Cuba Issues New Cooperatives Regulations: Tentative Experiment in Socialist Market Enterprise or a Privatization of State Management?

I have been writing about the development of new theoretical and legal approaches to cooperatives, as the experiment is unfolding in Cuba.  Backer, Larry Catá, The Proletarian Corporation: Organizing Cuban Economic Enterprises in the Wake of the Lineamientos — Property Rights between Corporation, Cooperatives and Globalization 33 Northwestern Journal of International Law and Business —(forthcoming 2012-2013). 

 (Pix FromTranslation: Granma article on cooperatives, Cuba's Socialist Renewal, Oct. 9, 2011)

The new approach was an important element in Cuban efforts to reform their economic model that found expression in the Linemientos adopted during the Cuban 6th Party Congress. (e.g., Cuba's 6th Party Congress and the Lineamientos (Guidelines) For Structural Change In Cuba, Law at the End of the Day, May 17, 2011).  It is meant to solve a conceptual problem for a state that sought to reserve for its public organs the right to aggregate capital, but at the same time was seeking a mechanics for developing private markets, and with it the possibility of aggregating productive effort. Cuba is seeking to develop a four part economic model--(1) public and state managed operation of most productive capital through traditional state owned corporations, (2) private markets limited to the production and delivery of consumer goods and services through cooperatives and sole proprietorships, (3) national markets of state and private sector enterprises managed through state organs, and (4) regional economic development operated on the basis of state to state operations supporting limited private consumer markets.    (Backer, Larry Catá, The Proletarian Corporation: Organizing Cuban Economic Enterprises in the Wake of the Lineamientos, supra)

For Cuba, the most innovative part of this economic reconstruction project was the development of a  new governance framework for cooperatives, which embrace notions of aggregation of effort, not aggregation of capital. But this is innovation that the Cuban state is embracing tentatively and with substantial reservations, despite its potential. After a long period of gestation and with the strong support for an innovative approach form influential academics and others at the University of Havana, on December 11, 2012, the Cuban government published the long awaited regulations on cooperatives. Gaceta Oficial de la República de Cuba, No. 53 Extraordinaria, CE DL. No. 305, 306; CM D. No. 309; MEP 570/12; MFP 427/12 (December 11, 2012). The regulations may be accessed HERE (in Spanish) and an analytical summary of which follows below.   The cooperative form holds much potential for Cuba (and other developing states) as it seeks, however tentatively, to trust its people to remain true to its political system even as they sort their economic relationships within a highly controlled environment. But this experiment will not succeed if the regulatory framework used to manage it seeks merely to replicate and privatize the system of state management the failures of which, acknowledged by the highest levels of the Party,was the very impetus for the reform reflected in the new socialist cooperative.

The new Cooperative regulations actually comprise a cluster of related regulations published in the Official Gazette as No. 53 Extraordinary legislation on December 11, 2012.  These include two decree-laws of the Council of State: (1) Consejo de Estado Decreto-Ley No. 305 and (2) Decreto-Ley No. 306.  It also includes one decree form the Council of Ministers--Decreto No. 309.   Lastly, it includes two ministerial resolutions: (1) Ministerio de Economía y Planificación Resolución No. 570/12, and (2) Ministerios de Finanzas y Precios Resolución No. 427/12.  

I will discuss each briefly each part of the new cooperative regulation framework in turn.The primary focus will be on Decreto-Ley 305 that establishes the organizational framework for cooperatives. 

Decree-laws of the Council of State: 

(1) Consejo de Estado Decreto-Ley No. 305; the "proletarian" corporate law of cooperatives

Decree-Law 305 is preceded by a short preamble that essentially reproduces the justifications for the development of non-agricultural cooperative regulations that accompanied the provisions of the Lineamientos. But it also quite clearly suggests the tentative nature of the reforms and the limited scope within which these regulations will be given effect.  It notes that since 1987 cooperatives have been recognized as separate juridical persons and as a legitimate form of collective property that contributes positively to the national economy. More importantly it reluctantly concedes that in order to develop the Cuban economic model, it is necessary, but only as an experiment, to create a legal framework for non-agricultural cooperatives. Thus the very limited framework that guides the construction of the structures of non-agricultural cooperatives which follow in the decree-laws, decrees, and  resolutions, that follow. 

