Cuba on the Cusp: Getting the Story Right This Time | The American Spectator

There is a growing, if tentative, sense that Cuba may be approaching an inflection point. Rapidly mounting economic stress owing to losing its Venezuelan oil lifeline, persistent shortages, outward migration, and quiet policy experimentation suggest that the island could rapidly begin moving, however unevenly, toward more market-oriented arrangements in the months ahead. These shifts may not resemble a clean “transition” in the textbook sense. They may come piecemeal: expanded private enterprise here, currency reform there, selective liberalization of trade or investment. But the direction of travel matters more than the speed. After decades of rigid central planning, even incremental movement toward markets would mark a profound change. (RELATED: Darkness Before the Light in Cuba)

However such changes unfold, it is difficult to argue that they would not, on balance, improve conditions for Cubans and, by extension, the world at large. We may debate the sequencing, the political compromises, or the degree of continuity with the existing regime. But the baseline reality is impossible to ignore: when citizens, often with children, risk their lives crossing 90 miles of shark-infested, open water on makeshift, rickety boards, the status quo is untenable. A society that ceases to generate such desperate exits is, almost by definition, a society that is improving. If liberalization reduces the need for that kind of flight — even modestly — it will be a meaningful step forward.

Precisely because such a moment may be approaching, it is worth revisiting the interpretive mistakes that followed the collapse of the Soviet Union. That episode was not just an economic and political transformation; it was also a narrative failure. Many of the most widely repeated explanations for the Soviet system’s demise were either incomplete or outright wrong, and those misinterpretations have shaped expectations and public understanding in ways that blunted the perceived success of market transitions. If Cuba begins to open, getting the story right will matter; not only for historians, but for policymakers, economists, investors, and the Cuban people themselves.

One of the most persistent errors concerns the role of external constraints versus internal dysfunction. In Cuba’s case, the U.S. embargo is frequently cited as the primary cause of economic hardship. But this explanation does not withstand scrutiny. Cuba trades with numerous countries, including major economies in Europe, Latin America, and Asia. Goods flow onto the island; tourists arrive; remittances circulate. The problem is not isolation, but the means by which resources are allocated once they arrive. Chronic shortages, low productivity, and poor quality goods are hallmarks of a system that systematically misallocates capital and labor — not one that is simply cut off from the world. To attribute Cuba’s economic stagnation primarily to the embargo is to misunderstand the underlying mechanisms at work.

A similar pattern of misinterpretation characterized explanations of the Soviet collapse. One common claim is that “no one had any incentive to work,” as if the system failed merely because of widespread laziness or moral decline. Incentives certainly mattered, but this framing trivializes the deeper problem. Even with well-intentioned and industrious workers, a centrally planned system lacks the ability to coordinate complex economic activity effectively.

Another popular explanation is that the United States, particularly under Ronald Reagan, forced the Soviet Union into effective ‘bankruptcy’ by compelling it to overspend on military competition. While geopolitical pressure played a role, it was not the root cause of the collapse. The Soviet economy was already stagnating under the weight of systemic inefficiencies long before defense spending became unsustainable. These narratives, though superficially appealing, distract from more fundamental issues.

There were, of course, many real and serious challenges in the post-communist transitions of Russia and Eastern Europe. Rapid privatization without well-defined property rights, weak legal institutions, corruption, and the absence of financial infrastructure all contributed to uneven and, at times, painful outcomes. These factors should not be dismissed. They offer important lessons about the stages and institutional prerequisites of successful market reform. But they should not obscure the core reason why the socialist systems themselves failed in the first place.

At the foundation of that failure were two interrelated problems identified decades earlier. The first, articulated by Ludwig von Mises, is the problem of economic calculation. Without market prices generated through voluntary exchange, planners lack the means to determine the relative value of different uses of resources. They cannot know whether steel should go to bridges or machinery, whether labor should shift from agriculture to manufacturing, or which technologies are worth adopting. The second, emphasized by Friedrich Hayek, is the knowledge problem: the information required to make such decisions is dispersed, tacit, and constantly changing. It cannot be aggregated and processed by a central authority in any meaningful way.

As more information about Cuba’s internal economic conditions becomes available — whether through greater openness, increased private activity, or simple leakage of data — it will likely reinforce these insights. The island’s difficulties are not mysterious, nor are they primarily the result of external pressure. They are the predictable consequences of a system that cannot calculate effectively and cannot harness the knowledge embedded in millions of individual decisions.

If Cuba is indeed on the cusp of change, then the stakes are not only economic but interpretive. The world will once again be tempted to explain outcomes through simplistic narratives, blaming external forces for internal failures or attributing success to anything other than the emergence of markets and the institutions that support them. It would be a mistake to repeat that pattern. Making the causes of collectivism’s repeated failure clear is not only a moral imperative, but underscores the promise of liberalization and the reasons why it matters.

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