Fidel Castro - Economic Policies

Fidel Castro wanted to industrialise Cuba and to make it economically independent. This was not easily possible, as the Cuban economy was to be remained linked to other nations' policies and decisions. A few different international economic decisions shaped Castro's economic policies.

Moral incentives and voluntarism

Che Guevara was a revolutionary who was the President of the National Bank of Cuba and, later became, Minister of Industries. Guevara believed that the best ideology to follow was the one of communism instead of capitalism. He wanted a centrally planned economy where the key value would be self-sacrifice, as he believed the people should work and fight for the values of the revolution rather than any personal interests. All workers would receive equal wages, and overtime work would not be paid, as it was seen as the voluntary personal contribution to the revolution. Cuba changed their currency in 1962, which meant that anyone who had savings in banks that were not owned by the state, would lose them overnight, and in cities rents were abolished. In 1963, a second agrarian law was informed, which reduced the amount of and that could be owned personally. After 1963, the state owned 70 % of all land on the island.

After the exodus of counter-revolutionaries, Cuba was missing specialised personnel and technicians, which meant that assessing and finding solutions to problems was limited. Farmers in collective farms were forced to sell their produce to the state at very low prices, which lowered the incentive for the farmers to produce more that needed to survive. Castro, still determined to advance in industrialisation, continued to buy machinery, which merely increased Cuba's debt. By 1964, Cuba had to intensify sugar production in order to reduce its debt.

The Revolutionary Offensive (1968)

The aim of the 'Revolutionary Offensive', which was launched in 1968, was to eradicate the remains of capitalism, so Cuba would be purely communist. Again, the campaign emphasised the value of self-sacrifice. The last privately owned enterprises were expropriated, and self-employment was banned.

The 'Offensive' did not succeed, as it did not increase productivity, and merely created administrative chaos. At the same time, the return of the self-sacrifice values led to many refusing to go to work, and even some vagrancy.

The 'Year of the Ten Million' (1970)

To repair the damage of the 'Offensive', Castro announced that Cuba was to break its previous sugar production record and reach 10 million ton output in 1970. The aim was to be able to pay off the debt, by selling the surplus of sugar. It was intended to show those who were still doubting the revolution and its goals.

In order to create motivation for the people of Cuba, posters of Castro himself in fields harvesting sugar, were hung in the streets. Student, emigrants, law breakers, etc, all worked in the sugar cane fields as 'volunteers'. Free time entertainment, such as theatres and bars were closed, and holidays such as Christmas and New year and their celebrations were cancelled in order to increase productivity.

Cuba did reach a record amount of sugar, but they did not reach the 10 million tons that Castro had aimed for. 'Only' 8.5 million. The intense productivity had worn on the machinery and the people. It had harmed the forestry and fishing parts of the economy, and the military felt their status diminished, as the soldiers had been used to cut cane, instead of defending the nation.

The blow hit Castro both economically and politically. In a speech addressed to the nation on July 26th 1970, he admitted the failure, and by blaming the administrative side instead of the peoples commitment and offering his resignation to a crowd that was cheering his name, he managed to stay in power, and withhold his political position.

Following this, Castro had to abandon Guevara's ideas of voluntarism and self-sacrifice, and accept greater economic dependency on the USSR. State owned companies were given enough autonomy to be able to make their own decisions without having to run it by the state bureaucracy first. Despite these improvements, Cuba remained in the same similar economic state.

Cuba was badly hit by the international economic situation as the USSR cut the price it paid Cuba for sugar. Unemployment and debt were some of the factors that ended up leading to the 1980 Mariel exodus when 125000 people abandoned Cuba to go to America.

The Rectification Campaign (1986)

Castro returned to the self-sacrifice values once again during the 'Rectification Programme'. Farmers' markets were prohibited again, bonuses, extra pay were abolished, and self-employment was discouraged. Yet another Agrarian Reform Act was implemented, causing the percentage of land managed by independent farmers to drop to less than 2%.

The results of the programme, economically, were poor. Productivity fell, and once again workers refused to go to work. There was a reduction in the supply of milk, oil, textiles and suger, which led to the prices increasing. Transport and electricity prices also increased, and black markets started to reappear in the country.

The Special Period (1991)

After 30 years of economical and social cooperation, the USSR suddenly and unexpectedly ended it with Cuba. Soviet technicians abandoned projects as they left Cuba, and subsidised goods, oil and access to international loans that the USSR provided to Cuba were finished. 

This lead Castro to announce that Cuba had entered a 'special period of peacetime'. Hereon after Cubans faced tighter rationing. Energy had to be saved as the USSR had cut off their oil supply, which limited the working hours of the population, and it induced long black-outs and restricted public transport.

To come through these rough times new policies were implemented:

- State-owned farms began to be run as worker-managed cooperatives

- Cuba was opened to international business. (Tourism in particular developed positively)

- (1993) Cubans could now buy and sell US dollars

- Farmers' and handcraft markets reappeared and some level of self-employment was allowed.

By 1994 Cuba showed signs of economic recovery, as sugar was being replaced by tourism.

(All information is from Pearsons 'History, 20th century world, Authoritarian and Single-Party States', 2010)