From Plunder to Economic Reforms in Cuba

Since 1959, the economic history of the Castro-communist regime can be summarized by a constant: to destroy private property when it feels strong, to tolerate it partially when it feels cornered, and to strangle it again when an external support appears. In Cuba, there have been no true economic reforms, but rather tactical concessions, limited openings, ideological backsliding, and new patches presented as structural changes.

The first stage was one of direct assault on property. In the early years of the "revolution," the new power started with measures that many Cubans interpreted as "social justice": rent reductions, promises of land for the peasant, intervention in foreign monopolies, and rhetoric against the abuses of the old order. However, it soon became clear that this was not about democratizing property, but rather about transferring it almost entirely to the "revolutionary" State.

The First Agrarian Reform Law, signed on May 17, 1959, limited rural property to 30 caballerías, approximately 402 hectares, although it included exceptions for certain exploitations deemed productive. In theory, it aimed to eliminate large estates and benefit landless farmers. In practice, it established the National Institute of Agrarian Reform (INRA), which became a key political and economic tool for concentrating power in the hands of the new regime. Many farmers received land, but the State began to dominate planning, credit, supplies, marketing, and pricing.

The Second Agrarian Reform Law, enacted in October 1963, completed the tightening of restrictions. It reduced the limit for private rural property to five caballerías, approximately 67 hectares. Any land exceeding this size was transferred to the State. As a result, the regime not only dismantled large estates but also diminished a significant portion of medium-sized agricultural property in Cuba. This led to the expansion of state farms and cooperative forms that were subordinate to central planning.

In the countryside, the regime experimented with various formulas. The Credit and Service Cooperatives allowed small farmers to formally maintain ownership of their land, but they tied them to the state system of credit, supply, and marketing. Later, Agricultural Production Cooperatives emerged, where peasants handed over their land to a collective form of production. Then, in the 1990s, the UBPCs, Basic Units of Cooperative Production, were established on former state farms. On paper, they were cooperatives; in reality, they operated under controls, quotas, imposed prices, and state dependency. It was the Cuban version of the Soviet model: farms subjected to political command, akin to kolkhozes and sovkhozes adapted to the tropics.

Meanwhile, in the cities, the crusade against private businesses advanced. First, large companies, banks, refineries, sugar mills, and public utility companies were intervened, primarily those owned by American and Cuban interests. The compensations, when they were announced, turned out to be unrealistic, deferred, conditional, or simply nonexistent for most of those affected. Then came the nationalization of wholesale trade and a significant portion of the productive apparatus. The State took ownership of factories, warehouses, hotels, cinemas, shops, and rental housing.

But there were still small businesses: bodegas, barbershops, cafes, bars, workshops, shoe repair shops, food stalls, laundries, carpentries, butcher shops, family-run street stands. That last space was devastated in 1968 with the so-called Revolutionary Offensive. Fidel Castro presented it as a moral battle against selfishness, profit, and the “petty-bourgeois mentality.” In reality, it was the dismantling of the last independent business fabric. More than 55,000 small enterprises were nationalized or shut down. The "revolution" not only confiscated from large property owners: it also put an end to the bodega owner, the barber, the cobbler, the food vendor, the mechanic, the carpenter, and the self-employed worker.

What was allowed? Very little. Some small farmers retained land within strict limits. Certain individual activities survived in a residual or informal manner. Specific trades and services remained in gray areas. But the general principle was clear: the citizen could not prosper on their own; they had to rely on the State.

In the 1960s, there was also an internal debate among figures of the regime itself. Ernesto Che Guevara advocated for a model of extreme centralization, budgetary financing, moral incentives, and the formation of the "new man," supposedly detached from material interests.

In contrast to that perspective, Carlos Rafael Rodríguez and other figures associated with the old pro-Soviet communism advocated for methods closer to Soviet economic calculation: companies with accounting, some measurement of costs, material incentives, and a more institutional approach to planning.

In practical terms, Fidel Castro fluctuated between both models. Initially, he embraced Guevarist voluntarism, massive mobilization, and an offensive against all markets. After the failure of the “ten million harvest” in 1970, he moved closer to the classic Soviet model, reliant on external subsidies, central planning, and subordination to the communist bloc.

The first significant economic opening occurred in 1980 with the establishment of free peasant markets. Private producers and cooperatives were allowed to sell agricultural surpluses based on supply and demand prices. It was a small market opening within a state-controlled economy. It worked well enough to reveal something perilous for the regime: when producers have incentives, they produce more; when they can sell, they supply better; and when prices reflect scarcity and demand, food becomes available that the State cannot guarantee.

But the relative success of those markets resulted in inequalities, the enrichment of some producers and intermediaries, and above all, an unbearable truth for Castroism: the market was more efficient than communist planning.

In 1986, Fidel Castro initiated what was called the Process of Rectification of Errors and Negative Trends. He closed the rural free markets, attacked material incentives, revived Guevarist rhetoric, and once again demonized profit. The regime did not correct its mistakes; it blocked the minimal economic freedom it had reluctantly allowed.

