Thread: Cuba opening up 'economic zones' to increase foreign investment

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    Default Cuba opening up 'economic zones' to increase foreign investment

    http://www.reuters.com/article/2013/...98M12H20130923


    Reuters) - Cuba published rules and regulations on Monday governing its first special development zone, touting new port facilities in Mariel Bay in a bid to attract investors and take advantage of a renovated Panama Canal.
    The decree establishing the zone and related rules takes effect on November 1 and includes significant tax and customs breaks for foreign and Cuban companies while maintaining restrictive policies, including for labor.
    Cuba hopes the zone, and others it plans for the future, will "increase exports, the effective substitution of imports, (spur) high-technology and local development projects, as well as contribute to the creation of new jobs," according to reform plans issued by the ruling Communist Party in 2011.

    The plan spoke positively of foreign investment, promised a review of the cumbersome approval process and said special economic zones, joint venture golf courses, marinas and new manufacturing projects were planned.
    Most experts believe large flows of direct investment will be needed for development and to create jobs if the government follows through with plans to lay off up to a million workers in an attempt to lift the country out of its economic malaise.
    The Mariel special development zone covers 180 square miles (466 square km) west of Havana and is centered around a new container terminal under construction in Mariel Bay, 28 miles from the Cuban capital.
    The zone will be administered by a new state entity under the Council of Ministers, and investors will be given up to 50-year contracts, compared with the current 25 years, with the possibility of renewal.
    They can have up to 100 percent ownership during the contract, according to Cuba's foreign investment law.
    Investors will be charged virtually no labor or local taxes and will be granted a 10-year reprieve from paying a 12 percent tax on profits. They will, however, pay a 14 percent social security tax, a 1 percent sales or service tax for local transactions, and 0.5 percent of income to a zone maintenance and development fund.
    Foreign managers and technicians will be subject to local income taxes.
    All equipment and materials brought in to set up shop will be duty free, with low import and export rates for material brought in to produce for export.

    However, one of the main complaints of foreign investors in Cuba has not changed: that they must hire and fire through a state-run labor company which pays employees in near worthless pesos while investors pay the company in hard currency.
    Investors complain they have little control over their labor force and must find ways to stimulate their workers, who often receive the equivalent of around $20 a month for services that the labor company charges up to twenty times more for.
    And investors will still face a complicated approval policy, tough supervision, and conflict resolution through Cuban entities unless stipulated otherwise in their contracts. And they must be insured through Cuban state companies.

    MARIEL PORT
    The Mariel container terminal and logistical rail and highway support, a $900 million project, is largely being financed by Brazil and built in conjunction with Brazil's Grupo Odebrecht SA. The container facility will be operated by Singaporean port operator PSA International Pte Ltd.
    The terminal is scheduled to open in January.
    Future plans call for increasing the terminal's capacity, developing light manufacturing, storage and other facilities near the port, and building hotels, golf courses and condominiums in the broader area that runs along the northern coast and 30 miles inland.
    Mariel Bay is one of Cuba's finest along the northern coast, and the port is destined to replace Havana, the country's main port, over the coming years.

    The Mariel terminal, which will have an initial 765 yards of berth, is ideally situated to handle U.S. cargo if the American trade embargo is eventually lifted, and will receive U.S. food exports already flowing into the country under a 2000 amendment to sanctions.
    Plans through 2022 call for Mariel to house logistics facilities for offshore oil exploration and development, the container terminal, general cargo and bulk foods facilities.
    Mariel Port will handle vessels with up drafts up to 49 feet compared with 36 feet at Havana Bay due to a tunnel under the channel leading into the Cuban capital's port.
    The terminal will have an initial capacity of 850,000 to 1 million containers, compared with Havana's 350,000.
    (Editing by Tom Brown and Jim Marshall)
    fka xx1994xx
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    Capitalism in action!
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    Capitalism in action!
    Well if it preserves cuban sovereignty...
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    Looks like he's following the lead of Deng and Maduro.
    Segui il tuo corso e lascia dir le genti.

