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Small Businesses & Socialism

Historic fish restaurant and cocktail bar, Floridita, in Havana. Photo by DW.

By Jonathan Salinas

Small businesses and socialism co-exist. In fact, they've helped socialist economies survive in the face of harsh sanctions. Considering the democratic character of socialism, it's no wonder small businesses thrive under it.

In capitalist countries, we're told otherwise. Anti-Marxists, conservative and liberal alike, instill fear about communism by claiming it is anti-small business and -initiative. They hope to convince small business owners and vendors that they’re in a "fair market," even though they’re goldfish in a shark tank compared to the monopolists who own the banks and the government. Under capitalism, big industry is favored by virtue of necessity and the nature of class-rule.

Capitalist reformers on the left, right and center describe the government as a neutral instrument whose utilization is won in democratic elections and the winners can therefore deploy its powers, according to their principles. Marxists recognize the government is an instrument of class-rule. Whichever social class controls production and trade can rig the state to advance its own class interests. The big capitalist class, the owners of large industries (coal, oil and gas), and their land-owning counterparts currently possess class-rule in the United States. Thus, no matter who wins “elections,” capitalism can't be voted out.

Because of capitalist class-rule, monopolies receive “bailouts” while well-connected small businesses get "loans" and the rest get nothing, during economic crises. Under the guise of combating COVID-19, most recently, pandemic policy had disastrous impacts on working-class communities and small businesses who suffered the brunt. Meanwhile, large corporations raked-in record profits. Yes, it's “rigged”; and it cannot "un-rig" itself.

In the 1840s, as capitalism solidified its rule around the world, misery for the toilers who worked the factories and for the small agriculturalists who were driven off the land by richer landowners only accumulated. Big business, and its governments, are perpetually “incentivized” to drive smaller businesses into the ground and make former owners return as and thereby convert into wage-slaves (workers) or paupers. This is the history behind sharecropping in the U.S. and the reason the federal government, to this day, still tries driving small ranchers off the land through eminent domain and bank foreclosures. While proponents of capitalism argue it favors small businesses, reality suggests otherwise.

Another aspect of capitalism's barbarity is its necessary cut-throat competition, which eventually leads to destruction of the environment and all who stand in its way. While some small businesses grow to large franchises and corporations under capitalism, it’s incontestable that the necessary reality for every “top dog” of industry requires the failure of 1,000 underdogs who don't make it, if not more. Thus, business competition by its nature is dog-eat-dog. Competition is not an optional aspect of business; it’s survival. Neither dog-eat-dog morality, nor parasitic states, however, persist in socialist countries today.

In Cuba, Vietnam and even North Korea, small businesses have helped their respective socialist economies survive by supplementing foreign currencies which help circumvent U.S. sanctions against them. In turn, small businesses have found a friendly government who cooperates in good faith. How does this work? How can small businesses thrive in Havana, Hanoi or Pyongyang? Are they no longer communist countries?

Just as there is capitalist-class rule, there is working-class rule, in alliance with small farmers and all those oppressed by monopoly and foreign capital. Like capitalist rule, worker rule can take different forms: totalitarian, bureaucratic or democratic. The old Stalinist states of Eastern Europe were examples of totalitarian and bureaucratic worker states. Cuba is the best living example of workers' democracy, with its regular municipal and national elections on all important questions, organized by their workers and farmers government.

Socialist Cuba is democratic because the working-class and small farmers and small vendors are the ruling-class in Cuba and thereby exert direct democratic control over their living conditions, without any regard to capitalist rule over large production. No matter who wins elections, socialism can't be voted out. Cuba’s capitalist class was defeated in 1960 when Cuban workers and farmers took control of production, land, and banks, under the leadership of Fidel Castro and the July 26th Movement. Ever since Cuba's socialist revolution, which proved it was possible in the Americas, the imperialist United States has mercilessly blockaded and suffocated Cuba’s economy.

The hostility against Cuba by the United States, regardless of the president, is an example of the irreconcilability between capitalist-class rule and working-class rule. Although Obama eased some restrictions in 2016, Trump undid them, and Biden has continued Trump's amped-up sanctions. As was also seen after the Russian Revolution of 1917, big capitalist countries have to suffocate socialist republics because the example of a different world, embodied in their defiant existence alone, constitutes an existential threat to capitalist-rule because revolutionary ideas have the terrible tendency to spread. It's up to us to oppose the capitalist U.S. government's blockade against Cuba's socialist republic.

And yet, Cuba’s tourist economy has survived despite crippling sanctions, the loss of the Soviet Union in 1991, and terrorism against it organized inside the U.S. and captured in the film, Red Avispa/Wasp Network. To be sure, industries on which populations depend for survival must be state-owned, under workers’ democratic control. The tourist economy of small vendors and shopkeepers, which gives Cuba life, has survived and been encouraged, with reasonable regulations. Licenses are regularly given by the Cuban government. Many Cubans have found owning a small business as an empowering form of work. With Cuba's public health system, guaranteeing healthcare to all, small businesses under socialism don't have to worry about "health insurance."

Socialist governments have also proven to be more receptive to small business concerns. A round of protests, for example, arose in Cuba this past year. Although they were funded by the U.S. government as a means to disrupt Cuba's economy, which failed, the government recognized some elements of the protests were Cubans with real grievances. They listened and took their concerns into consideration, updating regulations on small businesses by raising the number of employees they can hire to 100, which went into effect last month. As Havana re-opened international flights in mid-November, they've received a "booster-injection" to their economy as they've also maintained the new virus and its strains under control without "mandates."

Small businesses have found a friend in socialist governments. While in Cuba they've tended to admittedly increase class-divisions in some ways, they can operate without a parasitic capitalist state trying to destroy them at every turn. The co-existence between small business and socialism shouldn't be too surprising. While vestiges of capitalism will linger during the transitional phase between capitalism and socialism, in the long run, world communism will abolish the need for the state by creating the material conditions for an "association" of small producers, as prophesied in the Manifesto.

Small business owners carry that longing for a lost communal world, of generations past. They're more closely connected to the workers than the absentee board of directors. Many act as just another part of the team. No wonder small businesses have been historically sympathetic to strikes.

While the Democratic and Republican Parties say their reformers possess answers for small businesses, socialist democracy possesses the necessary class solidarity with small vendors to actually mean it, because of the nature of working-class rule. Workers, small farmers/ vendors, and all oppressed by capital, are natural allies who together will create a new society where the government actually represents our interests, because it's made of and by us.


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