State Ownership vs. Private Ownership

at 12:43 AM Wednesday, August 3, 2011

There's been quite a bit of sloppy reporting regarding Cuban dictator Raul Castro's economic "reforms."

For example, news reports like this:

In remarks to parliament late Monday, quoted by state media, Castro closed a twice-yearly session with lawmakers by discussing the implementation of a raft of reforms, including allowing small private businesses to operate in the communist country.

Let's be clear:

There are no private businesses in Cuba.

A private business implies private ownership.

In other words, any business not owned by the state

(In the case of Cuba, "state" can be used interchangeably with "the Castro family").

Cuba remains a totalitarian state, where the state owns all businesses.

Raul's "reforms" have allowed a select group of Cubans to lease self-employment licenses from the state.

Thus, the state owns the business, while those licensed are given "permission" to operate it.

So let's recap:

A privately owned business refers to a commercial enterprise that is owned by non-state actors.

Private business comprises the private sector of an economy.

An economic system that contains a large private sector is referred to as capitalism.

This contrasts with socialism, where most industry is owned by the state.

Moreover, this contrasts with (Cuban) totalitarianism, where all industry in owned by the state.