Economic Impact of Socialism in Cuba

*By Jaime Suchlicki

One of the first economic measures introduced by the Castro revolution after 1959 was the 50% reduction in rents people paid for apartments and single-family residences. This Urban Reform Law was hailed as a victory for the lower and middle classes, and a measure that would stimulate the economy since now renters would have more money to spend.

The result was very different. The law had a snowballing effect on the economy. Investors in apartments and commercial real estate refused to further invest. The real estate industry was paralyzed. Cement plants, plumbing companies, wood manufacturing, electronic factories and many more related enterprises closed, many went bankrupt. The economy entered a period of stagnation which never to recovered.

Other “revolutionary” or socialist laws such as the “Agrarian Reform Law” which confiscated, without payment, privately own land had similar results, also the confiscation of large and small businesses produced an economic paralysis and threw hundreds of thousands of workers to the unemployment lines.

All these measures and actions of the government were accompanied by a demonization of capitalism, private enterprise and money making. Business enterprises, as well as money, were considered evil. “Money is the evil intermediary” said Fidel Castro, “between what man produces and what man consumes.”

Two years after the beginning of the revolution the economy entered into a major down spiral. Massive unemployment developed; inflation became out of control; all commercial and industrial production was paralyzed. The country rapidly followed this socialist phase with a Marxist-Leninist period with rationing of most products, militarization of society, alliance with the Soviet Union, conflict with the United States and the migration of more than 2 million Cubans. The economy never recovered. The middle and upper classes were destroyed, and the workers joined the ranks of the unemployed, underemployed or of the state, working for miserable wages.

* Jaime Suchlicki, Professor Emeritus, University of Miami and Director and founder of the Cuban Studies Institute, CSI, a non-profit research group in Coral Gables, FL. He is the author of Cuba: From Columbus to Castro & Beyond, now in its 5th edition; Mexico: From Montezuma to the Rise of the PAN, 2nd edition, and Breve Historia de Cuba.

Published by The Miami Herald, November 13, 2019