The Cuban Mirage: How Socialist Central Planning Led to a Failed State

For over six decades, Cuba’s socialist experiment has promised equality and prosperity. Instead, it has delivered economic collapse, crumbling healthcare, and political repression. By 2025, the island’s reality stands in stark contrast to socialist ideals, surviving only through capitalist lifelines. Here’s how central planning failed Cuba—and what alternatives might have worked.

"Cuba’s healthcare system, once a socialist poster child, is falling apart. By 2025, 58% of essential medicines were unavailable."

1. Economic Collapse Under State Control

After 64 years of socialism, Cuba’s economy reveals the pitfalls of central planning. The 1960s collectivization of farms gutted agriculture, slashing annual sugar production from 8.5 million tons to just 350,000 tons by 2025. Despite $2 billion in yearly subsidies, 78% of state farms limp along at under 40% capacity—a clear sign that central planning can’t sustain even basic food production.

The 2021 “Tarea Ordenamiento” currency reform aimed to unify Cuba’s dual currency system but failed miserably. Average monthly wages crept up from $30 to $42 (in Cuban pesos, CUP). Yet hyperinflation erased any gains. The black market exchange rate for U.S. dollars soared from 100 CUP/$1 to 250 CUP/$1. Meanwhile, basic food prices surged 680% by 2025.

Tourism, often seen as Cuba’s economic lifeline, brought in $3.1 billion from 3.7 million visitors in 2025. But 89% of that revenue went straight to the military-run Gaviota Group, leaving ordinary Cubans with little. Compare that to the Dominican Republic: with half Cuba’s population, it earned $7.8 billion from tourism the same year, showing how state control stifles opportunity.

2. The Crumbling Healthcare Myth

Cuba’s healthcare system, once a socialist poster child, is falling apart. By 2025, 58% of essential medicines were unavailable.

A staggering 72% of hospitals lacked working X-ray machines. In Havana, emergency room wait times averaged 14 hours.

The crisis deepened with a mass exodus of doctors. Since 2020, 43,000 physicians—32% of the workforce—have defected, chasing better lives abroad. In Colombia, doctors earn $3,800 a month compared to Cuba’s $45. Spain even offers citizenship pathways to lure talent. The COVID-19 response highlighted more failures: Cuba’s Abdala vaccine, initially hailed as 92% effective, proved just 52% effective in real-world studies by 2023. Distribution faltered, with only 11% of Cubans receiving boosters by 2025.

3. A Machinery of Political Repression

Cuba’s government clings to power through fear and control. The state telecom ETECSA tracks 98% of internet traffic, blocking over 210 “counter-revolutionary” websites in 2025. Dissenters face harsh consequences—a 2024 UN report counted

1,532 political prisoners, 89% held without formal charges.

The July 2021 protests led to 1,400 arrests and 22 deaths in custody. In 2025, the regime doubled down with “Law 149,” slapping 15-year sentences on those guilty of “digital subversion.” These measures show a government more interested in control than human rights.

4. Socialist Promises vs. Harsh Realities

Socialism’s lofty promises have crumbled in Cuba by 2025:

Wealth Redistribution? 70% of Cubans rely on overseas remittances to survive.

Full Employment? Youth unemployment sits at 38%.

Free Healthcare? Patients pay $120 bribes for urgent surgeries.

Food Security? Families queue eight hours daily for bread.

Technological Progress? 2.1 million Cubans still drive cars from the 1950s.

5. Capitalism’s Paradoxical Lifeline

Ironically, Cuba leans on capitalist workarounds to survive. In 2025, $6.9 billion in remittances from Miami—60% of Cuba’s hard currency—funded 78% of private businesses, keeping the economy afloat. Over 14,000 paladares (private restaurants) now employ 210,000 workers, though each pays a steep $250 monthly “revolution tax” to the state. Meanwhile, El Paquete Semanal, an underground USB network, delivers uncensored news and entertainment for $5 a week. It reaches 4.2 million subscribers—37% of the population—bypassing state propaganda.

6. Systemic Flaws of Central Planning

Cuba’s struggles lay bare the flaws of central planning.

Doctors earn just $15 a month—far less than hotel bartenders, who make $200

pushing talent to flee abroad. Technology lags painfully: 3G internet arrived in 2023, 18 years behind Jamaica. Resources are squandered, too. The state spends $200 million a year—enough to equip dozens of hospitals—propping up Habanos S.A., its unprofitable cigar monopoly, while healthcare crumbles.

