Economic Update: Cuban Commitment to Worker Co-ops

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On the first half of this week's show, Prof. Wolff presents updates on the different metrics used for US unemployment, IMF on uneven recovery, money and US elections, Indigenous People's Day, and lastly China's commitment to digital currency, while big banks hold back other countries. The second half of the show features an interview with Havana professor Camila Piñeiro-Harnecker.

About our guest: Camila Piñeiro-Harnecker, has been professor, researcher and consultant at the University of Havana. Her work focuses on economic democracy, with a focus on worker cooperatives and public policy towards the enterprise sector. She is author of many articles and book chapters, and three books on cooperatives, and the edited the volume "Cooperatives and Socialism: A View from Cuba" (Palgrave, 2012).

Publications: https://www.researchgate.net/profile/Camila_Pineiro_Harnecker


This transcript has been edited for clarity.

Welcome, friends, to another edition of Economic Update, our weekly program devoted to the economic dimensions of our lives: jobs, debts, incomes — our own and those of our children. I'm your host, Richard Wolff.

I want to begin today with a perennial issue, and bring you up to date, because of new statistical work. The issue is, what exactly is the unemployment rate? It comes up often on this program, and in the news media all the time. It has become recently, and over the last two or three decades, a regular political football. Whatever political party is in power tries to represent that unemployment is low. And whatever political party is trying to get into power argues the reverse. And each of them has their numbers, just like they have their different polling data, and the different worlds they increasingly seem to live in. So I wanted to cut through this and talk about unemployment a little bit with you so that you get a handle on how serious this problem actually is.

So let's start. The official rate these days is listed as 7.9 percent. And here's what that means: 1 in 12 — that's what it means, 1 in 12 — Americans that are in the labor force are out of work but looking for a job. That's what that number counts. But, unfortunately, if you're working part-time and you're not earning very much money, you're considered employed. If you've stopped looking for work because you're disappointed, or you're upset, or you're living in some way off illegally gotten income — and we're not talking about small numbers here — well, you're also then kind of not counted. You're not part of the unemployed.

This has led people — and the government is doing this, I'm going to assume, in reasonably good faith when it does this kind of counting with qualifications — so some people have said, let's ask the question differently. And it's the results here that I want you to think about. Now here's the first step these folks took. Let us ask who's unemployed and count everybody who's either not working; or given up looking; or not earning very much because they work haphazardly, a few hours here, a few there — who's really kind of virtually out of work. And the number zooms from 7.9 percent right now to 26.1 percent, which puts it right at the worst of the Great Depression, 1933, when we peaked at 25 percent of the labor force.

But they've gone on, these folks (I'm going to give you their name in a minute), to ask another question. And this is the one that struck me. They asked, let's look at all Americans over the age of 16 and who have a full-time job paying more — more — than $20,000 a year. Okay? So all Americans over 16, adults, who are working full-time and are earning more than $20,000. Because you really don't want to count the ones that are working full-time and earning $20,000, because those people are in trouble. They are not really employed in the sense of a decent job and a decent income.

What are the numbers? Forty-six percent of white Americans in America right now over 16 are earning more than $20,000 a year — 46 percent. That means the majority of white Americans over 16 — the majority — are not doing a full-time job earning $20,000 or more. And among black Americans it's 40.8 percent. So the majority of whites and blacks in our country that are over 16 don't have a full-time job earning $20,000 or more. You know what those people are? Functionally unemployed. They are not being used to their capacity, they are not earning a decent living, they cannot live a decent life.

That's the level of the problem, and it's been these numbers for a long time. If you're interested in taking a look, the Ludwig Institute for Shared Economic Prosperity — lisep.org — will give you the information in detail.

