Introducing Private-Property Rights to Cuba: How Cuba's New Constitution Paves the Way for Economic Growth

Case Western Reserve Journal of Case Western Reserve Journal of

International Law International Law

Volume 52 Issue 1 Article 28

2020

Introducing Private-Property Rights to Cuba: How Cuba's New Introducing Private-Property Rights to Cuba: How Cuba's New

Constitution Paves the Way for Economic Growth Constitution Paves the Way for Economic Growth

Renee Monzon

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Renee Monzon,

Introducing Private-Property Rights to Cuba: How Cuba's New Constitution Paves the Way

for Economic Growth

, 52 Case W. Res. J. Int'l L. 629 (2020)

Available at: https://scholarlycommons.law.case.edu/jil/vol52/iss1/28

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Case Western Reserve Journal of International Law 52 (2020)

629

Introducing Private-Property

Rights to Cuba: How Cuba’s New

Constitution Paves the Way for

Economic Growth

Renee Monzon*

On February 24, 2019, Cuba adopted a new Constitution.

The new

Constitution formally recognizes private-property ownership. From the

beginning of Socialism’s impact on Cuba, private-property ownership

had been legally abolished until Fidel Castro stepped down from power

in 2008.

This new Constitution shows a departure from the socialist

grasp on the economy. Cuba likely recognizes that private-property

ownership is fundamental to economic growth in capitalist countries

and now seeks to benefit from the growth that accompanies a system of

private-property rights. Cuba is not the first socialist country to embark

on a process of property privatization. This paper will look at how post-

communist countries have implemented property rights in the past and

apply the prevailing economic theories to the process Cuba is going

through now.

Table of Contents

Table of Contents .......................................................................... 629

Introduction ................................................................................... 630

I. BRIEF HISTORY OF CUBA ............................................................. 634

II. CUBA’S NEW CONSTITUTION ..................................................... 637

III. Evolving Property Rights in Cuba ..................................... 641

A. Property Rights Under the Castro Regime ..................................... 641

* Renee Monzon is a 2020 J.D. candidate at the Case Western Reserve

University School of Law. In 2019–2020, she served as the Managing

Editor for the Case Western Reserve Journal of International Law.

1 See Geoff Thale & Teresa García Castro, Cuba’s New Constitution,

Explained, W

ASH. OFFICE OF LATIN AM. (Feb. 26, 2019),

https://www.wola.org/analysis/cubas-new-constitution-explained/

[https://perma.cc/EY4Q-VCDC].

2. See Carmen Sesin, Cuba After Castro: How Much Change, How Quickly,

NBC NEWS (Nov. 27, 2016), https://www.nbcnews.com/storyline/fidel-

castrosdeath/cuba-after-castro-how-much-change-how-quickly-n688681

[https://perma.cc/76XM-XDLE] (stating when Fidel Castro stepped

down from power); M

ARK P. SULLIVAN, CUBA: U.S. POLICY IN THE 116TH

CONGRESS 6 (2019),

https://crsreports.congress.gov/product/pdf/R/R45657

[https://perma.cc/E8FS-ZSXP] (noting a new provision in Cuba’s

Constitution is the reintroduction of private property rights).

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

630

B. Legalization of Private Property by Statute .................................... 643

C. Constitutional Recognition of Private Property............................... 644

IV. PROPERTY OWNERSHIP ............................................................ 646

A. Traditional Forms of Property Ownership ..................................... 646

1. Private Property in Capitalist Systems .......................................... 647

2. Private Property in Socialist Systems ............................................. 648

B. Cuba’s Constitutionally Recognized Forms of Property Ownership .... 649

V. Theories Concerning the Intersection of Private

Property Rights Economic Growth ...................................... 651

A. Privatization in Post-Communist Countries ................................... 651

1. Constitutional Provisions Protecting Property Rights ................... 652

2. Formal Versus Informal Recognition of Private Property Rights

........................................................................................................ 653

3. Speed of Reforms ............................................................................. 655

4. Methods of Privatization ................................................................. 656

5. Legal Systems and Property Rights ................................................ 658

B. Private Property Rights in Latin American Countries ..................... 659

1. Inability to Produce Capital ........................................................... 660

2. Formal Recognition of Property Rights .......................................... 660

VI. RECOMMENDATIONS FOR CUBA .................................................. 662

A. Challenges Cuba Faces ................................................................ 662

B. Problems to Avoid ...................................................................... 663

1. Wealth Inequality ............................................................................ 663

2. Creation of a Plutocracy ................................................................. 664

3. Regression to Socialist Policies ........................................................ 665

C. How to Best Facilitate Growth ..................................................... 665

1. Amend Laws to Reinforce Private Property Rights ....................... 666

2. Expand Economic Policies that Promote Privately-Owned

Enterprises ..................................................................................... 666

3. Develop a Legal System that Protects Private Property Rights .... 667

Conclusion ...................................................................................... 667

Introduction

Cuba has embarked on a process of partial privatization in an

attempt to reinvigorate an economy that suffers from some of the

highest levels of inequality and lowest rates of growth in the world.

Cuba’s recognition of private-property rights shows a departure from

the previous ownership system established under Fidel Castro’s

communist regime. Their attempts to create an economic market that

3. See Nora Gámez Torres, Cuba Is A Lot Poorer Than The Government

Reports, A New Study Shows, MIAMI HERALD (Jan, 22, 2018),

https://www.miamiherald.com/news/nation-

world/world/americas/cuba/article195681589.html

[https://perma.cc/F42F-QNH3].

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

631

welcomes private-property ownership indicates a trend towards

capitalist economic policies. While not an impossible transition, this

privatization process is fraught with dangers, as exemplified by other

countries who have gone through similar patterns on the road to post-

socialist economic growth.

Several decades ago, a handful of countries pursued the Communist

ideals laid out by Marx and Engels.

While utopian communism was

never perfectly achieved, most of these countries devolved into socialist

systems.

Socialist countries strive towards social ownership over the

means of production, which often means consolidation of property in

the state’s hands.

This communal ownership, however, often leads to

depletion of resources and economic decline.

When socialist countries

realize these problems, they often turn to policies that tend to produce

growth in capitalist economies.

Property rights are central to most

modern economic systems and are a key feature of the capitalist

economy.

In abandoning socialist economic structures established

during communist rule, the recognition of property rights and

privatization of state-owned assets are some of the first reforms

implemented.

And now, Cuba is experimenting with this same process

of instituting capitalist economic theories and private-property rights

in a socialist economy. This paper will analyze patterns and theories

about the intersection of private-property rights and economic growth

and apply them to Cuba’s unique circumstances.

First, this paper will look at the history of Cuba, particularly how

their political and economic systems have evolved over its time as a

sovereign nation. Cuba is a geographically small country with a deep,

4. See David Floyd, What’s the Difference between Communism and

Socialism?, I

NVESTOPEDIA (Feb. 11, 2019),

https://www.investopedia.com/ask/answers/100214/what-difference-

between-communism-and-socialism.asp [https://perma.cc/ADX7-SPC6].

5. See id.

6. See id.

7. See Lack of Property Rights, E

CONOMICS ONLINE,

https://www.economicsonline.co.uk/Market_failures/Lack_of_property

_rights.html [https://perma.cc/WV39-BWQQ].

8. See, e.g., Paul R. Gregory, Why Socialism Fails, H

OOVER INST. (Jan. 10,

2018), https://www.hoover.org/research/why-socialism-fails

[https://perma.cc/A3GU-FZDJ].

9. See Sean Ross, How are Capitalism and Private Property Related?,

NVESTOPEDIA,

https://www.investopedia.com/ask/answers/040615/how-are-capitalism-

and-private-property-related.asp [https://perma.cc/H6XB-4XZC] (last

updated June 25, 2019).

10. See E.S. Savas, Privatization in Post-Socialist Countries, 52 P

UB. ADMIN.

REV. 573, 573 (1992).

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

632

complicated history. An ally of the Soviet Union during the Cold War,

Cuba retained its communist system long after the fall of Communism

in much of the world.

Their communist roots played a vital role in

the shaping of their current socialist system. And learning how Cuba’s

current economic system formed is essential for understanding how

theories of privatization and economic growth will apply to its unique

circumstances.

The second section of this paper will discuss the most recent change

in Cuba’s political atmosphere: the adoption of a new Constitution. In

June of 2018, Cuba took a bold step forward. The National Assembly

put together a committee to draft a new Constitution.

Amongst the

many changes made in the proposed constitution, it recognized private

property as a form of ownership.

This first draft also reaffirmed the

socialist system but diminished its references to communist ideals.

The

proposed Constitution then went through a period of public comment

and revisions.

After some notable changes, the Constitution was

adopted by national referendum in February of 2019.

The changes found in this new Constitution fall in line with the

evolution that property rights have undergone in Cuba over the last

several decades. And the third section of this paper will look at this

development of property rights in Cuba. For decades, private-property

ownership was a foreign concept in Cuba. All means of production were

11. History of Cuba, THE NATIONS ONLINE,

https://www.nationsonline.org/oneworld/History/Cuba-history.htm

[https://perma.cc/U7PV-BUUS] [hereinafter History of Cuba].

12. See id.

13. See Guillermo Nova, Cuba’s Legislature Approves Constitutional

Reforms, H

AVANA TIMES (July 23, 2018),

https://havanatimes.org/features/cubas-legislature-approves-

constitutional-reforms/ [https://perma.cc/49XY-EJGZ].

14. Communist-run Cuba to Recognize Private Property in New Constitution,

EUTERS (July 14, 2018, 6:14 PM), https://www.reuters.com/article/us-

cuba-politics/communist-run-cuba-to-recognize-private-property-in-new-

constitution-idUSKBN1K4108 [https://perma.cc/S9QT-NVZ6].

15. See Andrés Oppenheimer, Cuba’s New Constitution is Worse Than the

Old One, M

IAMI HERALD (Aug. 11, 2018, 5:57 PM),

https://www.miamiherald.com/news/local/news-columns-blogs/andres-

oppenheimer/article216527420.html [https://perma.cc/LCR5-EQSL].

16. See Sarah Marsh & Nelson Acosta, Cuban Lawmakers Approve New

Constitution Which Heads to Referendum, R

EUTERS (Dec. 22, 2018, 5:00

PM), https://www.reuters.com/article/us-cuba-constitution/cuban-

lawmakers-approvenew-constitution-which-heads-to-referendum-

idUSKCN1OL0OF [https://perma.cc/8FNT-7JK5].

17. See Andrea Rodriguez, Amid Crisis, Cuba Plans Revamp of State and

Legal System, A

SSOCIATED PRESS (Mar. 14, 2019),

https://www.apnews.com/ee5ea44978d544cf8720abd11a99b99d

[https://perma.cc/3YAT-2H82].

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

633

owned by the state.

We first saw this regime deteriorate when Cuba

started allowing for certain forms of property ownership in 2011.

The

National Assembly enacted a statute that allowed for Cuban citizens

to own homes.

