Where next for the revolution?

Venezuela-based economics adviser Stephanie Blankenburg considers the future of the Cuban revolution

Fidel Castro is to take retirement. In a brief statement – by the standards of a man famous for speeches lasting the best part of a day and essays disguised as “letters” – Castro announced on 19 February that he will step down as his country’s president and comandante en jefe. The announcement follows a slow and difficult recovery from a serious intestinal illness and paves the way for Castro’s brother, Raúl, to become the next president of Cuba on 24 February when the recently elected national assembly will come together for the first time to elect the members of the next Council of State.

Reactions around the world have been predictable, ranging from veiled threats by the US government to everyone contemplating positive engagement with Cuba after Castro’s retirement and prompt calls for a “democratic transition” from European leaders to a warm and friendly salute from China. But despite the extraordinary amount of coverage dedicated to the Cuban leader’s decision, including a six-page leader in El País, reactions have also been surprisingly cautious: This time, not even the otherwise surreally fanatical anti-Castro community of Cuban Exiles, that had prematurely celebrated Castro’s death in the streets of Miami when he first fell ill in July 2006, felt moved to a repeat display of its usual shenanigans.

Both the high level of media attention and the caution are well placed: The first amounts to a well-deserved, however implicitly granted, tribute to an extraordinary political figure who kept a socialist project on a tiny Caribbean island on the world agenda, steering it through such historical events as the downfall of the Soviet Union, and who gained the (grudging) admiration of friends and foes alike for his political skills and his encyclopaedical command of knowledge, from major world affairs down to the latest production figures of the Chilean copper mines, the technicalities of a Venezuelan infrastructure project or the reserve movements of any Central Bank in the world. The second reflects the lasting complexities and contradictions that have characterised the Cuban revolution from its beginnings and that are not about to be resolved in a stroke of post-Castro genius.

At the heart of these complexities is the unique case of a revolution that, differently from Chile, Nicaragua or Venezuela in Latin America and also from Russia or China, truly wiped out an utterly politically bankrupt elite of semi-feudal landowners and rentiers, as well as its social and political institutions and its middle class allies. The memory of the sad caricature of a “Banana Republic”, run by native torturers and international thugs in casinos that was Cuba before Castro, is deeply rooted in the collective psyche of contemporary Cuba. Together with outstanding achievements of the revolution in the area of social policies, recognised by most international organisations, this has made for a potent mix of a wide-spread progressive nationalism and a latent, yet potent, loyalty of the people to “their” revolution without which even Castro could never have weathered the lengthy, repetitive and often punishing economic crises the country has experienced over the past 50 years, for reasons both of internal policy mistakes as well as external threats.

Today, the main challenges, apart from the continuing external threats, arise from two main issues that will require careful consideration: First, Cuba’s social landscape is changing fast. As a result of both, the gradual opening of the economy to international investment in a few sectors, such as tourism, since the 1990s, as well as a growing sophistication of the state structure and economy, Cuban society is becoming more stratified and also more unequal – spatially, economically and socially – than at any stage before in its revolutionary history. When all over Latin America the poor were forced to pay the price for their leaders' obsession with neoliberal policies, Cuba managed to maintain a basic safety net for those affected by unavoidable economic restructuring measures, such as the scaling down of sugar production, with the help of a centralised state system of social services. More than ten years on, this centralised system may no longer be adequate to respond to much more diversified social needs and a tendency towards growing inequalities.

Second, ethanol production offers a very tempting solution to Cuba’s immediate economic problems. For several years now, the US has pursued a policy of “rule and divide” in Latin America, offering its agrarian and industrial elites lucrative long-term high fixed-price and low or zero-tariff deals for the export of crops for bio-fuel production. Behind the closed doors of meetings to promote free trade agreements, this was the real deal with the explicit intention of bereaving popular left-wing alliances across the continent of their upper and middle class allies. Which is, of course, also why Fidel Castro continues to oppose any such deal. Yet, from a purely economic point of view, the Cuban revolution needs nothing more urgently than a lucrative long-term export deal, not least to provide the finances for an intelligent and progressive response to the growing complexities of its social base, and thereby also to set an example to the social phraseology of the neoliberal world.

In this context, speculation about personalities is secondary: True, possibly differing approaches to these problems have already been attributed to those up and coming in the new Cuban leadership. Raúl Castro, 76, is a guarantor of continuity, not least given his founding role and decades-long command over the Cuban military. Together with his main ally, Carlos Lage, 56, Vice-President of the Cuban Council of State and Secretary General of the government’s Executive Committee (thus comparable to a Prime Minister), Raúl Castro has been read to advocate a “pragmatic” opening of the Cuban economy and society to international economic and political relations. Of equal importance is, however, Felipe Pérez Roque, 42, currently Cuba’s Foreign Minister who was in charge of negotiations with Chávez’ Venezuela and all important agreements to supply Cuba with oil in exchange for doctors and social workers. He is generally seen to be a close ally of Fidel Castro’s more cautious stance towards offers from the “Empire”.

Be this as it may, Cuba’s new leaders share the iron-clad will of the majority of their people never to go back to anything resembling the pre-Castro era. This resolve will be much more important than any potential divisions on policy that may surface more openly now than they have in the past. Similarly, it would be premature to expect any serious overtures for a real change in relations from a new Democratic US president. It was a Democrat who sent a rogue army to the Bay of Pigs, for fear of being regarded as weaker on national security than his Republican rivals. Things change, but usually not very fast. Long as he may live, a retired Fidel Castro might be very much needed to oversee whatever real changes may be on the agenda.

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.