|Central American University - UCA
Number 368 | Marzo 2012
Self-employment is back
When this Nicaraguan university student went to Cuba
to research the self-employment that had officially opened up,
she found that micro-businesses were flourishing in Havana.
Why are these changes in the economy happening?
Can they be sustained with no political opening?
Has Cuban society changed?
These are her reflections.
I arrived in Cuba at the end of January 2011. My flight from Miami was filled with Cubans carrying what looked like five or six times the alloted quota of 44 pounds of luggage per person. Some people had as many as eight pieces of luggage, many of them wrapped in hermetic green plastic wrap and labeled alimentos (food).
We were in Havana in only 40 minutes. Once outside the airport, the first thing I saw was billboards with anti-imperialist slogans: “Liberty can’t be blocked” or “8 hours of blockade equal the resources to repair 40 pre-schools.” Others advertised Cuba’s independence and socialist values like solidarity and sacrifice.
Those first official messages contrasted with what I witnessed in Miami and what became evident during my four months in Cuba: a huge discrepancy between the official ideals and the country’s current reality. Those bulging suitcases reflect the “things” Cubans can’t get and want: beans, a flat-screen TV, a new sound system, spare car parts...
State unemployment The national and international context after the revolution forced Cuba to maintain its dependence on imports, substituting the role of the United States before 1959 with the USSR and keeping the economy’s focus on a few export goods, primarily sugar. Now, in this post-soviet era, the economy is creating a new dependence on both tourism and remittances from abroad, mainly the United States, both of which bring in hard currencies.
This new dependence, the effects of the US blockade and a very low agricultural yield—the island only produces about 50% of the calories its population consumes—translates into a serious scarcity of many foods. Even basic staples such as milk are available only sporadically or can’t be found at all in large cities like Havana. Powdered milk is now sold at specialty stores in convertible pesos known as CUCs (equivalent to a dollar), but the prices are largely inaccessible to most Cubans.
As a (flexible) vegetarian, I was challenged to supplement the breakfast and dinner served at the residence where I lived, which relied heavily on starches and pork. My forced quest for proteins and veggies meant spending a lot of time practicing the verb conseguir (to obtain). It and the verb resolver (to deal with) are heard all over Havana, usually to describe creative solutions to everyday problems such as product scarcity or water and electricity shortages. As a foreign student, I had the privilege of a housing arrangement that meant not having to cope with the many issues on which Cubans spend so much time and energy, but I did have to “deal with” complex formal and informal networks to find quality food. Doing so facilitated my research on the new opportunities for self-employment, and led me to focus on the food industry, a visibly dynamic sector within an ongoing broader transformation process in search of a viable form of socialism in Cuba.
The latest in a series I was in Cuba just as the most recent economic reforms were being implemented. Among the novelties I found was the official acceptance that State industries are inefficient. The consequence has been massive layoffs and a visible surge of small private businesses, many of which previously existed underground for years but can now obtain a license to practice their trades legally.
of economic reforms
Among these new businesses are hundreds of new eateries and paladares (home-based restaurants). Their style, prices and offerings reflect the influence of the tourism industry, the changing consumption desires of the Cuban population and the stratifying of society as income differences become increasingly visible.
The first such reforms came in 1994 as a survival imperative after the collapse of the Soviet Union. Even more importantly, in my view, providing self-employment licenses enabled the State to reincorporate into the revolutionary project millions of Cubans who were operating outside of the state economy, in the black market.
But the process has been slow. The government viewed people who took the licenses as traitors, or at least as non-revolutionary. Not until 2010, with the new wave of reforms, has there been evidence of a change in the discourse related to self-employment.
The socialist conception To understand the implications of these reforms and why they might pose a contradiction with the Cuban socialist project, it’s necessary to step back and analyze the relationship between people and labor in the planned economy before 1990. One of the revolution’s basic principles was to transform Cuban men and women.
of work and its incentives
According to Che Guevara’s 1965 speech “Socialism and Man in Cuba,” the revolution’s “new man” is one who has achieved “total conscience of his social being, which is equivalent to his full realization as a human being, liberated from all chains of alienation.” The first step for this to become possible is to free people’s material needs from their productive contribution to society. In other words, labor should achieve a new condition in which men and women work for the satisfaction of producing, creating and contributing to society, not to satisfy basic individualistic needs as in a capitalist system. In a socialist society, people don’t sell their labor, but rather fulfill their social duty, thus allowing them to achieve their greatest potential and live a fulfilling life.
Under this principle, the Cuban State took control of all economic activities, providing a standard wage that was only minimally differentiated between occupations. To free people from their material needs, it provided a wide range of social services to fulfill those needs, including free health care and education, access to subsidized food through a rations booklet, subsidized clothing, toys, appliances etc., and highly subsidized utilities such as water, electricity and telephone service.
Few incentives to work All this presupposed re-educating Cuban society. In this ideological context, one of the revolution’s greatest challenges has been to keep industries productive. A common joke on the island is that Cuba is the only country in the world where one can survive without working. The average absenteeism level at the workplaces—all of them run by the State—reached 29% in 1970.
or to be productive
The economy suffers when there are few economic incentives to work or be productive at work, and where the centralized model means that orders and norms must be approved and passed down from above. Cuban economist Lázaro González Rodríguez criticizes the atmosphere of fear and absence of responsibility over decisions in workplaces because every decision, even “the dispensary of pens,” as he puts it, has to be approved by officials higher up.