Even though the government heavily regulates this

ownership, it created a housing market in Cuba, an economic sector

that never had a reason to exist before.

When Cuba’s new

Constitution and its recognition of private property is viewed in the

context of its evolving rights and markets, we can best analyze avenues

for future economic growth in Cuba.

While Cuba remains reluctant to admit any trends away from a

socialist economy and towards Capitalism, some recognized forms of

ownership in the new Constitution parallel Western understandings of

property rights.

The fourth section of this paper will first look at

traditional definitions of property rights in capitalist countries.

Recognition and legal protection of private-property rights is essential

to capitalist economies.

This section will then look at the types of

property ownership recognized under the new Cuban Constitution. The

ownership forms Cuba recognized deviate from socialist conceptions of

property ownership and create fodder that could lead to economic

growth.

Cuba is not the first country to use privatization as a means to

achieve economic growth in a system crippled by failed Communism.

The fifth section of this paper will look into theories of economic growth

and patterns that have arisen from other post-communist countries who

went through this same transition. Theories on what set of

circumstances leads to the best growth extend to the speed of

transition, types of reforms, social atmosphere, and legal framework.

18. See William N. Trumbull, The Cuban Economy, COLLEGE OF

CHARLESTON (Aug. 10, 2017), http://cubaonthehorizon.cofc.edu/the-

cuban-economy/ [https://perma.cc/6SE4-QLNF].

19. See Damien Cave, Cuba to Allow Buying and Selling of Property, with

Few Restrictions, N.Y.

TIMES (Nov. 3, 2011),

https://www.nytimes.com/2011/11/04/world/americas/cubans-can-buy-

and-sell-property-government-says.html [https://perma.cc/U923-LQGL].

20. See id.; Decreto-Ley

288, GACETA OFICIAL, G.O. Ext. No. 35, at 359 (Oct.

28, 2011), available at http://cafefuerte.com/documentos/1308-

documentos-decreto-ley-288-y-resoluciones-para-la-compraventa-de-

casas-en-cuba/ [https://perma.cc/V66H-BR5J].

21. See Philip Peters, Cuba’s New Real Estate Market, T

HE BROOKINGS INST.,

at 1–2 (Feb. 2014), available at https://www.brookings.edu/wp-

content/uploads/2016/06/Phil-Peters-Cubas-New-Real-Estate-

Market.pdf [https://perma.cc/T3QD-XF46].

22. See Thale & Castro, supra note 1.

23. See Ross, supra note 9.

24. See generally Savas, supra note 10.

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

634

While the best source for analyzing post-communist economic reform

comes from the countries that emerged after the Soviet Republic

collapsed, Cuba’s circumstances are fundamentally unique. This paper

will also analyze property-ownership theories specific to Latin America.

Countries in Latin America are subject to a unique mix of conditions

that change how property rights and capitalist economic policies are

applied.

Cuba is making significant shifts in their economy, but they

are not attempting to build a new political and economic system from

scratch. While post-Soviet countries provide relevant guidance,

recommendations for Cuba must arise out of a blend of post-communist

theories and Latin American experiences.

The last section of this paper will then apply relevant theories

about the intersection of private-property rights and economic growth

to Cuba’s unique circumstances. While the changes Cuba has made are

significant, the government will have to continue to create a stronger

economic system and legal framework to support private property

rights if they want to see consistent economic growth. The manner in

which reforms are currently being implemented are neither decreasing

wealth inequality nor increasing lower-class purchasing power. On this

trajectory, Cuba risks the formation of a plutocracy instead of the

middle-class growth they were seeking. This section will provide further

recommendations and guidance for the Cuban government for how to

best utilize private-property rights for economic growth. Ultimately,

Cuba’s best option for achieving economic growth will require them to

modify their legal and political frameworks to accompany this new

constitutional recognition of private-property rights.

I. BRIEF HISTORY OF CUBA

Cuba’s known history dates back to the Spanish colonization of the

island in the fifteenth century, but Cuba ultimately gained formal

independence in 1902.

Since then, Cuba has undergone several

revolutions and regime changes.

Even after Cuba ceased being an

American protectorate, the United States retained a great amount of

control over Cuba.

Cuba began to come into its own during the

revolution in 1933, when Fulgencio Batista became the face of Cuban

leadership and politics.

Through several communist puppet-presidents

25. See generally HERNANDO DE SOTO, THE MYSTERY OF CAPITAL: WHY

CAPITALISM TRIUMPHS IN THE WEST AND FAILS EVERYWHERE ELSE (2000).

26. History of Cuba, supra note 11.

27. See generally id.

28. Id.

29. Id.

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

635

and a presidential term of his own, Batista controlled Cuban politics.

The 1940 Constitution sought to enforce radical progressive ideals, such

as the right to labor and healthcare.

From 1944 to 1952, the opposing

political party in Cuba gained control of the presidency.

During this

time, Cuba saw economic growth, an influx of foreign investment, and

an increased standard of living.

Batista returned to Cuba in 1952,

regaining control of the country through a military coup.

He remained

in control of the Cuban government until 1958.

During that time,

Batista revoked many political liberties and outlawed the Cuban

Communist Party.

Becoming unsettled with the corrupt political system, Fidel Castro

spearheaded another Cuban Revolution starting in 1956.

Castro

officially assumed the position of Prime Minister in 1959.

The United

States initially supported Castro’s efforts, viewing it as an opportunity

for democracy to take hold in Latin America.

However, when Castro

legalized the Communist Party, summarily executed leaders of the old

regime, and expropriated American property in Cuba, tensions quickly

rose and the United States retaliated with economic sanctions against

Cuba.

During the Cold War, Cuba aligned itself with the Soviet

30. Id.

31. See C

ONSTITUCION DE LA REPUBLICA DE CUBA (1940) (Cuba), translated

in I CONSTITUTIONS OF NATIONS 610–11, 625 (Amos J. Peaslee ed. &

trans., 2d ed. 1956) [hereinafter 1940 Constitution].

32. History of Cuba, supra note 11.

33. Id.

34. Id.

35. Fulgencio Batista, E

NCYCLOPÆDIA BRITANNICA,

https://www.britannica.com/biography/Fulgencio-Batista

[https://perma.cc/XC7M-DP35].

36. D

ANIEL JAMES, CUBA: THE FIRST SOVIET SATELLITE IN THE AMERICAS 86

(1961).

37. Rebecca Sanchez, Elissa Curtis & Rachelle Klapheke, Remembering the

Cuban Revolution, MSNBC (July 28, 2015),

http://www.msnbc.com/msnbc/remembering-fidel-castro-and-the-cuban-

revolution#slide1 [https://perma.cc/G27W-JX7W].

38. Id.

39. Castro and Communism in Cuba, U

NIV. OF GRONINGEN,

http://www.let.rug.nl/usa/outlines/history-1963/america-in-the-modern-

world/castro-and-communism-in-cuba.php [https://perma.cc/4R4H-

YB3W].

40. Cuba Sanctions, U.S.

DEP’T OF STATE,

https://www.state.gov/e/eb/tfs/spi/cuba/ [https://perma.cc/59CJ-

6TBB].

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

636

Union, providing troops in return for economic support.

After the

collapse of the Soviet Union, Cuba went through a period of intense

economic hardship, but began to recover after aligning itself with

countries like Venezuela.

Despite these changes, Cuba remained a

communist regime, controlled by the Communist Party in a “one party

– one state” system.

Serving as prime minister, president, and leader of the Communist

Party, Fidel Castro retained his position of power until he stepped

down in 2008.

He appointed his brother, Raúl Castro, to serve as

President and head of the Communist Party.

When Raúl Castro took

office, he promised greater freedoms and fewer restrictions.

While not

fulfilling all of his promises, Cuba did undergo several changes during

his tenure as President.

Raúl Castro increased access for tourism,

opened channels for investment and trade, improved relations with

other countries and international organizations, and worked with

President Obama to mend the divide between the U.S. and Cuba.

Though Raúl Castro still serves as the leader of the Communist Party,

he stepped down from his role as president and Miguel Diaz-Canel was

elected in 2018.

41. Berta Esperanza Hernández Truyol, Out in Left Field: Cuba’s Post-Cold

War Strikeout, 18 F

ORDHAM INT’L L.J. 15 (1994) (discussing how the

Soviet Union provided Cuba with economic support); Jorge I. Dominguez,

U.S.–Cuban Relations: From the Cold War to the Colder War, 39 J.

INTERAMERICAN STUDIES AND WORLD AFFAIRS 49 (1997) (discussing how

Cuba and the Soviet Union were allied in deploying troops).

42. Mimi Whitefield, Cuba is Slowly Losing a Lifeline as Venezuela Collapses,

L.A.

TIMES (Oct. 3, 2019), https://www.latimes.com/world-

nation/story/2019-10-03/venezuela-meltdown-us-sanctions-batter-cuba

[https://perma.cc/FBR9-EZDZ].

43. History of Cuba, supra note 11.

44. Phil McCausland, Former Cuban Leader Fidel Castro Dead at 90, NBC

NEWS (Nov. 26, 2016), https://www.nbcnews.com/storyline/fidel-castros-

death/former-cuban-president-fidel-castro-dead-90-cuban-tv-n688511

[https://perma.cc/NVW5-CABF].

45. Id.

46. Id.

47. C

ONG. RESEARCH SERV., R44822, CUBA: U.S. POLICY IN THE 115TH

CONGRESS (2019).

48. Id.; Lauren Duffy & Carol Kline, Complexities of Tourism Planning and

Development in Cuba, T

AYLOR AND FRANCIS GROUP (Mar. 25, 2018),

https://www.tandfonline.com/doi/full/10.1080/21568316.2018.1440830

[https://perma.cc/XZ7S-8VDP]; Daniel P. Erikson, Raul Castro,

NCYCLOPÆDIA BRITANNICA,

https://www.britannica.com/biography/Raul-Castro

[https://perma.cc/K5L4-R9M8].

49. Patrick Oppmann & Alanne Orjoux, Miguel Diaz-Canel Named Cuba’s

New President, CNN (Apr. 20, 2018),

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

637

Over the years, Cuba has had various different constitutions, the

most recent one being enacted in 1976.

This Constitution, taking

effect during Fidel Castro’s reign, continually emphasizes a system

guided by the communist principles of Marx, Engels, and Lenin.

this day, the Communist Party remains the seat of power in the Cuban

political system, and the head of the party—the First Secretary—serves

as the de facto leader of Cuba.

Since Fidel Castro’s death, Cuba has seen the largest expansion of

political and economic freedoms in decades. While these changes are far

from dramatic, they do indicate Cuba’s willingness to enter the modern

international political system and drift away from the communist

ideologies that controlled their society in the past.

II. CUBA’S NEW CONSTITUTION

Cuba’s most notable and recent political activity was the adoption

of a new Constitution. In June of 2018, a constitutional commission

proposed a new Constitution that would bring a variety of changes to

the island country.

