“The old story of non-compliances and overdrafts must come to an end,” Cuban President Raul Castro told the National Assembly on December 18. “The plan and the budget are sacred.”

Cuban socialism is changing. Foreign onlookers on the right welcome the prospect of a failed socialist state. Others on the left warn of alleged capitalist accommodation. But for many who respect Cuba’s sovereign right to chart its own course, the assumptions, goals, and methods involved are of intense interest.

Recently released documents, reports and interviews are relevant. Divided into 11 work groups, the Cuban Communist Party’s Economics Commission last November released its “Draft Economic and Social Policy Guidelines for the Party and the Revolution.” This detailed, comprehensive summary of proposed changes was prepared for nationwide study prior to the Sixth Communist Party Congress in April, 2011. It’s available here.

Cuba’s hand is forced. Affected by the world economic crisis, export and tourist income is down and import prices, particularly for food, are high. Internal waste and low agricultural production weigh heavily. Foreign debt is past due or coming due. The U.S. economic blockade ups the cost of buying and transporting vital foreign goods. International lending institutions and banks, under U.S. influence, interfere with Cuban trade and borrowing. Hurricanes in 2008 caused damage costing $10 billion.

Finance Minister Lina Pedraza recently called for “guaranteeing income levels sufficient to back up decisions on social spending.” She indicated income from state enterprises and projects had covered only 55 percent of recently budgeted state expenses.

Economic adjustment began in 2007 with diagnostic commissions and new models of business management. In 2008, the government opened up sales of personal communication equipment and access to tourist facilities for use by Cubans. It expanded direct food sales to consumers and initiated land-use reform aimed at utilizing idle land.

In 2009, Cuba modified its budget, reduced imports, created an accounting agency, and removed some free services and subsidies. Last year the government eased home construction and repair regulations, and expanded taxable self-employment opportunities. Municipalities began incorporating small businesses and cooperatives into local development plans. Tourist facility developers gained long-term land-use rights. Farmers could now purchase supplies on their own. Agricultural cooperatives began planning for the manufacture of agricultural products. The government announced elimination of 500,000 state jobs over six months and authorized 250,000 small, privately owned businesses that would be allowed to hire their own employees.

The planning process features attention to detail, establishment of priorities, and efforts at consensus. Haste and improvisation are out. With the “Draft Economic and Social Guidelines” as centerpiece, discussions have focused on goals, methods and mindset of a process in motion. Socialist purposes, current economic pressures and priorities, local autonomy, international collaboration, separation of long- and short-term goals, and environmental sustainability are on the agenda. That agenda includes taxes, enforcement of compliance, foreign and internal investments, management of debt and credit, salaries, pricing, cooperatives, import substitution, agricultural production, tourism and educational correlates. A multifaceted educational and deliberative process has extended throughout the island.

Recurring themes are self-criticism, decentralization, prioritization of economics, wealth redistribution through taxation, and emphasis on efficiency, work and self-pay programs. Speaking to leaders of the CTC trade union confederation, President Castro and Finance Minister Murillo urged unionists to take on key roles in implementing new tax policies and encouraging production and work efficiency.

A recent interview by Cuba’s “Rebel Youth” (Juventud Rebelde) newspaper with former economics official Joaquin Infante provides useful background information. Australian Marce Cameron’s translation is available on her valuable new Cuba Socialist Renewal blog.

According to Infante, “Administrative management of the economy has a long history,” with a “cult of plans for material output, not of … financial balances. We became accustomed … to always covering deficits and deficiencies whether or not results were obtained.” He recalled, “Finances smacked of capitalism to us, and this led to an extreme centralization of planning and economic decision-making. With this rigidity and inflexibility, finances cannot function.”

Subsidies applying originally to “products sold to the population” extended to “thousands of products and productive activities,” he said. However, “if you subsidize all production, nobody knows the cost of anything,” he said. “One of the key changes is that losses will no longer be subsidized. Thus, the enterprise will be obliged to become more efficient.”

“This implies a decentralization of power towards the enterprise system,” Infante explained. Currently, he said, “funds from earnings cannot be kept in the enterprise… and everything goes up.” Opportunities are lacking to reward “work excellence and quality.” “With an economy that doesn’t prosper, how can the social programs be sustained?” he asked.

Asked about criticisms from “leftist theoreticians who believe they’re seeing the end of socialism in Cuba,” Infante replied: “Is it about resolving the concrete problems of a country? I’m a practical theorist. Nobody has managed to construct an ideal socialism. Here we do things in our own style, for more socialism. And what is socialism, if not to give well-being to the people and redistribute the resources in the best way possible?”

He added: “When you put an end to administrative tutelage, and you are ruled by economic-financial results, you will be cornering bureaucratism. The priority is to change our conception of the economy, for more and better socialism.” He said the aim is for “planning to take precedence over the market, but [leaving] spaces for the market.”

Raul Castro, speaking to the National Assembly, repeated his earlier declaration that “I was not elected President to restore capitalism in Cuba nor to surrender the Revolution. I was elected to defend, maintain and continue improving socialism, not to destroy it.” Castro insisted, “The Socialist State shall not leave any citizen unprotected and via the social welfare system it shall ensure that people who are unable to work will receive the minimum required protection.”

The Cuban president said the new guidelines “signal the road towards a socialist future, adapted to Cuba’s conditions and not to the capitalist and neo-colonial past which was defeated by the Revolution. Planning and not free market shall be the distinctive feature of the economy … the concentration of ownership shall not be allowed.”

Photo: A mural in Havana in 2009 marks the 50th anniversary of the Cuban Revolution. PW/John Bachtell