My Cuban cinema professor at the University of Havana told another interesting joke that reflects how Cuban’s see themselves and their own society: groups of people from different countries are isolated on an island by a group of researchers and given tool boxes and materials. After one year, the researchers come back to see what the groups have done. The Americans have already designed an intricate commercialization system and the Japanese have created some impressive pieces of technology, but the Cubans are just sitting on the beach, the boxes unopened. When asked why they haven’t done anything, they respond that they’re waiting for orientations to be passed down. This professor says he tries to develop creative thinking in his students, but it’s traditionally discouraged in the education system.
Part of the labor model of Cuba’s planned economy was to place great value on higher education and ensure a job for every citizen. Its commitment to fight visible unemployment was successful but at the cost of efficiency, hiring more workers than needed in state industries and underpaying them. Until 2009, the State claimed that unemployment was only 1.7%. One of my most curious encounters with this form of inefficiency was a visit to a statue of John Lennon sitting on a bench in a small park in the neighborhood of Vedado. Because Lennon’s copper glasses have been stolen so many times, it is now someone’s job to sit next to the statue and put a pair of glasses on it when tourists want to take a photograph.
Pavel Vidal, an economist at the Center of Studies of the Cuban Economy, noted in 2007 that the average nominal wage in Cuba was some 400 Cuban pesos (about US$17), but because of the inflation of the peso, that only represented 24% of its 1989 purchasing power. Wages have gone up to 450-500 Cuban pesos since then, and the State still provides many things, such as health care and education, and in some professions there are extra benefits beyond the salary, like being able to purchase a car or access to an Internet account in the case of doctors.
The “Special Period” and After the collapse of the Soviet Union, the economy had to be reorganized and a series of special measures adopted to maintain the socialist system. That stage, known as the “special period in times of peace,” was one of extreme scarcity and enormous daily difficulties for the entire population, including a ferocious food crisis. Communications Professor Ariana Hernández-Reguant wrote then that “to address the emergence of malnutrition-related illnesses, the media sought to reeducate the population’s eating habits, promoting such recipes as sweet potato leaf salad, mashed banana peel, and fried grapefruit peel.”
the first economic reforms
People constantly look back to the special period and even joke about the extremity of their situation. In a Young Filmmakers festival in Havana, one artist made a satirical documentary film on the huge increase of marriages between 1991 and 1994. In those years, the government provided newlyweds a case of beer and the opportunity to purchase home appliances at a discounted price. To access these benefits, thousands of Cubans got married multiple times. The government finally had to limit people to one marriage every three years. Overall, this period is remembered as the darkest economic crisis faced in the history of Cuba.
In 1993, in an effort to acquire foreign currencies to pay for imported products, the Cuban government allowed the dollar to circulate. It was the start of a dual economy: one in national currency, the Cuban peso, and one in convertible CUCs (essentially dollars, worth 25 pesos). The type of currency citizens have access to determines what goods they can consume, as some state stores function with pesos and have controlled prices and others only accept CUCs.
That same year Cuba also opened up fully to tourism, allowed US remittances to enter the country and let a small percentage of the population pursue small-scale private enterprises. While state employees continued to earn wages in pesos, a sector of the new self-employed minority began benefiting directly from the tourism industry and thus gaining access to CUCs. As Cuban sociologist Haroldo Dilla explained, a dual economy was set in place: a dynamic one linked to the international market and an internal one ruled by central planning and subsidized by the first one.
The official political discourse called these market reforms “a necessary evil” to keep the country afloat. Though they were announced as temporary policies, there has been no official end to the special period. Instead what we see is a negotiation process: moments of more or fewer incentives or restrictions to engage in this second economy. Meanwhile, the problem of inefficient and over-employed state industries remained.
Economic opening with no political openingDuring the reforms of the early nineties, Cubanologists expected the contradictions between the inequalities being created by the new market economy and the socialist ideals to delegitimize the government and produce a regime change. They were surprised to see that such theories about Cuba’s subsequent political liberalization didn’t materialize. I believe the Cuban government has been able to maintain power both by limiting these market reforms and by incorporating new ideas into its project, at once maintaining and constantly transforming what socialism, revolution and being a Cuban citizen mean.
It’s easy to conclude that nothing has changed in Cuba because the same political leadership is in place and people still support it. Adjunct Professor Sujatha Fernández contradicts this conclusion by proposing that we conceive of hegemony “as a process of partial reincorporation, or the efforts of actors at various levels to assimilate counter-dominant expressions and practices into official discourses and institutions. Hegemony is always being made and remade, but in a moment of crisis when the system faces challenges from a variety of groups, we can see the process of reincorporation much more clearly.” She writes about Cuba’s state-sponsored arenas for debate and dissent in the realm of the arts, particularly filmmaking. She claims that while Cuban films are not arenas for contesting hegemonic discourses, they do propose or contain counter-hegemonic discourses or ideas, attempting to resolve them within the film in ways “that allow for the synthesis between old ideas and new realities.”
This concept of hegemony can be applied to understand how and why the earlier and current economic reforms—which seemingly contradict the revolution’s official discourse—are being woven into that discourse, allowing the government to maintain power and even strengthen its influence over society. While the original measures were seen as an economic necessity to attract foreign currencies and thus be able to import basic needs (primarily food), I believe these reforms, particularly self-employment, also responded to the growing “economic disobedience” represented by the black market activities and informal transactions as Cubans sought to resolver through any means. By licensing—but also restricting—certain trades, the government provided a space “within the Revolution” to thousands of Cubans who were migrating to a parallel economic system, and also breached the gap between the discourse and the reality of millions who were resorting to the informal sector. This policy of partial incorporation has been crucial, in my opinion, to the regime’s stability.