Articles 1-10 focus on general principles and provisions.

Article  1 sets out the objectives of the experimental decree-law--to establish the norms that regulate the constitution, operation and dissolution of cooperatives within non-agricultural sectors in the national economy. 

Its characterization of the legislation as fundamentally experimental in nature, emphasized both in the preamble and in Article I is especially troubling.  It suggests both the impermanent nature of the legal structure being created, provides notice that the state might at any time end or change the rules of the experiment, and that the legitimacy of the project within the Cuban economic model is still not settled.  The importance of this characterization cannot be understated--by signalling that the rules may not survive, it serves to substantially increase the risk of forming and operating a cooperative.  It deprives the law of the sort of legal certainty.  This may well reduce the number of people willing to take the risk of investing substantial effort or resources into a cooperative form that may be yanked out from under them at any time.   

Article 2 emphasizes that cooperatives have economic and social objectives; that it it is invested with private and public obligations that extend beyond the individuals involved.  This reflects the debate int he 6th Party Congress about the social role of economic aggregations, like cooperatives, and their insistence that, whether public or private, such enterprises must serve the state and its economic policy objectives even as it serves to increase the well being of its operators. The principal objectives of cooperatives are to serve the retail sector through the production of goods and the offer of services, all of which must be compatible with social objectives (managed by state organs and the Communist Party) and the interests of the cooperative's members. As long as it meets these objectives it may enjoy autonomous juridical personality, use and distribute its property, meet its expenses from its revenues and otherwise comply with its obligations (contract). 

Article 3 describes the universe of rules under which a cooperative may be organized and through which it is regulated including the relevant law-decrees, decrees, resolution of ministries and its own internal organizational documents. 

Article 4 articulates the seven basic organizing principles of operation of cooperatives.  These include (1) cooperatives are voluntary organizations formed and dissolved by mutual consent, (2) all members are expected to collaborate in the work of the cooperative, (3) management decisions are to be made by all members , each of whom have the same participation rights; decision making is guided by democratic principles, (4) cooperative expenses must be paid out of its revenues, and after payment of taxes and other impositions owing to the state, net revenues may be distributed to the members  but only in proportion to the members' contribution, (5) all members are to comply with their work obligations in conformity to the terms of the agreements establishing the cooperative and in conformity to the direction of those charged with its administration, (6) the social obligations of cooperatives are to be emphasized in establishing and managing its objectives, in addition to which cooperatives must in their operations contribute to the economic and social development of the nation, protect the environment, avoid speculation, and ensure compliance with law; the members of the cooperative must work to promote cooperative culture and to satisfy the material, training, social, cultural, moral and spiritual needs of its members and their families, and (7) cooperatives will express its relations to other enterprises through contract, collaboration agreements, exchanges and other lawful means.   

These organizing principles are notable, at first blush not merely for their breadth and ambiguity.  That is too easy a charge to lodge against these provisions, and are ultimately a distraction.   The principles are useful for establishing the conceptual limits of cooperatives.  It is clear that these enterprises are meant to remain small and closely tied to the primary contributions of its members.  The efficiencies of corporate form of denied this form of organization.  Yet there is a hint odf movement toward conventional rule of law notions in the emphasis of the use of contract in managing relationships among entities.  That may well open the door to the construction of state organs (judicial) for the vindication of these rights and might contribute in that way to the development of a body of private and commercial law that may in turn contribute to the development of a more robust commercial sector. More important, though, is the emphasis on the social obligations of cooperatives.  This is not meant as mere rhetorical bluster.  Rather, it is the gateway through which state management of the business of cooperatives may be effectuated.  Because the state may control the meaning and application of social obligations, it may, as it likes, also control the functioning of cooperatives.  It is in this way that the state ministries may still be able to control cooperatives even as they appear to be directed by their members. In effect, the state seeks to transfer the risk of the enterprise to the members but retain a substantial control over its operation, at least at a macro level.  It remains to be seen how aggressively state organs, and functionaries seek to use this power to interfere in the operations of cooperatives, and to what ends.  It will also be interesting to see if in these powers the law provides an opening to corruption in the relations between cooperatives and the functionaries responsible for their oversight.