The draft of the constitution was approved by the

National Assembly in July of 2018.

The draft constitution’s proposed changes ranged from property

rights to political structure to personal freedoms.

Under the draft

constitution, marriage was defined as a relationship between “two

people” instead of between a man and a woman.

The draft added the

presumption of innocence in criminal cases and the right to habeas

https://www.cnn.com/2018/04/19/americas/cuba-new-president-

named/index.html [https://perma.cc/WW62-YEJH].

50. See generally C

UBA’S CONSTITUTION OF 1976 WITH AMENDMENTS THROUGH

2002, translated by Pam Falk, Milagros M. Gavilan, & Anna I. Vellve

Torras, Oxford University Press (July 27, 2018), available at

https://www.constituteproject.org/constitution/Cuba_2002.pdf?lang=e

n [https://perma.cc/2YGV-6UWY].

51. Id. at 7.

52. Sesin, supra note 2; Raul Castro to Lead Cuba’s Communist Party until

2021, FRANCE 24 (Apr. 19, 2018),

https://amp.france24.com/en/20180419-raul-castro-leadership-cuba-

communist-party-2021-diaz-canel [https://perma.cc/74VS-4ZTZ].

53. See generally Marc Frank, Cuba’s proposed new constitution: what will

change, R

EUTERS (Aug. 13, 2018), https://www.reuters.com/article/us-

cuba-constitution-explainer/cubas-proposed-new-constitution-what-will-

change-idUSKBN1KY1UC [https://perma.cc/37PX-EDYN].

54. Nova, supra note 13.

55. Id.

56. Id.

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

638

corpus.

Additionally, it provided that people could sue the state for

damages and negligence.

Under political reforms, it added the role of

an appointed prime minister to manage the day-to-day affairs of the

government.

Additionally, the draft provided that a new set of

governors will replace the Communist Party first secretaries as the

highest official in Cuba’s 15 provinces.

The tone of the Constitution

also shifted. The draft did not reference past goals of reaching “utopian

communism.”

The only references to Communism were in the

continued establishment of the Communist Party as the only legal

political party and its irrevocable role in guiding the nation.

Instead,

the draft constitution continually established Socialism as the political

and social system of Cuba.

The proposed Constitution also laid out a series of economic

reforms. The text of the draft Constitution established an economy

based on “socialist ownership,”

but some elements of the draft actually

showed a trend away from socialist policies. For the first time, the

proposed Constitution recognized the market as a fact of economic life,

though the language allowed the government to retain ultimate control

over the market and countermand it at will.

Additionally, private

businesses and non-farm cooperatives were designated as legitimate

economic activity, and the role of foreign investment was upgraded

from secondary to “important” or “fundamental.”

Most importantly, the proposed constitution recognized private

property as a form of ownership in Cuba.

Article 21 of the draft

constitution lists and defines six types of property ownership under the

57. Frank, supra note 53.

58. Id.

59. Id.

60. Rodriguez, supra note 17

61. Frank, supra note 53.

62. Id.

63. See Proyecto de Constitución de la República de Cuba [Proposed

Constitution] Jul. 22, 2018 (Cuba), translated in B

ILL OF THE

CONSTITUTION OF THE REPUBLIC OF CUBA (Maria del Carmen Gress,

trans., HeinOnline World Constitutions Illustrated Library 2018)

[hereinafter Proposed Constitution].

64. Id. art. 20.

65. Frank, supra note 53; see also Proposed Constitution, supra note 56, art.

20.

66. Frank, supra note 53.

67. Id.

68. Proposed Constitution, supra note 63, art. 21.

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

639

Economic Foundations section.

Even though this draft recognized

private property, it followed the definitions of property ownership with

a qualifier that the state encourages property ownership of a “more

social character,”

indicating the continued establishment of socialist

principles. Article 22 went onto establish that the state will regulate

ownership to guarantee that the concentration of ownership in non-

state persons “does not exist.”

So even though property rights are

being recognized, the government is attempting to retain strong control

over them.

After the National Assembly approved this draft, the proposed

constitution was open for a period of public comment from August 13

to November 15.

Over this three-month period, 7 million Cubans

gathered at over 100,000 locations to comment on the proposed

Constitution.

The hundreds of thousands of proposals and opinions

were presented to the constitutional commission for review.

Based on

these comments, the commission made 760 changes to the first draft of

the Constitution.

While the initial draft of the Constitution showed bold steps away

from Cuba’s communist roots, the revised version indicates that Cuba

took a step back towards their old ways. Notably, Cuba reinserted the

goal of “advancing towards a communist society” after its absence from

the first draft sparked public outcry, according to state-run media.

The updated draft also restricted some social freedoms the first draft

provided for, removing the language that would have paved the way

for same-sex marriage and weakening the provisions that provided for

69. Id.

70. Id.

71. Id. art. 22.

72. National News Staff, A Constitution to Serve Cuba, G

RANMA (July 23,

2018), http://en.granma.cu/cuba/2018-07-23/a-constitution-to-serve-

cuba [https://perma.cc/Q5VQ-UWVG].

73. Mimi Whitefield, Cuba Asked For Public Feedback On A New

Constitution. Now It’s Deciding Which Suggestions to Include, M

IAMI

HERALD (Dec. 3, 2018), https://www.miamiherald.com/news/nation-

world/world/americas/cuba/article221917690.html (last accessed March

17, 2019).

74. Id.

75. Nelson Acosta & Sarah Marsh, Cuba Reinserts Goal Of ‘Advancing

Toward A Communist Society’ Into New Constitution Draft After Public

Outcry, I

NDEPENDENT (Dec. 21, 2018),

https://www.independent.co.uk/news/world/americas/cuba-

communism-constitution-draft-raul-castro-public-outcry-referendum-

a8694956.html [https://perma.cc/5SW3-CB6Q].

76. Id.

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

640

religious freedoms.

During the comment period, the government even

invited Cuban exiles to make suggestions for the Constitution draft.

But the final version does not expand the role of private property or

the political rights of citizens residing outside the island, which were

two of the most popular demands among Cubans living abroad.

With regard to property rights, the constitutional commission

revised the section about the accumulation of property.

In the first

draft, the constitution banned the accumulation of property, stating

that it “does not exist.”

The revised Constitution simply stipulates

that the state must regulate the accumulation of property.

Most

importantly for this paper, the updated draft further restricted the

original definition of private property. The final document includes a

clarification to emphasize that private property only has “a

complementary role in the [planned socialist] economy.”

While there

were several other changes, these are the most relevant and important

for the analysis of Cuba’s future economic growth.

On December 22, 2018, the National Assembly approved the

updated text of the Constitution and released it to the public as the

77. The Associated Press, Cuba Eliminates Language About Same-Sex

Marriage from Draft of New Constitution, N.Y. TIMES (Dec. 18, 2018),

https://www.nytimes.com/2018/12/18/world/americas/cuba-gay-

marriage-constitution.html [perma.cc/9L9N-CN89]; Diana Chandler,

Cuba’s Proposed Constitution Cuts Religious Freedoms, B

APTIST PRESS

(Feb.18, 2019), http://www.bpnews.net/52436/cubas-proposed-

constitution-cuts-religious-freedom [https://perma.cc/2X59-TYDH];

Thomas Williams, Religious Freedom Commission Slams Draft of New

Cuban Constitution, B

REITBART (Dec. 12, 2018),

https://www.breitbart.com/latin-america/2018/12/12/religious-freedom-

commission-slams-draft-of-new-cuban-constitution/

[https://perma.cc/5CNU-7EW2].

78. Nora Gamez Torres, Cuba invites exiles to take part in debate for proposed

changes to island’s Constitution, M

IAMI HERALD (Aug. 3, 2018),

https://www.miamiherald.com/news/nation-

world/world/americas/cuba/article216065045.html

[https://perma.cc/4JJH-NN94].

79. Nora Gamez Torres, Cuba Could Have a New Government Soon if Draft

Constitution Takes Effect, M

IAMI HERALD (Jan. 5, 2019),

https://www.miamiherald.com/news/nation-

world/world/americas/cuba/article223980880.html

[https://perma.cc/7G3T-PDQS].

80. Marsh & Acosta, supra note 16.

81. Proposed Constitution, supra note 63, art. 22.

82. Marsh & Acosta, supra note 16.

83. Nora Gamez Torres, Government Could Change in Cuba, V

ALLEY NEWS

(Jan. 6, 2019), https://www.vnews.com/Cuba-could-have-a-new-

government-soon-if-draft-constitution-takes-effect-22600356

[https://perma.cc/RZN2-SZP4].

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

641

final version of the Constitution that would be voted on.

Cuba held a

national referendum for the Constitution on February 24, 2019.

The

following day, state-run media reported that the Cuban population

passed the new Constitution with a 78% approval rating.

In the wake

of the Constitution’s passage, Cuban legal experts expect that the

National Assembly will have to enact between 60 and 80 new laws over

the next two years to adapt to the changes the new Constitution

requires.

Meanwhile, Cuban citizens remain hopeful that this new

Constitution will bring big, positive changes to the political system and

state structure.

III. Evolving Property Rights in Cuba

The Cuban population has not always suffered from the deprivation

of private-property rights. The 1940 Constitution, established under

Batista, protected property rights, providing that “[t]he Cuban Nation

recognizes the existence and legitimacy of private property in its

broadest concept as a social function and without other limitations than

those which, for reasons of public necessity or social interest, are

established by law.”

Under this regime, Cuban citizens enjoyed the

right to own and use property without government interference.

These

constitutional guarantees were acceptable under international law and

consistent with democratic legal principles of the time.

A. Property Rights Under the Castro Regime

Cuba’s constitutional property rights began to deteriorate when

Fidel Castro seized control of the island at the beginning of 1959.

Castro’s first attack on property rights occurred when he amended

84. Marsh & Acosta, supra note 16.

85. Id.

86. Rodriguez, supra note 17. Though, this is a relatively low passage rate for

Cuba, with most other measures with passage rates over 90%. Id.

87. Id.

88. Id.

89. 1940 Constitution, supra note 31, at 626, art. 87.

90. Jose A. Ortiz, The Illegal Expropriation of Property in Cuba: A Historical

and Legal Analysis of the Takings and a Survey of Restitution Schemes

for a Post-Socialist Cuba, 22 L

OY. L.A. INT’L & COMP. L. REV. 321, 326–

27 (2000).

91. Id. at 327.

92. Id. at 328 (stating that though constitutional property rights were

deteriorated in the past, Castro initially reestablished them then promptly

returned them to a deteriorated state).

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Article 24 of the Constitution on government confiscation of property.

The amended version allowed for discriminatory takings of property

and worked as a mechanism to punish all political opposition.

A month after assuming control, Castro officially repealed the 1940

Constitution and established the Fundamental Law.

Within the

following two years, the government nationalized nearly all private

property.

First, the Agrarian Reform Act converted all large

agricultural estates into state-owned farms.

And those who were

allowed to keep their land were severely restricted in the use and

transference of the property.