Informality, economic resistance The emergence of an informal economy, particularly in a socialist country, becomes a space of competition with the system. It constructs itself in opposition to the “formal” sector—in Cuba’s case the State and the cooperative sector—outside of state regulations. Furthermore, it disputes the values set forth by the revolution regarding the social character of work, favoring individual benefits. For Cuban citizens, getting involved in the black market wasn’t only a survival need, but also a form of resistance, a way to regain agency over what, when and how they consumed.
It’s important to note that, since 1968, when private enterprise was prohibited, there has always been a large informal—and mostly illegal—market providing the goods and services not available through the State. The special period accentuated this gap of what the State couldn’t provide, making the black market much more widely visible.
In fact, there seems to be consensus among government officials, analysts on the island and scholars abroad that the crisis of the official economy starting in the early 1990s greatly expanded the scope and size of the black market economy. It is estimated that between 1990 and 1992 its transactions rose from 17% to 60% of all sales. Furthermore, the Economic Commission for Latin America (ECLA) calculates that before circulation of the dollar was legalized, the Cuban population already held US$200 million, attesting to its “resistance” to state restrictions on receiving money from abroad and also to the globalized nature of this resistance economy.
The “blind eye” policyBecause the State couldn’t supply the demand, it tolerated certain illegal practices that allowed the Cuban economy to stay afloat. Anthropologist Amelia Rosenberg describes a first-hand account of the gray space of illegal private enterprise: “…Other common private (and untaxed) services available in homes, in addition to video rental, included manicures, pedicures, hair salons, laundry services, massages and indoor plumbing repair, along with unlicensed room rental and satellite TV viewing, all of which was spinning around the CDR president and any potential informers who cared to take a hint. There were also illegal sales of coffee, beans, cheese, powdered milk, fresh eggs, frozen fish and seafood, homemade candy, decorated cakes, bootleg vinegar, imported clothing and music CD’s, all going unreported to, and seemingly unnoticed by, the CDR president.”
This tolerance, referred to as a vista gorda or blind-eye policy, was—and still is—the most prevalent mechanism of negotiation between the population and the government with respect to goods and services. Giving some leeway for the emergence of certain economic activities and the circulation of goods and services outside of the regime’s ideal of who Cuban citizens are and what they should have was a first step in the negotiated incorporation of new ideas into the Cuban canon of a socialist (planned) economy. It permitted the State to allow some—only some—activities, without having to accept them officially in the discourse.
A tug-of war over the years The process of incorporating and accepting these new activities “into the revolution” has been a slow and definitely non-linear negotiation between the State and the people, marked by moments of greater or less acceptance, encouragement or restriction. In 2008 writer Ileana Fuentes described the history of self-employment as a tug-of-war, where the State takes two steps forward and one step back, a politics of incongruence and constant harassment of the self-employed by the authorities.
to maintain state control
Self-employment started in 1993 with 55 legalized activities according to Law 141/93, but established specific restrictions to the application for licenses; the next year Law 147 criminalized illicit enrichment (defined as accumulation of wealth); the year after that the number of activities increased to 117 and the following year to 157 but 37 activities were restricted again between 1997 and 1999 by not granting new licenses. Nonetheless, in the summer of 1997, casas particulares (private home-stays), which had been operating semi-clandestinely since the early nineties, were added to the list of occupations. In 2001 the issuing of all new licenses was again suspended.
Other informal restrictions included no credit availability for developing private businesses, no access to a wholesale market, a prohibition on hiring people outside the family and limits on growth (paladares could only have 12 seats, thus limiting the number of customers). Between 2001 and 2003, the self-employed population shrank from 170,000 to 150,000. CNN News reported in 2001 that the “hardest hit by the government crackdown have been the paladares, or family-run restaurants. Havana used to boast 600 such eateries: Cuban authorities have stopped issuing licenses for new ones, and fewer than 200 have survived high government taxes and restrictions.”
The logic behind these constant changes was pressure to move from the economic opening to political openings and fear of losing control over the process. The government also perceived these private businesses as a threat or competition to state businesses, especially those tapping into the tourist economy.
The government restrictions and licensing require¬ments, rules of conduct for the businesses, procedures for paying taxes and monthly contributions, number of partners a self-employed business may have, etc., are often strict and complicated; researcher Ted Henken describes them as a “Sword of Damocles” the State can hold over their heads. Laws are enforced when enforcement is in the State’s interest, but need not be enforced if the population can be intimidated into policing itself. Some rules are fastidiously detailed. For example, prepared or processed food (pizza, cakes, sandwiches etc.) may not be served on a plate or with utensils unless one has a specific—more expensive—license.
Legal accomplices of illegal businesses
Even after the reforms, the black market didn’t disappear. Economics professor Iram Marquetti, who works for the Economic Planning Center, estimated that for every legal self-employed person, four were doing that same job illegally.
I had my first explicit encounter with the black market walking through the Agro gourmet on 19th and B Streets. As I walked, I began to hear a few people whisper “eggs” or “shrimp.” Eggs are technically not to be sold outside of the state-sponsored ration card, and shrimps are not to be sold anywhere to the general public. In fact, restaurants need a special license (which means a higher tax) to serve seafood, as it is destined for the tourism industry or for export. In theory, Cubans aren’t allowed to buy them, but here’s this guy whispering to every passerby. Though I never followed up on their offer, I learned that one basically follows this person out of the agro to some nearby side street where the transaction takes place, paid in CUCs.
Though the list of legal trades one can pursue has expanded, most of them must still rely on the black market to some extent; the two markets continue to depend on each other and operate simultaneously. A restaurant may have a license to operate, but it might have acquired its products (like shrimp) illegally or stolen them from state enterprises.
