Science & Society, Vol. 76, No.

1, January 2012, 1140

Che Guevara and the Great Debate,

Past and Present
HELEN YAFFE
ABSTRACT: New reforms and debates are underway in contemporary Cuba. The core issues, however, were raised but not resolved
by the Great Debate of 19631965 instigated by Che Guevara.
The challenge was then and remains today to increase productive
capacity and labor productivity in conditions of underdevelopment
and in transition to socialism, without over-reliance on capitalist
mechanisms which undermine the formation of a new consciousness and social relations integral to socialism. The Great Debate
focused on the operation of the law of value, money, finance and
banking, and consciousness and incentives in the transition to
socialism, issues which remain central today. The concern for efficiency within socialism frames the connection between Guevaras
critique of the USSRs Manual of Political Economy, his Budgetary
Finance System of economic management, and contemporary
developments within Cuba.

N AUTUMN 2010, THE CUBAN WORKERS CONFEDERATION

(CTC) announced plans to remove half a million workers in surplus
posts in the state sector, offering them alternative state employment in construction, agriculture or teaching, or setting them up in
cooperatives or self-employment. Following a well-established pattern,
the announcement was greeted by jeering international headlines as
journalists raced to misinterpret the new measure. Cuba is rarely of
interest to the bourgeois press unless it believes that there is some crisis
to celebrate or that new measures can be interpreted as evidence of a
shift from socialism to capitalism. The measure was described as a dramatic shift for the communist government as it urgently tries to salvage
the flailing economy (Tracy Wilkinson, Los Angeles Times, September
11

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17, 2010), a reform that makes Margaret Thatcher look like a leftist
radical (Editorial, Financial Times, September 17, 2010); and the end
of half a century of thundering revolutionary certitude about Cuban
socialism (Rory Carroll, The Guardian, September 9, 2010).
Al Jazeera wondered what Che Guevara, the legendary communist
revolutionary, would make of Cubas plan to lay off 500,000 state workers by 2011 as the island moves closer to a market economy (Chris
Arsenault, Al Jazeera, October 10). Actually, Che Guevara himself
argued that full employment should not be prioritized over improvements in productivity and efficiency, without which socialism and
communism would not be possible. In 1962, once the structural underemployment inherent in pre-revolutionary Cubas sugar economy had
been tackled, Guevara insisted (on January 20): We should think
about productivity without fear that it makes workers unemployed. Yes,
it is true that workers are made unemployed; but every excess worker
in a factory means social unemployment. . . . the worker stuck in a job
where he has to divide his work with another worker adds nothing
to society (Guevara, 1966, 153).1 Guevara believed that socialism
was a phenomenon of both technology/productivity and political
consciousness, and that these had to be augmented simultaneously
in the transition process. In the early 1960s, Guevaras solution was to
send surplus workers to study. In contemporary Cuba, with extremely
high educational levels nationwide, the solution to low productivity
has to be sought elsewhere.
Other recent reforms in Cuba, especially those introduced under
Ral Castro since 2008, have elicited similar responses from the international media and political commentators outside of Cuba. Those
measures have included the removal of wage caps for production over
the norm, the distribution of idle state land in usufruct (short-term,
rent-free loan) to families and individuals, increasing state payments
for private or cooperative farm produce, the opening up of access to
previously restricted durable goods, and experimentation with small
urban cooperatives in fields such as hair cutting. However, contemporary developments cannot be understood from a purely ideological
perspective as if they express a political decision to embrace capitalism.
1 Similarly, in 1986 Fidel Castro warned against speaking about the standard of living as if
it was divorced from productivity, from economic and social development, as if it was divorced from the development needs of a country in the Third World, even a socialist one
(November 30, 1982, cited in Granma, July 15, 2010, 1).