    Socialism resides entirely in the revolutionary negation of the capitalist ENTERPRISE, not in granting the enterprise to the factory workers.
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    Well if it preserves cuban sovereignty...
    Not sure if serious....?
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    Capitalism in action!
    Can you please explain your viewpoint rather than making an obvious one liner? i'm not trying to add hostility to the discussion, rather i just want you to add a bit of substance to your argument.

    im sorry, i honestly dont understand your message here. Cuba has participated on the world market ever since the revolution, not to mention before that. Now that there is no socialist bloc, the only difference is the trade partners; as well as the terms of trade between Cuba and other states.

    Well if it preserves cuban sovereignty...
    What exactly is this Cuban sovereignty? i'm with The Boss asking you if your serious?

    Sure Cuban society was to some degree (and still is to some degree) socialist, and the state is nobody's pawn; neither the US nor Spain controls Cuba. However, this doesn't mean that they are "sovereign". That they have the independence they once had. More and more the Cuban state is aiming to increase the share of private/foreign capital within the economy because its becoming a necessity. Cuba is no more "sovereign" than China, Vietnam, Brazil, or Belarus. The only difference is the form of government and that a Cuban capitalist class does not dominate. Nor do foreign capitalists dominate. However more and more influence is being exerted by world trade, and Cuba is forced to conform.

    Looks like he's following the lead of Deng and Maduro.
    i grow really tired of these comparisons. Deng split the world communist movement in half for good, following in the footsteps of Mao. Chavez, Maduro, the PSUV, and all their supporters are something totally different. In an economic sense the Cuban state has historically been well to the left of these two examples, and currently are much closer to socialism than either China or Venezuela.

    However that's beside the point. Why must these comparisons be made? The Cuban state is going to do whats best for them, not follow examples of anyone else. Sure, they trade with China and Venezuela extensively; but had they merely followed their examples, the Cuban economy would be heavily privatized (which basically means corrupt as fuck). Not only that but it would have happened much earlier.

    One could argue that Cuba's economy is already privatized and corrupt to a significant degree. There's truth to that; but nothing close to the outrageous path taken by the CPC even before Deng. Venezuela is still ruled by private capitalists and all the great/progressive reforms and committees wont change that.

    This is to be expected! Don't fret over the Cuban state doing shit like this. They are surviving. They haven't been overthrown by mercenaries and murdering psychopaths. So long as this hasn't happened...the Cuban people are free to develop their own consciousness and can change their own society for the better.

    i must admit i am very biased in favor of the Cuban revolution as it was probably the most progressive event in the history of the "Western Hemisphere" so far. My close proximity to Cuba and daily experience with Cuban emigres is re-affirming.

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    This is to be expected! Don't fret over the Cuban state doing shit like this. They are surviving. They haven't been overthrown by mercenaries and murdering psychopaths. So long as this hasn't happened...the Cuban people are free to develop their own consciousness and can change their own society for the better.

    i must admit i am very biased in favor of the Cuban revolution as it was probably the most progressive event in the history of the "Western Hemisphere" so far. My close proximity to Cuba and daily experience with Cuban emigres is re-affirming.
    I suppose you're right. Honestly the fact the Cuban economy has been sustained to this point is in itself an anomaly. They can only be self-sustaining to a point, and with the global economy the way it is today, it should be no surprise the state has to take such measures. And you are right in noting that a majority of the gains made through the Revolution and the subsequent political structure.

    I visited the island several years ago myself and talked to as many people as I could, what are your recent experiences?
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    This is to be expected! Don't fret over the Cuban state doing shit like this. They are surviving. They haven't been overthrown by mercenaries and murdering psychopaths. So long as this hasn't happened...the Cuban people are free to develop their own consciousness and can change their own society for the better. .
    This. I think, here, we just have to trust the Cubans that they know what they are doing, and that they are able to make the right decisions.
    Cuba is far from perfect, and how could it be, given the incredibly hard circumstances they find themselves in.
    Socialism itself is full of contradictions, even more so on a small island surrounded by capitalist states, and as long as capitalism is dominant in the world, no small island can opt out of its laws completely (they have to trade with someone...), even if very important steps have been made through ALBA.
    Cuba doesn't need people to make smart-sounding comments about how they are abandoning socialism, Cuba needs our solidarity. They need us to put pressure on the US government to end the blockade, and, most of all, they need us to continue the fight for socialism in our own countries.
    "The philosophers have only interpreted the world, in various ways; the point is to change it." - Karl Marx

