel bars, but in money, with which the workers can then buy whatever they desire. They are willing to accept money because they know from experience and insight that everyone else in the society will also accept that money in payment.

The modern, almost infinite latticework of exchanges, the market, is made possible by the use of money. Each person engages in specialization, or a division of labor, producing what he or she is best at. Production begins with natural resources, and then various forms of machines and capital goods, until finally, goods are sold to the consumer. At each stage of production from natural resource to consumer good, money is voluntarily exchanged for capital goods, labor services, and land resources. At each step of the way, terms of exchanges, or prices, are determined by the voluntary interactions of suppliers and demanders. This market is “free” because choices, at each step, are made freely and voluntarily.

The free market and the free price system make goods from around the world available to consumers. The free market also gives the largest possible scope to entrepreneurs, who risk capital to allocate resources so as to satisfy the future desires of the mass of consumers as efficiently as possible. Saving and investment can then develop capital goods and increase the productivity and wages of workers, thereby increasing their standard of living. The free competitive market also rewards and stimulates technological innovation that allows the innovator to get a head start in satisfying consumer wants in new and creative ways.

Not only is investment encouraged, but perhaps more important, the price system, and the profit-and-loss incentives of the market, guide capital investment and production into the proper paths. The intricate latticework can mesh and “clear” all markets so that there are no sudden, unforeseen, and inexplicable shortages and surpluses anywhere in the production system.

But exchanges are not necessarily free. Many are coerced. If a robber threatens you with “Your money or your life,” your payment to him is coerced and not voluntary, and he benefits at your expense. It is robbery, not free markets, that actually follows the mercantilist model: the robber benefits at the expense of the coerced. Exploitation occurs not in the free market, but where the coercer exploits his victim. In the long run, coercion is a negative-sum game that leads to reduced production, saving, and investment, a depleted stock of capital, and reduced productivity and living standards for all, perhaps even for the coercers themselves.

Government, in every society, is the only lawful system of coercion. Taxation is a coerced exchange, and the heavier the burden of taxation on production, the more likely it is that economic growth will falter and decline. Other forms of government coercion (e.g., price controls or restrictions that prevent new competitors from entering a market) hamper and cripple market exchanges, while others (prohibitions on deceptive practices, enforcement of contracts) can facilitate voluntary exchanges.

The ultimate in government coercion is socialism. Under socialist central planning the socialist planning board lacks a price system for land or capital goods. As even socialists like Robert Heilbroner now admit, the socialist planning board therefore has no way to calculate prices or costs or to invest capital so that the latticework of production meshes and clears. The current Soviet experience, where a bumper wheat harvest somehow cannot find its way to retail stores, is an instructive example of the impossibility of operating a complex, modern economy in the absence of a free market. There was neither incentive nor means of calculating prices and costs for hopper cars to get to the wheat, for the flour mills to receive and process it, and so on down through the large number of stages needed to reach the ultimate consumer in Moscow or Sverdlovsk. The investment in wheat is almost totally wasted.

Market socialism is, in fact, a contradiction in terms. The fashionable discussion of market socialism often overlooks one crucial aspect of the market. When two goods are indeed exchanged, what is really exchanged is the property titles in those goods. When I buy a newspaper for fifty cents, the seller and I are exchanging property titles: I yield the ownership of the fifty cents and grant it to the news dealer, and he yields the ownership of the newspaper to me. The exact same process occurs as in buying a house, except that in the case of the newspaper, matters are much more informal, and we can all avoid the intricate process of deeds, notarized contracts, agents, attorneys, mortgage brokers, and so on. But the economic nature of the two transactions remains the same.

This means that the key to the existence and flourishing of the free market is a society in which the rights and titles of private property are respected, defended, and kept secure. The key to socialism, on the other hand, is government ownership of the means of production, land, and capital goods. Thus, there can be no market in land or capital goods worthy of the name.

Some critics of the free-market argue that property rights are in conflict with “human” rights. But the critics fail to realize that in a free-market system, every person has a property right over his own person and his own labor, and that he can make free contracts for those services. Slavery violates the basic property right of the slave over his own body and person, a right that is the groundwork for any person’s property rights over nonhuman material objects. What’s more, all rights are human rights, whether it is everyone’s right to free speech or one individual’s property rights in his own home.

A common charge against the free-market society is that it institutes “the law of the jungle,” of “dog eat dog,” that it spurns human cooperation for competition, and that it exalts material success as opposed to spiritual values, philosophy, or leisure activities. On the contrary, the jungle is precisely a society of coercion, theft, and parasitism, a society that demolishes lives and living standards. The peaceful market competition of producers and suppliers is a profoundly cooperative process in which everyone benefits, and where everyone’s living standard flourishes (compared to what it would be in an unfree society). And the undoubted material success of free societies provides the general affluence that permits us to enjoy an enormous amount of leisure as compared to other societies, and to pursue matters of the spirit. It is the coercive countries with little or no market activity, notably under communism, where the grind of daily existence not only impoverishes people materially, but deadens their spirit.

Further Reading

Ballve, Faustino. Essentials of Economics. 1963.

Hazlitt, Henry. Economics in One Lesson. 1946.

Mises, Ludwig von. Economic Freedom and Interventionism, edited by Bettina Greaves. 1990.

Rockwell, Llewellyn, Jr., ed. The Free Market Reader. 1988.

Rockwell, Llewellyn, Jr., ed., The Economics of Liberty. 1990.

Rothbard, Murray N. Power and Market: Government and the Economy, 2d ed. 1977.

Rothbard, Murray N. What Has Government Done to Our Money? 4th ed. 1990.

Author:

Murray N. Rothbard

Murray N. Rothbard made major contributions to economics, history, political philosophy, and legal theory. He combined Austrian economics with a fervent commitment to individual liberty.

https://mises.org/library/what-free-market