Cuba’s Market Reform Show There’s No Silver Bullet

December 12th, 2012

Cuba has allowed farmers to grow and sell crops privately in an attempt to boost production, but the changes haven’t been a success:

Mistrust is widespread. To get the growth Mr. Castro wants in agriculture and the economy, people need to trust the government, analysts say. But after half a century of strict control, many Cubans doubt proclamations from officials, who insist that this time, despite previous crackdowns, private enterprise will be supported.

Some farmers still wonder when the government is going to swoop in and take what they have built.

“What concerns me is that in a place like this, after five or six years the state might need the land to complete some kind of project,” said Reinaldo Berdecia, who is raising cows outside Havana.

This shows is just how important the rule of law is in allowing a market system. Without trust that the land and output will remain theirs, few farmers will take the necessary steps to make use of it.

Another problem farmers run into is that while they now can effectively own land, they don’t have the resources to effectively farm it due to other restrictions still in place, like tractors (the government maintains a monopoly on selling almost all new equipment, so farmers use decades-old, unreliable equipment) and fertilizer.

Without the rule of law and relatively unfettered access to other goods, too, it’s difficult for a market to emerge.