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    Not the ideal circumstances for socialism but considering you can nearly see the world's top capitalist nation from the Cuban coast they are doing well enough to stay communists(although not perfect communists) for over 40 years now.
    If the us embargo was lifted then that would be another story. They are taking crucial and correct measures according to the circumstances they have today.
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    I'm going to continue convincing myself that these are just small reform so they can survive...
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    This. I think, here, we just have to trust the Cubans that they know what they are doing, and that they are able to make the right decisions.
    Why should we trust the Cuban state? The Cuban people is not the Cuban state. The Cuban state is a treacherous machine like any other capitalist state.
    The revolutionary despises public opinion. He despises and hates the existing social morality in all its manifestations. For him, morality is everything which contributes to the triumph of the revolution. Immoral and criminal is everything that stands in its way.

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    This. I think, here, we just have to trust the Cubans that they know what they are doing, and that they are able to make the right decisions.
    Cuba is far from perfect, and how could it be, given the incredibly hard circumstances they find themselves in.
    Socialism itself is full of contradictions, even more so on a small island surrounded by capitalist states, and as long as capitalism is dominant in the world, no small island can opt out of its laws completely (they have to trade with someone...), even if very important steps have been made through ALBA.
    Cuba doesn't need people to make smart-sounding comments about how they are abandoning socialism, Cuba needs our solidarity. They need us to put pressure on the US government to end the blockade, and, most of all, they need us to continue the fight for socialism in our own countries.
    What do you mean 'smart-sounding comments about how they are abandoning socialism'? I mean, do you understand what Socialism is? And do you understand what capitalism is?

    Read the OP article. The situation in Cuba is that foreign investors will be producing goods in Cuba, using Cuban labour. The Cuban workers will be paid around $20 per month in the equivalent CUP, or non-convertible peso. The products will then be sold for multiple times the wage paid to the workers. That IS capitalism. It is nothing other than capitalism. It's what Marx identified and codified as the capitalist social relationship - that of the employing capitalist and the waged labourer. it's what we've fought against for 100, 200 years. Why should we abandon that fight just because one country waves a red flag and once (over 20 years ago!!) had a state-controlled economy?

    What you're seeing in Cuba is exactly what happened in China in the 1980s, and which of you will stand up and defend China today? If you defend Cuba and don't defend China as is today, that makes you wholly hypocritical, and makes me question your actual understanding of Marxism, and of what a Marxian understanding of socialism and capitalism actually is.
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    Why should we trust the Cuban state? The Cuban people is not the Cuban state. The Cuban state is a treacherous machine like any other capitalist state.
    The actualisations of the Cuban economy (which is what you call "opening") have been discussed in all of Cuban society, multiple times.
    Cuba is a democratic state (in the real sense, not in the bourgeois sense), it is still defined by the Poder Popular, the power of the people. The decisions made by the Cuban state are the decisions made by the Cuban people.

    Originally Posted by The Boss
    What do you mean 'smart-sounding comments about how they are abandoning socialism'? I mean, do you understand what Socialism is? And do you understand what capitalism is?

    Read the OP article. The situation in Cuba is that foreign investors will be producing goods in Cuba, using Cuban labour. The Cuban workers will be paid around $20 per month in the equivalent CUP, or non-convertible peso. The products will then be sold for multiple times the wage paid to the workers. That IS capitalism. It is nothing other than capitalism. It's what Marx identified and codified as the capitalist social relationship - that of the employing capitalist and the waged labourer. it's what we've fought against for 100, 200 years. Why should we abandon that fight just because one country waves a red flag and once (over 20 years ago!!) had a state-controlled economy?
    I've been to Cuba just recently, and I've had the chance to talk to (very informed and politically active) Cubans about this exact project. The deal is this: Cuba needs foreign currency, they need foreign technology, and they need to find a way around the US blockade.

