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Helen Yaffe’s groundbreaking work on Che Guevara’s economic ideas plugs a key gap in the history of revolutionary Cuba and has contemporary resonance
Che Guevara: The Economics
of Revolution
Helen Yaffe
2009, Palgrave Macmillan
354 pages
Reviewed by Gavin O’Toole
ALONGSIDE Enrique Dussel’s monumental trilogy on Karl Marx’s economic manuscripts (La Producción téorica de Marx, 1985; Hacia un Marx desconocido, 1988; and El último Marx, 1990), Helen Yaffe’s Che Guevara: The Economics of Revolution must represent one of the most important contributions to debates about Marxist economics of recent years.
As a highly original exposition of Guevara’s personal thinking and achievements in the broader effort to create a revolutionary economy, Yaffe’s work fills an important gap in the economic history of post-revolutionary Cuba.
But as a reminder of the concrete commitment to revolutionary change that Guevara has been immortalised for in such idealistic terms, amid renewed debate about the form taken by global capitalism and the revival of state ownership and redistribution across Latin America, this book makes essential reading.
Yaffe takes a major step that allows scholarship of Guevara – with all the partisanship that this has entailed over so many years – to move on from simplistic arguments about his idealism or the legendary “mismanagement” of the Cuban economy under his watch.
She has approached the work undertaken by the Argentine revolutionary as president of Cuba’s National Bank, head of the Department of Industrialisation and Minister of Industries from 1959-65 with a scientific rigour that would do the great man himself proud. All the while she keeps her eye on her reader and makes this text as accessible as possible for the non-economists among us (she includes, for example, the celebrated quip by the Cuban president, Osvaldo Dorticós, about Castro’s request at a late meeting of the Council of Ministers for “a good economist” to take over the National Bank and a sleepy Che’s response, having raised his hand, that he thought Fidel had said “a good communist”).
Breathtaking task
The task facing Guevara and his comrades after the 1959 revolution was breathtaking: how to increase production and labour productivity amid conditions of underdevelopment and the new commitment to making a transition to socialism in a way that would not rely on capitalist devices that could undermine the forging of a new consciousness.
From 1959, Guevara spearheaded the changes that transformed Cuba from its semi-colonial underdevelopment to independence and integration within the socialist bloc. He was instrumental in bringing about a largely successful transition from a capitalist industrial sector to a socialist one – within the period 1959-61, Cuba was transformed from a free-enterprise economy dominated by US investment and trade into a country in which the state controlled about 84 per cent of industry and trade almost entirely through socialist policies.
He did so in conditions that were highly unusual and unstable: massive nationalisation, shifting trade relations, the introduction of state planning, an exodus of highly qualified professionals, the tightening grip of the US blockade, invasion, sabotage and the threat of nuclear war. To add to that, the government lacked access to western credit, was denied loans by international financial institutions, and relied on trade and aid from countries less developed than the advanced capitalist economies. US imperialism had locked Cuba into a structure of underdeveloped, mono-crop (sugar) dependency dominated by American monopolies
In particular, Guevara’s influence was critical between 1961-65 in the formulation of the Budgetary Finance System (BFS) of economic management developed to help solve the concrete problems faced by Cuba’s Ministry of Industries.
Based on the managerial techniques of US corporations, the BFS is a key theme running through Yaffe’s book, although the reader should explore the many others that she examines to gain a richer understanding of Che the economic thinker, revolutionary and man as well as of the broader economic problems faced by revolutionary Cuba and the solutions it applied.
The BFS began as a set of practical organisational measures in the Department of Industrialisation (within the agrarian reform ministry, INRA) to deal with the problems created in Cuba by the extensive nationalisation of industry, and in particular the centralisation of the administration and budgeting of the nationalised units. Above all else, it was a response to a lack of specialists – a shortage of technicians, engineers and managers – and the problems of financing production.
Centralisation represented a response to a lack of revenue and the need to prevent production stoppages when factories lacked the revenue to pay salaries, buy supplies and pay for maintenance and repairs. By depositing the funds of every business in a central bank account from which they were then allocated a budget to cover production costs and salaries, the surplus from profitable enterprises – cigarettes, beer, soft drinks, cosmetics, oil refineries etc. – could be reallocated to struggling workshops and factories.
Ideological significance
However, the BFS began to take on a more ideological significance, based on strict financial accounting discipline, as the Department of Industrialisation secured greater control of production and Guevara developed his own theoretical analysis. He and his colleagues claimed that this cost-centre rigour applied the managerial precepts of the US monopolies and subsidiaries that had been operating in Cuba and adapted these to the planned socialist economy – an evolution in keeping with Guevara’s understanding of Marxist analysis, that communism would arise from the fully developed capitalist mode of production. Indeed, the tendency towards the concentration of capital – monopoly – is central to Marx’s ideas.
Guevara’s colleagues, therefore, devoted considerable attention to identifying the efficiencies of the US monopolies that had operated in Cuba – such as the Cuban Electric Company – and understanding their accounting systems, while appending to administrative control the key element of worker participation. It was these budgeting mechanisms, they believed, that would enable Cuban socialist economic management to become more efficient, productive and advanced than that adopted in the Soviet Union.
While the BFS in its origins was as an audacious practical response to the reality of 1960s Cuba, the thinking behind it developed considerably beyond this – and is subsequently outlined by Yaffe as a much broader set of principles governing the socialist management of industry that has contemporary resonance. The author alludes, for example, to the debate about “socialism for the 21st century” initiated by the Venezuelan president, Hugo Chávez.
Surviving members of Guevara’s inner circle have advised the Venezuelan government, economists and policymakers extensively about the BFS, and have found a newly attentive audience in today’s Latin America. As Yaffe concludes:
“The phrase ‘socialism for the twenty-first century’ has begun to enter the academic literature and popular discourse, yet few have attempted to explain what this means; what forms the new society will take and how it will differ from those previously adopted under the banner of socialism. However, key players in Cuba, Venezuela and Bolivia have laid claim to Guevara’s legacy in this process … Relative success or failure in implementing the principles of Guevara’s approach to the economics of revolution in Cuba, Venezuela, Bolivia and elsewhere will be a litmus test for the feasibility of building socialism for the twenty-first century.” [pp. 273-4]
Gavin O’Toole is Editor of the Latin American Review of Books