The International Monetary Fund, for our second update, has issued its forecast for the year 2021. Here's what they say: The recovery from the pandemic and the crash will be long and uneven. It will not be quick, and it will not be a tide that lifts all boats. And I want to expand on it because there's a particular reason I want everyone to understand. The pandemic and the crash have hit poor people worse than rich people, employees much worse than employers, and black and brown people much worse than white people. In a simple sentence: Because of the way our economy works, this virus is making our society more unequal than it was before. And you can't blame the virus, really, can you? Because we don't have a society that spreads the pain equally. We have a society that exacerbates the already-existing inequality by unequally preparing for, and unequally containing, the virus.

The long-term consequences of the growing economic divisions worsened during this pandemic, worsened during this economic crisis. They will be with us for a long time. And this is an important issue. Far beyond the elections coming up will be this question of the inequality, worsened by this pandemic.

Because the elections are coming up, my third economic update for today is a kind of perennial. I wanted to look again at how the numbers shape up in terms of who's giving money to the political process — who's investing in this or that candidate, this or that party, for all the usual reasons. And because it's not well known, here are the basic numbers: Three quarters of all money — given Senate races, House races, presidential race, everything — three quarters of it comes from less than one percent of the American people. These are people who give (this is the way the statistics are set up) $200 or more into the election. Less than one percent of Americans — a good bit less than one percent — give $200 or more. And that makes up three quarters of all the money. So right away you can see that the 99 percent of us who don't have that kind of money, to give $200 or more, we're kind of out of it. We're not relevant to the money raising. And, by the way, the estimate this year is that the money raised for this election will be a record, in excess of $11 billion — with a “b.” I'm going to come back to that.

I then looked at the tiny number, one hundredth of one percent. So we're not talking about the top one percent; we're talking about the top 0.01 percent, the top people. These are folks who give $10,000 or more to the political process. This year it's roughly 44,000 people, and they are giving roughly a third of the money. So now we're getting to the people who give a third — one out of every three bucks — to the politicians are people who can give $10,000 or more. And obviously, most of you, like me, can't do that.

And then here's the last number I thought you'd be interested in. I'm comparing the United Kingdom, Canada, and the United States, their last national elections. Okay. The last one in the United States, 2016, when Mr. Trump won and defeated Hillary Clinton; the last national election in Canada was a year before, 2015; and the last national election in the United Kingdom was in 2017. So I'm now going to tell you how much money was donated in each of these three countries. Start with the United Kingdom, the most recent, 2017. They spent (ready?) $50 million — 5-0. Canada, 2015: They spent $90 million. The United States, between those two years, 2016, spent (ready?) $1 billion, 450 million on their national election. We are not even close. We spend more than everyone. We have, therefore, the honor to say, we have the best government money can buy.

My next update has to do with a small matter that, when you think about it, turns out not to be small. There are 10 states in the United States — out of 50 — 10 that celebrate on October 12th something called Indigenous Peoples’ Day. It is a celebration of the people who lived for many, many, many millennia here in what we now call the United States before the Europeans arrived. It's a remembrance, this day, that they were here, that they had very elaborate cultures, and societies, and histories, and that what the Europeans did when they came to this country was one of the greatest examples (and I use “great” in a loose way) of ethnic cleansing that we have in world history.

And there ought to be a recognition that something strange happens to a society that begins its first three centuries — the 17th, the 18th, and the 19th centuries, the bulk of the history of the European colonization of the United States — with a protracted, three-century-long slaughter of the people who were here. And that does something to a culture, and a society, and we're still seeing some of what it does.

My last update that we'll have time for is a small item which, again, isn't so small. The People's Republic of China has unveiled what they believe now will be their next new currency. It's a digital currency. It's not money as we know it. It's the new form of money — electronic money, digital money — that is much more easy to pay between businesses and people, to settle debts among people, to settle the debts that we have to the government for our taxes. It's a much quicker, much cheaper, and much more efficient system. And why are the Chinese rolling it out? Because it's being blocked in the West, by the big banks who see it as a threat to the stranglehold they have on our monetary system — another way in which capitalism self-destructs.

