By:

Dr. Armando Nova GonzálezCentro de Estudio de la Economía CubanaUniversidad de La HabanaSEPTEMBER –OCTOBER 2012

COMMENTS BY:

Mario A. González-Corzo, Ph.D.Associate Professor, Department of Economics, LEHMAN COLLEGE, CUNYFaculty Fellow, BILDNER CENTER, CUNY

I concur with DR. NOVA in that Cooperatives represent a viable form of property, in which Cuba already has vast accumulated experience, and could play a decisive role in transformation of the agricultural sector by: Improving the rational use of resources and the allocation of

agricultural output Improving total factor productivity (TFP) Contributing to the reduction of the massive FOOD IMPORT BILL Providing alternative means of employment in the Non-State sector

DR. NOVA found that:Cooperatives produce 77%77% of food.The most efficient are: CCS and Private.CCS and Private.

Combined, these Non-State agricultural producers Combined, these Non-State agricultural producers account for 57 % of the total food output for the account for 57 % of the total food output for the country, with only country, with only 24.4 %24.4 % of the arable land. of the arable land.

They produce They produce 63 % of milk 63 % of milk (the State produces 13 %), (the State produces 13 %), own more own more 64% of the milk-producing cattle 64% of the milk-producing cattle and and more than more than 57 and 60 % 57 and 60 % of cattle and hogs, of cattle and hogs, respectively.respectively.

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As Dr. NOVA indicated, The “Guidelines” approved in 2011 represent a step in the right direction.

However, these “Guidelines” still contain certain characteristics that still do not facilitate the full realization of property.

I. ECONOMIC MANAGEMENT MODEL GENERAL GUIDELINES The socialist planning system will continue to be the main

national management tool of the national economy. Its methodology and organization and control must be modified. Economic planning will influence on the market and take into account its characteristics.

  The management model recognizes and encourages socialist

State-owned companies – the main national economic modality - as well as the foreign investment forms described in the law (e.g., joint ventures and international association contracts), cooperatives, small farming, usufruct, franchisement, self-employment and other economic forms that may altogether contribute to increased efficiency.

  In the forms of non-State management, the concentration of

property in the hands of any natural or legal person shall not be allowed.

DR. NOVA argues that property cannot only be associated with possession of material goods, and that the realization of property consists of: Giving Producers’ autonomy to make resource allocation and output distribution decisions, taking

the social good into consideration. Expanding their access to a market (or markets) for inputs, Giving them the ability to hire labor, as necessary, AND Expanding their access to financial resources (such as credit, loans, etc.) and technical assistance

While I agree with DR. NOVA that conceptually any movement towards the full realization of property is a positive step, the definition of this concept raises several questions for future research and discussion:

1) How much autonomy should producers have? Can this be adjusted over time? Depending on circumstances?

2) Who makes this choice? The bureaucratic apparatus? A Central Planning Board (CPB) as proposed by the classical proponents of “market socialism” like Oskar Lange and Abba Lerner?

3) How is the “social good” defined? How can it be incorporated into the objective function --- i.e. utility max. profit max. ---- of producers capable (and free to) make autonomous factor utilization decisions and output decisions?

4) What is the role of prices in the realization of property? For example, can I enjoy the realization of property, even if I am given legal title and economic rights over it – but face fixed prices (set by the State) for the output it produces?

5) If access to financial resources is a requirement for the realization of property, how is the supply of credit financing to be determined? Price controls? Subsidies? Quotas? Market Forces – taking risk into account?

6) If measures to achieve the realization of property are to be implemented systematically, what are some of the features of the system to be put in place to achieve this goal?

7) What roles should centralized coordination mechanisms play? What roles should be permitted for market based coordination mechanisms?

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