Has Cuba finally realised that its socialist economic system suffers from serious flaws, and even more important, that substantial market-oriented reforms are needed to overcome such flaws?

Last month, Cuba’s Communist Youth newspaper, Juventud Rebelde, ran a three-part story on illegalities in the Cuban society that disclosed the results of an investigation by its undercover reporters into state businesses in the capital, Havana. The overall picture was one of rampant theft, widespread fraudulent practices, and extreme inefficiency in most retail stores and services of the Cuban capital. The newspaper also revealed that a local team of academic specialists would begin studying the issue of “socialist property” in Cuba in search of ways to improve the current economic model.

Since Fidel Castro introduced the socialist system into Cuba almost 50 years ago, the economic policies pursued by his government have exhibited several shifts away from and toward the market. A reduced emphasis on the role of the state and pragmatic acceptance of market reforms generally occurred in the wake of economic crises or sluggish growth, when the government temporarily put aside its commitment to state control, equality, and moral incentives in favour of liberalising measures aimed aimed at boosting the economy. But today, the island’s economy is in better shape than it has been in years. So why would Cuba support market reforms that would mean a loss of control for the government, and generate social effects such as growing income inequality deemed unacceptable by its leadership?

In effect, Cuba has been moving exactly in the opposite direction in recent years. Havana’s authorities have rolled back some of the timid capitalist-style reforms that they had implemented between 1993 and 1994 to ensure the survival of a system that was then on the verge of collapse. The drive against economic crime, one of the elements of the “battle of ideas” launched by Castro in 2000, has gathered pace since late 2005 when Castro himself recognised the urgent need to tackle the threat to Cuba’s socialism from vice and the pilfering of state resources by adopting the necessary counter-measures.

What are these counter-measures? As usual, they involve more discipline and state control. During the past year, Cuban officials have recruited and trained thousands of inspectors to detect “irregularities” in both the public and private sectors. And on October 25, only three days after the last part of the Juventud Rebelde story was published, the Communist Party newspaper, Granma, announced that new rules for all state enterprises “aimed at strengthening order, educate the workers, and deal with lack of discipline and illegalities in the performance of labour” will take effect in January 2007.

Cuban academic specialists have yet to complete their study of what is wrong with the island’s socialist system. The Castro government, however, has already decided what to do about it. — The Christian Science Monitor