“Scientific truth is always a paradox if judged by everyday experience, which catches only the delusive appearance of things.” said Karl Marx (known for his widely different ideologies, like the Marxian Economics) in his book ‘Value, Price and Profit’. Little did he realize that the principle he designed and arrived upon for the equality of the world, especially the Labour Class would have to face its doomsday due to its blemishes. Karl Marx, one of the great political theorists of the 20th century is widely known for his propaganda of Marxist i.e. Communist Principles all over the world and also for his criticism of Capitalism. His ideologies provoked revolutionary changes throughout the world against the structure of capitalism that existed in the 20th century.
Now, before you divert your thoughts to Marxism, let me remind you of one of the principles that are talked about less which is, the principle of Marxian Economics. Though these two principles are closely related to each other, it differs in its essence that Marxian Economics focuses more on the development of the economy with the efforts of Labour Force whereas Marxism defines relations between the bourgeoisie (The Labour Class) and Capitalists and how it will eventually result in revolutionary communism in the state.
Marxian Economics examined the importance and inevitability of Labour as one of the factors of production that was owned by the capitalists and exploited by them. Marxist Economics clearly analysed the Labour Theory of Value and brought a different definition to it. It believed that in a capitalist dominated state there might be a crisis of overproduction and that of the extra-value added (profit) not being able to reach the right hands which are evident through the following excerpt from his book Das Kapital.
‘The surplus of the total value of the product, over the sum of values of its constituent factors, is surplus of the expanded capital over the capital originally advanced [Kapital, I, 225-33].’ This implies that the surplus-value is created in the economy solely due to the efforts of the labour but since the capitalist owns this labour as one of the factors of production he exploits the labour and has a hold over the surplus thus created. So the countries which earlier adopted a Marxian Economy, following the rules of Marxist Economics with labour as the focal point are Poland, USSR, Yugoslavia, Bulgaria, Hungary, Cuba and so on, but these countries eventually dropped out from these principles and shifted to Laissez-Faire as their previous system failed.
I will take you through the rise and fall of this principle which is now almost non-existent by explaining the economic history of Cuba. Before delving into its history let’s understand the background of Cuba. Cuba, a Latin American nation, was ruled under a Communist dictatorship for almost six decades and is still considered to be indirectly controlled by this dictatorship. It is dominated by state-run enterprises.
The economic history of Cuba can be divided into four main phases namely Pre-Revolution Period, Revolutionary Period, Special Period and Recovery Period.
Pre-Revolution Period: (Before the 1950s)
Cuba in the pre-revolution period was one of the wealthiest countries in the Latin American area with almost all the required facilities like Television, Telecommunication which was highly coveted during those days. Cuba had a one-crop economy, which was sugar. Cuba was considered to be one of the major tourist spots by rich Americans. But the problem in this period was that the major shares of all the strategic wealth and property of Cuba were held by the U.S. The nation was dominated with U.S monopolies and this led to discontent among the Cuban population.
This is the initial phase described in Marxian economics where the capitalists own the surplus added by the Labour Class.
Revolution Period: (From the 1950s to 1980s)
At the beginning of the Revolutionary Period, the Cuban economy was taken over by poverty. Two-thirds of all Cuban kids didn’t attend school, with only 25% of the Cuban population being illiterate and around 40% of the population either unemployed or underemployed. This led to excessive migration to the capital city of Cuba, Havana. In this distressed economic and an unpleasant political situation, Fidel Castro, the most famous Cuban Revolutionary with a Marxist-Leninist Ideology took charge, as the leader of the nation, he seized the International Telephone and Telecommunications Corporation and brought it under state operations. Further, he urged the entire population to cultivate sugarcane which led to the production of around 7.56 million tonnes of sugar in Cuba.
When oil was refused to Cuba, even those oil refineries were nationalized under the regime of Castro. This eventually led to the U.S imposing sanctions on Cuba. Cuba also began exchanging Cuban sugar for oil with the USSR. During this period of revolution, the citizens weren’t required to pay income tax anymore as they received the net salary. Important sectors like education and healthcare were subsidized during this period. Cuba, during this period, was entirely socialistic. Cuba also started lending helping hands to other countries like Angola, Ethiopia, Laos, Guinea, and Tanzania through foreign aid and developed the infrastructure there.
This is the period which was completely based on Marxian Economics except for the fact that it majorly concentrated on Sugar production and had a dictatorship rule.
Special Period: (the 1980s to 1990s):
Things seemed to be fine during the Cuban Revolution initially but it started worsening the Cuban Economy drastically which was evident through the fall in GDP during this period. Cuba faced a trading loss with the USSR which further led to a fall in the world sugar prices, one major commodity upon which the whole nation depended. Foreign debts of Cuba were increasing considerably and Cuba was unable to meet the same.
The Special period also witnessed famine where the public distribution system of the government proved to be completely inefficient. Cuban people even started taking the food which was kept for zoo animals which is evident through this. This happened simultaneously along with the fall of the Marxian Economy in other countries. The government started taking various initiatives to bring in newer economic reforms by opening up tourism, inviting investment in private property, encouraging the self-employed, legalizing the U.S Dollar in Cuba, allowing foreign investment and providing labour incentives and so on. So this period which began with a bitter note started to recover towards the end.
Due to the improper implementation of Marxian Economic principles in Cuban Economy, it started facing a shortfall not just in Cuba but many other countries.
Recovery: (After the 1990s)
After the efforts are taken to bring in these economic reforms in Cuba, its GDP started picking up and always stood higher than the Latin American average for the GDP. After Fidel came down from his position, there were several noteworthy changes in the structure of the Cuban Economy. Now, there are five lakh plus entrepreneurs in Cuba. Cuba is what it is today only because it realized the reality and embraced it with changes.
The Marxian Economy is non-existent now but still there exist a few socialistic principles just like how it does in a mixed economy.
We can’t completely blame the theory of Marxian Economics for this, because the rise and fall of an economy also depend on the way it is implemented. Not just Cuba, every country has had its highs and lows. Here, we can reminisce the words of Churchill, “To improve is to change; to be perfect is to change often.”
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Raised in the land of idly,living in the land of kulcha,Meena is currently pursuing B.Com(Hons.) and multi-tasking at SRCC.She has a head for realism,heart full of candour and a hand to pen down her boundless thoughts and another to hold the coffee mug(always).Perky enough,she exerts to explore all her potentiality,ranging from music to research.