No More Free Lunch: Reflections on the Cuban Economic Reform Process and Challenges for Transformation ed. by Claes Brundenius and Ricardo Torres Pérez (review)

Written by distinguished academics from Cuba and from outside the country, and informed by valuable insights and research expertise, No More Free Lunch is an impressive collection of scholarly chapters on the far-reaching economic transformations (officially labeled an “update” of the socialist model) that are taking place in Cuba under the leadership of Raúl Castro. The volume offers fresh perspectives on a number of key subjects related to the reform process under way on the island, in particular the unprecedented changes in agriculture, the opening to small private enterprises and the authorization of nonagri-cultural cooperatives, the promotion of foreign direct investment, the abolishment of food rationing and the elimination of monetary duality, the massive layoffs of public employees and the overhaul of the business model of state firms, and cutbacks in state subsidies and gratuities. The structural problems of today’s Cuban economy and the main challenges facing Havana’s policy makers are also analyzed, along with the reform experience of other countries like China and Vietnam, to draw potential lessons for Cuba. The result is a rigorous intellectual project that sheds substantial light on the Cuban government’s attempts to devise a new economic model aimed at unleashing productive forces, reducing the notorious inefficiencies of the existing socialist system, improving living standards, and fostering sustainable development.

Taken as a whole, Raúl Castro’s economic reforms are well conceived and quite significant. Some of the structural market-oriented changes recently introduced in Cuba would have been unimaginable just a few years ago when Fidel Castro ruled the country. However, several major problems continue to affect the Cuban economy, above all the overreliance on exports of professional services with very few backward linkages, insufficient agricultural production and the meager performance of the manufacturing industry resulting in high levels of food imports and a persistent trade imbalance, little capital accumulation and chronic liquidity shortages, the underutilization of human capital, and a restrictive business environment. The contributors do not shy away from pointing out these problems and suggesting deeper reforms to tackle the shortcomings of Cuba’s state-dominated and highly centralized economy.

García Álvarez and Nova González call for a more decentralized agricultural management model and a greater presence of market forces in driving production and distribution activities. Torres Pérez recommends the implementation of policy measures specifically designed to boost higher levels of domestic integration (especially between the agricultural and industrial sectors) and to stimulate more complex and knowledge-intensive productive capacities with the involvement of small private businesses and cooperatives. Monreal also suggests a reorientation of Cuba’s highly trained workforce in career paths with increasing technological learning and argues that nonstate entrepreneurs could make a significant contribution to export diversification and development. Regarding small private enterprises, Ritter notes their dramatic expansion since 2010 but warns that these businesses in Cuba continue to be burdened by excessively high taxation rates and ill-advised restrictions and prohibitions. Similarly, Sagebien and Betancourt stress that the Cuban government’s distrust of an independent nonstate sector and of capital accumulation in private hands is hindering the growth of a prosperous entrepreneurial economy, yet they argue that the ongoing transformation of the socialist system with an increased role of market mechanisms provides a unique opportunity to foster the creation of socially responsible and economically viable nonstate enterprises.

The insufficient systemic focus of Raúl Castro’s reforms is a common theme throughout the volume. According to Pérez Villanueva, Vidal, and De Miranda Parrondo, the positive experience of other reform processes in countries such as China and especially Vietnam makes it clear that Cuba needs transformations that go beyond a simple update of its socialist model. Necessary changes include renewed efforts and liberalizing measures to attract foreign direct investment (also generated by Cuban residents abroad), monetary and exchange rate...