    So, what they are doing, is, they are building this huge harbour, which will 1) save them a ton of money, because they won't need this expensive process of reloading goods onto smaller ships just to get them into the harbour (which they do now in Havana), 2) become an import point in the region and thus put pressure on the US to lift the blockade (Keep in mind: Currently, every ships that lands in Cuba cannot land in the US for the next two years. The more Cuba has to offer, the more companies will pressure the US to change this law.) and 3) attract foreign investors, who will bring foreign currency and technology into the country.

    The idea is, then, that those foreign companies, who will be allowed to produce in Mariel, have to follow very tight regulations. They have to follow all Cuban laws regarding working conditions, and they have to pay the normal amount of what they pay their workers in their original countries to the Cuban state, who then pays the Cuban workers what they would earn working for a state company. Please keep in mind, that, in Cuba, $20, or 500 CUP, is still a lot of money. Cubans still get a lot of their food from their librettas (coupons they can exchange for food, or that they can get food for at very low prices), most people get free meals at work or school, healthcare and education are free, rent is 20 CUP a month, the bus is 1/2 CUP per ride, a cup of coffee is 1 CUP, and so on.

    I think you don't understand what socialism is. Socialism is intensified class struggle under the dictatorship of the proletariat. Nothing more, and nothing less. And if the Cubans have to make such deals with foreign companies (they've been doing that for a long time, btw, joint ventures are pretty common in Cuba), it means that they are making difficult and, yes, risky decisions in difficult times, and in some way they are making a deal with the devil, but it doesn't mean they are abandoning socialism.

    Also, with all due respect, what I wanted to say is this: Cuba doesn't need armchair Marxists to tell them that everything they're doing is wrong, it needs people who show their solidarity, and who also know that the best way to help Cuba is to fight for socialism right where they live.
    "The philosophers have only interpreted the world, in various ways; the point is to change it." - Karl Marx

    "It is more pleasant and useful to go through the "experience of revolution" than to write about it." - V.I. Lenin

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    I suppose you're right. Honestly the fact the Cuban economy has been sustained to this point is in itself an anomaly. They can only be self-sustaining to a point, and with the global economy the way it is today, it should be no surprise the state has to take such measures. And you are right in noting that a majority of the gains made through the Revolution and the subsequent political structure.

    I visited the island several years ago myself and talked to as many people as I could, what are your recent experiences?
    Everyday i work with Cubans in south florida. Many of them left Cuba simply to find better work. Others left for work but because they are also against the Cuban state. Many found better work and are content enough to stay. Many have found better work and think their lives were still better in Cuba. i've met communists or former party members who left Cuba.

    The point is that Cuban society is not Miami, and this place will always be dominated by the right. However, i've been introduced to many different debates going in Cuba because of our close proximity. For example, recently the Cuban state made it much easier for Cubans to travel. In my experience, everybody thought it was a good thing. However the same people will disagree vehemently about how agriculture is being re-organized (private vs coop etc etc) or how the Cuban peso is losing importance to the convertible peso.

    Most Cubans love to talk and debate; and they do so openly. That is the one unifying cultural trait that i've noticed. That and great rhythm.
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    I've been to Cuba just recently, and I've had the chance to talk to (very informed and politically active) Cubans about this exact project. The deal is this: Cuba needs foreign currency, they need foreign technology, and they need to find a way around the US blockade.
    Indeed, the people are tired of a state-controlled economy that limits what they can earn in terms of currency, which in turn limits what they can access in terms of consumer goods. There is a dual economy in Cuba which has, over at least the past 20 years since tourism became a boom sector for the country, created distinct classes of haves and have-nots.

    So, what they are doing, is, they are building this huge harbour, which will 1) save them a ton of money, because they won't need this expensive process of reloading goods onto smaller ships just to get them into the harbour (which they do now in Havana),
    It will save the Cuban state a ton of money, for sure. It will save the Cuban workers nothing, because the labour market will still be regulated by the Cuban state employment company, meaning workers will still be paid less than the fruits of their labour. This is exploitation, profit-seeking behaviour, which Marx identified 150 years ago.