The second major opening occurred in the 1990s, not out of conviction but out of urgent necessity. The fall of the Soviet Union and the socialist bloc left Cuba without subsidies, insufficient oil, preferential markets, and political credit. The "Special Period" was the acknowledgment of the structural failure of the model. Faced with the threat of collapse, the regime legalized the possession of dollars, allowed self-employment in certain activities, opened agricultural markets, authorized "paladares" with restrictions, promoted international tourism, accepted foreign investment, and approved the Foreign Investment Law of 1995.

That was not a comprehensive reform either. It was an emergency economy. It allowed Cubans to survive, but not to be truly free. The self-employed could work, but under limited licenses, suffocating taxes, absurd prohibitions, and constant persecution. The “paladar” could exist, but with restrictions on seating, employees, products, and supply. Farmers could sell, but only after meeting quotas and controls. Foreign investment could come in, but in association with the state, without full legal security and with workers hired through state agencies.

When Hugo Chávez came to power in Venezuela and began to subsidize the Cuban regime with oil, credits, contracts, and the purchase of professional services, Havana felt it had room to halt its opening. Starting in 2003 and 2004, there was a reinforcement of recentralization, the dollar was once again banned in internal transactions, taxes were imposed, state control over foreign exchange was strengthened, and spaces for the private sector were reduced. The logic was the same as always: when an external lifeline appears, the regime reverts to greater control.

With Raúl Castro, starting in 2008, came another phase of "updating the economic model." Discussions centered around eliminating bloated workforces, expanding self-employment, granting idle lands for usufruct, allowing the buying and selling of homes and cars, and acknowledging certain non-state forms. However, the system was not dismantled. The Party continued to hold power, the state enterprise remained designated as the "main actor," the military retained strategic sectors of the economy, and entrepreneurs remained trapped amid permits, inspectors, corrupt police, lists of approved activities, lack of wholesale market opportunities, absence of full ownership rights, and fear of a reversal.

In 2021, under Díaz-Canel, the regime authorized micro, small, and medium-sized private enterprises, known as Mipymes, at least in theory. This was a belated measure, more than half a century after having destroyed national private enterprise. Once again, the opening was a response to a deep crisis: pandemic, a decline in tourism, inflation, shortages, the failure of the Tarea Ordenamiento, productivity collapse, and popular protests. The Mipymes demonstrated agility, the ability to import, distribute, supply, and generate employment. However, they also exposed the state's failures. This led the regime itself to begin restricting them: new regulations, price controls, limits on profit margins, restrictions on wholesale trade, inspections, taxes, political suspicions, and accusations of enrichment.

The "reforms" announced by Miguel Díaz-Canel on Friday, June 12, 2026 continue that same tradition. There is talk of attracting investment, including Cubans living abroad, reducing state intermediaries in foreign trade, granting more autonomy to municipalities and businesses, stimulating national production, targeting subsidies, and studying experiences from China and Vietnam. However, the issue does not lie in the vocabulary, but in the essence. The regime wants capital without capitalism, investment without rights, entrepreneurs without independence, a market without freedom, and prosperity without secure property.

The difference between each cycle has not been of nature, but of context. From 1959 to 1968, the regime confiscated out of a sense of rising power, backed by revolutionary fervor. In 1980, it opened up slightly to alleviate agricultural inefficiencies and shortages, only to close again in 1986 due to ideological fears. In the 1990s, it opened because the Soviet subsidy was lost, and then it slowed down when Chávez offered support. Under Raúl, there was a slight opening because the state economy was unviable, but without democratizing power. With Díaz-Canel, Mipymes were allowed to open because the country was sinking, and then they were regulated as the private sector began to outpace the state in efficiency. Now, changes are being announced again due to the energy, food, fiscal, and migration crises, as well as social protests, which threaten the continuity of the undemocratic regime.

The lesson is clear: Cuba does not need another small reform; it needs real economic freedom. It is not enough to allow limited businesses under political surveillance and control. It is not enough to authorize investments while the courts are not independent. It is not enough to invite the diaspora if the state can change the rules overnight. It is not enough to talk about decentralization if the Communist Party retains political monopoly and if the military controls strategic sectors.

Countries that successfully transitioned from communism or extreme statism did not prosper through cosmetic reforms but through profound changes. Poland stabilized its currency, liberalized prices, opened trade, privatized enterprises, and built democratic institutions. Estonia focused on private ownership, trade openness, simple taxation, digitalization, legal security, and European integration. The Czech Republic progressed with privatizations, the restitution of properties, monetary discipline, and institutional reconstruction.

Cuba can learn from these examples, but not by half-heartedly imitating them or using China or Vietnam as an excuse to maintain a one-party dictatorship. Cuban prosperity demands a competitive market economy, with protected private property, respected contracts, independent courts, business freedom, unrestricted access to imports and exports, functional banking, a credible currency, openness to both domestic and foreign investment, and a government limited by law.

The Cuban problem is the lack of freedom. As long as we have a single-party regime that decides for everyone and imposes its will, Cuba will remain under oppression and extreme misery. The reality and the moment demand profound political and economic reforms.