Ernesto ‘Che’ Guevara: socialist political economy and economic management in Cuba, 1959-1965 Helen Yaffe London School of Economics and Political Science Doctor of Philosophy 1 UMI Number: U615258 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U615258 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 I, Helen Yaffe, assert that the work presented in this thesis is my own. Helen Yaffe Date: 2 Iritish Library of Political nrjPr v . # ^pc£ i ! Abstract The problem facing the Cuban Revolution after 1959 was how to increase productive capacity and labour productivity, in conditions of underdevelopment and in transition to socialism, without relying on capitalist mechanisms that would undermine the formation of new consciousness and social relations integral to communism. Locating Guevara’s economic analysis at the heart of the research, the thesis examines policies and development strategies formulated to meet this challenge, thereby refuting the mainstream view that his emphasis on consciousness was idealist. Rather, it was intrinsic and instrumental to the economic philosophy and strategy for social change advocated. Analysing the evolution, impact and institutionalisation of his ideas, this thesis fills several gaps in the history of economic thought, Cuban economic history and the literature on Guevara. Highlighting his study of Marx’s Capital, recourse to the technological and managerial advances of capitalist corporations and critique of Soviet political economy, the research offers a stimulating new contribution to the field of socialist theory. It examines the organisational structures and control mechanisms Guevara created, demonstrating how they link to his Marxist formation. It provides the first record of Guevara’s role in several critical areas: promoting education and training; establishing accounting, investment and supervision systems; forging workers’ participation in management; founding research and development institutions; formulating policies to raise consciousness and integrating psychology as an economic management tool. The research is based on new archival and interview sources. The thesis concludes that Ernesto ‘Che’ Guevara made an indispensable contribution to socialist political economy and played a vital role in industrial organisation and economic development in Cuba. It connects these two contributions, demonstrating how Guevara’s analysis of the law of value was integral to the economic management system he created as Minister of Industries. 3 Contents Acknowledgements CHAPTER 1 Introduction and methodology PART ONE Historiography and Literature CHAPTER 2 Cuba: historiography CHAPTER 3 Ernesto ‘Che’ Guevara: the existing literature PART TWO Background to the Budgetary Finance System Prologue CHAPTER 4 Revolutionary consolidation and emergence of Budgetary Finance System CHAPTER 5 The Great Debate 1963-65 Table 1 PART THREE Guevara’s solutions Prologue CHAPTER 6 Education, training and salaries CHAPTER 7 Administrative control, supervision and investment 186 CHAPTER 8 Collectivising production and workers’ participation 227 CHAPTER 9 Science and technology 270 CHAPTER 10 Consciousness and psychology 319 PART FOUR Conclusions 371 Prologue 372 CHAPTER 11 Critique of the Soviet Manual of Political Economy 376 CHAPTER 12 Assessment and conclusion 407 APPENDICES 416 1. Organigram of the Ministry of Industries 417 2. Standard interview questions 419 3. Bibliography: primary sources 424 4. Bibliography: secondary sources 436 5 Acknowledgements Between autumn 1995 and summer 1996 I lived in Cuba with my sister - austere years during the Special Period. Cubans dug deep to find what they needed to survive, as individuals and as a socialist society. During a solidarity brigade to an agricultural camp in Ciego de Avila we met hundreds of young Cubans who had volunteered to work in the fields. One teenager of my own age told me they were there ‘to defend our country, to defend socialism.’ Having grown up in central London, this was an unfamiliar attitude which served as an important insight into moral incentives and socialist consciousness. Since then this lesson has been reinforced on frequent trips to Cuba, by the commitment and sacrifice demonstrated by members of the Union of Young Communists who led brigades and organised international festivals. This thesis owes its content to the many protagonists who collaborated with Guevara in Cuba 1959-1965 and who patiently responded to my questions. Without them it would not have been possible, certainly not in its current form. This history is almost as much their own as Guevara’s. Orlando Borrego Diaz showed endless patience and encouragement, as the list of interviews in the bibliography demonstrates. My determination to