But social objectives can be a liberating principle as well.  Free of bureaucratic micro management, and perhaps subject to review and reporting on a periodic basis, requiring businesses to adopt something like a broad stakeholder model and reject the traditional shareholder or investor model of conventional enterprises, can provide the values based foundation for assessing the value of enterprise activity that can much more efficiently produce socially useful objectives than the traditional system of control and regulation managed by state bureaucrats.  The reason for this is simple--incorporating a stakeholder model as the foundational basis of the assessment of the value of enterprise activity internalizes the values and objectives of socially conscious activities.  As a consequence monitoring and management costs (to the state) are reduced substantially as the objective becomes internalized and self managed.  That, for e3xample, is the objective of moves outside of Cuba to provide a regulatory space for socially conscious enterprises.  (See, e.g., Edward Waitzer on Fiduciary Duty and Corporate Social Responsibility; Are Benefit Corporations a Step in the Right Direction?, Law at the End of the Day, March 6, 2012).  The difficulty of traditional control policies is that it remains something that is exogenous to the cultures of enterprises, is imposed and controlled by state actors who are not intimately connected with enterprise activity and who may impose transaction costs int he form of corruption. In effect, because the enterprise itself does not own its own obligation to increase stakeholder (or social) value, and because it appears alien to the operation--something imposed by an outside actor--it will not be easy to internalize the values of social welfare within the cultures of enterprise operation.  The concern with the system created by the Decree-Law, then, is precisely this--it points to a system of internalizing the requirements of stakeholder operations while retaining the inefficient structures of control of the specific implementation of social objectives through state management and control.That is the tension between the potential expressed in the Article 2 principles and the regulatory impositions of Article 11 (below) and the implementing regulations (Council of Ministers--Decreto No. 309) discussed below.

Article 5 follows the Lineamientos dividing cooperatives into two classes--primer grado cooperatives and segundo grado cooperatives. (Segund grado cooperatives are governed by the rules of this law-decree unless the rules are incompatible with its operaiton--Disposiciones Especiales, Cuarta). 

Article 6 describes the lawful forms of contributions (only by natural persons) to the formation of primer grado cooperatives: (1) cash aggregated for collective activity, (2) use of property or services contributed to the venture without transferring ownership, (3) use of state assets the right to the use of which has been acquired lawfully including state enterprises whose operations might be privatized (through leaseholds or otherwise), and (4) any combination of these.    The contribution of state assets suggests the possibility of privatizing state operations through cooperatives under appropriate circumstances, none of which are specified.  That suggest in turn that the state might, as it suits , to contribute or not under standards that may not be either transparent  or uniform and that may be arbitrarily applied.

Articles 7-9 deal with the use of state property.  Article 7 limits lease transfer contributions of state assets  to a maximum term of ten years.  Article 8 permits state entities to sell equipment and other goods to cooperatives in accordance with law. Article 9 permits cooperatives (whether not not fully established in accordance with law) to bid for state property and to contest the award of property let out to bid. 

Article 10 specifies the mechanics of cooperative formation.  Members are limited to natural persons who are permanent residents of Cuba and be able to perform productive work or services which constitute its activity.  Where state enterprises are contributed, the workers of those enterprises will have priority in becoming cooperative members.  Lastly, new members may be added in accordance with the operating principles of article 4.

