We have seen that in the period of 1901 to 1920, a neocolonial republic under US domination was established in Cuba (“A neocolonial republic is born” 7/1/2014), in which a Cuban figurehead bourgeoisie, totally subordinate to US corporations, has the function of maintaining social control and providing political stability to the neocolony.
But in order for a neocolony to be stable, two conditions must be met. The first is economic. The neocolony and the neocolonial world-system must have sufficient resources to make concessions to popular demands, in order that the state in the neocolony can use a combination of concessions and political repression to contain the popular movement, eliminating and nullifying the influence of the radical sector of the movement leadership, which seeks a revolutionary transformation of the neocolony. The second condition is political. There must be commitment by the core neocolonial power to satisfy the material interests of the figurehead bourgeoisie, so that it will have sufficient motivation and credibility to mobilize political and ideological resources in defense of the neocolonial system.
These two conditions are intertwined. When global economic resources are reduced, the political commitment of the core neocolonial power to support the figurehead bourgeoisie is weakened. Within the neocolony, when national resources are reduced, the figurehead bourgeoisie has less capacity to carry out its political and ideological role of social control and containment of popular movements.
The necessary conditions for neocolonial political stability did not exist in Cuba in the period of 1920 to 1933, because of economic and political developments both in Cuba and in the world-system. The result was that advanced social movements under revolutionary leadership, beyond the capacity of the figurehead bourgeoisie to contain, emerged in Cuba from 1923 to 1935 (Vitier 2006:111-46). The neocolonial republic had entered crisis.
The first sign of the crisis in Cuba was the “crack” of 1920. The situation was provoked by the abrupt fall of sugar prices during the second half of 1920. The vulnerability of a peripheralized economy to the boom and bust cycles in raw materials is a normal tendency, because of its dependency on one or two raw materials for export. Prior to 1920, Cuban sugar producers expanded production in response to high prices, utilizing loans obtained from Cuban banks. However, with the sharp fall in prices, Cuban producers were unable to meet debt payments to Cuban banks. But the Cuban banks had been functioning as intermediaries, borrowing from North American banks in order to make loans to Cuban producers. Thus, the fall of prices placed Cuban banks in a position of being unable to make debt payments to North American banks (Arboleya 2008:91; Instituto de Cuba 1998:194).
Initially, the Cuban government protected the Cuban banks by decreeing a moratorium on debt payments by Cuban banks. But North American companies located in Cuba and Enoch Crowder, personal envoy of the president of the United States who was acting on behalf of the interests of North American banks, pressured the Cuban congress to enact laws in 1921 that ended the moratorium, established procedures for the liquidation of banks, and reorganized the banking system of the country. As a result, twenty Cuban banks were liquidated. At the end of 1920, 80% of deposits in banks operating in Cuba had been in Cuban banks; but by the end of 1921, 69% of Cuban bank deposits were in foreign banks operating in Cuba, led by the National City Bank of New York and the Royal Bank of Canada. At the end of 1920, Cuban banks had been the owners of 71% of bank loans, but by the end of 1921 foreign banks operating in Cuba held 82% of bank loans (Instituto de Cuba 1998:194-97). As Jesus Arboleya has written, “North American financial capital became the proprietor of the national wealth as well as the monopolist of the system of commerce and credit, which meant the nearly total denationalization of the sugar industry and banking of the country” (2008:91).
Thus, US banks, US companies in Cuba, and the government of the United States took advantage of the 1920 fall in sugar prices to increase their control over the economic and financial resources of the island, ignoring the interests of the Cuban national bourgeoisie, which by 1920 already had been converted into a figurehead bourgeoisie. In addition, responding to the lower price of sugar, US sugar producers pressured the US congress to modify the Reciprocal Trade treaty of 1903 and to increase the customs duties on Cuban sugar during 1921 and 1922, with negative consequences for Cuba. Here there was a conflict of interest between sugar producers in the United States and US sugar producers operating in Cuba, with the interests of former prevailing during 1921 and 1922, at the expense of sugar producers in Cuba, both US and Cuban.
These political decisions by sectors of the US elite had the effect of reducing the power and authority of the Cuban figurehead bourgeoisie, reducing its capacity to fulfill the ideological and political functions assigned to it by the neocolonial world-system. And this would occur precisely at a time when the declining price and market for sugar would have negative consequences for Cuban popular sectors, reducing income and increasing unemployment. The deteriorating social and economic situation of the popular sectors gave rise to the emergence of leaders who could channel popular discontent into popular protest. They established organizations that were able to analyze the negation of popular needs as rooted in the neocolonial situation; that named the national bourgeoisie as collaborators in a world-system that did not respect the sovereignty of the nation; and that could mobilize the people to collective social action.
Thus, a Cuban radical revolutionary movement emerged at a time in which the Cuban figurehead bourgeoisie had been weakened, abandoned and ignored by its senior partners in the neocolonial world-system. And just as this occurred with respect to Cuba in the period of 1920 to 1935, it would occur on a global scale with the neoliberal project following 1980, as the core elite, driven by a blinded pursuit of particular interests, would abandon the national bourgeoisies in the neocolonies. The inherent political instability of neocolonialism, first revealed in the neocolony of Cuba, has now become apparent with respect to the neocolonial world-system, as we will discuss in future posts (see “The neocolonial world-system” 9/13/2013 and “The characteristics of neocolonialism” 9/16/2013).
The emergence of a renewed popular movement from 1918 to 1935 that would revitalize the vision of Martí and would forge a synthesis of the Cuban national liberation perspective and Marxism-Leninism will be the subject of our next post.
Arboleya, Jesús. 2008. La Revolución del Otro Mundo: Un análisis histórico de la Revolución Cubana. La Habana: Editorial de Ciencias Sociales.
Instituto de Historia de Cuba. 1998. La neocolonia. La Habana: Editora Política.
Vitier, Cintio. 2006. Ese Sol del Mundo Moral. La Habana: Editorial Félix Varela.
Key words: Third World, revolution, colonialism, neocolonialism, imperialism, democracy, national liberation, sovereignty, self-determination, socialism, Marxism, Leninism, Cuba, Latin America, world-system, world-economy, development, underdevelopment, colonial, neocolonial, blog Third World perspective, Cuban Revolution, neocolonial republic