read his book led me to Guatemala to improve my Spanish. It was worth it. Angel Arcos Bergnes offered me support and material from his own archive, and responded to my endless enquiries with the enthusiasm for which Guevara had praised him. Other important interviewees who allowed me to return for a second interrogation include Edison Velazquez, Enrique Oltuski and Tirso Saenz. These revolutionaries share an exciting history as part of Guevara’s inner circle and it is their commitment to Guevara’s theory and practice, and their wish to disseminate knowledge about it, which motivated their support. Several Cuban companeros from the younger generation encouraged and facilitated my doctoral research. Particularly, I would like to mention Rogelio Polanco Fuentes who, despite his overwhelming responsibilities as Director of Juventud Rebelde among other posts, showed a genuine interest in my studies and did more than I expected to make contacts and organise interviews with revolutionary leaders. The 6 Che Guevara Study Centre opened archives and Tatiana Martinez Hernandez gave me her own material and friendship. Kenia Serrano Puig also did everything in her power to help me and together with Nancy Coro Aguiar showed great concern, friendship and support. Yani Cruz Gutsens has been my rock since we met in 1998, not just helping with the research, but also acting as my surrogate sister during field work. She has been a great inspiration, along with her husband Eric, son Adrian and the rest of the family, who have taught me that political commitment is entirely compatible with fiesta pachanga! I have eternal gratitude for Mongui who welcomed me into his family with open arms, even before I met his son, Daniesky Acosta Linares, who gave me the ultimate moral incentive to finish the PhD - before our wedding! Back in London the first acknowledgement goes to my supervisor at LSE Colin Lewis. He worked hard to pin me to academic paradigms, but always supported and defended the intellectual integrity and authenticity of the thesis. Thanks also to Meghnad Desai who joined in as secondary supervisor and overwhelmed me with useful references. Thanks to Paul Bullock for stimulating discussions about the theoretical material. Thanks to all my companeros who have shown that moral incentives can even function ‘in the belly of the beast’. Special thanks to those who helped with proofreading this thesis, especially Carol and Nicki, but also Sam and Ethesham. Finally thanks to the unconditional support of my family: Susie and Leo, who had two beautiful babies while I was busy producing just one thesis; and my parents, Ann and David, who brought me up to think critically, and most important, to care. 7 Chapter 1: Introduction CHAPTER 1 Introduction Popular biographies, memoirs, academic articles and political tracts have focussed on Ernesto ‘Che’ Guevara’s military commitment to revolutionary social change; the influence of his travels in Latin America, his participation in guerrilla warfare in Cuba 1956-1959, the Congo 1965 and Bolivia 1966-67. Four decades after his death, Guevara is still both admired and derided, testimony to the fascination his persona continues to hold. Yet his most significant contribution remains largely unknown. His economic ideas and work in the Cuban government 1959-1965 have received scant attention from historians, social scientists and other commentators. Analysing the evolution of Guevara’s economic analysis, its impact and institutionalisation through the Department of Industrialisation, the National Bank and the Ministry of Industries, this thesis fills several gaps in the history of economic ideas, Cuban economic history and the literature on Guevara. It demonstrates that Guevara made an indispensable contribution to socialist political economy and played a vital role in industrial organisation and economic development in Cuba. It connects these two contributions, demonstrating how Guevara’s Marxist analysis of the law of value was integral to the economic management system he created, known as the Budgetary Finance System (BFS). The problem facing the Cuban Revolution after 1959 was how to increase productive capacity and labour productivity, in conditions of underdevelopment and transition to socialism, without relying on capitalist mechanisms that would undermine the formation of new consciousness and social relations integral to communism. Locating Guevara’s economic analysis at the heart of the research, the thesis examines policies and development strategies formulated to meet this challenge, thereby refuting the mainstream view that his emphasis on consciousness was idealist. Consciousness was intrinsic and instrumental to the economic philosophy and strategy for social change. 8