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Cuba: Capitalism or Socialism?

1. Please review the video clip from this link
http://www.mhhe.com/economics/solman_video_mov/capital_cuban.mov

2. Answer the following questions:

Why is a struggle underway in Cuba between social equality and the free market? Why did Cuba permit free markets? Who in the video wants Cuba to remain socialist? Why? Who in the video prefers free markets and capitalism? Why? What is the role of incentives in this struggle? In your view, which force will win? Why?

Solution Preview

Why is a struggle underway in Cuba between social equality and the free market?

The USSR was the major sponsor of Cuba. The result is that the collapse of the USSR resulted to discontinued millions of dollars of subsidy. This eventually resulted to economic difficulty in Cuba.
Now, Cuba has to fend for itself. It has to survive. That is why Cuban government encourages free market.
On the other hand, it doesn't want to contradict itself. For many decades Cuba defended that socialism is vibrant and strong. But Cuba's belief in socialism cannot feed it hungry mouths. It cannot admit that socialism was wrong.

Why did Cuba permit free markets?

Cuba today has no more sponsor from any communist country. It is isolated economically. It has to swallow its pride and embrace capitalism. You can argue that:

The problem of Cuba is that it has to survive economically. To survive, Cuba must open its doors to ...

Solution Summary

Cuba is on the crossroads of turning into a capitalist state or remain a socialist. Its people experience a capitalist flavor but others would like it to be what Fidel Castro would want it to be. Some free-loving citizens would like to see a democratic country embraced by the community of nations.

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