    2) become an import point in the region and thus put pressure on the US to lift the blockade (Keep in mind: Currently, every ships that lands in Cuba cannot land in the US for the next two years. The more Cuba has to offer, the more companies will pressure the US to change this law.)
    Cuba is becoming a more competitive capitalist economy so that capitalist companies will want to trade there. Exactly. Nothing to do with socialism. After all, why would large foreign multinationals want to trade in a genuinely socialist country - a country that wasn't for-profit.

    The only reason any sort of company would want to trade in Cuba is to make a profit. Profit-making, last time I checked with ANY communist, is mutually exclusive to socialism.

    and 3) attract foreign investors, who will bring foreign currency and technology into the country.
    Yes, capitalism, in a more global context.

    Please keep in mind, that, in Cuba, $20, or 500 CUP, is still a lot of money.
    No it's not. You can buy jack shit with 500 CUP. The access of ordinary Cubans to consumer goods and services is severely restricted by their wages.

    Cubans still get a lot of their food from their librettas (coupons they can exchange for food, or that they can get food for at very low prices), most people get free meals at work or school, healthcare and education are free, rent is 20 CUP a month, the bus is 1/2 CUP per ride, a cup of coffee is 1 CUP, and so on.
    Yeah, for a shit apartment, a crowded bus on shit roads, a TERRIBLE cup of coffee (Cuba is known for its bad coffee amongst the latin countries). For nice stuff, you need a hell of a lot more. I'm not saying it's a bad system, the rationing and welfare system, but let's not make out like Cubans have access to goods that are anything other than low quality, low efficiency.

    I think you don't understand what socialism is.
    I'm looking forward to this.


    Socialism is intensified class struggle under the dictatorship of the proletariat.
    There's nothing 'class strugglist' about allowing multinational companies into your country to make huge profits.

    There's also nothing socialist about letting them employ your workers - subjugating your own proletariat to exploitative capitalist relations with huge multinational companies is nothing but capitalism.

    Nothing more, and nothing less. And if the Cubans have to make such deals with foreign companies (they've been doing that for a long time, btw, joint ventures are pretty common in Cuba),
    Yes, Cuba has been an openly capitalist, mixed welfare economy for a long time now.

    it means that they are making difficult and, yes, risky decisions in difficult times, and in some way they are making a deal with the devil, but it doesn't mean they are abandoning socialism.
    The decisions aren't difficult. The Cuban political caste recognises that they can't survive politically, and Cuba can't survive economically, unless it becomes more competitive in the capitalist world. By having such low wages, and offering its low wage, educated workforce to foreign companies, it is doing just that. It is capitalism and nothing else.

    I hate to play this line, but seriously: have you actually read any Marx? Or any overviews of Marxian economics? Because it seems to me as though you don't understand what socialism is, what capitalism is, and why profit-seeking is not compatible with socialism. I am not trying to be a dick, but it's difficult to really take what you're saying seriously when you seem to have little understanding of what Marxists actually mean when they use terms like socialism, or capitalism.

    Also, with all due respect, what I wanted to say is this: Cuba doesn't need armchair Marxists to tell them that everything they're doing is wrong, it needs people who show their solidarity, and who also know that the best way to help Cuba is to fight for socialism right where they live.
    I presume you're referring to me as the armchair Marxist? Besides the irony of you typing that from behind your keyboard, all i'll say is: i've been active IRL, i've been to Cuba, and i'll show solidarity with the workers of Cuba, and indeed the workers of the world. I won't show any solidarity to those who capitulate to capitalist economic pressures. Why should I? All they're doing is putting the Cuban workers back into their chains, and i'll be damned if i'm gonna let that shit fly.
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    Why should we abandon that fight just because one country waves a red flag and once (over 20 years ago!!) had a state-controlled economy?
    Nobody is abandoning any fight against capitalism. At least i'm not. Certainly Cuba isn't either. Had they abandoned all hope for socialism, they would probably be a mirror image of Jamaica, Puerto Rico or even Haiti. The better living standard in Cuba is a direct result of that fight against capitalism. Whether it was completed or fits your or anybody's definition of socialism is irrelevant. The people there are better off than they might be had it not been for the revolution. This is objective.