It’s very common for a restaurant to offer foods not listed on the menu (like lobster) because it’s not legal to acquire lobster; the waiter will come and explain the “specials not included on the menu.” Another common bending of the rules is to engage in activities not supported by one’s type of license.
The controlled commercialization system for food and other products and the lack of a wholesale market suggest this phenomenon is unlikely to disappear any time soon, as self-employed workers must find the products some other way. While the legal distinction between licensed and unlicensed self-employment is important, it’s by no means absolute because most have to engage with the illegal market one way or another. For example, one eatery owner explained that one of the most common ways of “resolving” is to buy “on the side” from state businesses. Most if not all owners of casas particulares engage in some form of book bending. As one respondent put it, “Todos hacen su trampita” (we all cheat a little).
Though corruption does not exist in Cuba according to the official discourse, there are entire networks of under¬reporting at every level of society. In Society, Civil Society and the State: An Uneasy Three-way Affair, Damián Fernández describes how illegality and “bending the rules” can become necessary or justified. “While in the past this may have been seen as stealing, it has come to be understood as defending oneself or struggling.” In this context, it’s acceptable and even expected for one to take advantage of others, particularly tourists, in order to survive. The “vista gorda” policies still apply in the context of legalized self-employment, except when the State decides to crack down on something specific.
One hand washes the otherAnother crucial aspect to a business’ ability to “get by” is the strong informal friendship networks Cubans rely on in their attempts to “resolver”; mechanisms known as “sociolismo,” from the word socio, which means buddy or business partner. Forming relationships is absolutely crucial to navigate through Cuba’s economy (as well as most other aspects of life). By befriending an agro salesman, I was able to acquire some products that weren’t in season, like limes and hot peppers. In return, I helped him translate some vegetable names so he could communicate with foreign tourists more easily.
I witnessed countless times how my Cuban friends cut into lines, got in somewhere for free, etc., through a friend who worked somewhere or knew someone. These informal networks are applied in the self-employed sector to keep a business running. There are always Cubans outside the bus station offering you a ride to wherever you’re going for cheaper than the tourist bus. I took a car to Varadero for a weekend, and the driver took us directly to a casa particular owned by a “friend” of his. She later explained that she paid the driver a commission for bringing her tourists. When I asked why, she said, “That’s how things are; it’s how I get business.” She in turn referred us to a “friend’s” restaurant, which paid her a commission for sending us there.
This is not to say that there are no consequences for acting outside of the rules. My findings suggest that the same state mechanisms for negotiating with the illegal sector (vista gorda policies) are applied in this case: the government decides when it’s convenient for to enforce all these rules.
The new official discourse:Alongside these changes in the economic model, there have been changes in the State’s discourse on self-employment, which highlight the political dimension of the reforms. Ariana Hernández-Reguant notes that “discursively the Cuban government separated politics from economics [in the special period], and based its legitimacy on a glorious history of independence struggles, above and beyond the contingencies of the day. Socialism ceased to be a holistic project and instead became increasingly identified with little more than basic social rights such as education and health, which were to be guaranteed ad managed by the state.” In an attempt to breach the gap between those ideals and the new market reality, it also argued that the best and quickest way to surmount the crisis, especially if the country wanted to maintain its network of social services, was to continue supporting the revolution and protecting socialist values.
“Self-employment to preserve socialism”
This strategy is still used today. In a speech delivered during the closing ceremony of the National People’s Power Assembly on December 18, 2010, Raul Castro explained that these reforms are “aimed at the preservation of socialism by strengthening it and making it truly irrevocable, as was stated in the Constitution… in 2002.” This acceptance that socialism and the economy could be compatible with each other while not being the same was a first step in incorpor¬ating the reforms into the hegemonic discourse.
Concern that a new Despite seeing reforms as necessary for the continuation and strengthening of socialism, the government has varied its discourse regarding the place private enterprise should hold in society. As Perez Izquierdo noted in his 2003 study for the University of Havana’s Center of Demography Studies, self-employment was officially defined in its beginnings as “all those activities developed by economic agents outside of the fundamental sectors of the socialist economy, which are the State and cooperative sector.” Ana María Jatar-Hausmann, among others, appropriately termed the ambivalent position of licensed self-employed workers in the Cuba of the nineties: “legal but not legitimate.” That stigma lasted for years. Those who decided to attempt self-employment, even the legal trades, were considered a species of “pariahs with permission” within the Cuban economy. Fidel Castro himself called them “sneaky parasites” in a 2006 speech.
bourgeois class could emerge
The attempts to discourage self-employment were based on concerns that these people could become a new bourgeoisie class, getting rich at the expense of others and doing little work. The process of control and limiting of these licenses is a testimony of the State’s desire to keep the sector small.
What’s the new element?There’s something new in the 2010 reforms to liberalize these regulations, however. The State has entered a new stage in its negotiation process, in which self-employment is gaining some legitimacy within the revolutionary canon. With no “special period” that can be used to justify the reforms as absolutely necessary, they have been explained to the Cuban people as a “renewal” of the economic model on behalf of efficiency and increased productivity.
The announcements were surprising to many, especially because they involved official recognition of the under¬employment problem. In April of that year, President Raul Castro admitted that there were more than 1.5 million excess state workers; then in September he announced that between the following month and March 2011, half a million of them would be laid off.
There was little information when I was in Cuba on how many had actually been laid off and where they were going, but the layoffs weren’t keeping to the six-month announced schedule. There was, however, a very noticeable public emergence of private businesses. Between October and December 2010, more than 100,000 people are estimated to have requested licenses.