Second, the Castro Government further

amended Article 24 to expand the classes of persons that property could

be expropriated from.

Additionally, the amended text deprived

victims of any judicial procedure to challenge the expropriation and

removed the original guarantee of compensation for these government

takings.

100

Third, Castro enacted Law No. 851, which forcibly

expropriated all businesses United States citizens owned in Cuba.

101

Fourth, Castro passed Law No. 890 in October of 1960, which

confiscated virtually all Cuban-owned businesses and nationalized all

Cuban-owned industries.

102

To solidify the goals of the communist revolution in Cuba, Castro’s

government enacted the Constitution of 1976.

103

Chapter I, Article 15

defined property under this Constitution, establishing that all property

is socialist state property, belonging to the entire people of Cuba.

104

This Constitution placed almost all land and industry in the

government’s hands and removed all private-property ownership from

93. Id.

94. Id.

95. Lina Forero-Nino, The Cuban Government Approves Guidelines to

Reform Cuba’s Economic Model and Develops an Implementation

Strategy, 17 L.

& BUS. REV. AM. 761, 764 (2011).

96. See Ortiz, supra note 90, at 328–32.

97. Id. at 329.

98. Id. at 330.

99. Id.

100. Id. at 331.

101. Id. at 332; Ley Numero 851 [Law No. 851], G

ACETA OFICIAL, Special Ed.,

No. 22 (July 31, 1960) (Cuba).

102. See Ortiz, supra note 90, at 322; Ley Numero 890 [Law No. 890], G

ACETA

OFICIAL, Special Ed., No. 25 (Oct. 31, 1960) (Cuba).

103. See Ortiz, supra note 90, at 322.

104. Constitución de la Republica de Cuba (1976), translated in V

ONSTITUTIONS OF THE COUNTRIES OF THE WORLD 1 (Albert P. Blaustein

& Gisbert H. Flanz eds., 1996) [hereinafter 1976 Constitution].

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

643

the scope of constitutional protection.

105

This system remained in place

until Fidel Castro stepped down from power in 2008.

106

Over the past

decade, the Cuban government has begun to depart from the

communist ideals that justified Castro’s gross violations of property

rights.

B. Legalization of Private Property by Statute

In one of Raul Castro’s most important market reforms of his

presidency, Cuba recognized private-property ownership for the first

time in decades.

107

In 2011, the National Assembly passed Decree-Law

288, allowing for citizens to legally transfer titles to their homes for the

first time since 1959.

108

Granted, this statute still restricts home

ownership and property transfers.

109

People are only allowed to own

two homes, one to live in and a vacation home.

110

Additionally, all sales

are subject to a government tax on the property sale.

111

Scholars

indicate that allowing the free trade of property is a huge step towards

Capitalism.

112

On the other hand, Cuban officials claim that this new

law still maintains Socialism by containing provisions that control both

speculation and concentration of wealth.

113

Nevertheless, with a housing

105. Ortiz, supra note 90, at 333.

106. Anthony Faiola, In Cuba, the Castro Era Ends this Week as Raúl Steps

Down as Ruler, W

ASH. POST (Apr. 17, 2018),

https://www.washingtonpost.com/world/the_americas/for-the-first-

time-in-six-decades-cuba-wont-be-led-by-a-castro/2018/04/17/f1df8b3c-

3e61-11e8-955b-7d2e19b79966_story.html [https://perma.cc/4CZQ-

L6E6].

107. Cuba Passes Law Allowing Private Home Sales, BBC

NEWS (Nov. 3,

2011), https://www.bbc.com/news/world-latin-america-15575632

[https://perma.cc/77TE-YULT].

108. Decreto-Ley

288, GACETA OFICIAL, G.O. Ext. No. 35, at 359 (Oct. 28,

2011), available at http://cafefuerte.com/documentos/1308-documentos-

decreto-ley-288-y-resoluciones-para-la-compraventa-de-casas-en-cuba/

[https://perma.cc/3C8D-97Y4]; Damien Cave, Cuba to Allow Buying and

Selling of Property, With Few Restrictions, N.Y.

TIMES (Nov. 3, 2011),

https://www.nytimes.com/2011/11/04/world/americas/cubans-can-buy-

and-sell-property-government-says.html [https://perma.cc/N5CU-

7HRF].

109. See Cave, supra note 108.

110. Id.

111. Id.

112. See generally Christopher Palomo, “Capitalist” Cuba: The Privatization

of the Cuban Economy and Its Unintended Consequences, 24 U.

MIAMI

INT’L & COMP. L. REV. 195 (2016).

113. Cave, supra note 108.

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Introducing Private-Property Rights to Cuba

644

market, people finally have a stake in the economy, which then

generates economic activity.

114

Decree-Law 288 only affects sales to citizens and permanent

residents of Cuba, so foreign individuals cannot yet buy homes on the

island.

115

However, Raul Castro’s reforms have opened up possible

future opportunities for foreign property ownership in Cuba. The

National Assembly passed Decree-Law 273 in 2010 to promote “the

participation of foreign investment in international tourism.”

116

This

allowed for foreign corporations to enter the country and build up

resorts, golf courses, and real-estate developments.

117

It grants the

businesses “surface rights,” meaning that a business can improve and

use a piece of land but the state retains ownership of the land itself.

118

In 2012, Cuba reformed its migration and travel laws, allowing for

foreign visitors who are “residents of real estate developments.”

119

while there is no direct provision for foreign citizens to purchase housing

in Cuba, there are manners for which people can own and rent homes

in housing developments, staying in the country for one-year

increments.

120

Allowing for home ownership created a housing market in Cuba,

fostering a free-market economy.

121

Foreign investment and ownership

has also served as a boost to the economy.

122

Even though the market

is still heavily controlled by the government under these policies, it

begins to show a movement away from Socialism. These changes allow

for greater personal economic rights and freedoms, a trend that has

continued in recent years.

C. Constitutional Recognition of Private Property

Consistent with the continued expansion of economic freedoms in

Cuba, the new Cuban Constitution greatly expands on constitutionally

114. Id.

115. Peters, supra note 21, at 15.

116. Id. at 16.

117. Id.

118. Id.

119. Id. at 17.

120. Id.

121. Jill Hamberg, Cuba Opens to Private Housing but Preserves Housing

Rights, R

EIMAGINE, http://www.reimaginerpe.org/node/6930

[https://perma.cc/MUW8-TAGH]

122. See Mimi Whitefield, Foreign Investment in Cuba Might be at Risk if U.S.

Allows Lawsuits over Confiscated Property, M

IAMI HERALD (Feb. 20,

2019), https://www.miamiherald.com/news/nation-

world/world/americas/cuba/article221222875.html

[https://perma.cc/Y4GZ-29YH].

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Introducing Private-Property Rights to Cuba

645

granted property rights.

123

The property provisions in the Constitution

show a desire to abide with socialist economic principles while also

creating avenues that foster economic growth in capitalist systems.

The new Cuban Constitution defines seven different types of

property ownership: “socialist of all the people,” cooperative, mixed,

“of the political, mass and social organizations,” “of institutions and

associative forms,” private, and personal.

124

All of these ownership types

are founded on socialist policies and communal ownership, except for

private and personal ownership. Personal ownership is defined as

“exercised over the assets which, without constituting means of

production, contribute to the satisfaction of the material and spiritual

necessities of their holder.”

125

And private ownership is defined as

“exercised over certain means of production, in accordance with what

is established.”

126

The final version of the Constitution also emphasized

that private property only serves a complementary role in the socialist

economy.

127

Even though the definition of private property in Article 22 does

not reference land ownership,

128

Article 29 clearly establishes private-

land ownership to be “regulated by a special regime.”

129

The state places

further restrictions on private-land ownership, limiting property

transfers to the scope of the laws already established.

130

It additionally

prohibits any act that would serve as a cession of your individual rights

in the property (e.g. leasing, share-cropping, mortgage lending, etc.).

131

Even though the Constitution recognizes these private rights of

ownership, it also places limitations on property rights and allows the

state to retain ultimate control.

132

In the next couple years, the National

Assembly will likely enact further laws that solidify the scope of these

property rights. But if the property rights are further limited, these

123. Compare Constitución de la República [Constitution] Apr. 10, 2019

(Cuba), translated in CONSTITUTION OF THE REPUBLIC OF CUBA (Maria

del Carmen Gress, trans., HeinOnline World Constitutions Illustrated

Library 2019) [hereinafter 2019 Constitution], with 1976 Constitution,

supra note 104.

124. 2019 Constitution, supra note 123, art. 22.

125. Id.

126. Id.

127. Id.

128. Id.

129. Id. art. 29.

130. 2019 Constitution, supra note 123, art. 29.

131. Id.

132. Id. art. 30.

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646

freedoms will be constricted to a point that won’t allow for significant

economic growth.

IV. PROPERTY OWNERSHIP

A. Traditional Forms of Property Ownership

Property ownership is typically divided into two major categories:

private property and public property.

133

Public property is simply

property owned by the state.

134

In capitalist systems, public property

often includes things like parks, highways, and streetlamps.

135

They are

items owned and controlled by the state and serve for the public benefit

of all.

136

Because no individual would expend the cost and energy to

maintain a good that he has no individual right in, the government

owns and controls these goods.

137

Public property is a bit more all-

encompassing in socialist systems, where virtually everything is a public

good since everything is owned by the state.

138

Means of production and

flow of capital are completely under the state’s control.

139

Theoretical

Socialism concentrates ownership in the community rather than a state

entity.

140

Instead of the traditional state-owned public property,

socialist societies have a more fluid concept of communal property and

social ownership.

141

Private property is a bit more nebulous of a concept. Generally, it

is considered the ownership of property by non-governmental legal

133. See John W. Allen, Private Rights to Property: Private Versus Public

Property Rights, M

AYS BUS. SCH.,

https://maysweb.tamu.edu/sage/gradescourses/9th-12th-

grade/economics/private-rights-to-property/private-rights-to-property-

private-versus-public-property-rights/ [https://perma.cc/2Z3R-Q5QE].

134. See id.

135. Ron Way, Democratic Socialism, We’re Already Living in It, S

TAR

TRIBUNE (Oct. 20, 2015), http://www.startribune.com/democratic-

socialism-we-re-already-living-it/334832861/ [https://perma.cc/7LPN-

T549] (discussing public infrastructure as aspects of capitalist systems).

136. See generally id.

137. See Allen, supra note 133.

138. Will Kenton, Socialism, I

NVESTOPEDIA (Jun. 25, 2019),

https://www.investopedia.com/terms/s/socialism.asp

[https://perma.cc/UED5-3AF8] [hereinafter Kenton, Socialism].

139. Id.

140. Capitalism, Socialism, or Communism, C

ULTURE WAR,

http://www.culture-war.info/Socialism.html [https://perma.cc/J5SW-

PSW4].

141. See id.

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647

entities.

