HELEN YAFFE
In January 1962 Guevara told colleagues in Cuba’s Ministry of Industries (MININD): ‘In no way am I saying that financial autonomy of the enterprise with moral incentives, as it is established in the socialist countries, is a formula which will impede progress to socialism’.[1] He was referring to the economic management system applied in the Soviet bloc, known in Cuba as the Auto-Financing System (AFS). By 1966, in his critique of the Soviet Manual of Political Economy, he concluded that the USSR: ‘is returning to capitalism.'[2] This paper will demonstrate that Guevara’s analysis developed in the period between these two statements as a result of three lines of enquiry: the study of Marx’s analysis of the capitalist system, engagement in socialist political economy debates and recourse to the technological advances of capitalist corporations.[3] At the same time Guevara was engaged in the practical experience of developing the Budgetary Finance System (BFS); an alternative apparatus for economic management in MININD.
Guevara was head of the Department of Industrialisation and President of the National Bank in 1960 when all financial institutions and 84% of industry in Cuba were nationalised. His BFS emerged as a practical solution to problems thrown up by the transition from private to state ownership of industrial production. Cuba had an unbalanced, trade dependent economy dominated by foreign interests, principally from the United States. The production units which passed under the Department’s jurisdiction ranged from artisan workshops to sophisticated energy plants. Many faced bankruptcy while others were highly profitable. Guevara’s solution was twofold: first, to group entities of similar lines of production into centralised administrative bodies called Consolidated Enterprises. This allowed the Department to control the allocation of scarce administrative and technical personnel following the exodus of 65-75% of managers, technicians and engineers after 1959; and second, to centralise the finances of all production units into one bank account for the payment of salaries, to control investment and sustain production in essential industries which lacked financial resources. With the establishment of MININD in February 1961, the BFS evolved into a comprehensive apparatus which embedded these organisational structures in a Marxist theoretical framework, to foster Cuba’s industrialisation, increase productivity and institutionalise collective management.
Advanced technology
Guevara set up the BFS with compañeros who understood the internal accounting practices, administrative centralisation and productive concentration of US corporations and their subsidiaries in Cuba. Guevara examined the documentation from these companies as they fell into state hands. He was impressed with their management structures, the use of centralised bank accounts and budgets, determinate levels of responsibility and decision-making, and departments for organisation and inspection.[4] He told colleagues that the BFS had an accounting system similar to the pre-1959 monopolies operating in Cuba, with their efficient control systems: ‘it’s not important who invented the system. The accounting system that they apply in the Soviet Union was also invented under capitalism.'[5]
Guevara first travelled to the USSR in 1960. His deputy Orlando Borrego recalled that they visited an electronics factory which did accounts by abacus. Having studied the US-owned Cuban Electricity Company, Shell, Texaco and other corporations which used the latest IBM accounting machines, Guevara was struck by the backwardness of Soviet techniques. He believed that advances achieved by humanity should be adopted without fear of ideological contamination.
With the imposition of the US blockade, Cuba was forced to buy factories from the socialist countries, especially the USSR. This assistance was essential, but the relative backwardness of the equipment clashed with Guevara’s desire for advanced technology transfers. He did not criticise the Soviets for this backwardness per se. Rather, he complained about the contradiction between the high level of research and development in military technology and low investment applied to civilian production. He objected to their ideological resistance to appropriating advances made in the capitalist world. This was a costly mistake in terms of development and international competitiveness.[6] For example: ‘For a long time cybernetics was considered a reactionary science or pseudo-science…
it is a branch of science that exists and should be used’.[7] He added that in the US the application of cybernetics in industry had resulted in automation – an important productive development.
Basing a management system for socialist transition on capitalist technology was consistent with Marx’s stages theory of history, which predicted that communism would emerge from the fully developed capitalist mode of production. Marx showed how the tendency to concentration of capital, that is, to monopoly, was inherent in the system. Therefore, the monopoly form of capitalism was more advanced than ‘perfect competition’. The Soviet system originated from predominantly underdeveloped, pre-monopoly capitalism. A socialist economic management system emerging from monopoly capitalism could be more advanced, efficient and productive. The origin of the BFS was the multinational corporations of pre-1959 Cuba and it was therefore more progressive than the AFS which was adapted from pre-monopoly Russian capitalism.
Marx’s analysis of the law of value
While Guevara argued for the adoption of advanced technology he opposed the use of capitalist mechanisms to determine production and consumption. He challenged the Soviet’s reliance on capitalist categories to organise the socialist economy, particularly the operation of the law of value. The dispute about the law of value in transition economies is central to the question about the feasibility of constructing socialism in a country without a fully developed capitalist mode of production. It is integral to problems of accumulation, production, distribution and social relations. Communism implies a highly productive society in which conditions exist for distribution of the social product based on need, not surplus-generating labour time. However, the countries which have experimented with socialism have been underdeveloped, lacking the productive base for the material abundance implied by communism. The Soviet solution was to rely on the operation of the law of value to hasten the development of the productive forces, applying the profit motive, interest, credit, individual material incentives and elements of competition to promote efficiency and innovations. Guevara argued that these were not the only levers for fostering development. The BFS was the expression of his search for an apparatus to increase productive capacity and labour productivity without relying on capitalist mechanisms which undermine the formation of new consciousness and social relations integral to communism.
Between 1963 and 1965 these questions were examined in Cuba during the Great Debate on socialist transition. To the extent that commodity production and exchange through a market mechanism continued to exist after the Revolution in Cuba, it was clear to all participants in the Great Debate that the law of value continued to operate. The social product continued to be distributed on the basis of work done. However, the disagreements were about the conditions explaining the law’s survival, its sphere of operation, the extent to which it regulated production, how it related to the ‘plan’ and whether the law of value should be utilised or undermined, and if so, how. This discussion was linked to practical questions such as how enterprises should be organised, how workers should be paid and whether goods should be exchanged between state enterprises as commodities.
Guevara agreed that the law of value remained under socialism but argued that measures taken by the Revolution to undermine the capitalist market meant that the law could not serve as the dynamic catalyst to productivity and efficiency in the same way as it did under capitalism.[8] Socialisation of the means of production and distribution had ‘blunted’ the tools of capitalism.[9] Marx described a commodity as a good which changes ownership, from the producer to the consumer. Consistent with this definition, Guevara insisted that products transferred between state-owned enterprises did not constitute commodities because when they were transferred from one state factory to another there was no change in ownership. The state itself should be considered as one big enterprise.[10] For Guevara commodity-exchange relations between factories threatened transition, via ‘market socialism’, to capitalism. He stressed central planning and state regulation as substitutes to such mechanisms.
The Soviet’s argued that commodity production, the law of value, and money would disappear only when communism was achieved, but that to reach that stage it was necessary to use and develop the law of value as well as monetary and mercantile relationships. Guevara disagreed:
‘Why develop? We understand that the capitalist categories are retained for a time and that the length of this period cannot be predetermined, but the characteristics of the period of transition are those of a society that is throwing off its old bonds in order to move quickly into the new stage. The tendency should be, in our opinion, to eliminate as fast as possible the old categories, including the market, money, and, therefore, material interest – or, better, to eliminate the conditions for their existence.'[11]
Marxists for more