Money Trumps Ideology: Cuba Moves Away From the Command Economy

By Brian Sherry

Three decades after Communist China took the momentous step of transitioning from a command economy to one in which markets play a vital role, Cuba has begun to embrace a similar version of state capitalism. According to NBC News,

President Raul Castro’s government is building its own version of a Chinese-style economic zone on the banks of the Mariel Bay, 30 miles west of Havana, where the laws of scientific Marxism will not apply. Inside a 180-square-mile special economic zone, Cuban planners have envisioned a global capitalist enclave where foreign companies can install manufacturing plants, research centers and operational hubs.[i]

Comparisons with China often leave out certain key variables—namely size, power, and geography—that might indicate a different future for Cuba than that experienced by its Asian counterpart. The sheer vastness of China and its economic potential necessitated that the developed democracies adapt themselves to Chinese desires, most notably Beijing’s insistence on maintaining an authoritarian system of government side-by-side with a developing market economy. In contrast, Cuba is small and located just next to the United States, a country which refuses to trade with the island nation as long as it refuses to adopt democracy. Although many other countries—particularly America’s rivals and critics in the global community—are supposedly interested in exploiting Cuba’s new economic openness, the fact that Cuba’s large and powerful neighbor will maintain its decades-old embargo for the foreseeable future indicates that a thriving capitalist yet still-authoritarian Cuba on the model of China will be an unlikely outcome of this experiment.

What could happen, however, is that a slight taste of investment and profit within Cuba will result in a greater push for the reforms that would enable dialogue with Washington regarding the end of sanctions. Removing the sanctions would bring a more durable and far-reaching prosperity to Cuba. Just as the West had to adapt itself to the desires of a globally significant China, a much less significant Cuba would have to accommodate itself to American pressure for democratization; judging by these latest developments there is at least some willingness in Havana to sacrifice ideology for material betterment. So far the case of China has dampened the belief that economic liberalization leads to political liberalization. But one thing remains clear: money serves as a powerful incentive to change attitudes. In Cuba, that incentive might just lead to democracy.