142

It is typically divided into three categories: personal

property, real property, and capital goods. Personal property includes

an individual’s possessions that were gained in a socially fair manner.

143

This can include clothing, cars, furniture, computers, and any other

items acquired for personal use. Real property is typically defined as

land and any structures on it.

144

And capital goods include capital

(money) and means of production.

145

1. Private Property in Capitalist Systems

Capitalist systems often approach private property with a “bundle

of sticks” theory of ownership.

146

This asserts that property rights can

be given and taken away in parts or in the entirety.

147

The owner has

absolute control over their property and the rights of ownership in the

property.

148

Capitalist systems discourage government involvement in

property ownership because it takes away from the number of “sticks”

that the owner should have with legal ownership of property.

149

The

greater amount of rights that the government asserts over a piece of

property, the fewer rights the owner has left to enjoy.

150

Capitalist systems are not only founded on the recognition of

private-property rights, but also the legal protection of them.

151

When

someone infringes on an individual’s ability to fully enjoy their property

142. CAMPBELL MCCONNELL ET AL., ECONOMICS, at G-22 (McGraw-Hill, 18th

ed. 2008).

143. See L

EGAL ASPECTS OF PROPERTY, ESTATE PLANNING, AND INSURANCE

363 (2012), available at https://2012books.lardbucket.org/pdfs/legal-

aspects-of-property-estate-planning-and-insurance.pdf

[https://perma.cc/52H6-V59B].

144. Objects, Subjects, And Types of Possessory Interests in Property,

NCYCLOPÆDIA BRITANNICA,

https://www.britannica.com/topic/property-law/Objects-subjects-and-

types-of-possessory-interests-in-property [https://perma.cc/8TDE-

83MH].

145. Kimberly Amadeo, Capital Goods with Examples and their Effect on the

Economy, T

HE BALANCE, https://www.thebalance.com/capital-goods-

examples-effect-on-economy-3306224 [https://perma.cc/P3Q8-GEEG].

146. See Property Rights as a Bundle of Sticks, T

HE THUGOUT (Sept. 23, 2009),

https://thugout.wordpress.com/2009/09/23/property-rights-as-a-bundle-

of-sticks/ [https://perma.cc/7JB5-NUJP].

147. Id.

148. Will Kenton, Capitalism, I

NVESTOPEDIA,

https://www.investopedia.com/terms/c/capitalism.asp

[https://perma.cc/EN75-UFGL] [hereinafter Kenton, Capitalism].

149. See generally id.

150. See Property Rights as a Bundle of Sticks, supra note 146.

151. Kenton, Capitalism, supra note 148.

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648

rights, there is often a legal remedy for that wrong.

152

Thus, capitalist

countries require a developed court system to support the enforcement

of private property rights.

153

In a capitalist system, private-property ownership boosts economic

activity, encouraging the buying and selling of goods and creating a

flow of capital into the market.

154

Private ownership provides incentives

for private owners to invest in their property and make it more

productive and valuable because they will reap the benefits of doing

so.

155

For example, by investing in a house, the owner increases the

house’s value; the incentive to invest comes from that value. When an

owner then sells that house, the increased value of the house goes to

the owner and the wealth generated by the increased value can then be

used to purchase and invest in other property. The incentive to invest

in property is what leads to economic growth.

156

On the other hand, if

there are restrictions on what you can do with property, then that

incentive is diminished.

157

A large tax on the increased value of property

reduces the incentive to invest in it. A ban on sales or a forced sale to

the state removes the incentive even more. The potential of private

property to lead to growth depends on how and what kind of

restrictions the state puts on property.

2. Private Property in Socialist Systems

Socialist systems often don’t recognize private property, since all

ownership rights are held by either the government or community.

158

Traditional understandings of Socialism show a rejection of all private

property, and people typically assume this means that you do not have

ownership rights in anything.

159

But socialist regimes often let citizens

retain control over personal property, like your toothbrush or cell

152. Id.

153. See Sean Ross, What Role Does the Government Play in Capitalism,

NVESTOPEDIA,

https://www.investopedia.com/ask/answers/040615/what-role-does-

government-play-capitalism.asp [https://perma.cc/62S7-H2SF].

154. See Benjamin Powell, Private Property Rights, Economic Freedom, and

Wellbeing, M

ERCATUS CTR.,

https://www.mercatus.org/system/files/Private-Property-Rights-

Economic-Freedom-and-Well-Being.pdf [https://perma.cc/G363-H3BH].

155. Id.

156. See id.

157. Id.

158. Kenton, Socialism, supra note 138.

159. Steven Keehner, Let’s Clear the Air About Socialism, I

MPACT NEWS (Oct.

11, 2018), https://theimpactnews.com/columnists/tales-of-an-american-

redhead/2018/10/11/lets-clear-the-air-about-socialism/

[https://perma.cc/TB3A-U478].

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Introducing Private-Property Rights to Cuba

649

phone.

160

It is the private property that Socialism seeks to abolish.

Socialist theorists define private property as anything used by

individuals to create profit from someone else.

161

This does complicate

certain pieces of property, such as homes and real estate, where they

can be used for personal enjoyment as well as profit. Consequently,

some of these aspects of Socialism are applied differently depending on

the country. Additionally, socialist countries do not have legal systems

designed to protect private-property rights because there is no need for

this protection.

162

B. Cuba’s Constitutionally Recognized Forms of Property Ownership

Cuba’s new Constitution recognizes seven different forms of

property ownership.

163

The first defined form of ownership is “socialist

of all the people.”

164

This is described as property ownership where the

state owns the property and acts in representation of and to its

benefit.

165

This is the typical state-owned property you would expect to

see in a socialist system. The second type of ownership is “cooperative,”

meaning it is collectively owned by multiple proprietary partners and

sustained on collective work and the principles of cooperation.

166

In this

context, cooperative ownership is used in the workplace, serving as a

small-scale socialist environment.

167

Consistent with the renovation

Cuba is going through, we see the devolving of state power downwards

to lower levels of government and cooperatives.

168

Third is ownership

“of the political, mass, and social organizations.”

169

Just as it sounds,

this property ownership is exercised by these entities over their assets.

170

The most obvious example of this in Cuba is the property owned by

the Communist Party. While separate from state-owned property, these

160. Id.

161. Id.

162. See Kenton, Socialism, supra note 138.

163. 2019 Constitution, supra note 123, art. 22.

164. Id.

165. Id.

166. Id.

167. Cliff DuRand, Cooperatives in Socialist Construction, G

RASSROOTS ECON.

ORGANIZING (Apr. 28, 2016), http://www.geo.coop/story/cooperatives-

socialist-construction [https://perma.cc/96XA-BPQJ].

168. Id.

169. 2019 Constitution, supra note 123, art. 22.

170. Id.

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650

social organizations are largely interconnected with the government.

171

The fourth type of ownership is “of institutions and associative forms,”

which provides for ownership over an entity’s assets that are not being

used to produce revenue.

172

This would include property owned by

organizations like non-profits or community groups, as long as the

assets are used “for the fulfillment of purposes of a non-lucrative

character.”

173

Diverging from more socialist forms of ownership, the fifth type

recognized is “personal” property ownership.

174

This ownership is

consistent with the normal understanding of personal property. It is the

things you own to satisfy material and spiritual necessities, and it does

not include any means of production.

175

The sixth—and most

important—type of ownership is “private” ownership.

176

Article 22

defines private-property ownership as ownership over the means of

production, “in accordance with what is established.”

177

The final

version of the Constitution also emphasized that private property only

serves a complementary role in the socialist economy.

178

Although this

seems like a narrow definition, Article 29 does recognize private

ownership of land.

179

This is a huge divergence from past practices in

Cuba. This constitutional provision builds on the 2011 statute that

allowed for home ownership,

180

taking a monumental stride forward by

formally recognizing private property ownership in the Constitution for

the first time since 1959.

181

The last type of property ownership is

“mixed,” meaning that it is a combination of two or more forms of

ownership.

182

Most of these forms of property ownership seek to advance the

socialist goals of the government, but private property is where we see

171. See generally Communist Party of Cuba, ENCYCLOPÆDIA BRITANNICA,

https://www.britannica.com/topic/Communist-Party-of-Cuba

[https://perma.cc/QEW2-KXFG].

172. 2019 Constitution, supra note 123, art. 22.

173. Id.

174. Id.

175. Id.

176. Id.

177. Id.

178. 2019 Constitution, supra note 123, art. 22.

179. Id. art. 29.

180. See generally Cave, supra note 108.

181. See Ortiz, supra note 90, at 322.

182. 2019 Constitution, supra note 123, art. 22.

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651

a divergence.

183

Normal socialist systems try not to recognize private-

property ownership.

184

While it seems that Cuba is trying to encourage

economic growth by allowing for privatization in some sectors, it is

currently unclear how they plan to recognize these rights while

maintaining a socialist government and economy. If Cuba wishes to

avoid some of the problems post-communist countries experience with

privatization, the Cuban government should look to countries who have

gone through this transition before.

V. Theories Concerning the Intersection of Private

Property Rights Economic Growth

Over the past few decades, political scientists and economists have

started to realize the important relationship between property rights

and economic growth.

185

Initially, political scientists focused on the type

of political reforms countries were instituting, but over the years, legal

recognition and protection of property rights have proven to be vital

components for economic growth.

186

This section will first look at how

post-communist countries have gone through privatization processes to

stimulate economic growth since they abandoned their communist

regimes. These countries and theories provide insight into the transition

Cuba has been going through since the end of Fidel Castro’s regime.

The second section will look at the important role that private property

rights play in Latin American economies, since Latin America

experiences a unique blend of economic circumstances that often make

it difficult for capitalist economic policies to take root.

187

Looking at the

application of private-property rights across these different systems will

give Cuba the best understanding of what methods of privatization lead

to the most economic growth.

A. Privatization in Post-Communist Countries

After the collapse of the Soviet Union, twenty-nine countries in

Central and Eastern Europe were given the opportunity to reinvent

183. Frank, supra note 53.

184. Kenton, Socialism, supra note 138.

185. Gerald P. O’Driscoll Jr. & W. Lee Hoskins, Property Rights: The Key to

Economic Development, C

ATO INST. (Aug. 7, 2003),

https://www.cato.org/publications/policy-analysis/property-rights-key-

economic-development [https://perma.cc/K6SZ-DGKC].

186. See generally Paul H. Rubin, Growing a Legal System in the Post-

Communist Economies, 27 C

ORNELL INT’L L.J. 1 (1994).

187. See generally

DE SOTO, supra note 25.

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Introducing Private-Property Rights to Cuba

652

their institutional frameworks.

188

They implemented a variety of

economic and political reforms to structure their countries, with varying

degrees of success.

189

These post-Soviet countries have served as

excellent examples of countries who have implemented property-rights

reforms in the transition from a socialist, state-planned economy to a

capitalist, market economy.

190

1. Constitutional Provisions Protecting Property Rights

Every post-Soviet country either wrote a new Constitution or

reinstated a modified version of the Constitution that was in place

before they were absorbed into the Soviet Union.