CHE GUEVARA AND THE GREAT DEBATE

13

Rather, they must be understood as pragmatic measures introduced by

the revolutionary leadership in an attempt to strengthen the socialist
economy. They are not disguised as theoretical advances or political improvements; rather, they reflect the Revolutions flexibility in
devising policies to deal with urgent problems without straying from
the paradigm of Cuba Socialista. Policies are devised within existing
limits political commitments to socialist welfare, state planning, the
predominance of state property, and anti-imperialist internationalism
and economic constraints the U. S. blockade, trade dependency,
difficulty obtaining credit and the low productivity of Cuban industry
and agriculture. This flexibility in turn reflects a lack of consensus
about which policies and economic management system are appropriate for Cuba in this globalized world.
The aim of this article is not to discuss the current reforms in
detail, but to demonstrate that the corresponding debate underway
in contemporary Cuba is as old as the Revolution itself.2 This debate
addresses the problem at the heart of the revolutionary process: how
to increase productive capacity and labor productivity in conditions
of underdevelopment and in transition to socialism, without overreliance on capitalist mechanisms (market forces, the profit motive,
competition, material incentives) that undermine the formation of a
new consciousness and social relations integral to socialism. It raises
the questions: What strategies are best to build socialism in a blockaded
and trade-dependent island? How can consciousness and productivity
be increased simultaneously during socialist construction?
When we evaluate half a century of revolution it is clear that
Guevara was Cubas most vociferous and innovative protagonist in the
search for solutions to these challenges. Guevara did not discover
the problem, nor was he unique in searching for practical solutions.
However, Cuba was the first country in Latin America to have a socialist
2 The notion of debate does not refer to a closed academic, political or elite circle. The
social and political economy guidelines for updating the Cuban economy, published
in preparation for the 6th Congress of the Cuban Communist Party (CCP), held in April
2011, were debated by all Cubans, not just CCP members. Between December 1, 2010 and
February 28, 2011, 163,000 meetings were organized by work or study centers, political and
residential groups to discuss the guidelines. Out of a total population of 11.2 million, almost
nine million people participated in these meetings (it was possible to participate more than
once) making three million comments about the guidelines. These were categorized into
780,000 proposals about aspects of the guidelines which should be removed, added, modified or about which there are doubts and concerns. Following analysis of these proposals at
the CCP Congress, 68% of the guidelines were modified (R. Castro, 2011).

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revolution, and he forced the question onto the agenda, initiating the
Great Debate in the early 1960s and developing a unique system of
economic management for the transition to socialism, the Budgetary
Finance System (BFS), between 1959 and 1965. The BFS was inspired
by the administrative, financial and technological methods used by
the U. S. corporations and their subsidiaries in Cuba, adapting the
centralization and efficiency inherent in monopoly capitalism to the
socialist planned economy. This was consistent with Marxs stages
theory of history, which predicted that communism would emerge
from a fully developed capitalist mode of production. Marx showed
how the tendency to the concentration of capital, that is, to monopoly,
is inherent in the system. Therefore, the monopoly form of capitalism
is more developed than perfect competition. Guevara believed that
a socialist economic management system emerging from monopoly
capitalism could be more advanced, efficient and productive than
the Soviet system of economic management, which was adapted from
predominantly underdeveloped, pre-monopoly Russian capitalism.

Che Guevara and the Emergence of the Budgetary Finance System

The revolution seized power from the Batista dictatorship in January 1959, but it was not until October that year that Guevara joined the
government, first as head of the Department of Industrialization within
the newly created National Institute of Agrarian Reform (INRA), then
as President of the National Bank. In 1960, on Guevaras watch, all
financial institutions, 83.6% of industry, including all sugar mills and
42.5% of land, were nationalized.
The early 1960s was a tumultuous period: nationalizations, the shift
in trade relations, the introduction of state planning, the exodus of
managers and professionals, the imposition of the U. S. trade blockade,
sabotage and terrorism, invasion and the threat of nuclear conflagration. Despite this, under Guevaras directorship, Cuban industry stabilized, diversified and grew testimony to his capacity for economic
analysis, structural reorganization and mobilization of resources. One
Cuban economist who studied the national statistics of the period,
Alfredo Gonzlez Gutirrez, said:
What took place under Ches management was the transition from a capitalist
industrial sector to a socialist-run industrial sector. It was such a smooth and

CHE GUEVARA AND THE GREAT DEBATE

15

positive transition, without trauma or a fall in production. There has never

been a more profound change with less trauma or with a better response to
the new conditions created. That was Ches main achievement. (Gonzlez,
2004.)