Articles 11-16 focus on the governing documents of the cooperative and the process for obtaining state consent for operation.  These are amplified under the regulations specified in Council of Ministers--Decreto No. 309 discussed below.

Article 11 specifies the governmental unit from approval must be obtained to form a cooperative, distinguishing between cooperatives formed from private contributions from those organized from privatized state enterprises. The request must include the cooperative's constitution, though it is not clear what sort of review process or what sort of forms must be filled out. Article 14 provides for the formalities of the preparation of a cooperative constitution.   Article 12 indicates that all applications for cooperative formation must be reviewed by the Council of Ministers (Consejo de Ministros) as well as appropriate local regulatory bodies.  Article 13 provides that approval for cooperative formation will also specific in some detail the authorized activities of the enterprise and such other obligations as the approving agencies might deem appropriate. Article 13 also provides that the approving agency remains responsible for the control and evaluation of the operations of the cooperative. Indeed, under Article 15, cooperatives may not merge, dissolve, split up, or modify its organization or operations without the approval of the state organ that approved its constitution.

What is clear is that though anyone who meets the requirements for cooperative formation may apply, the state has reserved to itself the right to refuse the formation of any cooperative, apparently for any reason.  Those reasons are likely to be based on an assessment that the cooperatives does not appropriately meet the social or national objectives. This is a significant method of control of both individuals and of cooperative activity.  The state stands as the gatekeeper in a way that has no parallel in the West where since the early 20th century, most enterprise formation that complies with formal requirements are not otherwise subject to particular review. It also substantially limits cooperatives in their engagement with market changes.  Any change in the operations, business or focus of the cooperative will require governmental review and approval. This is another way by which the state retains substantial control over the operations of cooperatives--it effectively serves as the ultimate controlling entity with respect to changes in the operations, scope of business or operations of the cooperative. That authority extends not just to consent rights for cooperative business decisions that change its operations but also to evaluation and control of the cooperative. 

Articles 17-19 regulate the internal organization of cooperatives.

Article 17 provides that the general assembly of the members is the supreme governance unit of the cooperative. The General Assembly elects a President, Presidential alternate and secretary by direct and secret ballot. It also may appoint an administrator or administrative committee.  It may also elect a board of directors (Junta Directiva) overseen by the cooperative's president.   These provisions are similar to organizational provisions for private companies.  

Article 18 provides a waiver of these organizational requirements for small and less complex cooperatives.  Cooperatives with 20 or less members may operate by appointing an administrator.  Cooperatives with more than 20 but no more than 70 members may operate through an Administrative Council (Consejo Administrativo).  Cooperatives with more than 70 members may elect both an administrative council and a board of directors.   

Whatever their organizational form, Article 19 provides that all cooperatives must administer their financial affairs through a specially designated member or through a Control and Audit Committee (Comisión de Con- trol y Fiscalización) appointed by the General Assembly.

Articles 20-25 deal with financial matters.

Article 20 specify the principle of accounting standards to be applied by cooperatives.  It does not, however, specify accounting conventions. These are specified in the Regulations.  The Decree-Law provides only that standards will be adopted and that such standards must be contextually appropriate.  Article 21 specifies the initial capital of the cooperative using a qualitative standard. The focus is on "work capital" (capital del trabajo)  rather than financial capital, all of which constitute the cooperative's capital under Article 22. Article 23 provides an important disciplinary element grounded in the quality of work capital--it requires all members of a cooperative to work int he enterprise.  That, of course, is at the heart of this form of economic organization--the notion that the labor and production rather than capital is at the heart fo the organization and operation of the enterprise. 

Article 24 deal with distributions, providing for the development of rules fr the distribution of net revenues to members in conformity to the principles and other limitations of law.  More important, and implied in this article, distribution rules must also conform to the conditions for approval imposed by the state agencies with regulatory and supervisory authority over each cooperative under Articles 13 and 15.    