191

Sixteen of these

countries implemented Constitutions that had clear protections of

property rights, though each country also placed some sort of limitation

on the right to private property.

192

The property-rights provisions were

typically vague, leaving the government with significant power to

handle property ownership how they wished.

193

These flexible provisions

undermined the legal right to property ownership.

194

If the scope of legal

recognition and protection of property rights can be controlled by

political choices, these limitations counteract any benefit of the

constitutional protection of property rights.

195

After the fall of the Soviet Union, countries like Estonia, Moldova,

and Ukraine, provided very strong constitutional provisions protecting

property rights, but also limited the use of private property.

196

While

some countries fall in the middle with weaker constitutional provisions

on property rights,

197

the Czech Republic is at the opposite end of the

188. Christian Bjørnskov, Constitutional Property Rights Protection and

Economic Growth: Evidence from the Post-Communist Transition, R

ATIO

INST., at 6 (Mar. 16, 2012).

189. See id. at 6–7.

190. While this paper recognizes that other communist countries bear

significant resemblances to Cuba, they have fundamental differences that

would render comparisons irrelevant. China is an excellent example of a

county who has adopted capitalist economic policies but still has a

political system controlled by the communist party. But China also enjoys

the second-largest population in the world, a mass amount of resources,

and healthy foreign investment. Cuba does not have the population or

resources to undergo the mass industrialization that China did.

191. Bjørnskov, supra note 188, at 6.

192. Id. at 20.

193. Id. at 20–21.

194. Id. at 21.

195. See id.

196. Id. at 7.

197. Bjørnskov, supra note 188, at 7.

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653

spectrum with a constitution that does not even mention private

ownership or property rights.

198

The Czech Republic does recognize

private-property rights, just not through their Constitution; private

property is protected by statutes and judicial norms.

199

Despite the lack

of constitutional provisions protecting private property, the Czech

Republic has some of the highest levels of property rights protection

and has experienced one of the largest rates of economic growth since

the fall of the Soviet Union.

200

In contrast, Ukraine, whose Constitution has strong protections of

property,

201

remains one of the poorer countries in Europe with higher

levels of inequality than other post-communist countries.

202

There are

several theories for why Ukraine’s constitutional property protections

did not lead to economic growth. It might be because the governmental

restrictions placed on property rights undermined the grant of legal

protection. It might be because Ukraine’s gradual reformation process

203

did not put necessary institutions in place quickly and early-on to

establish a system of property ownership. It might be because Ukraine

formally recognized private-property rights without building up

informal structures to enforce societal recognition of these rights and

protect them at a local level. While constitutions are an important tool

for laying out the framework of a country, constitutional recognition of

property rights without complementary reforms in other sectors will

not lead to economic growth.

2. Formal Versus Informal Recognition of Private Property Rights

Post-communist countries can make as many large-scale,

constitutional property-rights reforms as they wish, but some

economists theorize that economic growth will not occur until there is

change in the community, local courts, and civil society.

204

Formal

198. See ÚSTAVA ZÁKON Č. [CONSTITUTION], Jan. 1993 Sb., (Czech Republic),

translated in English translation of Constitution of the Czech Republic of

6 December 1992, 1/1993 Sb., as amended to Constitutional Act 98/2013

Sb. [1] (1993).

199. Bjørnskov, supra note 188, at 7.

200. Id. at 7–8.

201. Id. at 7.

202. Aleksander Kuczabski & Tomasz Michalski, Ukrainian Post-Communist

Transformation: Causes, Consequences and Threats, 33 Q

UAESTIONES

GEOGRAPHICAE 171 (2014).

203. Marian Tupy, Countries That Transitioned Rapidly from Communism to

Capitalism Fare Better, R

EASON (July 19, 2016),

http://reason.com/archives/2016/07/19/countries-that-transitioned-

rapidly-from [https://perma.cc/854C-H778].

204. See generally Javad Bahmani, The Role of Civil Society in Development,

5 J.

CIVIL LEGAL SCI. 1 (2016).

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Introducing Private-Property Rights to Cuba

654

institutions include rules that show depth and durability, such as

constitutions or democratically-enacted laws.

205

On the other hand,

informal institutions are rules that shape human behavior, but are

outside of government control.

206

In its most simplified form, informal

institutions are the culture of a country.

207

Informal institutions include

private mechanisms that exist to protect and secure property.

208

Legislatures can adopt formal civil codes to force a new legal system

in a country.

209

But a more favored route is allowing the common-law

process to gradually recognize private-property rights and build a legal

framework for protecting those rights while the political system

stabilizes.

210

Studies have shown that culture positively affects property

protection, while formal institutions have no impact on the level of

property protection in countries.

211

Informal institutions might be the

primary mechanism for securing private property protection in post-

socialist countries.

212

Granted, this does not render formal institutions

invalid, as formal-institution reforms are often aimed to bring changes

to informal institutions.

213

But there will be little economic growth

flowing from the protection of private-property rights unless there are

societal shifts and reforms that accompany large-scale policy changes.

As seen in the Czech Republic, formal constitutional provisions are

not necessary to benefit from the economic growth that private-

property rights can bring.

214

But because they had political, civil, and

legal reforms that accompanied economic reforms,

215

there was a

balance between the formal recognition of private property and the

informal protection and enforcement of it on a local and practical scale.

The protection of private-property rights through informal institutions

is essential to economic growth is post-socialist countries.

205. Claudia R. Williamson & Carrie B. Kerekes, Securing Private Property:

Formal versus Informal Institutions, 54 J.

OF L. & ECON. 537, 545 (2011).

206. Id. at 546.

207. See id.

208. Id.

209. Rubin, supra note 186, at 9 (stating that there are two major methods

deriving the law governing private relations, one of which is the adoption

of formal civil codes through legislation).

210. See id. at 10.

211. Williamson & Kerekes, supra note 205, at 559.

212. Id.

213. See id. at 553.

214. See Bjørnskov, supra note 188, at 7.

215. See Tupy, supra note 203.

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655

3. Speed of Reforms

A recent study has shown that the speed of transition also plays a

significant role in post-communist countries.

216

Former Soviet countries

who have undergone a process of rapidly adopting capitalist economic

regimes have fared better over the past 25 years.

217

While the beginning

of the transition is often chaotic and leads to an increased risk of

corruption, countries who transitioned rapidly have grown richer and

more democratic, while experiencing less impoverishment and a smaller

increase in income inequality.

218

Other countries have adopted a more

gradual approach, but they have all performed worse economically,

socially, and democratically.

219

Unfortunately, there is this

misperception that rapid reform leads to severe human suffering, and

even though rapid transitions are difficult at the beginning, they prove

more beneficial over time.

220

When initial reforms occur, there also need to be structures in place

to accommodate those reforms.

221

If large-scale recognitions of property

rights do not occur alongside the development of institutional methods

for protecting those rights, the economic market will not benefit from

private-property ownership.

The Czech Republic is unique in that it initiated several policies up

front and sustained them over time.

222

Their reforms focused on the

creation of democratic political institutions and processes, the

transformation of state-planned economies into market economies, the

gradual introduction of the rule of law, and the growth of a civil

society.

223

These reforms shaped everything from local recognition of

property rights to statutory protection of private property.

224

216. Oleh Havrylyshyn et al., 25 Years of Reforms in Ex-Communist

Countries: Fast and Extensive Reforms Led to Higher Growth and More

Political Freedom, C

ATO INST. (Jul. 12, 2016),

https://www.cato.org/publications/policy-analysis/25-years-reforms-ex-

communist-countries-fast-extensive-reforms-led [https://perma.cc/KD33-

9LCN].

217. Id.

218. Id.

219. Id.

220. Id.

221. See Williamson & Kerekes, supra note 205, at 559.

222. Tupy, supra note 203.

223. See id.

224. See generally T

HE SCOPE AND STRUCTURE OF CIVIL CODES (Julius Cesar

Rivera ed., 2013).

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656

Alternatively, Russia continued to enforce socialist policies in their

country for decades after the fall of the Soviet Union.

225

Instead of

rapidly reforming, Russia adopted several reforms early on, but then

abandoned or reversed some of those reforms.

226

By 1998, Russia faced

economic collapse.

227

Ukraine has gone through an even slower reform

process, stretching out its gradual changes over the past 25 years.

228

Ukraine’s initial constitutional recognition of property rights was not

quickly followed by the establishment of institutions to protect those

rights, so the economy did not benefit from the creation of that right.

It is important to note that other prominent theorists argue that

the creation of a market economy does not need to be done quickly.

229

Gradually privatizing and creating market institutions could avoid a

political backlash against reformers, leading to less pain in the short

run and greater stability and economic growth in the long run.

230

Slovenia serves as an example of a country who privatized more

gradually yet achieved sustainable economic growth.

231

Because

observing the speed of reforms alone can lead to varying results, it is

important to look at the rate of reform alongside the manner that

reforms were carried out.

4. Methods of Privatization

Post-Soviet countries went through different processes of

privatizing previously state-owned property.

232

State-owned enterprises

(SOE’s) are distinct legal entities that are owned by the government

and engage in commercial, industrial, or financial activities involving

the production and sale of economic goods or services;

233

SOE’s are

225. Tupy, supra note 203.

226. See Anders Aslund, Why has Russia’s Economic Transformation Been

So Arduous?, C

ARNEGIE ENDOWMENT FOR INT’L PEACE, (Apr. 28, 1999),

https://carnegieendowment.org/1999/04/28/why-has-russia-s-economic-

transformation-been-so-arduous-pub-201 [https://perma.cc/XW8W-

9Q2P].

227. Abbigail J. Chiodo & Michael T. Owyang, A Case Study of a Currency

Crisis: The Russian Default of 1998, F

ED. RES. BANK OF ST. LOUIS, 7

(2002),

https://files.stlouisfed.org/files/htdocs/publications/review/02/11/Chio

doOwyang.pdf [https://perma.cc/Z83A-CTYL].

228. Kuczabski & Michalski, supra note 202.

229. Simeon Djankov, The Divergent Postcommunist Paths to Democracy and

Economic Freedom, Discussion Paper No. 758, at 3 (Peterson Inst. for

Int’l Econ., Jul. 2016).

230. Id.

231. Id.

232. Savas, supra note 10, at 573.

233. Id.

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657

fundamental to socialist systems.

234

In Soviet countries, SOE’s

comprised roughly 85% of the economy, as compared to capitalist

countries where SOE’s make up about 9% of the economy.

235

When

post-socialist countries decide to transition to a capitalist economic

system, they have to decrease the number and involvement of SOE’s in

their economy. This process is typically done through privatization of

state-owned assets.

236

Privatization can occur through three different methods: (1)

divestment; (2) displacement; and (3) delegation.

237

Divestment means

removing an asset or enterprise by selling it, giving it away, or

liquidating it.

