In Cuba, day by day it is possible to perceive how formerly empty spaces on the streets and doorways have been swamped with neon signs announcing boutiques, print services, cell “clinics”, and so many small businesses that were considered illegal economic activities just three years ago. We are witnessing how new behaviors are emerging from the basis of society as the State’s functions are being decentralized in order to revive this sector of economy, small and medium businesses.
Not going through the legislation prior to the triumph of the Revolution in 1959 (the Constitutions of 1901 and 1940), which constitutionally outlined prerogatives granted to the private sector in the country as the predominant economic source, the first trace of small businesses in Cuba can be found in the introduction of the Nationalization Law 980 of October 13th, 1960, where it the revolutionary reality established in Cuba with the existence of capitalism was declared incompatible and just left margin for medium and small enterprises.
The nationalization process did not imply the immediate or total liquidation of the small and medium capitalist sector; their presence was necessary and feasible. Yet, during early 1968, with the Revolutionary Offensive approximately 58 000 businesses by small urban producers were nationalized. Self-employment was literally eliminated: shoemakers, plumbers, among many others were taken away from their area of expertise.
The economic and social cost of that large scale process is immeasurable: it presupposed the loss of many trades that had survived the passing of time as family traditions. This process organized that heterogeneous mass of entities under a regime of bureaucratic direction and control, with more directors that employees, increasing the number of non-productive workers within the State.
With the collapse of the former Soviet Union and the CAME, Cuba undertook a series of readjustment and reform measures to overcome the unprecedented crisis the country was facing not only in the economic sphere but also in the political and ideological fronts, which had a repercussion en every scenario of the Cuban society and the way in which Cuba interacted with the world. It was necessary to come up with new ideas taking into account that in order to maintain the socialist project, first they had to survive as a nation. With Law Decree No. 50 of August, 1982, for the first time the country opened up for foreign capital investment after the triumph of the Revolution as a result of the need to bring in western technologies in the industrialization process in view of the delay of technologies from the Soviet Union. The progressive policy of the Resolution on Economic Development resulting from the Fourth Congress of the Cuban Party in 1991and the Constitutional reform of 1992, was followed by the creation of a new cooperative sector from state agricultural enterprises, the opening to the individual-familiar urban private sector, the increase in number of farmers, and finally, the reorganization of the state enterprise system in autonomous mercantile and self-financed state-owned entities.
Since the comeback of self-employment in the legal system, there has been a gradual increase of this sector to the detriment of the state sector and incipient forms of associations among self-employed workers have been experienced. These associations have developed in the creation of informal “businesses”, which, although had been undertaken outside the law, have high creative levels and a desirable capacity for self-management.
That’s the reason why, within the framework of this far-reaching reassessment of the challenges Cuba is facing internally and externally, it should be seriously analyzed these daring options (not for their inherent risk but for breaking obsolete canons and ways of thinking addressed not precisely to the real development of the country) of economic management because after all: on what depends the recognition of the small and medium businesses in Cuba? It depends only on the will of legislators because tacitly they already exist.
According to a report by CEPAL and OCDE “2013 Latin American economic perspectives, Small and medium enterprises policies for structural change” small and medium enterprises have distinctive characteristics with occupational and financial limits controlled by States or regions. They are independent entities with high relevance in the commercial and services market given their adaptability to changes in supplies and in consumption patterns, being practically excluded from the industrial market. They can adjust to the economic mechanisms of large or state enterprises in order to maximize profits and minimize costs, and their dynamics grants them high levels of efficiency and competitiveness. Given their characteristics they demand small investments and depend on their workers productive capacities.
In “Small and medium businesses and their spaces in the Latin American economy” by specialists Ariel Batista and Teresa Machado, these businesses have been evaluated in different socioeconomic models as the ideal formula for decentralization and oxygenation of the economy. There are the examples of Viet Nam or China, whose actions have been taken into account by the direction of our country for the analysis and the possible implementation of their experiences. However, due to the necessary implementation of dialectics, it would be a simplistic approach to compare with Asian socioeconomic models which have different socioeconomic and regional reality rather than analyzing the case of Latin American countries that during the last decade have increased the number of small and medium businesses in their logics of national development.
