Although the Cuban economy may be thought of as a complete
failure, the command system structure can still be an effective way of creating a
successful economy. From the 1960s revolution to the 1990's collapse of Russia, the Soviet Union managed to maintain the
Cuban economy by trading them sugar in return for oil
(http://lanic.utexas.edu/la/cb/cuba/asce/cuba1/panel.html). The USSR paid "higher than
market prices" for Cuban cane, and Cuba paid "lower than market prices" for Russian
petroleum products. This arrangement which Cuba benefited from, allowed Castro to
provide benefits to the citizens such as higher education, free total medical care, and
subsidized food and housing. Now, ever since the deal with the Soviet Union has
collapsed, the Cuban economy has fallen by 35% from 1989 to 1993
(www.odci.gov/cia/publications/factbook/index.html). Instead of the island being
maintained or enhanced, it is barely be sustained. Although the lack of aid from the
Soviet Union has had a great influence in the Cuban economy, it still has some hope
because of increased tourism, agricultural trade and additional US dollars.
The Cuban economy is strongly based on a command system, where the
government has nearly complete control of the economy. Just as any other economic
system is required to do, the command system must answer the 3 basic economic
questions. what to produce, how to produce it, and who gets what (Lyons, Brian 1987).
The government controls things such as the quantity of each good that is to be imported
and exported, prices of goods and services, wages, housing. etc. Through the goverments
control, they can decide who recieves what share of the economic pie. Unfortunatly, this
means that they can use this power to there own advantage and limit the amount of
income that each citizen receives. In Cuba, each working age citizen is "given" a job
which pays them from 250 - 500 peso...