A response to the downsizing of the StateThe latest set of reforms thus comes as a response to the downsizing of the State in the hopes of gaining efficiency. An official document that circulated that October set the goals for the reforms: “We will try to create 465,000 jobs in the private sector: 250,000 self-employed and 215,000 in other activities.” The “other activities” referred to joint ventures and cooperatives. It also announced that 178 self-employment activities would be authorized, but only 9 of them were new; the rest had simply been frozen for years.
CubaDebate wrote in January 2011 that Cuba is experi¬encing a “crusade against mistakes, suppression of absurd prohibitions and the eradication of erroneous conceptions that limit the development of the productive forces.” As part of this new discourse of “updating” the economic model, the media also began to deconstruct the previous image of people who engage in self-employment as cheaters and traitors. In the September 24, 2010, edition of Granma, one could read that “we must shun those concep¬tions that virtually condemned self-employment to extinction and stigmatized those who decided to pursue it in the nineties.”
Raul Castro: “No going back”While constantly renegotiating but never totally trans¬forming Guevara’s meaning of revolution and socialism, the official discourse is now focusing on keeping the economy thriving. In a second speech to the National Assembly on December 18, 2010, Raul Castro reiterated the necessary change of mentality that must accompany this process. “We have come to the conclusion that large numbers of self-employed persons are one more employment opportunity for working-age citizens with the aim of increasing the supply of goods and services to the population, ridding the State of those [services] so it can focus on what is truly decisive. What the party and the government should do is facilitate their work rather than generating stigmas and prejudices against them. Therefore it is fundamental that we modify the existing negative approach that quite a few of us have towards this form of private employment.
“When defining the features that ought to characterize the building of a new society, the classics of Marxism-Leninism stated, among other things, that the State, on behalf of all the people, should keep the ownership over all the basic means of production. We turned this precept into an absolute principle and almost all the country’s economic activity started to be run by the State. The steps we have been taking and shall take in broadening and relaxing self-employment are the result of profound meditations and analyses and we can assure you this time there will be no going back.”
This change of discourse, particularly the justification of self-employment as still being within a Marxist-Leninist ideology, is a sign of the State’s attempts to truly incorporate self-employment within the revolution, and not just accept it as a necessary economic factor, as the official discourse of 1993 suggested.
Who are the new self-employed? Unlike what Rosenberg describes in her ethnography of the first years of this century, where informal economic activities were relegated to the “private sphere,” invisible to the public eye, I arrived in Cuba in a different time: new visible businesses and commerce all over the city.
Walking down 23rd Street in Vedado with my friend Julia, who had lived in Havana a year earlier, she was struck by the number of new eating options and other new visible businesses. We counted nine eateries in a span of three blocks leading to the University of Havana; she said only one of them was there last year.
These are very small places, restricted from setting out tables and chairs to limit their enrichment. Of the nine, three sell pizzas: ham, cheese or onions or a combo that includes all three ingredients. Prices range from 10 to 20 pesos. The other establishments sell plates of food: moros y cristianos (rice and black beans), some form of meat (generally pork), a coleslaw salad and some starch (generally white sweet potato). These range from 25 to 35 pesos. On request, they can sometimes substitute the meat with a fried egg. Most of them also sell ham and cheese or ham and mayo sandwiches for 5 to 10 pesos. Students frequently comment on this recent availability of options, though most don’t believe they will last if they don’t start diversifying their products. One of my Cuban friends mentioned that some businesses had already closed after only one month.
Other proliferating businesses include the sale of pirated CDs and DVDs. Ironically, a practice that’s illegal in the rest of the world is legal here, where there is otherwise tight control over the circulation of information. Every morning I walked by three kiosks in the ten-block route to the university, where I was able to buy all the recent Oscar nominated films for 25 pesos each. It’s a concrete example of how the State is now attempting to incorporate “within the revolution” activities that were previously relegated to the black market. It’s also a way for the State to both gain some revenue through the high taxes and maintain tighter control over what materials are circulated, though for now one seems to be able to find pretty much any mainstream film.
Some operations aren’t newMany of the people I talked to who had just taken out a license had already been involved in the informal market. A bakery near the place I lived opened in January 2011 but bore a sign reading “fifty years of experience,” the continu¬ation of a family business that existed before the revolution. While private businesses were banned, the family sold sweets on the side in the black market while holding state jobs. The youngest of the crew, a recent college graduate in the humanities, decided to take on the business. Though she didn’t discuss her reasons in great detail, she mentioned wanting to continue the family tradition as well as general dissatisfaction with her job opportunities after college.
Another common trend I observed was the return of places that had closed during the periods of tightening of the reforms, among them, a paladar that was open in the nineties but closed in 1999 because the restrictions got too difficult to manage. One source claimed that the taxes rose to 10,000 pesos a month (about $400). With the new opportunities, the old owners decided to gather up the same workers (then illegal as businesses weren’t allowed to employ someone who was not a family member) and reopen the place. One waiter who worked for the original paladar is now employed officially. In his words, “the paladar has the same chef, but the helper now went to a better life (which in current Cuban lexicon means not dying but leaving the island). He thinks this wave of reforms is more permanent than the previous ones: “We’re not in a state of emergency anymore; they’re looking to change the whole system.”
To halt the migration of youth?The possibility for a young person to establish a business is one of the changes announced in 2010; before then, only retired individuals or housewives could apply for a license. This new permission seems aimed at halting the alternative coping mechanism young people have found: leaving the country. A very large proportion of Cuban migrants of the past decade were between 18 and 35 years old for generational reasons: disinterest in and distrust of the revolutionary project by an unmotivated generation that would rather prioritize its personal projects. This can be seen as a way of reincorporating those potential migrants into the State.