7. Missed Alternatives

Other nations offer lessons Cuba ignored. Vietnam’s Đổi Mới reforms allowed private farms, boosting rice exports to 6.4 million tons by 2025. Costa Rica’s eco-socialism achieved 99% renewable energy while sustaining 4.3% GDP growth. Chile’s pension reform, based on personal retirement accounts, created a $320 billion fund, far outpacing Cuba’s bankrupt system.

8. Conclusion: The Utopian Delusion

Cuba’s 64-year experiment proves socialism’s fatal flaw: it suppresses entrepreneurship, merit, and choice, fostering scarcity and corruption. As dissident Yoani Sánchez observed, “We became a nation of equal beggars, all equally hungry.” Today, Cuban socialism clings to life through capitalist remittances and tourist dollars—a hollow shell of its utopian dreams and a stark warning to idealistic planners everywhere.

How Socialism Denies Basic Human Nature: Lessons from Venezuela, China, and Central Planning

Socialism promises equality but falters by ignoring human instincts: the drive for personal gain, innovation, and resource stewardship. Evidence from Venezuela’s oil collapse, China’s ghost cities, and other socialist regimes reveals how central planning distorts these instincts, often enriched by self-serving leaders who amass fortunes under the guise of public good. From Hugo Chávez and Nicolás Maduro in Venezuela to Daniel Ortega in Nicaragua and Fidel Castro’s regime in Cuba, leaders’ corruption exposes socialism’s disconnect from human nature. This article explores these failures and highlights systems that align with our instincts.

"Chávez and loyalists siphoned $11 billion from PDVSA between 2004 and 2014, buying mansions in Miami"

I. The Human Nature Socialism Ignores

Incentive Structures

Humans thrive on personal rewards and ownership. Venezuela’s 2007 oil nationalization destroyed over 50,000 jobs, gutting incentives for skilled workers. Norway’s Equinor, a state-controlled firm, uses performance bonuses to sustain 3.2 million barrels per day (Mbpd) of output.

"A 2025 survey shows 61% of Chinese EV buyers prefer Tesla"

Innovation Instinct

Central planning stifles decentralized experimentation. China’s 100+ electric vehicle (EV) firms, 95% unprofitable, mimic competition but lack market-driven innovation. Tesla’s $7,000 per car profit in 2025 dwarfs BYD’s $900, showing consumer-driven design’s edge.

Resource Stewardship

Individuals manage owned resources efficiently; states often don’t. China’s 65 million empty apartments in 2025 reflect bureaucratic waste, while homeowners prioritize utility.

II. Case Study: Venezuela’s Oil Paradox

Venezuela’s oil industry collapse illustrates socialism’s denial of meritocracy, risk-reward incentives, and the rampant corruption of its leaders. Before 2007, PDVSA engineers earned $120,000 annually, competitive globally. Hugo Chávez’s nationalization capped salaries at $18,000, prioritizing loyalty over expertise. Production plummeted from 3.7 Mbpd to 680,000 barrels per day (kbpd) by 2025, forcing a nation with 303 billion barrels of reserves to import gasoline.

"Altruistic Bureaucrats? PDVSA’s $11 billion embezzlement (2015–2020) and Chávez-Maduro’s looting are echoed elsewhere"

Chávez and his successor, Nicolás Maduro, enriched themselves while Venezuelans starved. Investigations (e.g., 2019 U.S. Treasury reports) estimate Chávez and loyalists siphoned $11 billion from PDVSA between 2004 and 2014, buying mansions in Miami and stashing funds in Swiss accounts. Maduro continued this plunder, with a 2020 U.S. Department of Justice indictment alleging he and allies stole billions through PDVSA and the CLAP food program, using shell companies to launder funds while citizens faced famine. A 2019 New York Times report detailed Maduro’s stepsons pocketing millions from food contracts meant for the poor. This looting underscores how socialist leaders exploit power for personal gain, betraying their rhetoric of equality.