238

Displacement is a more passive process where state

involvement gradually dissipates, and markets develop to satisfy needs

that SOE’s are no longer fulfilling.

239

Displacement can either occur

through default—where the public finds that government provisions are

inadequate and fill the gap—or through withdrawal—where the

government shuts down a failing enterprise.

240

The last method of

privatization is delegation, where the government delegates the activity

of producing goods or services to the private sector but retains the

responsibility of overseeing the result.

241

Delegation often serves as an

intermediate step before divestment.

242

Unfortunately, the process of privatization in post-socialist

countries faces several hurdles. Janusz Lewandowski, Poland’s Minister

for Ownership Changes, summarized the difficulties post-socialist

countries face, stating that, “privatization is the sale of enterprises that

no one owns, and whose value no one knows, to buyers who have no

money.”

243

One hurdle is determining ownership of this property.

244

Many of the state-owned assets being privatized once belonged to

citizens before they were expropriated.

245

New post-socialist states must

determine how and if they choose to recognize old ownership rights and

234. Kenton, Socialism, supra note 138.

235. Savas, supra note 10, at 574.

236. See id. at 573.

237. Id.

238. Id. at 574.

239. See id. at 575.

240. Id.

241. Savas, supra note 10, at 576.

242. Id.

243. Id.

244. Id. at 577.

245. Frances H. Foster, Restitution of Expropriated Property: Post-Soviet

Lessons for Cuba, 34 C

OLUM. J. TRANSNAT’L L. 621, 627 (1996).

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658

award restitution for being deprived of property.

246

Next, they must

determine the value of and sell SOE’s.

247

Because there was no market

for these enterprises before, there is no guide for how these assets should

be valued.

248

And then the state is trying to sell them to a population

that doesn’t have the wealth or economic capacity to purchase assets.

249

Poland, the Czech Republic, Lithuania, Estonia, and Romania

attempted to remedy these problems through the free transfer of shares

in SOE’s to all citizens.

250

This process was fair, easy, quick, and

accessible to citizens who did not have capital to purchase assets.

251

the other hand, these shares were viewed as gifts instead of investment

opportunities and often did not lead to the formation and growth of a

market economy.

252

Other post-Soviet countries have taken a decentralized approach to

privatization.

253

Instead of mass, nation-wide privatization, countries

like Slovakia, Slovenia, and the Czech Republic implemented

administrative avenues for privatization of SOE’s.

254

Plans for

privatization of business could be submitted to agencies, who looked

over the plans for privatizing and helped establish a business that will

contribute to the economy.

255

Privatization in post-socialist countries is a difficult process, but a

few former-Soviet countries have undergone successful privatization

processes and are now experiencing economic growth in a market

economy.

5. Legal Systems and Property Rights

Once private-property rights are granted and citizens possess

property, there needs to be a mechanism to protect these property

interests. Court systems are fundamental to support the recognition

and protection of private-property rights in post-socialist countries.

256

246. See id.

247. Savas, supra note 10, at 578.

248. Id.

249. Id.

250. Id.

251. See id.

252. Id.

253. Savas, supra note 10, at 579.

254. Id.

255. Id.

256. See generally The Fundamental Right to Use One’s Own Property,

IBERTAS INST., https://libertasutah.org/policy-papers/property-

rights.pdf [https://perma.cc/KKW9-CYEA].

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659

Most post-communist countries base their legal systems on civil

codes instead of common-law rulings by judges.

257

The lawyers and

policymakers who draft civil codes must have knowledge of both local

conditions and capitalist legal theories of property rights.

258

Policymakers won’t have an adequate grasp on what laws are needed

to adequately protect and encourage private-property ownership until

after capitalist ownership policies have been implemented.

259

Thus,

judges and courts serve this function of enforcing property-right

protections, acting after initial policies have been implemented. Courts

make decisions about the day-to-day functions of property rights that

arise out of the dispute-resolution process.

260

National legislatures can enact civil codes to govern property rights,

but they will be the most successful when they work with the judicial

system to bring property-right protection through a common-law

system.

261

Court systems define the local, informal institutions that are

so vital to protecting property rights and encouraging economic growth.

Each of the factors previously discussed, and many more, play a role in

determining how to best implement private property rights in order to

facilitate economic growth. But the struggles facing post-socialist

countries are not the only factors Cuban policymakers must take into

consideration.

B. Private Property Rights in Latin American Countries

Latin America is comprised of states that experience the highest

rates of wealth inequality, low development rates, and fluctuating

GDP’s that fall well below developed countries.

262

Cuba shares these

unique characteristics of Latin American countries, further

complicating Cuba’s road to post-socialist economic growth.

Economists theorize that the key to economic development in Latin

America lies in the recognition and protection of private-property

rights.

263

257. Rubin, supra note 186, at 9.

258. Id. at 10.

259. See id.

260. Id.

261. See id.

262. High Levels of Inequality in Latin America Constitute an Obstacle to

Sustainable Development, E

CON. COMM’N FOR LATIN AM. AND THE

CARIBBEAN (May 30, 2017),

https://www.cepal.org/en/pressreleases/eclac-high-levels-inequality-

latin-america-constitute-obstacle-sustainable-development

[https://perma.cc/AS8T-NF93].

263. See generally, DE SOTO, supra note 25.

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660

1. Inability to Produce Capital

Many people are led to believe that the citizens of Third World

countries are oppressed beggars, trapped in obsolete practices.

264

But

this is far from the case. Latin American countries are overflowing with

entrepreneurs that already possess the assets needed to form a

successful capitalist system.

265

The reason that the majority of the world

is not benefiting from Capitalism is that they lack the ability to produce

capital.

266

Even the poorest countries in Latin America have the assets

necessary to jump-start a capitalist market economy, but they own

these assets in defective forms.

267

Houses are built on land with

unrecorded ownership rights.

268

Entrepreneurs own unincorporated

businesses without proper liability protection.

269

Businesses and

industries are located where investors cannot be made aware of them.

270

In Western countries, every parcel of land is recorded, every

business must meet legal requirements, and every enterprise has the

opportunity for investment.

271

The creation of capital in these countries

began when they established widespread, formal property law that

equipped every citizen with the ability to participate in the market

system.

272

Formal private-property rights give low-income citizens a

stake in the market system, providing an opportunity to invest in and

develop their assets.

273

Latin American countries are stuck in a cycle where they cannot

produce capital to invest in the economy because there is no formal

legal recognition of the capital they already possess.

2. Formal Recognition of Property Rights

As a region, Latin America experiences the highest rates of income

inequality in the world.

274

By establishing formal property rights,

264. Id. at 4.

265. Id. at 4–5.

266. Id. at 5.

267. Id.

268. Id. at 5–6.

269.

DE SOTO, supra note 25, at 6.

270. Id.

271. See id.

272. Id. at 10.

273. See generally id.

274. See generally High Levels of Inequality in Latin America Constitute an

Obstacle to Sustainable Development, supra note 262.

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661

governments give their citizens a stake in the economy, a means to

invest and participate.

275

Peru is one of the most economically stable Latin American

countries.

276

And their growth directly flowed out of Peru’s success in

reforming and improving their property rights.

277

Economic reforms

moved Peru’s street vendors, transportation workers, low-income

farmers, and millions of other participants in the informal sector into

the legalized economy.

278

Coupled with policy reforms—like simplifying

administrative processes, improving access to public information,

unifying business registries, and democratizing rule-making—Peru has

seen significant economic growth flowing from the recognition of

private-property rights and integration of low-income participants into

the economy.

279

Alternately, Brazil has demonstrated minimal economic growth in

the last decade, since their system does not grant full property rights.

280

Brazilian law punishes owners if their property does not serve a “social

function,” which weakens the importance and value of private

property.

281

Owners are obligated to make their property productive, in

accordance with the state’s criteria.

282

In Brazil, state intervention

clearly has a negative impact on the economy, and the lack of legal

security in property rights scares investors away.

283

Many developing countries have the assets required to support a

capitalist market economy,

284

but economic growth will not occur until

property rights are formally recognized. Without a proper stake in the

economy, individuals will not invest in or develop their assets in a

manner that stimulates growth.

275. Moisés Rendón, Latin America Can Slash Poverty with Property Rights,

ANAM POST (Mar. 13, 2016),

https://panampost.com/editor/2016/03/13/latin-america-can-slash-

poverty-with-property-rights/?cn-reloaded=1 [https://perma.cc/H6D2-

9PRT].

276. Id.

277. Id.

278. Id.

279. Id.

280. Id.; Alexandre dos Santos Cunha, The Social Function of Property in

Brazilian Law, 80 F

ORDHAM L. REV. 1171, 1174 (2011).

281. Rendón, supra note 275.

282. Id.

283. Id.

284.

DE SOTO, supra note 25, at 5.

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662

VI.

RECOMMENDATIONS FOR CUBA

In the wake of implementing a new Constitution, the Cuban

government has a responsibility to provide further structure and

guidance for its constitutional provisions.

285

Cuba’s monumental

recognition of private-property rights will be futile without further

reforms to protect and define that right. Because of Cuba’s socialist

system and current economic predispositions, the path to sustainable

economic growth will be difficult. But, by looking at past experiences

of countries who have gone through similar processes, we can learn

about potential obstacles that Cuba might face and provide

recommendations for transitioning to an economically healthy private-

property system.

A. Challenges Cuba Faces

No other country in the world has been in the exact same position

Cuba is in right now. Post-Soviet countries benefited from being able

to start from scratch in building a new institutional framework.

286

Whereas Cuba seems to be gradually transitioning out of an existing

political and economic system. Successful Latin American countries laid

out the framework for capitalist market economies before going through

property-rights reform.

287

Whereas Cuba is trying to imbue their

socialist economy with capitalist mechanisms for growth.

When it comes to privatization, Cuba is not seeking to relinquish

all control over the means of production. Even their Constitution still

establishes state and communally-owned property as the favored form

of ownership.

288

While there might not be the mass privatization

movement that Soviet countries experienced,

289

Cuba is undergoing

small-scale privatizations.

290

Over the last 10 years, Cuba has laid off

surplus state labor and expanded private-sector business licenses.

291

While they hoped that this would help grow the private sector of the

economy, the practical and legal restrictions on market access have

strangled this opportunity for growth.

292

But these reforms occurred

before both the statutory creation of ownership rights in homes and the

285. See Rodriguez, supra note 17.

286. See Bjørnskov, supra note 188, at 7.

287. See generally

DE SOTO, supra note 25.

288. 2019 Constitution, supra note 123, art. 22.

289. Savas, supra note 10, at 573.

290. See generally Palomo, supra note 112.

291. Id. at 198.

292. Id. at 199.

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663

constitutional recognition of private property.

293

If Cuba follows

through with reinforcing and protecting property rights, they might be

able to remedy this problem, because private-property rights give

individuals the capital to invest in the market.

294

Legalizing private property comes with a whole new set of

problems. In Cuba’s housing sector, residences have been owned by

single families for generations without proper recording, and many of

the property transfers that occurred before 2011 were illegal transfers.

