The Dangerous Persistence of Illusion

The Dangerous Persistence of Illusion
March 16, 2015
Prices, salaries and the Cuban Marxist
Rogelio Manuel Diaz Moreno

HAVANA TIMES – Comrade Erasmo Calzadilla (who I hope won't be offended
at being addressed in this "outmoded" way) recently offered his latest
contribution on the subject of prices, salaries and markets. I would
have liked him to take into consideration some ideas if only to refute
them. At the risk of being a nuisance, I'd like to repeat that the
problem of high prices and low salaries in Cuba isn't so hard to
understand; rather, it can be clarified with a dab of basic political
economy from the old boys: Adam Smith, Richard Wolff and Karl Marx, plus
a little raw objectivity.

In believe many valuable tools of these theories can be clearly applied
here in Cuba. This option, however, has been hampered by the dogmatic
and slanted implementation that was seen here and which didn't merit the
name of Marxism, not to mention the deliberate distractive techniques of
those who knew better. Another well-used technique born of bad faith,
opportunism, demagogy or other spurious interests was to complicate
things in order to make them sweeter or to confuse their adversaries.
This has not contributed to realistic solutions.

Starting with the obvious, we can see that Cuba is – unfortunately – a
poor Third World society, with a disastrous agriculture and an industry
that is generally unproductive, obsolete and decapitalized. This has its
causes, but I prefer to leap directly into the core issue of prices and
salaries.

Simply speaking, a society that suffers from poverty can't fully satisfy
the material necessities of its entire population. In other times, there
were other methods here for distributing the wealth – great or small –
that was produced or given to us. Today, nothing is given to us and the
market is the fundamental mechanism for distributing the little that is
produced. We have a very simple marketplace, none of the financial
complications of the XXI century. Basically, it's a market of
equivalents, of merchandise exchange. Real values are interchanged –
food, industrial goods, services – and also abstract values as
represented by money.

The national poverty implies little per capita disposable wealth. The
subjective impression is that the products in the market "are
expensive". Expensive for whom? The social differences that strike us
imply that the majority go to the market with scant buying power, while
a minority bring a much greater capacity. For these latter, the products
are not so expensive.

Many people sustain that in the more or less near future the laws of
supply and demand will "balance" the prices with the purchasing power of
the majority, (income from their salaries or from small businesses).
They claim that this hasn't happened quite yet only because some rascals
work badly while others hoard, and still others "won't allow" this law
to work well. But – they claim – when we have become like the "normal"
countries, these economic laws will cause production to rise and prices
to fall.

In the first place, neither the market nor the famous laws of supply and
demand obligate the producer – or the intermediary – to increase the
quantity of real value that is delivered when money is exchanged for
merchandise. Rather, this is discouraged, and they are induced to hoard
or simply let a part of this value be lost when their market realization
– commercial gain – lessens.

All of this reveals the dangerous persistence of a certain illusion or
fetish that sees the market as the supposed motor force of development
and prosperity. This deeply ingrained fetish is one of the greatest
victories of the capitalist ideology in our country; not even the daily
clash with reality has discredited it. I'm not trying to Satanize the
market; I concede that it plays an important role, and certainly
resolves that matter of interchange of equivalent merchandise. But I
want to note its key limitations. In the marketplace that we have today,
today's law of supply and demand is at work. The perceived situation of
high prices is nothing more than the inexorable effect of little
produced wealth and a concurrence to purchase it, together with a
minority with high buying power and a majority with less.

Eventually, a certain increase in production is produced, as with the
tomatoes that Comrade Calzadilla threw. The people who suffer from the
market fetish wait for this increase in the supply and then despair when
they don't see the price go down. The problem that remains outside their
view in this dangerous illusion is that the increase then seeks to line
up with another increase that is produced – that of the total purchasing
power. Due to the latter, the segment that's going to buy, considered as
a whole, now has more abstract value to offer the seller of the real value.

Unfortunately, in these global increases, it's not unusual to see the
wealthy minority come out better and the precarious majority end up
worse off. This is at play in the moments of an increase in the
disparity of wealth, as we see in many of the poorer countries of the
Third World – and lately, even in the First World. This also describes
the current scene in our country. In the end, only the already favored
minority can couple their demand with real solvency in order to afford
the luxury of increasing their own consumption as well as inputs for
their own investments. The demand of the majority sector with less
buying power lacks the solvency to maintain itself at that same level.
That majority, then, perceives the price level as not coming down but
going up; this has been happening here for a long time.

Increasing salaries, in itself, won't bring a better balance or welfare
through the market because bills are an abstract value, not real in
themselves but merely a reflection of the real value of the consumable
wealth and services. In this point I differ from the perspective of
Pedro Campos. It wouldn't give time to increase the productivity of
those deficient companies, nor of the wealth being offered. Rather, a
rapid inflationary spiral would provoke a rapid redistribution of those
abstract values and the purchasing power of the impoverished majority
would be left the same as before. For this reason, the State can't
resolve the problem in this way.

Under the reins of the state economy, the majority of the population
won't be able to get out of this trap. The deterioration of their living
conditions is linked therefore to a discourse that tries to falsely
represent this as socialism, while at the same time all of the
pro-capitalist ideological mechanisms are reinforced. The capitalist
marketing practices of a few lucrative state companies reinforces this
idea still more. Consciously or unconsciously, this favors the
conviction that the solution lies in more markets, more private economy,
more capitalism.

If the kind readers see this article and add their passionate comments,
it's possible that the editor may consent to my further musings with
respect to all this.

Source: The Dangerous Persistence of Illusion - Havana Times.org -
http://www.havanatimes.org/?p=109989