III. Case Study: China’s Ghost Cities and EV Graveyard

China’s urban and industrial overreach ignores price signals and consumer choice, with Party elites profiting from state-driven projects. Local officials built ghost cities like Ordos (70% vacant in 2025) to inflate GDP, not house 200 million rural poor. Hong Kong’s public housing, blending private developers with subsidies, achieves 80% occupancy by contrast.

"China’s NDRC misallocated $4.3 trillion (2010–2025) to ghost cities and EVs while underfunding elderly care"

Similarly, 112 state-backed EV firms chased “strategic industry” status, not demand, creating overcapacity. A 2025 survey shows 61% of Chinese EV buyers prefer Tesla and despite all the Chinese EV's to choose from, the Model Y was the best selling car in China since 2023. Reports (e.g., 2023 Bloomberg) reveal provincial leaders funneled billions in subsidies to connected firms, amassing personal wealth while projects languished. This mirrors the self-enrichment seen in other socialist systems, where state control breeds corruption.

IV. The Central Planning Fallacy

Socialism assumes omniscient planners, altruistic bureaucrats, and static human needs—assumptions shattered by leaders’ greed:

• Omniscient Planners? China’s NDRC misallocated $4.3 trillion (2010–2025) to ghost cities and EVs while underfunding elderly care (1.4 beds per 100 seniors).
• Altruistic Bureaucrats? PDVSA’s $11 billion embezzlement (2015–2020) and Chávez-Maduro’s looting are echoed elsewhere. In Nicaragua, Daniel Ortega and his family control key industries like fuel distribution, with a 2021 OCCRP report estimating they’ve amassed $2.7 billion through state contracts since 2007. In Cuba, Fidel Castro’s regime funneled millions to family and allies via state monopolies, with Forbes estimating his personal wealth at $900 million in 2006 despite his “comrade” image. China’s Politburo families hold $1.6 trillion in offshore assets (2022 Panama Papers). Self-interest, not public good, drives these regimes.
• Static Needs? Venezuelans pivoted from oil jobs to black-market dollar trading, forming a “shadow meritocracy” despite state control.

  "If a socialist system rewards everyone equally, what’s the point of working hard? ... You’re not going to work overtime (for others)"

Leaders’ enrichment—whether Maduro’s billions, Ortega’s empire, or Castro’s hidden wealth—proves human nature’s pull: even socialist champions exploit power for personal gain, undermining their ideology.

V. Alternatives Aligned with Human Nature
Even Successful systems that harness human instincts, blending oversight with market signals and curbing elite corruption, STILL face challenges:

• Singapore’s Housing Model: State-owned land plus private construction yields 90% homeownership, with transparent governance limiting profiteering. But even with their success, they still have issues found in capitalist systems like affordability of housing—most young people and foreigners can’t afford even subsidized housing.
• Germany’s Energiewende: Market-tied renewable subsidies tripled solar capacity (2010–2025), spawning 40+ profitable firms without enriching a corrupt cadre. While the goals of the subsidies were reached, Germany has some of the highest electricity prices in the world, with the bottom 10% of the populace finding it difficult to literally keep the lights on.
• Botswana’s Diamond Governance: State mines share profits with De Beers via wealth funds, boosting GDP per capita to $18,000—versus Venezuela’s $2,100—while accountability curbs theft. Yet while those state mines do share profits, they still have the potential for corruption, and worse, dependency means that when the diamonds run out, is the economy diversified enough to continue expanding? Only a capitalist system could make that happen.

VI. Conclusion: The Fatal Conceit
Socialism’s denial of human nature—our need for ownership, competition, and price feedback—creates scarcity from abundance. Venezuela’s oilfields, China’s empty cities, Nicaragua’s plundered economy, and Cuba’s state monopolies are monuments to this failure, compounded by leaders’ greed. Chávez and Maduro stole billions while preaching equality; Ortega built a dynasty under a socialist banner; Castro lived lavishly while Cubans rationed food. The reality is that even disregarding these “Robber Leaders,” socialism clashes with the most basic human instincts, like working hard to care for your family. If a socialist system rewards everyone equally, what’s the point of working hard? You’re not going to work overtime so your community can reap the rewards—you’ll do it to feed your family, not anyone else’s. As Friedrich Hayek warned, economics reveals “how little [humans] know about what they imagine they can design.” The fortunes amassed by socialist elites prove even they can’t escape human nature’s pull. Systems embracing these instincts—through accountability and markets—offer prosperity over ruin.