‘A refreshing study on one of the most significant attempts of our age to chart an alternative course of development’ — Professor William I. Robinson, University of California, author of Latin America and Global Capitalism (2008)

George Lambie is a Principal Lecturer in the Department of Public Policy at De Montfort University in Leicester. He is also a Visiting Professor of the University of Havana and joint-Editor of the International Journal of Cuban Studies. His writings on Cuba have won academic awards.

The Cuban Revolution in the 21st Century

By George Lambie

Pluto Press

Copyright © 2010 George Lambie
All rights reserved.
ISBN: 978-0-7453-3010-5

Contents

Acknowledgements, ix,
Introduction, 1,
1. Globalisation: Understanding the Rationale for an Alternative, 13,
2. Western Liberal Democracy: Definitions, Ideology and Alternatives, 60,
3. The Cuban Revolution: Building a Participatory Democratic Process, 119,
4. The Revolution in Crisis, 170,
5. Defending Cuban Socialism Against Global Capitalism: Fidel Castro Retires: The End of an Era?, 207,
Conclusion, 251,
Bibliography, 258,
Index, 283,

CHAPTER 1

Globalisation: Understanding the Rationale for an Alternative

To analyse Cuba’s position today and its prospects for the future, especially as it strives to defend its Revolution and seeks to align and integrate its socialist experience with anti-neoliberal movements in Latin America, it is essential to understand the challenges, opposition and opportunities it faces in a globalising world system.

As noted in the Introduction, Fukuyama (1989:4) has argued that ‘Western liberal democracy [is] the final form of human government’. From this perspective, the Cuban Revolution is an impossible and failed experiment, and the only way forward is for the country to abandon its past and try to catch up with the ‘inevitable’ trend that history has taken. For those who accept this view, there is no longer a debate regarding Cuba’s future. The only issues at stake are how long the Castro brothers’ leadership can survive, and how long the socialist system over which they preside can resist the logic of global market forces and democratisation (Eckstein 2003; López 2002). This view must be questioned if one is to make sense of the Revolution in the twenty-first century.

To undertake this task it is not enough to simply declare a political preference for the Cuban system or cite impressive social statistics, which some authors seem to think is sufficient. One must analyse, interpret and challenge the whole hegemonic worldview upon which is premised the certainty of Cuban socialism’s demise. Moreover, to suggest that Cuba offers alternatives to the market creed, it is necessary to conceive of a counter-hegemony that can transcend globalisation.

Globalisation is a much-contested subject and invites many definitions and interpretations. However, this uncertainty resides in the application of inadequate analytical tools, rather than in the elusiveness of the subject. Economics, politics, business studies and many other academic disciplines can offer us insights into the globalisation process, but none alone can explain it. Therefore the approach taken by the author is International Political Economy (IPE), which seeks to understand globalisation as a ‘totality’: an ‘epochal shift’ within capitalism which transforms virtually everything we do and experience. From this perspective it has a historical background. In economic terms it is principally associated with the deregulation of international finance, a technological revolution (especially in microelectronics), and the transnationalisation of production processes. Such developments are complemented and facilitated by ideological and political changes that took place during the last three decades of the twentieth century, principally the rise of neo-liberalism and the collapse of Soviet-style Communism.

Combined, these trends have opened up the world to market forces. In this environment there appears to be a shift of power, away from the nation-state and towards a new community of international financiers, multinational corporations (MNCs) and multilateral agencies such as the World Trade Organisation (WTO), the International Monetary Fund (IMF) and the World Bank. To its advocates, globalisation represents the unshackling of the logic of capitalism, especially free markets, and its ascendancy into a supreme and inevitable world system. To its detractors, it is capitalism in extremis, temporarily unchallenged, and sense lies not in its existence but in its eventual demise. Between these two poles there are many intermediate interpretations and shades of opinion.

THE BACKGROUND TO GLOBALISATION: FROM CAPITALISM ‘CONTROLLED’ TO CAPITALISM UNLEASHED

In 1944, towards the end of the Second World War, the allied nations, headed by America and Britain, attended a conference at Bretton Woods in the US to discuss the post-war world economic order. The conference was dominated by a strong anti-free market (but not anti-free trade) ideological current led by the British economist John Maynard Keynes and the American Harry Dexter White. They believed that the liberal (free market) financial order of the 1920s, which had been dominated by speculative private financial interests and a blind faith in the market, had led to the Wall Street Crash of 1929. This in turn had resulted in a collapse of international capital markets, the abandonment of the gold standard, descent into recession, social and economic disorder in the capitalist powers and many peripheral nations, and, indirectly, the war. Addressing the conference, US Treasury Secretary Henry Morgenthau stated that an agreement should be reached at Bretton Woods that would ‘drive the usurious money lenders from the temple of international finance’ (cited in Helleiner 1994:4).

