How Cuba Is Using Cooperatives to Decentralize Its Economy

With the recent announcement that the U.S. will normalize relations with Cuba, change is in the air for the island country. Just a few years before this, Cuba began shifting its economy from state-controlled enterprises to citizen-controlled cooperatives.

Worker cooperatives are nothing new in Cuba. Agricultural coops, which are responsible for 70 percent of the country’s farmed land, are a key part of the state’s subsidized food system. Until recently, however, worker coops were not found in other sectors of the economy. But in 2011, the Cuban Sixth Communist Party Congress approved a set of economic reform goals called the “Guidelines on Economic and Social Policy for the Party and the Revolution.” It contained 313 measures including the following actions:

• Dramatically increase nonstate sector employment of the labor force
• Encourage large-scale private sector business opportunities
• Allow for the creation of nonagricultural worker cooperatives for the first time
• Provide for the use of idle lands in usufruct
• Decentralize the operation of state enterprises

Due to this reform, there are now almost 500 non-agricultural worker coops in Cuba ranging from beauty salons and auto repair shops to transportation companies and technical services. The coops are still state-approved, but cooperative workers have increased their incomes and created better, and more productive, working situations.

In early 2014, the NCBA CLUSA Cuba Cooperative Working Group (CCWG) was formed to “explore opportunities for engaging with Cuba on cooperative development in various sectors of the country’s economy.” The CCWG met with a network of U.S. cooperative leaders from various sectors interested in connecting with Cuban cooperatives, cooperative researchers, and policymakers.

The working group’s first project was a one-week exploratory trip to Cuba to learn more about the Cuban cooperative movement, the country’s economy, and the increasingly important role cooperatives play in the country’s economic reform.

The group’s Cuba Research Trip report [pdf] outlines the group’s observations and takeaways and shines light on some of the challenges the cooperative movement in Cuba faces. Here are the key points:

Successes

• The majority of the Cuban agricultural economy is already run by cooperatives. Now, the non-agricultural sector is embracing the cooperative model, laying the foundation for a cooperative economy.
• Rural areas are being repopulated as people take advantage of farming state land with agricultural cooperatives.
• There is a lot of momentum around the new cooperatives. People have increased incomes, better working conditions, and an optimistic vision for the future.
• Leaders and workers understand that there’s a major economic shift taking place—and that they have a lot to learn. This openness lends itself to future collaborations.
• Production levels are increasing dramatically.
• Mechanisms are being created to support the bottom-up creation of cooperatives to help people better their lives.
• The state is leasing property to cooperatives at reasonable rates, so even privately-owned coops can participate in the movement.

Challenges

• The conversion of managers of state-run businesses into cooperative leaders poses challenges of shifting perspectives and hierarchical leadership. Governance will be a key issue for future success.
• Cooperative education and training is limited. Cooperative ideas are now integrated into a business’ guiding documents, but understanding, the report states, “does not appear to go much beyond the values of democratic participation and elections, and general equality in sharing economic risks and returns.”
• There is no central, cooperative branch of the state. Each sector’s ministry is responsible for converting enterprises into cooperatives and lending support and leadership to them. This lack of a central ministry means there are inconsistent levels of support.
• There needs to be more connection between Cuba and the international cooperative community.
• There are cultural obstacles in place, including the fact that people are accustomed to relying on the state for their livelihoods. A context of ownership culture needs to be created.
• A major impediment has been the inability of Cuban cooperatives to “secure inputs from national or international markets, due to economic and political constraints.”
• Once laws are passed, there tend to be long lag times before they’re implemented, which slows down the creation of cooperatives.

Possible Next Steps

• Determine interest within other U.S. constituencies for improved relations through engagement with the Cuban cooperative sector.
• Do network-building and liaising with various cooperative networks working in Cuba.
• Continue meeting to share CCWG’s observations and engage other in Cuba’s cooperative movement.
• Continue to grow technical exchange and assistance programs
• Pass cooperative-supportive legislation and continue to draw from international best practices.

A cooperative economy provides a viable alternative to a purely market-driven economy for Cuba. As the report states, “It appears that the hope of the Cuban government, and many supporters of the cooperative model, is to develop a cooperative sector that achieves market success while avoiding the excesses of the market-driven economy and promoting social values and ownership.”

Depending on how the movement evolves, Cuba may be laying the foundation for a cooperative-rich economy. There are key challenges, however, that need to be addressed, including cultural shifts in both the citizens and the government.