Photos: Cuba looks to cooperatives to slow rise of capitalism

Marc Frank and Rosa Tania Valdes
Reuters11:54 p.m. CDT, April 13, 2014

A man applies silicon on a Soviet-made Lada car at the “Novedades” cooperative in Havana
(ENRIQUE DE LA OSA, REUTERS /April 13, 2014)

HAVANA (Reuters) – Cuba’s slow, cautious reforms to revive its state-run economy suddenly burst into life at businesses like Karabali, a Havana nightclub owned by a 21-member cooperative.
The communist government began leasing Karabali to its employees just six months ago and now the once sleepy club is regularly packed with more than 100 customers from midnight until dawn despite competition from dozens of private and state-run night spots in the city.

Out on bustling 23rd Street in the Vedado district, bright multicolored lights beckon a young, almost entirely Cuban crowd into Karabali to see live music on weekends.

Even on Wednesdays, when only recorded music plays, the place is jumping as hip-swiveling patrons dance on stage to rumba.

A feeling of ownership has replaced the apathy that afflicts many state enterprises, and the cooperative’s members are optimistic. There is a buzz about the place, their salaries have been tripled, and they get a cut of the profits.

“We have more of a sense that this belongs to us,” said Heydell Alom, who has spent 11 of his 38 years tending bar at the club. “Here no one steals. This place belongs to everyone. We earn depending on what we can accomplish without any problems from the government.”

Cuban authorities are turning more and more state businesses into cooperatives and providing incentives for small private companies to do the same. Some 450 have been created over the past year, and there are plans for thousands more.

The initiative is one of the market-oriented reforms ordered by President Raul Castro since he took over from his ailing brother Fidel in 2008.

While Raul Castro says his reforms are about strengthening Cuban socialism, they have led to the emergence of thousands of private businesses since 2010, ranging from restaurants to electronics repair shops to mom and pop retail outlets.

Less well known and less common are the cooperatives but they are part of a political balancing act for the government, which needs to move hundreds of thousands of workers off the state payroll but also wants to slow the rise of capitalism.

In many ways it prefers cooperatives, where each worker has a stake in the business, to private businesses where owners make profits based on the work of their employees.

As is typical with Cuban reforms, the push to establish more cooperatives has started as an experiment that will be expanded if it is deemed to be successful.

Its supporters see it as a way of allowing free enterprise, like other communist governments have done, while limiting an inevitable surge of income disparities.

“The model is different from China and Vietnam,” said a Cuban economist who specializes in cooperatives. “We have the advantage of learning from their experience.”

No other county has tried to convert state companies into cooperatives on such a large scale, said the economist, who requested anonymity due to a ban on speaking to journalists without permission.

The cooperatives include restaurants, cafes, wholesale and retail produce markets, construction firms, manufacturers of clothing and furniture, bus companies and car washes, recycling operations, body shops, computing and accounting services, beauty salons, night clubs and even dealers of exotic birds.

They operate independently of state entities and businesses and set prices according to the market in most cases.

Some have thrived. Others have yet to grasp what it means to compete in the marketplace.

LESS THAN DIVINE

Copyright © 2014, Reuters

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