Since the early 1930s, all the major powers had used some form of state control to deal with the depression that followed the 1929 crash. Indeed, the most successful economies during the decade were the Soviet Union and Nazi Germany, which, although political polar opposites, had in common massive levels of state intervention. Regulation and the subjugation of finance to economic and political priorities increased in the late 1930s and during the war, especially in the US and Britain. This gave rise to a new alliance of state officials, industrialists and labour leaders, who assumed positions of power that had previously been held by the champions of laissez-faire business and private and central bankers. Intellectually, this new hegemonic bloc was wedded to Keynesian economic principles and believed that the reconstruction of the post-war world order should be state- rather than market-driven. This represented a radical shift in thinking which rejected the liberal financial policies that had predominated before 1931, and, as Keynes himself put it, ‘What used to be a heresy is now endorsed as orthodox’ (1980:17). But Keynes was not a socialist; on the contrary, he was dedicated to market principles in an environment of stability. As one analyst notes, ‘Keynes, for all that he broke with classical economics, operated entirely within its framework. He was a heretic rather than an infidel’ (Drucker 1983).

While most of Europe lay in ruins, the US emerged from the war with its economy intact and booming, and was the only power capable of leading a recovery of world capitalism:

At the end of the war the USA controlled some 70% of the world’s gold and foreign exchange reserves, and more than 40% of its industrial output while Europe and Japan had been devastated by war and the Third World was still locked into colonial servitude and contained less than 1% of the world’s industrial capacity. (Brett 1985:63)

Bretton Woods established the US dollar, backed by gold, as the key world currency against which other currencies would be pegged in a system of semi-fixed exchange rates. The unquestioned hegemonic power of the US after the war gave it the ‘exorbitant privilege’ (Giscard d’Estaing, cited in Gourinchas & Rey 2005) of being able to print limitless paper certificates in the form of dollars, which could be exchanged for imports from other countries at no cost to the issuer. The former hegemon, Great Britain, had enjoyed a similar privilege in the nineteenth century, based on the gold standard and the international role of sterling. Although America’s financial advantage can be see as a means to advance its imperial power, a dominant and stable ‘fiat’ currency was essential for world economic recovery and Bretton Woods represented the first ever attempt to establish an international financial and trading order among independent nation-states. The founding of the World Bank, the IMF, and the General Agreement on Tariffs and Trade (GATT) were also planned at the negotiations, as a means to regulate finance and trade in the post-war world economy.

The so-called Bretton Woods system that emerged was a watered-down Keynesian version of development that placed emphasis on the management of capitalism by international and state institutions. With Europe severely weakened and Communism on the doorstep, this was no time to leave the rebuilding of the economies of the Western world to the vagaries of the market. Fundamental to this view was that states had the right to impose capital controls in order to take charge of internal development strategies, and that the international system of semi-fixed exchange rates would promote world economic stability and curb speculation. Keynes stressed the importance of encouraging the function of ‘productive’ and ‘legitimate’ capital that supported real economic activity and trade, rather than speculative financial movements.

The Bretton Woods formula was given material substance through the European Recovery Programme (Marshall Plan 1948–52), when the United States pumped $12 billion into the economies of Europe and Japan to support their reconstruction and keep up demand for US industrial goods after the war’s end. The plan was sold to the American public, and to Congress, as a means to turn the ‘Red Tide’ (perceived support for Communism), particularly in France and Italy, but there was little evidence that such a threat existed (Kunz 1994). Marshall aid certainly made an important contribution to post-war reconstruction. However, as Milward (1984) has suggested, European recovery was already underway by 1948 and Marshall dollars were needed not so much for the buying of goods, but rather to provide offsetting finance for purchases already made in the US, and to compensate for continuing private capital flight to America, despite regulatory controls. Because of these problems, and especially the weakness of the British economy, it was not until the late 1950s that international conditions were suitable for the full implementation of the Bretton Woods financial order based on the convertibility of currencies (Burnham 2003).

Although the establishment of Bretton Woods was problematic and delayed, the quarter century from 1945 to 1970 was the most successful period of economic development ever recorded, especially in the industrialised world. ‘Between 500 and 1500 AD the world’s income grew by 0.1% a year. Over that millennium ‘world’ Gross Domestic Production went up by 2.5–3 times. The world economy grew just as fast in only twenty years from 1950 to 1970 – and from a higher base’ (Maddison 1982:4–5). Moreover, during this latter period, gains were made not only by those who owned capital and the means of production, but also by ordinary working people as welfare reforms, trade unions and national economic planning improved job security and standards of living. High levels of Keynesian-style domestic investment and a sustained increase in world trade drove the long boom of the post-war period. The aim of the system was full employment, growth, development, and limited wealth redistribution, all under the control of national elites and professional managers. A formula that would secure political stability in a divided world, in which Communism was presented as a threat to the capitalist West and its professed values.

