A few days ago the New York Times carried an article entitled “How Capitalist Are the Cubans?” The article addressed the surge in private economic activity that is taking place within Cuba in response to a decision by the Cuban government to loosen up governmental restrictions on economic enterprise.
The article points out:
Cuba, after all, has been dominated for decades by an all-consuming anticapitalist ideology in which there were only three things promoted on billboards, radio or TV: socialism, nationalism, and Fidel and Raul Castro…. The changes of the past few years – allowing for self-employment, freer travel, and the buying of homes and cars – have been both remarkable and extremely limited…. No one seems to know whether Cuba is really on the road to capitalism, as The Economist asserted in March, or if the island is destined to sputter along, with restrained capitalism for a few and socialist subsistence for the rest.
Whatever label is used to describe what is happening in Cuba — “capitalism,” “restrained capitalism,” “loosened socialism,” or whatever — there is one important thing that should be noted about what is taking place there: It’s not freedom and, specifically, it’s not economic freedom.
It’s a fascinating coincidence of history that the Declaration of Independence and Adam Smith’s famous economics treatise, An Inquiry into the Nature and Causes of the Wealth of Nations, were published in the same year, 1776.
Smith explored the vitally important issue of what makes certain nations wealthier than other nations. That is, he didn’t study the causes of poverty. He understood that poverty had historically been the natural state of mankind. He wanted to know what caused the exception. Why did some nations become wealthy while others remained poor?
Smith found the answer. He said that people who live in nations whose government maintains less control, regulation, and management on economic activity will enjoy higher standards of living than people in nations whose government imposes more control, regulation, and management on economic activity.
It was a revolutionary notion. Throughout history hardly anyone had questioned the notion that government domination of economic activity was absolutely necessary to ensure economic security and prosperity for the citizenry, especially for the poor. Here was Smith saying: Not so! It’s the exact opposite.
In the same year, Thomas Jefferson issued the most revolutionary political declaration in history when he stated that every person has been endowed by God or nature with fundamental, inherent rights that preexist government. These rights include, but are not limited to, life, liberty, and the pursuit of happiness. The reason that people call government into existence is to ensure the protection of these natural, God-given rights.
That declaration shocked the world. For centuries, people had been inculcated with the notion that people existed to serve the king or the state and the greater good of society. It was commonly accepted that people’s lives, activities, and properties were state-granted privileges that could be controlled, regulated, and managed by the government.
Now, combine those two revolutionary principles: economic liberty and fundamental rights, and you’ll see immediately why what is going on in Cuba does not constitute freedom. Under the principle enunciated by Jefferson, people have the fundamental, God-given, natural right to engage in economic enterprise. It’s an essential element of what being free and pursuing happiness are all about. No government can legitimately regulate, control, or manage an inherent right, one that preexists government.
Yet, that is precisely what the Cuban government is doing by permitting people to exercise a bit more latitude when it comes to economic activity. But even if the government permitted Cubans much more latitude, as the Chinese communist regime is doing in China, it still wouldn’t constitute economic liberty because it is being done by permission.
What the Cuban regime is doing is actually no different from what governments throughout history have done. The mindset among Cuban officials and the Cuban people is the same mindset that has guided statists throughout history — that when it comes to economic activity, government is the boss and the citizenry are the subjects.
So, while it’s true that Cubans will be better off economically to the extent that the Cuban government issues more permits and licenses to engage in private economic activity, no one should mistake this for a free society. The genuinely free society is one in which the government is constitutionally prohibited from regulating, controlling, or managing people’s economic activity or any other fundamental, God-given, natural rights.