Domestic Policies: Economic Policies
- Sugar dependency: Over 70% of export earnings came from sugar, leaving Cuba vulnerable to price fluctuations and lacking diversification.
- U.S. dominance: Much of industry and trade controlled by the U.S.; the embargo after 1959 deepened economic challenges.
- Inequality: Rural poverty, concentrated landownership, and underdevelopment fueled unrest.
- Castro’s goals: Diversify production, industrialize, gain economic independence, and reduce inequality.
- Che Guevara’s vision: Advocated a centrally planned economy with moral incentives (revolutionary ideals over money), equalized wages, and voluntary overtime for the revolution.
Note
- Cuban voluntaryism and the “New Man”
- “New Man” (El Hombre Nuevo): Che Guevara’s revolutionary ideal (early 1960s).
- Citizens motivated by moral incentives, not material gain.
- Traits: altruism, discipline, honesty, social responsibility, political commitment.
- Rejected individualism and capitalism; promoted voluntary labor, communal living, and loyalty to socialism.
Radical Economic Reforms (1961–1968)
- Currency reform (1962): New peso (CUP) wiped out private savings in non-state banks, eliminating capitalist influence but causing financial losses and distrust.
- Rent abolition: Landlords lost income; ~80% of urban tenants benefited, reducing homelessness and boosting regime’s social justice image.
- Agrarian Reform Law (1963): Further limited land ownership; by 1968, state controlled 70% of arable land.
- Revolutionary Offensive (1968): Nationalized all remaining private businesses, banned self-employment, expanded full state control of economy.
Exam technique
- Some questions in Paper 2 may revolve around the success or failure of policies.
- Remember that success and failure is “measured” according to aims.
- Go back to the aims that Castro had for his economic policies.
- What aspects seem successful up to now? What is failing?
Challenges to the economic policies
- Nationalization: State took control of almost all sectors → rapid bureaucratic expansion.
- Inefficiency: Slow decision-making, poor coordination, and resource misallocation.
- Absenteeism: Lack of material incentives led to low productivity despite strict discipline.
- Brain drain: 300,000+ professionals and skilled workers emigrated in the 1960s, leaving shortages in expertise and management.
- Moral incentives: Guevara’s system failed, low fixed prices discouraged effort and efficiency.
Self review
- If you’re studying another socialist/communist authoritarian state as your second case study, try to build a pattern surrounding economic policies for Compare and Contrast questions.
- Regardless of the particular policies, are their shortcomings similar?
- How far were people engaged with revolutionary change?
- How did different regimes deal with potential lack of commitment?
The Ten Million Ton Harvest (La Zafra de los Diez Millones)
- Goal: Produce 10 million tons of sugar in one season to earn foreign currency, repay debts, and reduce reliance on the USSR.
- Mobilization: Nearly 20% of Cubans (students, soldiers, professionals) sent to rural areas for voluntary labor; ministries and industries redirected to support the harvest.
- Symbolism: Portrayed as national pride, economic salvation, and embodiment of the “New Man.”
- Outcome: Only 8.5 million tons produced → short of goal.
- Impact: Disrupted other sectors, drained economy, exposed inefficiencies, and marked a failure of centralized planning.
Note
- In the 1950s, sugar production typically ranged from 5 to 6 million tons annually, making Cuba the world’s largest sugar exporter at the time (Pérez-Stable, 1999).
- From 1961 to 1968, production fluctuated between 4.5 and 6 million tons, with 1963 and 1964 falling closer to the lower end due to organizational inefficiencies and poor weather.
Self review
- Was the Zafra de los Diez Millones such a failure if the average was around 6 million tons per harvest?
- How would you evaluate the campaign?
Case study
The Ecological Impact of the Zafra
- The ecological impact of the 1970 Ten Million Ton Harvest was significant and largely negative, though not always widely discussed at the time.