According to a university friend, the government job allocation process is intricate, and starts with placing students in majors depending on their aptitudes, grades and performance on standardized tests. Once out of college, graduates are assigned a job they must keep for two years, often working outside their field of study.
Assigning students straight out of college a job for the first two years ensures every student a job, but also allows the State to allocate people into the less desired ones. Most Cubans are university graduates, but there are official restrictions on practicing their career in the private sector. For example, architecture is not on the list of freelance options, but working as an architect for the State doesn’t provide an income worthy of one’s aspirations.
The impossibility of choosing one’s job coming out of college and the low economic incentives have become important factors in young people’s decision to choose the self-employment route. Those who engage in legal self-employment do so primarily for the potentially higher income it provides. Informants constantly refer to the advantages, like working for themselves, but also complain of the stress and uncertainty of not having a fixed income.
Where do they get the products to sell?Despite the liberalizations, many obstacles in the system still make it very complicated to run a food-related business in Havana, as owners frequently complain. The main difficulty is getting access to the inputs to make the foods they sell, an especially relevant problem for the small eateries that target a Cuban clientele as they sell their products in pesos while most of their inputs are only found in CUCs. Bakery owners constantly talk about the difficulty getting flour and butter.
The prices of such items also keep changing, but the businesses have adopted a philosophy of trying not to change their prices; instead, they offer enough variety of products that there’s something for everyone. One of the three pizza places near the university said the main difficulty was with the cheese. One kilo of cheese cost them about 5 CUCs, while each pizza sold for 12 pesos. The excessive cost of cheese forced them to raise their prices just two months after opening, only possible because of the massive university student clientele they had already attracted. The pizza place next door wasn’t so lucky; it closed after a month.
The lack of a wholesale market is one of the strategies devised by the State to prevent the enrichment of owners, yet another sign of the only partial incorporation process, accepting but limiting new forms of employment. This decision seemed politically rather than economically motivated, as it ended up hurting the retail market’s delicate balance. The sudden appearance of these businesses depleted local food suppliers of many communities. One taxi driver asked me if I would mind him stopping at the state bakery on the corner. He explained that he had been doing so almost every day for the past three weeks and that all the bread had been commissioned to the small eateries that had flooded the city.
Both remittances and space are necessaryA third very visible trend made possible in the 2010 reforms is obtaining a second license to make some extra income. One of the new street pizzerias that opened while I was there is owned by a recent college graduate. He cited economic reasons as his sole incentive. His parents are already involved in self-employment by renting a room in their house to tourists, and they have enough space in the front of their house on one of the main avenues in my neighborhood, so he decided to try his hand at managing a business. My observations suggest that a large part of the eateries are managed by families who also run casas particulares and thus have accumulated some capital.
Given the lack of financing opportunities, having some form of capital to start a business is an imperative, thus perpetuating the inequalities the system created to provide access to better income, such as receiving remittances from abroad. A 1995 investigation by Jose Manuel Cafiano, an independent journalist, found 116 paladares(between legal and illegal) in Old Havana; more than two thirds of the owners claimed in interviews to have created their businesses with resources from abroad.
Another of the conditions needed start a business is a physical space in the household, which raises more questions about who has access to the new opportunities. In the same spirit of “resolver,” Cubans get creative when there’s limited space. A pizza place near the university devised a system to operate from the third floor of a building: the customer goes to the front of the building and yells the order up to a man peeking over the third floor balcony; some minutes later the man sends the pizza down in a plastic bucket on a pulley and collects the money the same way. This is one of the few encounters I had with an honor system; it wouldn’t be at all hard to run away with the pizza without paying.
According to some scholars, these economic reforms are also revealing structural racial differences in Cuban society. Alejandro De la Fuente argued in 2001 that it’s nearly impossible for Afro-Cubans to open paladares because they tend to live in more densely populated barrios and lack the space to carry on entrepreneurial activities.
Businesses come and goIt quickly became evident to me that the protracted process of deciding to permit self-employment in Cuba has left a long and curious trail of confusion over what’s legal and what isn’t. A January 2011 article in the online journal Diario de Cuba revealed the worries of many people taking licenses who were unclear about the boundaries of their newfound professions. “Milagros wants to know that if as a typist she’s allowed to use a computer or only her old typewriter, and Lazaro wonders if he is violating the law by advertising the offer of candles and collars in his Santería store…. The confusion is such that the official radio station Radio Rebelde has opened the microphones to the public for several days, with experts from the Ministry of Labor answering questions about the licenses.”
In conversations with a pair of bakery owners, one said that most people taking out licenses aren’t reading the fine print in their contracts. “Lawyers’ work is to write things so no one understands them, so you have to be careful… you also have to have an understanding of how the market economy works; if everyone sells the same thing, there’s too much competition and some have to close.” The other one added that many people took out licenses without knowing what they were getting into. Since they don’t know how to manage their businesses, they are now returning the licenses. “The day we went to ask for the license there were two lines, one to open and one to close,” she said.
Cuban society is now differentAn interesting debate around these new reforms has been the extent to which privatization should advance. According to a publication by Camila Pineiro in the official magazine Rebelión, a socialist enterprise doesn’t necessarily have to be administered by the State, but it does have to be administered by society: its workers and the community surrounding it. By this logic, a self-employed citizen or one who works in a cooperative oriented by social interests is a socialist enterprise. The threat to socialism comes when individuals start hiring employees. This “capitalist” makes all the decisions and the workers sell their labor power, losing all rights to control it. According to Marxist theory, this sort of relationship allows for the development of values like individualism, selfishness and apathy or insensitivity to the needs of others.