Article 25 deal with the particularly sensitive issue of pricing goods and services.  The provisions is troubling.  On the one hand its basic premise is that the cooperative may set prices for goods and services in accordance with market conditions.  Yet the provision also specifies that this rule may be altered  by rules promulgated by competent state authorities.  In effect, the provision makes it possible for the state to privatize its operations without loss of any power over the management of pricing.  Markets for goods and services may be tolerated only as and to the extent, and for as long as, competent state agencies permit.  But the state, it is clear, can at its option, step in at any time and regulate pricing.  For cooperatives seeking to maximize welfare maximization, and even ones sensitive to their social obligations, this may work against the creation of robust enterprises that might be able to survive.  Worse, to the extent that pricing is not centrally controlled, it is possible that pricing schemes for cooperative goods and services may vary among regulatory regions, creating incentives for strategic behaviors and corruption.

Article 26 deals with the sensitive issue of hiring labor by cooperatives.  Article 26.1 permits cooperatives a very limited power to hire labor.  The maximum period of hire is three months and hiring is permitted only when there are no members able to perform the task.  The object of this regulation, of course, is to create incentives to include hired labor as members.  In effect, labor hire appears to serve as a kind of probationary period for potential invitation to join a cooperative. See article 26.4.

Articles 27-29 deal with conflicts among cooperative members.

Article 27 urges negotiation as the first step to resolving conflicts among members or between members and the cooperative. Negotiation is initially between the principles to the dispute.  The provision leaves open the possibility of setting up some sort of institutional mechanism with the cooperative for mediating disputes.  Article 28 provides that after 60 days without resolution of the dispute, the dispute may be taken to the administration of the cooperative, again under rules and through systems that may be organized by the cooperative.  If this does not resolve the dispute then the dispute may be taken to judicial bodies. Article 29 reminds all participants that disputes are to be resolved in accordance with this Decree-Law (rather than some other law or principle).  

Articles 30-32 deal with dissolution. As in conventional corporate law statutes, cooperative extinction is composed of two steps--dissolution and liquidation.   Dissolution is covered under Article 31. Most of the causes of dissolution are unremarkable--by the terms of its constitution, because of the impossibility of undertaking its business, on the loss of leases required for operation, on a revocation of the authorization to operate,  by judicial decree, or otherwise as permitted by law.  

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(2) Decreto-Ley No. 306--governmental impositions, taxes and social security regimes. 

Decreto-Ley 306 sets out an ambitious program of capturing hoped for revenues from the operations of cooperatives.  Yet, given the extent of state control and management of both markets and entities in Decreto-Ley 305, it is hard to imagine the market derived revenues the production of which is the premise that animates the financial optimism of Decreto-Ley 306.  Beyond that, of course, the object of this provision is the same as that of similar provision in Western welfare states--to tax economic enterprises with the social costs of maintaining public support services for individuals.   But taxes are transaction costs to enterprises.  And these present a substantial burden on new enterprises.  Taken together with the potential for substantial state control of cooperative activities and internal organization, and the possibility that the state could rescind the entire experiment at its whim, the  burdens on the cooperative enterprises beyond the usual business risks of business activities becomes formidable indeed.  Ironically, it is unlikely that there would have been sufficient political will to undertaken even this anemic step toward a fundamentally sound Marxist Leninist approach to collective activity without these institutional hobbling mechanisms. Yet the tensions that result makes it as likely that this experiment will fail as a consequence of institutional impediments as it is likely that it can succeed because it serves the public interest in robust markets to satisfy basic consumer demands. And thus the great irony in Cuba--they have the intellectual and academic capacity to approach the issue of creating potentially path breaking approaches to the aggregation of human productivity on a basis other than capital, but it does not have the political will to create the institutional mechanisms to maximize the possibility that the experiment might succeed even comfortably within the parameters of a largely state driven and controlled (now better put managed) economy.

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 Decrees of the Council of Ministers

(1) Council of Ministers--Decreto No. 309.   