There was also a general acceptance that ‘development’ must be a staged process in Third World countries, an idea that was mainly informed by ‘modernisation’ theory. In many respects this was the highest level of the nation-state phase of capitalism, characterised by domestic circuits of production (‘auto-centric accumulation’) linked to a wider system through international markets and nationally orientated capital flows that were tied to trade, aid and production. Nation-states, and particularly developed ones, had a significant degree of control over their economic activity, and governments were expected to regulate such spheres as employment, industrial policy and growth.

During more liberal phases of capitalist development in the nineteenth century and in the decades on either side of the First World War, the colonies were fundamental to the accumulation regimes of the industrialised European nations because they allowed for super-exploitation to take place abroad. This relieved some of the pressures on their own domestic working classes. However, the problems of economic depression, followed by wartime destruction of capitalist stock, decolonialisation and the rise of Communism, put pressure on national ruling elites to reach an accord with their subordinate classes. Fordist manufacturing techniques and Taylorist forms of work organisation permitted the centralisation of production and high levels of social control, but their continuing success was based on satisfying the material needs and welfare of the workers. Representative democracy along with Keynesian-style state controls allowed the popular classes to support political leaders who would act on their redistributive demands, and constrain the more aggressive aspects of capitalism. This arrangement has been termed by Lipietz (1992) the ‘Fordist class compromise’. In this context it has been claimed that the ‘full employment capitalism’ which this model sought to create needed to ‘develop new social and political institutions which [reflected] the increased power of the working class. If capitalism can adjust to full employment a fundamental reform will have to be incorporated in it’ (Kalecki, cited in Glyn 2001:4).

Because capitalist classes were largely tied to national territories, they developed national identities which helped strengthen their legitimacy and hence their hegemony over the rest of society. Slogans like ‘Buy British’ and ‘Uncle Sam Wants You’ helped to promote the myth that Britain and the US were ‘classless’ unified nations, in which individual interests were indivisible from national interests. This view was reinforced as ruling elites in many countries were seen to be competing with each other in the international arena.

In retrospect this period appears to have been a less aggressive phase of capitalism than the earlier laissez-faire era or the globalisation that we are experiencing today. However, it must not be forgotten that the post-war period was one of US hegemony – giving rise to the notion of the ‘American Century’ – and while this power was in some respects benign, it was also exercised in the pursuit of geo-political ambitions (Chomsky 2003). Many ordinary people in developing countries who were caught up in a US invasion or a US-inspired war, or lived under a US-backed dictatorship, would probably have regarded it as an imperialist state. This perception was shared by most inhabitants of the socialist world.

It may also be argued, from a broadly Marxist view, that the post-war period was less about the containment and regulation of capitalism, and more a response to the crisis of profitability during the interwar years. From this perspective, the post-Second World War period represented not so much a compromise by capital, but its reconstitution into a new model of accumulation. Although during the Second World War workers, particularly in Britain, enjoyed their first real taste of state-led management and protection, and experienced a growing sense of solidarity and national purpose, the discipline and sacrifice of the war period also prepared them for the conformity that would be demanded by the social democratic ‘Fordist’ production system that emerged after the victory. Braverman (1974) in particular has shown that advanced technology, mass production, adoption of the capitalist work ethic, and modern management techniques deepened workers’ alienation and exploitation instead of liberating them.

A further factor contributing to capitalist renewal after the Second World War was the international regime of unequal exchange between the developed Western powers and the new Third World nations. Decolonialisation had led to independence but, as Fanon (1967) and others pointed out, many of the former colonies had been so deeply integrated with the imperial nations that even after achieving self-determination they continued to be dependent not just for trade and know-how, but also culturally and intellectually. Moreover, the mainstream development debate revolved around Rostow’s (1960) notion of ‘stages of economic growth’, which underpinned modernisation theory and the belief that the Third World could catch up with the West if it followed the latter’s ‘model’ of development. Such a view conveniently ignored the massive distortions caused by colonialisation and the disadvantages faced by producers of raw materials in their relationship with the diversified industrial economies. Despite his ‘scientific’ approach to development, Rostow was a hawkish Cold Warrior and staunch anti-Communist and, as an adviser to Presidents Kennedy and Johnson, pressed for US intervention in Vietnam (Milne 2007). Although after the Second World War the price of raw materials rose with increasing demand from rapidly expanding industrial economies, this did not always translate into resources for development, as old colonial and post-colonial ties continued to disadvantage the Third World. This tendency was exacerbated by the operations of emerging US multinationals which, through the establishment of economic enclaves and the use of political manipulation, were able to retain most of the wealth they extracted from developing countries.

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