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Cuba Under Castro, Building a New Economy

revolutionary leader Che Guevara, sugar fields, Cuban people, goods available, economic decisions

With most Cubans united behind his government, Castro completed the transformation of Cuba’s economy. The government centralized and coordinated all economic decisions. It provided every Cuban with work and set salaries that distributed wealth more equitably among workers. To inspire the population, revolutionary leader Che Guevara, a close associate of Castro, introduced the New Man Theory. This doctrine proposed that people would work not for their own material advancement, but to benefit the community. Castro and Guevara attempted to use the New Man Theory to motivate Cubans to work harder for the revolution. It did not prove successful. Although working-class and poor Cubans supported the goals of the revolution, many were not willing to work long hours without increased financial compensation.

In 1962 the economy collapsed due to poor government planning and a decline in trade with the United States resulting from the embargo. The amount of goods available, especially food and clothing, declined sharply. Inflation followed, since Cubans had money but little to buy. The government imposed price and wage freezes and rationed food, clothing, and gasoline. The black market offered scarce items at high prices.

Despite the shortages in goods during the 1960s, the government successfully redistributed wealth more equitably and provided a better quality of life for most Cubans. The government provided schools, medical clinics, retirement pensions, and public transportation. It also reduced rents and utility charges, lowering the cost of living. The poorest 40 percent of the population saw their per capita income rise, despite the faltering economy and the scarcity of many goods.

By the end of the 1960s, stabilizing the economy had become the government’s first priority. The reforms of the revolution and Castro’s ability to implement independent policies depended upon Cuba building an economy that could support extensive social reforms. To this end, Castro pledged that Cuba would produce 10 million tons of sugar in the 1970 harvest. As early as 1968, resources, both human and material, were being mobilized for sugar production. Cubans were pressured into “volunteering” their time to perform unpaid work in the sugar fields. Approximately 1.2 million workers from all sectors of the economy joined 100,000 members of the army and 300,000 sugar workers in the fields. In the end, the effort failed. On July 26, 1970, Castro informed the Cuban people that the nation had produced only 8.5 million tons. The consequences of the failure were harsh. All sectors of the economy declined sharply because labor and resources had been diverted to the harvest.

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