This represents the regulatory framework for the approval and management of primer grado cooperatives.  

Articles 1-2 set out the framework of the regulations.  Article 1 reinforces the experimental nature of this regulatory scheme and describes the objectives of the regulation--to specify rules for the constitution, registration, operaiton and dissolution of cooperatives.  Article 2 also emphasizes that, despite the rhetoric about the operation of cooperation of cooperatives within markets for consumer goods and services, cooperatives are subject to the supervision and enforcement of tax regulations, pricing, accounting and others that they are applicable. 

Articles 3-6 deal with the constitutions of cooperatives. The requirements are quite specific.  They require, for example, the articulation of both the activities to be undertaken by the cooperative and the expected territorial scope of the activity.  Articles 3-5 detail the approval path to be taken for the constitution of cooperatives.  All cooperatives must be reviewed and approved by the Council of Ministers (article 5). Of course, depending on the volume of applications, this procedure, requiring local and national approvals may substantially slow down the process of cooperative formation.  As a result fewer than optimal numbers of cooperatives may be formed, or more likely, cooperatives will be formed outside of the process. The possibilities for corruption are thereby increased.  As a further alternative, cooperatives "in formation" may be tolerated while they await approval.  But those will exist in a semi-official limbo, and as a result may also increase the temptations of corruption, because officials will have a greater power to shut them down. 

This possibility, of a large number of cooperatives "in formation" is the object of Articles 7-10 of the regulations.  Article 7 contemplates the operation of cooperatives without official approval by permitting these entities to operate with an indication of their status.  This permits the cooperative "en formación" to lawfully engage in a limited number of transactions and internal organization (article 8). However, cooperatives "en formación" are not deemed to acquire juridical personality (Article 10), so that the individual members remain liable during this formation period.  The local approval agency is empowered to negotiate the final form of cooperative constitution with this gestational organization.  Among the objects of negotiation are (1) the social objective of the cooperative, (2) the organization of cooperative financial structures, (3) the property to be leased to acquired, (4) goods or services to be utilized from the state sector, (5) the pricing of goods and services to be offered by the cooperative, (6) draft contracts or agreements, (7) if applicable deferments of lease payment provisions, (8) the materials (consumables) necessary for the production of goods or services to be rendered, (9) environmental impacts, (10) the ways in which the cooperative will comply with land use regulations, (11) the proposed governance framework (articles of association)  and (12) anything else considered appropriate.  Some of these items appear better suited to agricultural cooperatives (the establishment of which provided the framework for these regulations).  Others suggest that the state appears to intend to treat these cooperatives substantially like any other state enterprise within a highly centralized planned economy.  If that is true, the regulations  substantially impede any effort to permit cooperatives to develop to serve consumer demand.  Instead, it appears that the planning needs of the state take presence over the ability of the cooperative to adjust supply and price to market and demand.  This is especially true with respect to price and objects offered for sale or service.  If these will require state approval before they can be changed, the ability of the cooperative to operate in markets is substantially eviscerated. 

Artilces11-12  set out the details for authorizing the cooperative constitution.  These include the content of the cooperative constitution (Article 11) and the acquisition of property (Article 12).  Article 13 focuses on the process of bidding for state assets. The process is also heavily managed by the state, whose officials are given approval and supervisory authority. Articles 14-15 consider the social objectives of cooperatives in more detail.    

Articles 16-19 specify requirements for the setting up (constitution) of cooperatives and the role of the general assembly.  Articles 20-22 deal with the articles of association.  The constitution ofg the cooperative appear to function like a corporate charter; the estatutos seems to have been assigned the function of corporate bylaws.  The constitution is prepared by a Notario (article 16), the costs of the preparation of which are borne by the  founding members (article 19).  The constitution is filed with the Registro Mercantil (Article 23). The estatutos are approved by the general assembly (article 18). The estatutos include the fundamental regulations for the operation of the cooperative (article 20) and form part of the constitution. The minimum content of the estatutos is prescribed in Article 21. These include many of the items usually found in both corporate charters and bylaws. Article 22 presents rules for the modification of the estatutos. These include super majority provisions for cooperatives with more than 20 members.  For smaller cooperatives, such rules can be made to suit the members. Revisions to the estatutos must also be filed with the Registro Mercantil (Article 24). 