What Pineiro’s theoretical discussion fails to realize is that the economic crisis of the early nineties and the subsequent market reforms have inevitably already produced a deep transformation in society’s values, and expanded the imaginary of what is possible and desired. In a 2009 ethnography, Amelia Rosenberg focused on how Cubans live in a constant struggle to obtain material goods. She wrote in her introduction: “The protagonists of this book are ordinary Cuban families quietly in search of a life with basic luxuries. This search appears unremarkable, since neither their poverty nor their desires are extreme. They do not live terribly, they are not starving, but they work hard and they want to live better. They long for affordable quality goods and services that they believe are available elsewhere; they are frustrated with a nationalized system offering less than ever before, and they harbor resentment over their hard and unrewarded work.”
Based on my own experience, I agree with the two fundamental things proposed in that ethnography. First, Cuba’s redistributive policies have been largely successful at maintaining a strong safety net, even during the special period. Thus, one will not walk around the streets of Havana and see evident signs of extreme poverty or misery as one might in other Latin American countries. No kids are begging on the streets, no people walk around barefoot, and during the days in which her ethnography was written, all Cubans still had access to a minimum provision of food through a ration book, though in the months I was there, the provisions shrank considerably. As of March 2011, the rations booklet included rice, beans, 80 grams of bread per person per day and sugar, as well as the ability to buy one to five pounds of fresh vegetables at very discounted prices. Additional pounds cost more. What is provided is expected to last 10 to 15 days.
Second, Cubans do engage in a constant struggle for essential products that were once provided through the ration book and a few “luxuries” like juice for kids, yogurt or milk, red meat, butter, etc., a search that governs daily life. People are expected to magically come up with 3 CUCs (almost 20% of a state salary) to buy a liter of cooking oil or personal care items. The other alternative is to engage in a black market activity to get the money or find the products at a lower cost, although with the latest economic reforms, opportunities to earn a higher income legally and afford what is now sold in the “freed market” are emerging in the self-employed sector.
The stories of the darkest years of Cuba’s special period, when there was literally nothing in stock to be bought, are in the past. In today’s dual economy, one can find almost any product; the key is how much time and money one has or is willing to invest. Having CUCs is a survival imperative, and most Cubans have found some way to “resolver” outside of their state job. In stores that sell in CUCs, called tiendas en divisas (hard currency stores) or “shopping,” one can find a broad range of products—or rows of the same thing, depending on one’s luck. The spotting of things I wasn’t expecting to find included peanut butter, honey nut Cheerios (packaged in Mexico), abundant amounts (multiple rows) of pink mayonnaise, and some odd form of chocolate soy milk imported from Spain.
Dreaming of consumingIn my opinion, the self-employed cannot be referred to as a homogenous group or emerging “social class”; there’s a very wide discrepancy in the income of someone who has a license to sew buttons and one who rents rooms to tourists. Furthermore, it’s very difficult to distinguish the self-employed from other groups with access to CUCs, and in many cases it’s the same people working through different means, both legal and illegal. In fact, among the difficulties that arise from legitimizing self-employment is precisely the association with illegality or with the easy money of those who have access to remittances, sell products in the black market or work in “jineterismo,” an umbrella term used to describe anyone who gets paid for services ranging from escorting tourists or serving as their guides, to prostitution.
While it can’t be said that the self-employed are already a class, the changes in Cuba’s economy in which they are protagonists are evidently contributing to the differentiation of an allegedly “non-differentiated” society. Some of them are beginning to profit from their new business, especially those with paladares and casas particulars, which can earn revenue in CUCs.
As noted earlier, many of those who started a business (especially paladares) already had some capital, mainly from receiving remittances, and a portion of them are making good money. By pushing for the availability within Cuba of those things that are part of their imaginary of consumer societies elsewhere, these “nouveaux riches” are developing new consumer habits and want new services and products to be provided on the island as well, thus feeding the imaginary that prevails in consumer societies, hoping it will someday become a reality in Cuba.
This aspect of Cuban life is highly visible at the university, where many students constantly refer to the goods and services they wish to obtain, or flaunt those they already have that evidence some connection outside of Cuba. During a university event one girl would not put down her new I-phone, waving it around ostentatiously as she took photos with it and showed them to friends.
The emphasis on foreign brands and the latest “things” is important in this context of seeming closeness to the world outside of Cuba. I witnessed an interesting commercialization network functioning within the university: classmates would bring US-brand clothes to school to show around and sell during recess. They even gave some of the clothes to friends to help sell them for a commission. In reality, an international consumer culture that arrives through gifts from relatives abroad, visiting foreigners and the media (Cuban TV and theaters regularly play Hollywood films) is thriving in Cuba.
Every Cuban knows that all these things are widely available in other countries and believe life outside of Cuba is easier. Our Indian-American professor told us about a conversation she had with a taxi driver in which he asked where she was from and she asked him to guess. His answer was “surely from a place where you can own a house and two cars.”
With businesses comes advertisingThis new consumer base is both pushing for the availability of new employment options and defining what sorts of new services should be allowed to meet the demands of their consumer “wants.” One of the most important changes I witnessed with the surge of businesses out in the open was the growing quality of their advertising. Before, it was illegal to advertise; the informal economy ran solely based on networks highly secluded to private spaces. One could barely notice that a house was an eatery, or that they repaired shoes inside. The whole concept of “marketing” was viewed as a capitalist mechanism of oppression.
