Well-maintained cars like these are now private reserves of wealth for their owners. Photo: Ben Osborn for Mercy Corps

Starting today, Cubans can buy and sell property for the first time in over 50 years. Yet while most are excited to escape the cage of government restrictions, others fear being kicked out in the cold.

Many Cubans haven't paid for rent, health care or education since 1959, when Fidel Castro seized power and began nationalizing private property in one of the staunchest socialist experiments in world history. While the results were far from perfect, many of Cuba’s poorest undeniably benefited.

During the heyday of the Revolution, most Cubans had job security and guaranteed food rations. The Cuban government tinkered with novel programs and ideas, and where those programs failed, the Soviet Union often stepped in, checkbook in hand, to balance the books. While Cuba severely limited its citizens’ rights and freedoms, it also ensured a basic economic safety net below which no Cuban would fall. For the most part, success was more a function of loyalty to the government than it was a measure of personal skills. This is the government that many older Cubans identify with.

But after decades of stuttering progress, the fall of the Soviet Union brought an end to the heavily subsidized years of Cuban socialism, and a so-called “Special Period” of austerity began. For most young Cubans, these years of recession and stagnation are all they know of the Castro regime.

So the reforms of the past five years are evoking mixed emotions among Cubans. The loosening restrictions on property and trade will finally allow a burgeoning entrepreneurial class to openly improve their lives. Cubans can now buy and sell homes and cars, private businesses can be established, and skilled workers can offer their services freelance. These reforms are part of an effort by the government to wean its bloated public sector off of government assistance and flood the private sector with cash.

Suddenly, Cubans can earn more on their own initiative. As the New York Times reports, the iconic and ancient cars that sputter through Havana can be traded or sold, transforming old clunkers into a private reserve of wealth.

But as Cubans are given their own paddles to navigate capitalism, some fear the loss of the government life jacket. "What happens if I sell my home and then I can’t find another one to buy? Where do I sleep?” laments Félix Méndez, a 47-year-old hospital technician quoted in the New York Times.

Another risk inherent to the reforms is a widening rift between the richest and poorest Cubans. People can now sell their homes and move elsewhere. This newfound mobility is expected to lead to segregation, as wealthier Cubans (and their money) leave poorer neighborhoods in search of better living. "Thousands of Cubans have been waiting for this signal, like runners crouched at the starting line waiting for the gun to go off,” writes Yoani Sánchez, a prominent Cuban dissident blogger. When the gun goes off, existing inequality will likely be increased as money is drained from some neighborhoods without the government around to replenish it.

Spectators on both sides of the ideological aisle call the reforms necessary. Capitalism's enthusiasts see the changes as inevitable; the end of an anachronism. Those farther to the left view the reforms as necessary concessions amidst tough times; concessions to ensure the survival and restoration of one the few remaining self-proclaimed socialist regimes in the world.

As Ms. Sánchez writes, “a house, for 40 years an anchor, will become a set of wings.” It remains to be seen, though, who will sink and who will fly.

Ben Osborn is a 2011 graduate of Lewis & Clark College in Portland, Oregon. Read his other contributions to Global Envision.

A fruit vendor in the informal Cuban market. Once illegal, such activity is becoming accepted and taxed by the Cuban government. Mark Rowland (flickr)

As the Cuban economy is liberalized, budding entrepreneurs are competing with more than just each other. Their biggest competitor may be the Cuban government.

Last year the Cuban government announced it would gradually lay off over one million of its employees as part of a move to wean the population from the services and payrolls of cash-strapped socialist government. The government hopes to reduce costs and increase revenue by taxing the newly privatized businesses formed after it flooded the private sector with workers.

As reported by NPR, new business are springing up across the country. Most are competing with each other. Many are competing with the state. Until recently, most services were offered by state-run agencies that faced little competition and thus little incentive to evolve and improve.

Cuban entrepreneurs are taking advantage of this stagnation by offering goods and services at lower prices than do traditional government agencies. If the entrepreneurs are successful, Cuba will come to rely more on its markets and less on its government.

Now that Cuba's free market is rolling, it may prove harder for the government to slow the free market's momentum than it was for entrepreneurs to start it.

Economic reform in Cuba could lead to less government control over small businesses, like taxi services. Photo: raunov (flickr)

The Cuban government recently announced that it plans to lay off about 500,000 employees over the next seven months. This may signal the start of economic reforms that would privatize small parts of the centrally planned Cuban economy, writes the Economist.

In a speech announcing the government's decision, Cuba's only official labor union, the Cuban Workers Federation, said that the layoffs are motivated by a desire to curb inefficiency caused by cushy government jobs. As quoted in a story by NPR, the union says:

"Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls, and losses that hurt our economy are ultimately counterproductive, creating bad habits and distorting worker conduct."

But in a country where Time Magazine estimates that the government employs about 90 percent of the labor force, where will 500,000 suddenly jobless people find work?

According to Reuters, the government plans to legalize self-employment in 178 different fields, ranging from restaurant ownership to transportation to construction. Small businesses will also be able to hire their own workers for the first time since 1968, when small businesses were nationalized. An article in the Economist says that the reforms will also let employees take control of some small state-owned businesses.

These reforms are meant to reinvigorate Cuba's stagnating socialist economy by mixing in tiny bits of capitalism. This tactic has been successful in both China and Vietnam, where communist leaders control mostly privatized economies. However, the New York Times suggests that the Cuban government might not want to overhaul the system the way China and Vietnam have:

The plan announced so far is much more modest than what the Asian countries have done. Instead, it seems designed simply to boost Cuba’s economic productivity in small-scale enterprises and thus loosen up a state-run economy and work force that have been sputtering for more than a decade.

U.S. experts on Cuba disagree on how effective the reforms will be. The University of Miami's Jaime Suchlicki told the Wall Street Journal that "there is no private sector" to absorb laid-off workers. But in the same article, Philip Peters of free-market think tank Lexington Institute said it depends on how committed the Cuban government is to true reform. "If they carry this thing out fully," said Peters, "it will vastly improve the welfare of thousands of families."