We've come to the end of the first part of today's show. Before we move on, I want to remind you that we recently published my third book with Democracy at Work. It's called The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself. It's a compilation of essays that aims to explain how and why capitalism is the sickness underlying all those symptoms. Get your copy today at our website, democracyatwork.info/books. I want to thank our Patreon community, as always, for their ongoing and invaluable support. It helps make this show possible each week. So if you haven't already, go to patreon.com/economicupdate and sign up today for access to exclusive content and more. Please stay with us; we will be right back with today's guest, author and activist Camila Piñeiro Harnecker.

Welcome back, friends, to the second half of Economic Update for today. It is with great pleasure that I welcome to our microphones and to our camera a friend and an associate who does the kind of work I want us to have more of on this program. She's a professor at the University of Havana, Cuba. Her name is Camila Piñeiro Harnecker. She's a researcher and consultant, and her work focuses on economic democracy, with special interest in worker cooperatives and public policy towards enterprises — in this case, on the part of the government in Cuba. She's the author of many articles and book chapters, three books on cooperatives, and she edited a very important volume, which for those of you that are interested in the topic, I would recommend. In English it's called Cooperatives and Socialism: A View from Cuba, and it was published in 2012 by Palgrave publishers.

WOLFF: So first of all, thank you very much. I'm going to call you “Camila” because we know each other, but I want to introduce you to my audience. Okay, let's jump right in. You are an expert on Cuba. You live in Cuba; you work in Cuba. And Cuba is very important for this program, for the work that we do, because it took a remarkable step. It made a decision, some years ago, to shift from the reliance it had had on state-owned and -operated enterprises — typical of what had happened earlier in Russia, and China, and many other places — and to shift over to a different economic structure of enterprises, namely, worker co-ops owned and operated by independent groups of private Cuban citizens. So I want to begin by asking you how big a worker co-op sector was created in Cuba? How is it doing? Has it been able to reproduce itself? Has it grown? Bring us up to date, if you will, on this remarkable strategic “innovation,” let's call it, for socialism in Cuba.

PIÑEIRO HARNECKER: Well, good morning, good afternoon, good evening, to your listeners and viewers, and thank you for the invitation. And I have to make a little of history to answer that question. And I have to say that in 2005 then-President Fidel Castro, who I'm sure you all know, made a speech at the University of Havana, where for the first time he acknowledged publicly that there were very important challenges for the revolution in Cuba that made the sustainability of socialism and the revolution in Cuba not granted. Before, there were many statements where it was like, the revolution is invincible, and socialism is irrevocable — it's not like something we can take back. But this was the first time he said that they were not sure, really, how socialism was built, that everything needed to be reviewed with a critical lens.

And so that was the beginning, really, of a process that started in 2008, once Raúl Castro assumed power after Fidel was ill. But still Fidel was alive, and he was in agreement with this process, which was called The Updating of the Socialist Model in Cuba. And the first time that cooperatives were mentioned as a part of the reform process was as a result of a nationwide consultation that happened twice. The second time was to approve a set of guidelines in 2011. These guidelines recommended, for the first time, cooperatives were going to be opened beyond agriculture — for the creation of these cooperatives beyond agriculture in Cuba.

Because I don't know if many of your listeners know that cooperatives in agriculture are very important in Cuba. They produce around 80 to 90 percent of our agricultural output, and they manage around 70 percent of land. So there are already many agricultural cooperatives in Cuba. But throughout the life of the few initial years of the revolution, there were other cooperatives — like consumer cooperatives, worker cooperatives in the sugar industry were very important — but only at the beginning.

So this was very important, because it was a request from the academic and from other sectors for many years. Because Cuba has had different cycles of reform and rethought, and it's not the first time that this happened. But it was the first time that cooperatives were acknowledged as an important part of the reform process and they were among the key measures that were acknowledged.

