A Hidden History of the Cuban Revolution. Stephen Cushion

as a system that provides a high standard of living for the whole society, not just for the middle and upper classes. In Cuba in the 1950s, the productivity measures that business interests wished to implement in an attempt to maintain their profit margins were achieved by layoffs and by increasing workloads for the same or lower wages. An approach that considers only GDP and similar broad indicators gives a distorted view. As Jorge Ibarra Cuesta demonstrates, an increase in per capita income, when combined with higher unemployment and wage cuts for many of those in work, results in an increase in inequality.³ The struggle over the surplus produced by labor frequently takes ideological form in a discussion of the need for productivity increases, which can be portrayed by the employers as contributing to the common good. This argument was rejected by militant sections of organized labor, who had a tradition of fighting to defend what they saw as their rights, irrespective of the economic problems faced by their employers. This led many employers in Cuba at this time to feel that they needed an authoritarian regime to defeat working-class resistance to measures that would increase productivity. There is, therefore, a link between the fall in the price of sugar, the resulting crisis of profitability, and the employers’ need to increase productivity that provides an explanation for the 1952 military coup and the support given to the resulting dictatorship by business interests.

       Economic Dependence and the Power of Sugar

      Following U.S. intervention in the Cuban War of Independence, known to the North Americans as the Spanish-American War, the island received its formal independence in 1902 on condition that the new constitution contained a clause, known as the Platt Amendment after the U.S. senator who proposed it, that gave the United States the unilateral right to intervene in Cuban affairs. This constitutional arrangement was accompanied by a treaty of reciprocity that structured economic relations between the two countries to the advantage of the United States. In these circumstances, American capital quickly came to dominate the Cuban economy in general and the sugar industry in particular. Even if legally independent, the island was effectively a U.S. colony whose economy was overwhelmingly dominated by the production of sugar.⁴

      Between 1895 and 1925, world production of sugar rose from 1 million to 25 million tons, and by the end of this period Cuba, with annual harvests of around 5 million tons, was the most important single producer.⁵ In the second decade of the twentieth century, a speculative boom known as the “Dance of the Millions,” largely financed by loans from U.S. banks, collapsed, and most of the Cuban sugar industry passed into American ownership when those banks foreclosed.⁶ U.S. capital’s control of the sugar industry throughout the early years of the republic ensured its domination of the wider economy.⁷ Even though the Platt Amendment was abrogated in 1934, following an uprising against the dictatorial regime of Gerardo Machado, a new reciprocity treaty was signed the same year that was even less favorable than the first.⁸ However, over the next twenty years the nature of the relationship between the two countries changed as U.S. capital moved away from direct ownership of sugar production into indirect control through banking, as well as making considerable profit from the control of utilities such as electricity and telephones. Nevertheless, by 1958, U.S. capital still owned 42 percent of the productive capacity of the Cuban sugar industry.⁹ Between 1948 and 1955, $637 million in profits from sugar alone was repatriated to the United States, an important loss of capital that could otherwise have been used for internal economic development in Cuba.¹⁰

      As the pattern of U.S. involvement in the economy changed, there was a parallel process of integration of the Cuban bourgeoisie into U.S. capitalism.¹¹ The Reciprocity Treaty of 1934 gave preferential access for Cuban sugar to the U.S. market, and in return U.S. manufactured products were subject to lower import duty, thereby impeding the development of a Cuban manufacturing industry. The Cuban non-sugar bourgeoisie tended to spread their interests between commercial and manufacturing undertakings. This contradiction prevented them adopting a unified class position on such matters as import/export or industrial development because, as importers, they opposed local production of anything that might compete with their imports, and as manufacturers they wanted protection for their own locally produced products. This prevented the adoption of a united position on protective tariffs, as each manufacturer argued for his individual advantage while having little material interest in supporting the claims of manufacturers of other products. Only the sugar bourgeoisie had a consistent position, one opposed to Cuban national industrialization because they wanted the maximum trade in Cuba’s sugar. Sugar had dominated the Cuban economy for a very long time and had survived previous crises, so they saw no reason to diversify into other industries. Rather, they hoped to use their dominant position yet again to restore profitability, even if it was at the expense of the island’s other economic interests. Additionally, agricultural employers gained an advantage from a high level of unemployment to ensure sufficient available cheap labor at harvest time, giving them another reason to oppose industrialization. Thus the most consistent business influence on government economic policy was in a direction that maintained Cuban dependence on sugar and was against any industrial development or diversification.¹²

      Much of the rest of the economy was linked to sugar production, more or less directly. The major export traffic through the ports was sugar, and sugar played a dominant role in the development of the railway system.¹³ Important sectors of manufacturing industry, such as rum and soft drinks, also required the availability of sugar as a raw material. The other major traditional industry, tobacco, had declined considerably, with exports down from 256 million cigars per year in 1906 to only 21 million in 1949, whereas cigarette imports had risen from 1.7 million packs in 1935 to 15.6 million in 1949.¹⁴ The major utilities, telephones and electricity, were monopolies owned by U.S. capital. The large profits that these companies made in return for a poor service and how little of those profits were reinvested in Cuba had long been subject to criticism in the national press.¹⁵ There were small textile and shoe industries, but these could not even supply internal needs. The position of the textile industry was made worse by the 1954 commercial treaty with Japan that allowed the Japanese to export cheap clothing to Cuba in return for a guaranteed import of Cuban sugar.¹⁶ This deal provides another clear example of the dominant political influence of the sugar oligarchy. The non-sugar manufacturing bourgeoisie was organized in the Asociación Nacional de Industriales de Cuba (ANIC, National Association of Cuban Industrialists), but it did not have sufficient political weight to push the government toward protectionist tariffs and industrial development policies, which were opposed by the Asociación Nacional de Hacendados de Cuba (ANHC, National Association of Cuban Landowners) representing the interests of the sugar oligarchy. A further complication that reduced the ANIC’s ability to promote industrial development was the presence in its leadership of local representatives of U.S. business interests, most notably Colgate-Palmolive and Firestone tires, which had factories on the island. The parent companies of these U.S.-owned manufacturers had profitable links with the Cuban sugar industry. Nor was the Cuban non-sugar bourgeoisie itself independent of U.S. capital; however, they were linked more closely with U.S. finance capital, and the sugar oligarchy was linked to U.S. exporters of consumer goods. Although these factors meant that the manufacturing sector was unsuccessful in its attempts to pressure the government to adopt an effective industrial development policy, the ANIC and the ANHC were united in a belief that salary reductions were essential to make Cuban exports competitive.¹⁷ Another source of disagreement between the two associations was the corruption endemic in Cuban political and economic life. ANIC members were largely excluded from this source of income and therefore protested loudly.¹⁸

      A significant proportion of Cubans whose employment was not directly or indirectly involved with sugar worked in the top-heavy state bureaucracy, the service sector, or tourism. All three sectors were riddled with corruption, particularly in the case of tourism, which Enrique Cirules’s El imperio de La Habana shows was heavily influenced by the U.S. Mafia.¹⁹ Nearly all the government intervention aimed at developing the economy was directed to unproductive capital products, mainly in Havana, that did little or nothing to aid diversification.

      With this high level of dependence on sugar, any change in either the price received for the sugar crop or the amount that could be sold had a huge effect on the island’s economy. Therefore, when the political threat of a reduction in the amount purchased by