While it would be foolish to compare Cuba with any other consumer society, most of these small businesses now have some form of identifier, a name or billboard in front of the house, listing the menu and prices. My friend Julia mentioned that only a year earlier, even in “nicer” legal paladares, the quality of the menu presentation was very poor, particularly because half of their offerings were still illegal and couldn’t be listed. With a sudden explosion in supply, that’s beginning to change.
I also began to notice how different paladares advertise to national or international publics. In a country where there’s little public recognition for “health foods,” some paladares have begun to cater to the international public in that argot, even though what they sell is quite similar to the other places. For example, the menu on one new place said “Le ofrecemos una unica forma de mantener una Buena dieta” (we offer you a unique way to maintain a healthy diet). Prices were in CUCs and the menu included an English translation.
Responding to contemporary Cuban tastesIt should be noted that such advertising is also responding to the changing demands of a national consumer group with access to resources. I observed several examples of businesses tapping into the emergence of a Cuban market that emphasizes international conceptions of health and ideas of what a healthy body looks like. I also witnessed the opening of a spinning club, which charges 2 CUCs (about 12-15% of the average state wage) for a one-hour class. So far, its clientele has been steady. It’s made up mostly of young men and women who come before or after work, as well as some college students.
In early March of 2011 a new bar and music venue opened called El Submarino Amarrillo (The Yellow Submarine). The place is a tribute to the Beatles, and is decorated with psychedelic colors, posters and Beatles lyrics on the walls. Like almost all music venues, Submarino is State-run. At first I found it curious that the State would prioritize such a place, an ode to globalized pop culture, over other projects, particularly since the Beatles’ music was banned in Cuba as counterrevolutionary not all that long ago.
Then two weeks later another state-run bar, called Jade, opened up in Old Havana. One might argue that these new places are created to please the tourist economy, but I see them as the State’s response to Cubans’ consumer desires, incorporating a space for them, just like Sujata claimed happened with rock music or hip-hop. It’s Cubans, not foreigners, who have filled the tables.
Will Cubans keep pushing the envelope?The two college graduates who opened a bakery spoke confidently about their vision for their business: A coffee shop where one can sit down, have some tea or coffee and eat a pastry, “like the Café de Paris” (a bakery in the middle of Old Havana’s tourist sector). They say they don’t have the capacity or capital to do it right now, plus the State won’t allow it. Upgrading their license to have chairs and tables would require registering as a paladar, and a coffee shop’s income couldn’t cover the costs of what the State expects paladares to earn.
They see the State as restricting the expansion of their business and their desire to diversify beyond the current bakery offerings. They want to create a place with a different atmosphere, where customers can sit and enjoy not just the pastries, but also the experience. By explicitly naming 178 trades and the specific boundaries each license entails, the government is limiting Cubans’ potential creativity and their ability to thrive in a competitive economy.
The Cuban government’s experimentation with restricting and encouraging self-employment over the past two decades suggests that there was no clear objective or policy towards self-employment, but rather responses to the ongoing changes in society. The outcomes, I argue, have resulted from a process of negotiation between the State and the Cuban people, especially those looking for alternatives to the limits of the planned economy and labor-worker system that provide little space for creativity or fulfillment of a personal project.
“Cuban style” self-employment offers an alternative that might deter citizens from engaging in other means of contestation, such as operating completely within the black market or leaving the country; at the same time the “controlled” nature of this space allows the State some control over their activities and even some economic revenue.
Within this context, the latest set of reforms seems to further this incorporation process: we see a change in the official discourse toward these activities, and speculations are beginning to emerge about the self-employed gaining access to social security and retirement funds just like a state worker would. Nonetheless, the types of licenses permitted so far, with the exception of casas particulares and paladares, are trades such as shoe repair, the sale of peanuts and the like, which are considered part of the informal economy in other countries and don’t represent stable job opportunities. If the majority of Cuba’s discontented citizen-consumers are young university graduates, will they be satisfied with these options once the markets for paladares and other micro-businesses are saturated?
Through their modes of operation, use of informal friendship networks and continuation of the tradition of illegal operations now translated into the self-employment realm, Cubans are continuing to contest the system and its restrictions. Their actions, how well they follow rules or bend them, will produce more changes in the legislation.
A receptive and able governmentThe lesson I take from this experience is that the Cuban government is quite responsive, though it moves slowly and in partial ways to maintain its control over whatever changes it puts in motion. Furthermore, it has a great ability to shift the revolutionary project’s emphasis when needed; right now it is on productivity and efficiency, two pillars of a capitalist economy that the Cuban state has been able to justify within socialism, incorporating new counter-hegemonic ideas into its project.
Many questions remain unanswered about where these reforms might take Cuba. How far can the State’s responsive nature be pushed? Will there be further reforms as some of the difficulties and challenges the self-employed are facing, such as problems in the supply of inputs or unavailability of credit, become more widely acknowledged? How will the State continue to cope with the contradictions of establishing what are already very evident changes in the attitudes, values and ideas about consumption that some citizens have appropriated? Will we see similar mechanisms of incorporation?
Finally, Cuba is experiencing an odd reversal of the wage pyramid, in which these informal (legal or illegal) economic activities provide more income than the best-paying state salaries in posts that require much higher degrees of education (doctors earn only 450 pesos a month and a computer technician can earn 540 pesos). If it’s possible to make more through these self-employment trades, what incentives will there be to enter the university system and then the state-run sector?
Luciana Chamorro is majoring in anthropology and Latin American studies at Princeton University. This is an edited version of her research paper.