    What you're seeing in Cuba is exactly what happened in China in the 1980s, and which of you will stand up and defend China today?
    Not so. How many commodities that people use hundreds of times on a daily basis were made in Cuba? Can you pick up an iPhone made in the Pinar Del Rio branch of Foxconn? Are we hearing about suicidal cigar rollers? Are people being forced to live in tiny shacks and horrible excuses for shelter in the middle of Habana?

    i'm sure the United States and Israel are pretty similar when it comes to political economy, but how many people (right wingers) support both states? Not many i would assume.

    If you defend Cuba and don't defend China as is today, that makes you wholly hypocritical, and makes me question your actual understanding of Marxism, and of what a Marxian understanding of socialism and capitalism actually is.
    Take it easy.

    My understanding of Marxism and the differences between capitalism and communism are quite clear. Things doesn't always fit ones theoretical understanding of this or that mode of production.
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    All I can say is that Cuba is going to make some big profits from charging those Brazilian and Singaporean corporations such a high labor cost while paying the labor itself so little. It's funny that investors complain about it as if they care about how much the Cuban state pays their workers instead of the high-price on their source of surplus-value.

    Cuba will allow more foreign capital as the United States loses its dominance over the global market. The big enemy of the Cuban state was always the "American capitalist-imperialists", but the BRIC capitalists don't seem as bad. The Cuban Revolution was a popularly-supported nationalist revolt that reorganized the production of capital to circulate in Cuba (rather than it all being extracted by US corporations), not a social revolution that broke existing economic relations.

    Defenders of Cuba have valid arguments if you're some sort of left-wing nationalist/social democrat type.
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    I don't really find it odd that the workers are paid $20 a month. Of course it's bad that the state is taking most of the profit, but wouldn't it be a bit odd it they paid them like $220 a month? That could be like 6 times the average salary in Cuba. Perhaps the profit is being diverted to social programs, education or healthcare.
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    Nobody is abandoning any fight against capitalism. At least i'm not. Certainly Cuba isn't either. Had they abandoned all hope for socialism, they would probably be a mirror image of Jamaica, Puerto Rico or even Haiti. The better living standard in Cuba is a direct result of that fight against capitalism. Whether it was completed or fits your or anybody's definition of socialism is irrelevant. The people there are better off than they might be had it not been for the revolution. This is objective.
    It is not. It is a result of a coup that installed a social-democratic government, which, bound to some labour interest, was bound to do some social reform. Like any welfare state, Cuba offers things some other impoverished less socially-minded states does not, but it does not make it socialist. If there was a time when socialism was attempted in Cuba, it was long ago, and the current order of things is endlessly spiralling out of control towards an inevitable China syndrome (if you know what I mean).

    It was to some extent the relative prosperity of pre-Revolution Cuba that allowed some gains to be made. Bear in mind that today most things are stagnant. The railways can hardly operate, most roads are broken, houses are falling apart, infrastructure is declining, electricity unreliable. Water-born illnesses are increasing due to poor water treatment, following improvements in the 50's and 60's, the situation is now getting critical once more.

    Objective improvements are no sign of socialism, either. Sweden isn't socialist just because the population might enjoy more generous welfare than some other nation...

    Not so. How many commodities that people use hundreds of times on a daily basis were made in Cuba? Can you pick up an iPhone made in the Pinar Del Rio branch of Foxconn? Are we hearing about suicidal cigar rollers? Are people being forced to live in tiny shacks and horrible excuses for shelter in the middle of Habana?
    Well, the last thing definitely does exist. Houses with roofs collapsing. Improvised fixing and fitting. And yes, some shacks as well. Not on a Haitian scale, but they definitely do exist.

    i'm sure the United States and Israel are pretty similar when it comes to political economy, but how many people (right wingers) support both states? Not many i would assume.
    What? Plenty right-wing nuts love both the USA and Israel. What is your point? Now Nazis might not, but the modern racist Islam-obsessed right-wing movement is quite passionate about the Israeli state.

    My understanding of Marxism and the differences between capitalism and communism are quite clear. Things doesn't always fit ones theoretical understanding of this or that mode of production.
    You just don't want to call it what it is when you see it. Capitalism.
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