- To meet the target, vast areas of land were converted to sugarcane monoculture, including marginal lands poorly suited to such intensive cultivation. This practice led to:
- Soil exhaustion and loss of nutrients due to the repeated planting of a single crop.
- Deforestation in some areas to expand sugarcane acreage.
- Increased erosion and depletion of topsoil quality over time.
- The widespread burning of sugarcane fields, a traditional but polluting practice, was intensified:
- Released large volumes of smoke and carbon particulates into the atmosphere.
- Contributed to air pollution in nearby communities and added to Cuba's overall carbon footprint during that period.
The Political Impact of the Ten Million Ton Harvest
- Framing: Sugar harvest cast as national duty and revolutionary crusade.
- Castro’s role: Personally led campaign, gave daily speeches, joined manual labor, and appeared in propaganda as a farmer.
- Credibility: Tied his image and revolution’s success to the 10-million-ton goal.
- Failure: 8.5 million tons fell short → public setback, decline in enthusiasm, end of mass-mobilization drives.
- Aftermath: Castro admitted error, shifted to technocratic planning, stronger bureaucracy, and Soviet-style economic models.
Post-1970 Reforms
- Reforms: Reintroduced material incentives (bonuses, wage differentials), slight decentralization, limited autonomy for state enterprises, and reopened farmers’ markets (1980).
- Impact: Some stabilization, but overall stagnation persisted.
- Problems: Rising foreign debt, flat living standards, growing public frustration.
Note
- As we have seen in a previous section, this disillusionment culminated in the 1980 Mariel boatlift.
- The mass exodus shocked the regime and symbolized a crisis of legitimacy, exposing the limitations of post-Zafra reforms.
The 1976–1980 Five-Year Plan
- Cuba’s first full Soviet-style plan, aimed at modernization, industrial growth, and higher living standards.
- Goals: +40% industrial output, agricultural growth, housing expansion (with prefabricated tech), and better infrastructure.
- Support: Backed by Soviet aid, sugar-for-oil trade, COMECON integration.
- Results: Some industrial and housing gains, but agriculture stagnated, inefficiencies persisted, consumer shortages remained.
- Significance: Cemented Cuba’s commitment to Soviet central planning until the USSR’s collapse.
The Rectification Campaign (1986)
- Launched by Castro to reverse 1970s–80s market-oriented reforms amid economic stagnation.
- Blamed problems on market deviations, not central planning; farmers’ markets and self-employment banned.
- Reaffirmed Party dominance, reinstated voluntarism, and tightened centralized control.
- Rejected Eastern Bloc reforms like perestroika, fearing loss of Party authority.
- Result: worsened inefficiency, scarcity, and black-market growth, paving way for the 1990s Special Period.
The Special Period (1991 onwards)
- Impact of USSR collapse: Cuba lost 80% of trade, 90% of machinery imports; GDP fell 35% (1989–93); agriculture dropped 50%.
- Crisis conditions: fuel at 10% of prior levels, transit halted, 16-hour blackouts, caloric intake cut to ~2,440 kcal/day.
- Reforms: Castro legalized U.S. dollars (1994), reopened private markets, allowed limited self-employment, and promoted foreign investment (tourism, energy, biotech).
- Helms–Burton Act (1996): extended U.S. sanctions to foreign firms, deterring some investment but provoking EU condemnation.
- Outcome: economic freefall slowed, foreign investment rose ($74m in 2000 → $185m in 2008), but GDP remained below pre-crisis levels.
Note
- In short: the Special Period was Cuba’s worst economic crisis since the revolution, caused by the loss of Soviet support, and it forced the government to cautiously open parts of the economy.
Tip
- The most important aspect of Cuba’s economy under Castro is the will to diversify and make Cuba independent and how the efforts (especially during the 10 million ton harvest) always fell short to accomplish the aim.
- The part of the economy in the 1980s and 1990s will be more useful in questions regarding foreign policy or in questions from Topic 12: The Cold War and its impact on countries other than USSR and US.