And so in around 2010, what was said is that the plan was to transfer between 20 and 30 percent of employment from the state sector to the non-state sector, and around 15 percent of GDP to around 35 percent of GDP that this non-state sector would be producing. And the non-state sector is comprising cooperatives, self-employment, small and medium private enterprises, and also joint and foreign ventures.

So it's not just cooperatives, but as you'll see, part of another important document that was produced as a result of yet another nationwide consultation was this conceptualization of what the socialist model in Cuba should look like. And there it is very clear that cooperatives are the second most important type of enterprise after the state enterprises, which are still expected to manage the most important, or fundamental, activities. But it's recognized that the state sector has to take a step out of economic activities that don't make any sense for the state to be managing. And so that's where the non-state sector, and cooperatives in particular, are expected to grow.

And so the expectation is that these cooperatives, as I said, and the non-state sector in general, will play an important role. These were expectations, or plans, that were made more than 10 years ago, so I’m not sure I can tell you what the specific size is that the Cuban leadership is hoping for the cooperatives to fill in, but we know it is important. And after the economic crisis that has been created by the pandemic, in July, there was another statement by the now-President Miguel Díaz-Canel, and the Minister of Economy and Planning, saying that the cooperatives are expected to play an important role as part of the recovery from this crisis, and that they until now . . .

WOLFF: Camila, let me interrupt, because this is so important. Is it then correct, am I hearing you right, that we can say that Cuban socialism, as we are speaking, has the strategy of building socialism by a mixed situation in which a dominant position is played by the government with state-owned and -operated enterprises, but a large portion — maybe 30, 40 percent — of the economy will be private enterprises with an emphasis — not exclusively, but an emphasis — on worker cooperatives as being a core part of the other part of the economy, and that this is a different concept of building socialism than we have seen anywhere else in the socialist world? Is that a reasonable reading of what you're saying?

PIÑEIRO HARNECKER: Yes, yes. That was what I was trying to say, and how the idea evolved. And underneath these policy decisions is the understanding that social property, or social control of the economy — which in Soviet-style socialism was understood as state property, and control over the means of production — it's not necessarily that equivalent. That social property includes types of property like cooperatives, where the workers and the users are the owners of the enterprises, but with the understanding that these cooperatives need to be contributing to a greater good, as true cooperatives should do anyway if they comply with the seventh principle of commitment with communities. And so, yeah, that's a correct statement.

WOLFF: All right. Give us a sense, if you can — and I know we don't have enough time, but give us a sense — is this sector growing? Is it accepted in Cuba? Is there opposition? How would you help us outside understand the position of this new strategy, in terms of Cuban society?

PIÑEIRO HARNECKER: Yes, so what I can say is that the non-state sector, which includes cooperatives, as of the closing of 2019, now employs 33 percent of the labor force, and cooperatives are 10 percent of employment. The contribution to GDP is very hard to calculate. Cuba has different currencies; it's a very complex economic system. But we can say it is a significant one, if you consider that 80 to 90 percent of agricultural produce is produced by cooperatives. And in a very short time, when around 500 worker cooperatives beyond, outside, agriculture were approved, these cooperatives have been, for the most part, very successful. And they have managed to, on average, multiply by three or five the income of the workers. So what these workers were paid as state employees, they're earning now three to five times more. And also they have better working conditions. They can decide how to invest in their own workplaces, how they want to work, etc. So except for a few exceptions and some, I think, uses of the property model that were not the best, I think most of the population sees the cooperative as a useful and viable tool for strengthening socialism in Cuba.

WOLFF: Camila, I'm very glad — I'm sorry we've run out of time — I'm really glad that you came on the program, and I hope that people will understand the importance of this initiative that Cuba has taken, redefining socialism for a new century. And I'm sure the whole world is watching to see how this works out. Thank you very much for participating.

And to all of you, my audience, thank you so much for participating. This was an important message to bring to you from an important development in the world, and I look forward to speaking with you again next week.

Transcript by Marilou Baughman
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