YES CASTRO: ENTREPRENEURIAL SPIRIT AND GLOBALIZATION ARE THE FUTURE FOR CUBA
By Manuel Cereijo
The crucial aspects of big companies are not quantitative but qualitative: the nature of the product and the mode of manufacture and marketing. Successful firms typically start slowly as they make their initial investment in a new product, then enter a period of very rapid growth as markets are developed and productive methods are perfected. Finally, they reach a stage of routinized mass production. Only a relative small number of large companies ever arrive at this final phase, looming over the national and world economies.
Their great efficiency derives from many years of making the same thing and incrementally improving it and perfecting the means of producing and selling it. Such companies have become highly rigid and specialized, and in static terms, greatly productive. Many of them are now experiencing a new lease on life in the global economy. But from the point of view of overall economic growth and technological innovation, these firms are of little importance to the economy.
Entrepreneurs are fighting United States' war against the slow economy. It is small and high technology businesses, not big firms, that generate most of the employment. These small firms generate jobs about thirteen times faster than mature firms. This is the crucial role of entrepreneurs in these times of punctuated equilibrium. They will be a key factor in the future reconstruction of Cuba.
Yes, entrepreneurial spirit and globalization of our lives-socially, economically, and even educationally-will determine the success of our society, wherever we live. For the first time in human history, anything can be made anywhere and sold everywhere. In capitalistic economies that means making each component and performing each activity at the place on the globe where it can be most cheaply done and selling the resulting products or services wherever prices and profits are highest.
Minimizing costs and maximizing revenues, is what profit maximization, the heart of a successful social and economical society, is all about. Sentimental attachment to some geographic part of the world is not part of the system anymore. The global economy is both bigger and more of a reality than it ever has been.
In an era of man-made brainpower industries, the global economy is a dynamic one always in transition. The classical theory of comparative advantage has disappeared. The whole distinction between capital/labor collapses. Skills and knowledge, human capital, are created by the same investment funds that create physical capital. Today knowledge and skills stand alone as the only source of comparative advantage. They have become the key ingredient in this century's location of economic activity.
The source of the gifts of capitalism is the supply side of the economy. This simple recognition is the core of all successful economic policy. Castro, however, erroneously located the means of production in the material arrangements of the society rather than in the metaphysical capital of human freedom and creativity. Castro, one must give in order to get, supply in order to demand. And the trend started already in politics. Supply can create its own demand, even in the political realm.
By analogy, leadership is supply and public opinion is demand. The reverse is a sluggish and uncreative government, and a national decline-Cuba. Wealth consists in assets that promise a future stream of income. The flows of money do not become an enduring asset of Cuba until they can be converted into a stock of remunerative capital-industries, ports, roads, schools, and working skills-that offer a future flow of support when the input of money runs out. That is, any source of income must be transformed into capital goods at home, with a yield for the future. Castro, small businesses are not the problem, but part of the solution. Socialism is dead, intellectually bankrupt, morally defunct.
Technology and ideology are shaking the foundations of twenty-first-century capitalism. Technology is making skills and knowledge the only sources of sustainable strategic advantage. Ideology is moving toward a radical form of short-run individual consumption maximization at precisely a time when economic success will depend upon the willingness and ability to make long-run social investments in skills, education, knowledge, and infrastructure.
Yes, Castro, you are wrong again. Entrepreneurial spirit, globalization, capitalism, and democracy will lead Cuba to a bright future, to a just society, to individual and social economic bonanza.
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