Raul Castro’s decision to abolish the sacrosanct principle of equal pay for all is another small step along that trickiest and most treacherous of paths for a communist regime – how to liberalize and streamline a centrally planned system without losing control and destroying it. That Fidel’s younger brother is determined to change Cuba is beyond doubt. The move to pay higher salaries and bonuses for better workers and managers follows several other reforms. Whether they work – or merely hasten the demise of one of the world’s very few remaining communist states – is another matter.
Without doubt, Havana would like to emulate the Chinese model, where market reforms have created a vibrant economy and a flourishing middle class, but where the party retains absolute political control. Structurally, however, Cuba – whose economy is dominated by industry, not agriculture, and where popular frustration with decades of stagnation is tangible – far more closely resembles the former Soviet Union and its east European satellites, where attempts at reform from within failed dismally. Mr Castro’s actions thus far have been tinkerings compared with the revolution of perestroika and glasnost unleashed by Mikhail Gorbachev. But, as he is surely well aware, in the late 1980s the Soviet Union got the worst of both worlds – at least from the point of view of its rulers.
Gorbachev’s reforms broke the party’s monopoly of political power, but also made the economy even more of a mess. By combining superficial market reforms with a refusal to challenge the entrenched bureaucracy, perestroika merely made an already inefficient and corrupt system even worse.
Like Gorbachev, Mr Castro swears fealty to the principles of “socialism”. But the Soviet experience offers another worrying precedent. The collapse of communism there was in part brought about by the communications and information revolution. Back then the advent of fax machines, photocopiers and computers helped break the Kremlin’s grip on information. In today’s far more interconnected world, greater access to the internet and mobile phones could have the same effect in Cuba.
Undoubtedly, Mr Castro’s strategy has a foreign policy dimension. The days of draconian US economic sanctions against the island may well be numbered – especially if Barack Obama becomes president. The current reforms would make it easier for Washington to lift sanctions. They would also make it easier for the regime in Havana to adjust to a world in which it is no longer a pariah.
Even so, Cuba must learn from the mistakes of eastern Europe. It must reform boldly and without delay, refusing to subsidize failing companies. It must have a fair and transparent method of privatization, and overhauled regulatory and legal systems.