295

Further, the Cuban government continually fails to provide a remedy

for property expropriated under the Castro regime, especially for Cuban

exiles living abroad.

296

The systems Cuba currently has in place create property rights, but

the amount of restrictions on those rights discourages individuals from

using their assets in the market. And without market activity, Cuba

will not experience economic growth as a result of granting private-

property rights.

B. Problems to Avoid

Although there is no guidebook for how to successfully implement

property rights and capitalist economic reforms in a socialist country,

there are some major pitfalls that Cuba should be aware of. While Cuba

is already experiencing many of these issues, improperly stewarding the

implementation of property rights may lead to these problems

worsening. The central goal of recognizing private-property rights is to

encourage market participation and help expand the middle class.

297

property reforms are implemented without methods for protection or

stabilization, Cuba could face greater wealth inequality or the creation

of a plutocracy. And there is always the danger that they could regress

back to comfortable socialist economic policies.

1. Wealth Inequality

Although we do not have data on the current level of income

inequality in Cuba, experts theorize that Cuba has one of the highest

293. Id. at 197. See also 2019 Constitution, supra note 123, art. 22.; Decreto-

Ley

288, GACETA OFICIAL, G.O. Ext. No. 35, at 359 (Oct. 28, 2011),

accessible at http://cafefuerte.com/documentos/1308-documentos-

decreto-ley-288-y-resoluciones-para-la-compraventa-de-casas-en-cuba/

[https://perma.cc/H9YB-UCKX].

294. See generally Palomo, supra note 112.

295. See generally Peters, supra note 21.

296. See Nicolás J. Gutiérrez Jr., The De-Constitutionalization Of Property

Rights: Castro’s Systematic Assault on Private Ownership In Cuba, 5 U.

MIAMI INT’L & COMP. L. REV. 51 (2015).

297. See Kenton, Capitalism, supra note 148.

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

664

rates of economic inequality in the world.

298

Their population is divided

between the low-income working class and the wealthy political elite

(typically officials in the Communist Party).

299

There is virtually no

middle class in Cuba, and many other Latin American countries suffer

from the same problem.

300

If Cuba begins to privatize property without creating specific

provisions that welcome low-income citizens into the economy with

incentives to invest and participate, it will not experience economic

growth. The lower class will sell their assets to the upper class for short-

term gain, relinquishing the ability to participate in the market in the

future. The rich will become richer and the poor will become poorer.

Peru’s reforms were so successful because they welcomed low-income

entrepreneurs into the formal economic market.

301

The government did

not merely provide the opportunity to participate, they rewarded

investment in the market.

302

Granting private-property rights without

further provisions for effective participation in the market will lead to

higher rates of income inequality and will not serve the purpose the

reforms originally intended.

2. Creation of a Plutocracy

Going hand-in-hand with increased economic inequality is the risk

of the creation of a plutocracy. A plutocracy is a system of government

controlled exclusively by the wealthy, either directly or indirectly.

303

These systems can arise inadvertently, and many Latin American

countries trend towards this “rule by the wealthy.”

304

If Cuba enters a cycle where low-income citizens sell their assets to

the wealthy elite and fail to further participate in the economy, the

298. Audiotape: Maria Werlau, Communism in Cuba and North Korea,

Lecture given at Case Western Reserve University (Oct. 18, 2018) (on file

with author).

299. Id.

300. See George Gao, Latin America’s Middle Class Grows, But in Some

Regions More Than Others, P

EW RES. CTR. (Jul. 20, 2015),

http://www.pewresearch.org/fact-tank/2015/07/20/latin-americas-

middle-class-grows-but-in-some-regions-more-than-others/

[https://perma.cc/HU7M-8CSM].

301. Rendón, supra note 276.

302. See id.

303. Will Kenton, Plutocracy, I

NVESTOPEDIA (Jun. 20, 2018),

https://www.investopedia.com/terms/p/plutocracy.asp

[https://perma.cc/T3LT-9WUX] [hereinafter Kenton, Plutocracy].

304. W.W., This Ain’t No Banana Republic, A High Level of Income Inequality

May or May not Reflect Injustice or Plutocracy, E

CONOMIST (Nov. 19,

2010), https://www.economist.com/democracy-in-

america/2010/11/19/this-aint-no-banana-republic

[https://perma.cc/ZAH4-VN94].

Case Western Reserve Journal of International Law 52 (2020)

Introducing Private-Property Rights to Cuba

665

wealthy are left with complete market control. Cuba’s political system

is currently controlled exclusively by the Communist Party.

305

And the

majority of Cuba’s wealth is concentrated in its Communist Party

members.

306

Without a balance in market participation, all of Cuba’s

wealth and political power would concentrate in the hands of a few

hundred individuals, most of whom have some level of political

influence.

While it may seem like Cuba already has this system in place, their

current policies at least recognize the struggles of the lower class and

seek to remedy the distance between the working class and political

elite. The formation of a plutocracy would lead to the elimination of

the lower class’s involvement in the economy.

307

And sustainable

economic growth is not possible without widespread participation in

the market economy.

3. Regression to Socialist Policies

Cuba took a bold step towards capitalist economic principles in

their new Constitution. But even the differences between the first draft

of the constitution and the ratified version showed Cuba was shrinking

away from their initial trajectory.

308

While socialist economic policies in

Cuba have not been successful, they are familiar. If their attempts at

capitalist reforms do not lead to economic growth in Cuba, the

government may choose to return to its socialist roots.

Russia underwent a very similar pattern, making several economic

reforms up front, but then returning to some of their socialist

principles.

309

This regression made it incredibly difficult for Russia to

establish a market economy and promote economic growth.

310

If Cuba

backtracked on economic reforms, it would only lengthen the process

and impose greater burdens on the economy. Continual reforms might

create unpredictability in the short-term, but it will lead to growth and

stability over time.

C. How to Best Facilitate Growth

If Cuba seeks to benefit from the work it has already done with

recognizing private-property rights and attempting to build new sectors

305. Communist Party of Cuba, ENCYCLOPÆDIA BRITANNICA,

https://www.britannica.com/topic/Communist-Party-of-Cuba

[https://perma.cc/2N8W-VGAM].

306. Audiotape: Maria Werlau, Communism in Cuba and North Korea,

Lecture given at Case Western Reserve University (Oct. 18, 2018) (on file

with author).

307. Kenton, Plutocracy, supra note 303.

308. Acosta & Marsh, supra note 75.

309. Tupy, supra note 203.

310. Id.

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Introducing Private-Property Rights to Cuba

666

of the economy to facilitate growth, the reforms cannot stop here. In

the past, Cuba has tried to encourage economic participation without

providing the assets to effectively invest and grow in the market.

311

Now, Cuba is granting rights to establish those assets, but has yet to

implement any further framework for protection or implementation of

those rights. In order for Cuba to experience economic growth from

formally recognizing private-property rights, the government will need

to quickly enact laws and establish informal institutions to protect

those rights and encourage their use in the market.

1. Amend Laws to Reinforce Private Property Rights

Constitutional recognition of private-property rights is an

important tool to provide guidance for economic growth. But as seen

in Ukraine, formal recognition alone is not enough to protect property

rights in a manner that will encourage growth.

312

If Cuba wants to

benefit from the allowance of private property, it should accompany its

constitutional provisions with laws that establish a framework for

protecting and enforcing private-property rights.

Private property is not part of the society in Cuba, and societal

change is necessary for the protection and recognition of private-

property rights.

313

While the government cannot require people to

change their opinions, they can implement policies that lead to

transformations in informal institutions. By strengthening property

rights through small-scale provisions and local reforms, the state can

reinforce the importance of private property so that it eventually

becomes a recognized value in society.

Cuba needs to create a framework that supports and protects

private-property rights. At the same time, Cuba needs to decrease

restrictions on property ownership and use, since limitations on

property use disincentivize activity in the market.

314

Once Cuba

expands protections and decreases limitations on property rights,

citizens will have the incentive to invest their assets in the market,

leading to economic growth.

2. Expand Economic Policies that Promote Privately-Owned

Enterprises

While individual property rights are a decent starting point,

significant economic growth will arise from the development of

privately-owned businesses and the encouragement of

311. See Palomo, supra note 290, at 200.

312. See Bjørnskov, supra note 188, at 7–8.

313. See Williamson & Kerekes, supra note 205, at 559 (insinuating that

countries—like Cuba—who implement this system are in need of societal

reformation).

314. Powell, supra note 154, at 2.

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Introducing Private-Property Rights to Cuba

667

entrepreneurship.

315

Recent developments in business regulation have

been all over the board in Cuba, but the most recent set of reforms

severely limit business owners’ ability to effectively participate in the

market.

316

Peru experienced economic growth by formally recognizing informal

business operations.

317

The Czech Republic underwent a successful

process of privatization by legitimizing small, private business

operations that had previously been under state control.

318

Granting

businesses greater freedoms encourages economic growth. Even if

individuals have the legally protected assets to invest in the market,

they will not get involved in the market if the government’s limitations

on property place high burdens on economic participation. In order to

foster economic growth propelled by privately-owned businesses, the

Cuban government should decrease the amount of restrictions it places

on these business enterprises.

3. Develop a Legal System that Protects Private Property Rights

Cuba’s current court system does not afford any protection for

property rights because under the socialist system, there was no need

to protect private property.

319

Cuba typically relies on civil codes for guidance on how the courts

should rule and operate.

320

But courts are one of the most important

institutions in effecting societal change. Legislatures can make decisions

at the national level, but it is the court’s application of laws that will

impact the everyday lives of citizens.

321

Cuba should approach property-

rights protections through the use of common law rulings.

Legal protection of private property and recognition of those rights

in Cuba’s courts of law will provide citizens with the assurance and

incentive to use their assets in the market. When property rights receive

legal protection, economic growth follows.

322

If Cuban courts can

successfully establish the protection of private-property rights through

common-law rulings, Cuba will be one step closer to economic growth.

Conclusion

Cuba’s new Constitution formally recognizes private property as a

form of ownership, setting the stage for economic growth and

315. Id.

316. Palomo, supra note 290, at 199.

317. Rendón, supra note 276.

318. Savas, supra note 10, at 579–80.

319. See Kenton, Socialism, supra note 138.

320. Rubin, supra note 186, at 9.

321. See id. at 10.

322. See Id.

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Introducing Private-Property Rights to Cuba

668

participation in a capitalist market system. However, constitutional

recognition of property rights alone will not bring the growth Cuba is

seeking. In order for Cuba to benefit from the economic growth that

private-property rights bring to capitalist systems, Cuba should: (1)

implement policies that create a framework for the protection and

societal recognition of property rights; (2) reduce restrictions on how

individuals and business use their privately-owned assets in the market;

and (3) develop a legal system that safeguards private-property rights.

Cuba is in a unique position to bring about economic growth in their

nation. They have made the first step of recognizing private-property

rights. But we will have to wait and see what the future holds for Cuba.