Lineamientos Reform in Cuba

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Description

Julia Sagebien and Eric Leenson:

The "process of change ... began in 2011 with the approval by the Cuban state of the Guidelines for Economic and Social Policy, known as the Lineamientos. In comparison with the market-based reforms that occurred in many other countries in the 1990s, this blueprint for updating the nation’s economy is limited in scope. In Cuba, however, it has far-reaching implications.

The Lineamientos offer the managers of state industries greater discretion over the use of resources and increased decision-making power. They also enable the formation of “non-state enterprises” by self-employed people and by private cooperatives. Citizens can now legally buy and sell real estate and automobiles, and they can contract to provide services. Entrepreneurs and cooperatives can (at least in principle) access goods at wholesale prices. More than 465,000 people have been authorized to work on their own, and more than 200 non-farm cooperatives are now up and running. A mixed economy of private, cooperative, state, and foreign enterprise—all of it unfolding within a socialist framework—is taking shape.

Increased levels of commercial activity, of course, often bring unwanted side effects such as pollution and social inequality. In Cuba, state leaders are acutely aware of the dark underside of economic change, but the state lacks the resources to redress most of these negative externalities. To help confront that challenge, some of the country’s newly minted entrepreneurs and cooperative leaders have begun to conduct business on a social enterprise model. In every part of Cuba, they are exploring the boundary between the private economy and the social economy—between private interest and collective well-being." (http://www.ssireview.org/articles/entry/cuban_remix)


Discussion

Models of Social Enterprise in the 3 sectors of the economy

Julia Sagebien and Eric Leenson:


"In Cuba, there are essentially three forms of property: private, cooperative, and state. For each of those forms, efforts are now under way to promote socially responsible business.


Private enterprises

It was the state—in the person of Eusebio Leal Spengler, the Historian of the City of Havana—that planted the seed of social entrepreneurship in Cuba. The Historian’s Office is a cross between a municipal government, a real estate developer, and an NGO. Under Leal’s leadership, it has developed an approach to preserving the cultural, architectural, and social heritage of Old Havana that has unleashed an entrepreneurial spirit while also promoting social solidarity and environmental protection. Over time, Old Havana has become home to a thriving (by Cuban standards) private economy with a social economy component.

The leading social entrepreneur in Old Havana is Gilberto “Papito” Valladares Reina, owner of a barbershop and beauty salon called ArteCorte. His enterprise encompasses a business, a museum that honors the profession of haircutting in Cuba, and a school for teaching that profession to young people. Above all, it is a catalyst for community change. With the support of the Historian’s Office, Valladares has invested a portion of the profits generated by his business in various neighborhood improvements. To date, ArteCorte has facilitated the restoration of local housing stock, the construction of a children’s playground, and the development of both a soccer mini-field and a senior day-care facility. Restaurateurs and other entrepreneurs, drawn by the excitement of the ArteCorte project, have begun arriving in the neighborhood as well.


Cooperative enterprises

The Lineamientos have also opened up opportunities for cooperative organizations to address inefficiencies in the state’s productive and commercial apparatus. Like private entrepreneurs, cooperatives are in many cases providing higher-quality products and higher worker pay than state-owned entities do. They are also helping to fill environmental and social needs. Recycling cooperatives, for example, are finding new ways to engage people in recycling efforts. Members of these cooperatives collect a broad range of items (paper, plastic, glass bottles) and then sell them to state-run salvage companies. As a consequence, neighborhoods are becoming cleaner and landfills are filling up more slowly.

Framing the conception of enterprise success to include external stakeholders is a hallmark of many cooperative ventures that are now emerging in Cuba. Consider Cooptex, a formerly state-owned textile cooperative with 60 members. Cooptex, based in Havana’s Marianao neighborhood, is experimenting with practices that allow some of its member seamstresses to work from home so that they can meet their family responsibilities. The leaders of Cooptex are also exploring ways to produce inexpensive goods for pensioners and other lower-income populations.


The Socially Responsible Enterprise and Local Development in Cuba project

"We initiated the Socially Responsible Enterprise and Local Development in Cuba project (SRELDC). Its purpose is to support a broader understanding of how enterprises can operate in Cuba. Toward that end, we have created a space for learning and exchange, and for experimentation with socially responsible enterprise models. The project has gained substantial support among Cuban scholars, government officials, and citizens. It has also benefited from the energetic contributions of NGO, corporate, government, and academic participants from Canada, Europe, and Latin America. One of the most encouraging results of SRELDC has been the formation of the Red ESORSE (Network of Solidarity Economy and Socially Responsible Enterprises), an all-Cuban group that is examining models for applying socially responsible enterprise to the different forms of property in Cuba. Earlier this year, the Red ESORSE began to develop a Cuba-specific set of social responsibility indicators for various types of enterprises. These indicators, based on those developed by the ETHOS Institute of Brazil, resemble Global Reporting Initiative indicators but are more appropriate to developing countries.

The Red ESORSE is working closely with cooperatives in part because that form of property appears to be the one most likely to adopt socially responsible business models. For one thing, the solidarity exigencies of the cooperative model are generally in alignment with the principles of social responsibility. For another, cooperative enterprises in Cuba tend to be larger, better funded, and more business-savvy than small-scale entrepreneurial ventures. But the Red ESORSE is also making a special effort to adapt its ETHOS-based indicators to fit Cuban state enterprise realities. This more locally relevant set of indicators will provide a useful vehicle for dialogue with state enterprise managers, and it will mark a first step toward enabling real CSR activity at state-owned firms." (http://www.ssireview.org/articles/entry/cuban_remix)


More Information

"The NCBA CLUSA Cuba Cooperative Working Group (CCWG) was formed in early 2014 to explore opportunities for engaging with Cuba on cooperative development in various sectors of the country’s economy. NCBA CLUSA has a 60-year history of supporting cooperative development in more than 100 countries around the world, and is actively expanding its work in Latin America and the Caribbean, both as an implementer of development projects and as leader in the cooperative movement in the Americas.

The CCWG was formed in collaboration with Eric Leenson of SOL² Economics, which has been engaging with cooperative leaders in Cuba, Canada, and Latin America around the topic of socially responsible enterprise in Cuba."