Venezuela denominates small and medium businesses as Small and Medium Industry in Decree Law for the Promotion and Development of Small and Medium Industry and Social Property Unities 2008, who objective is the performance of any kind of legal economic productive, financial or commercial activity for the collective benefit of its members, with positive results in the sustainable development of communities.
Bolivia stands out as one of the nations of higher development of microfinances in the world according to Global microscope on the business environment for microfinances (2 nd place globally in 2009).
The fact that a considerable part of its economy is informal and that there are big scale production industries, has contributed with the follow up, growth and development of commercial and services microenterprises that have the financial support of different highly specialized microcredit entities. In Mexico, these businesses, regulated in the Law for the development of competitiveness of micro, small and medium enterprises of 2002, represent 90% of enterprises, 42% of employment, and contribute with 23% of the GDP; whereas Peru, according to Law Decree1086, micro and small enterprises generate 80% of employment, whether formal or informal.
These small and medium enterprises in Cuba, according to Pavel Vidal Alejandro and Omar Everleny Pérez Villanueva in their presentation at the Seminar of the Center of Studies on Cuban Economy in 2011 “Re-launching of self-employment in the midst of structural adjustments”, would boost the development of production, management capacities and new attitudes in the national social imaginary, as well as a sense of belonging and an increase of collective self-esteem as they can not only solve issues related to their enterprises but also in the personal sphere due to the necessary salary stimulus in accordance with their efforts. These will also become important spaces to put into practice and develop creative and intellectual skills, particularly regarding administration and innovation and will also serve to promote a more practical way of acting among Cubans.
The fusion of state enterprises and small and medium businesses does not pose a threat for state enterprises nor the weakening of the leadership nor their obsolescence. It is state enterprises the ones with greater chances to incorporate the new technological pattern and therefore will maintain their leading position. Integration favors the survival of state enterprises by making possible to control and coordinate the production process and also favors greater work capacities and complementariness with small and medium businesses. This way, the State will be able to be in a favorable position to devote its resources to the substitution of imports by encouraging, by means of effective demand from state enterprises, decentralized production nationwide in multiple small and medium businesses.
Local governments can facilitate their access to complementary services and customers by creating a central registry of hard access that would make easier the establishment of horizontal and vertical relations among them, and an institution that represents the interests of small and medium businesses before state institutions and enables important services for success.
Finally, it is necessary in parallel with the recognition of the legal entity of these businesses to device legislations and institutions that watch over work rights of these new working mass as to minimum wage, vacations and other benefits, maximum working hours, safety and protection. After taking a look at the Work Code Bill under debate for almost a year that these issues are solved, but in order to ensure its fulfillment it is necessary to strengthen unions and organizations that represent the interests of those workers and their right to work as a key human right indispensable for freedom.
On the contrary of what has been spread, small and medium businesses do not represent a cooperative. The article “Cuban Small and medium businesses and their limits” analyzes the so popular Decree Law 305 of 2012, which sets the bases for the creation of the erroneously called non-agricultural cooperatives, if taken into account that, apart from Cuba, a cooperative is not exclusive of the agricultural activity, therefore, there is no need for surnames for an institution that is just an autonomous association of people who voluntarily joined to form an democratic organization whose administration and management should occur in agreement between the partners and whose social objective is based in the diversity of needs and aspirations (work, consumption, joint commercialization, education, credit, etc.) of its partners. These businesses even have to be governed by the Cooperative Principles founded since 1985 by the international Cooperative Alliance.
Nevertheless, whether in the state or private sector, whether enterprise or cooperative in any of its variants, it should be remembered that, as a last resort, it is practice, legislation and its rightful implementation, the mechanisms that would guarantee work results that would define what we are able to achieve in Cuba, a country under necessary changes.