Chapter III of the regulations are devoted to issues involving the members of the cooperative (Articles 26-30). These include minimum rights of members (Article 28).  These include rights touching on labor obligations of members as well as rights relating to their interests in the cooperative. Article 29 focuses on member obligations, including the obligation to provide the labor services that represent the "benefit of the bargain" in exchange for which the individual obtained an interest in the cooperative.  Article 30 lists the bases on which a person can lose his status as a cooperative member (expuksion, death, retirement, incapacity, etc.).  Member discipline is elaborated in Articles 67-68.  These include fines, suspension or expulsion. Worker discipline is provided in Article 69.

Sections 33-45 provide rules relating to the governance organs of the cooperative.  Much of this  is similar to the provisions of corporate rules for private companies (ordinary and special meetings of collective bodies, quorum rules, notice of meetings, agendas, and the like), though some of the rules are more specific.  For example, collective bodies are required to have an odd number of members (Article 33.1(2).  The General Assembly is the supreme organ of cooperative authority.  It elects a president.  It has a long list of attributes specified in the regulation (Article 37(a)-(j)).  Their authority resembles in a general way that of shareholders. The authority of the President of the General Assembly is also specified (Article 38 (a)-(j)) many of which resemble those of the chair of a bopard of directors;  that of the Secretary is also specified (Article 39(a)-d)). The Junta Directiva appears to act like the standing committee of the General Assembly (Articles 40-41).  The administrator (or the administrative council)  functions like a chief executive officer (articles 43-44) with a number of functions elaborated in some detail. Lastly the Control and Audit Commission functions like a legal and audit committee of a board of directors (article 45). 

Articles 46-59 deal with issues of cooperative capital and accounting. Cooperatives account for the ri operations using the Normas Cubanas de Información Financiera. (Article 52). See “Las Normas Cubanas de Información Financiera (NCIF). Ms C. Sergio Pozo Ceballos, "Una visión desde la auditoría.” The cooperative is required to prepare an annual business plan (Article 54), though its scope feels more like the plans requires for ministerial action in a centrally planned economy than inn a market driven one. That again suggests the pull of traditional patterns of planning that may hamper the exercise in small opening to market based economic activity within the consumer retail sector.

Lastly, Articles 70-74 provide procedures and structures for mediating conflict.  Articles 75-77 frame dissolution and liquidation of cooperatives.

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Ministerial Resolutions 

(1) Ministerio de Economía y Planificación Resolución No. 570/12.

This resolution provides, in 22 articles, the procedures for bidding on state property that is to be contributed to the operation of a cooperative. 

(2) Ministerios de Finanzas y Precios Resolución No. 427/12.

This resolution deals with issues of taxation, accounting, and pricing for goods and services provided by cooperatives. Its object is to embed cooperatives within the state based planning for prices and  production. This resolution is based on the premise that prices are set by the market unless they are otherwise required to be set at a particular amount by the state (Paragraph 12). Prices may be set in CUP (pesos cubanos) or CUC (pesos convertibles) (Paragraph 13). The state continues to regulate the price margins between wholesale and retail markets. That can significantly limit competition among cooperatives.  It is clear that the state may be discouraging price competition.  But that may significantly affect the development of markets.  It again suggests an unwillingness to permit markets to develop in the absence of significant regulation that may be significant enough to make it impossible for robust markets to develop. The consequence may be that cooperatives may be expected to operate like privatized state sector organs. But that essentially defeats the object fo the redirection of the Cuban economy at the heart of the objectives of the Lineamientos.  It also suggest the triumph of the factions within the Cuban elite that view any change with great suspicion.