Monday, September 27, 2010

Capitalism sees new birth in Cuba

Capitalism Vs Socialism. Who wins?
The dominos stopped falling at Cuba. When the Soviet Union collapsed, capitalism was in the ascendance, but it didn’t reach as far as Cuba. And that brings us to an irony. On the eve of the credit crunch, when some argued capitalism was dying, it seems Cuba is at last embracing the profit motive as a way to kick life into the economy.

In 1992, soon after the Soviet Union collapsed, the author Francis Fukuyama penned the book “The End of History and the Last Man”. In essence, he argued that capitalism had won, and that moving forward there would be one economic and political system, hence the description “the end of history”.

Then in 2008 and 2009, when some argued capitalism itself was tottering, many dusted off their old copy of Fukuyama’s book and argued instead we were seeing the end of capitalism.

And yet, through it all, Cuba remained steadfast in its communist ways. In the land of cigars there is one wage – at least in theory. In theory, there are no wealthy or poor people. Instead, everyone has the same, which in practice means just about everyone is poor, with a few privileged exceptions.

But not even Cuba is immune to the harsh economic times. It has no choice but to cut 500,000 jobs. It’s a disaster in Cuba, and brings with it the risk of total disenchantment with the economic system.

But the government has responded by allowing Cubans to work for themselves in 178 categories. And in no less than 83 categories they will be allowed to employ non-family members.

And so it is that the genie that is the profit motive, is out of the lamp.

But which way next?

Clearly Cuba will not want to go the way of the Soviet Union. Not only will words like Perestroika and Glasnost, which mean openness and transparency, be taboo, but so will the spirit that these words conjure up.

Instead, Cuba will try and go down the Chinese route.

But Cuba differs from China in one important respect. For the island of the Caribbean has one rather large and distrustful neighbour separated by a bit of water. How this story will pan out will be truly fascinating.

From: Investment & Business News

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