Cuba: From State Socialism to a New Form of Market Socialism?

Cuba's post-revolutionary economic history was penalized by the twin sets of distortions stemming from its former, artificial trade relations with the Soviet Union and from the very nature of the state socialist model. Yet, Cuba's centralized resource allocation system and the consistent priority granted to the satisfaction of basic needs led to a remarkable accumulation of human capital and an extraordinary development of public services. Moreover, they serendipitously endowed the country with a lingering comparative advantage in some advanced, knowledge-based services sectors (SS). However, the tension between Cuba's exceptional human development achievements and the weakness of their material foundations cannot be maintained indefinitely. The central planning mechanism entails serious intrinsic deficiencies. The socialist principle of distribution according to work can no longer be ignored. The role of the market and monetary-commercial relations must be drastically enhanced. The shortcomings of the present system should be fully acknowledged and dealt with boldly, with a comprehensive structural reform program. The ultimate goal of such a program should be to definitively supersede the traditional state socialist model, leading to a transition towards a specifically Cuban form of market socialism.