Cuba had an unbalanced, trade-dependent economy dominated by

foreign interests, principally from the United States. The businesses
that passed under the Department of Industrializations jurisdiction
ranged from artisan workshops to sophisticated energy plants. Many
faced bankruptcy while others were highly profitable. Guevara worked
with Cuban colleagues who understood the internal accounting practices, administrative centralization and productive concentration of
U. S. corporations and their subsidiaries in Cuba to grapple with these
problems. He examined the documentation from these companies
as they fell into state hands with the nationalizations. Impressed with
their management structures, the use of centralized bank accounts
and budgets, determinate levels of responsibility and decision-making,
and departments for organization and inspection, he set out to incorporate these structures into the BFS (Figueras, 2006; Oltuski, 2006;
Menndez, 2005). He told colleagues that the BFS had an accounting
system similar to the pre-1959 monopolies operating in Cuba, with
their efficient control systems.
The BFS emerged as a practical solution to the problem of
financing and administering the industries transferred from private
to state ownership with limited technical or human resources. Guevaras solution was twofold: first, to group entities of similar lines of
production into centralized administrative bodies called Consolidated
Enterprises. This allowed the Department to control the allocation of
scarce administrative and technical personnel, following the exodus
of 6575% of managers, technicians and engineers after 1959; and
second, to centralize 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.
All surpluses were passed back directly to the state and there were
no commodity-relations between enterprises within the Ministry of
Industries (MININD).
Having studied the U. S.owned Cuban Electricity Company,
Shell, Texaco and other corporations which used the latest IBM
accounting machines, Guevara was struck by the backwardness of

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Soviet techniques; some factories still relied on the abacus to do their

accounts (Borrego, 2001, 60). Guevara did not criticize the Soviets for
this backwardness per se. He recognized the Soviet development feats
in the context of imperialist attack and isolation. However, he complained about the contradiction between the high level of research and
development in military technology and the low investment applied
to civilian production. He criticized the Soviets ideological resistance
to appropriating advances made in the capitalist world as a costly
mistake in terms of development and international competitiveness
(Guevara, 1966, 289). For example: For a long time cybernetics was
considered a reactionary science or pseudo-science . . . [in the USSR
but] it is a branch of science that exists and should be used. The
application of cybernetics in U. S. industry, noted Guevara, had led to
automation, revolutionizing productive development (Guevara, 1966,
3189). He believed that advances achieved by humanity should be
adopted without fear of ideological contamination.
The imposition of the U. S. blockade in 1960, however, forced
Cuba to buy most of its factories and other equipment from the socialist countries, especially the USSR. This assistance was essential, but the
relative backwardness of the equipment clashed with Guevaras desire
for advanced technology transfers. It also saw Cuba firmly incorporated into the trading system of the socialist countries, increasing the
pressure on Cuba to adopt the tried and tested system of economic
management in the socialist countries, known in Cuba as the AutoFinancing System (AFS).
In February 1961, when the new Ministry of Industries was set
up, Guevara continued to strengthen the organizational apparatus of
the BFS, while his ongoing study of Marxism increasingly embedded
this structure in a Marxist theoretical framework. Guevaras rejection
of the AFS was instrumental in Cubas resistance to blanket copying
from the existing socialist countries. Guevaras heresy reflected
his profound perception of socialism as a transitional stage the
period between capitalism and communism in which the qualitative tasks of preparing human consciousness and social-relations
for communist society were as important as the quantitative tasks
of developing the forces of production. Through the revolutionary
process, Cubans would transform themselves, and this would in turn
impact upon the institutions and relations they established within
the Revolution.

CHE GUEVARA AND THE GREAT DEBATE

17

The BFS aimed to foster Cubas industrialization, increasing productivity and institutionalizing collective management. Fidel Castro
secured Guevara the institutional space and the authority he needed
to experiment:
Che had an exceptional opportunity during the first years of the Revolution to
go deeply into important aspects of socialist construction. . . . He confronted
the task of applying the principles of MarxismLeninism to the organization
of production, as he understood them, as he saw them. He worked at this
for years, he spoke a lot, he wrote a lot about all those themes and really
he developed a theory that was very elaborate and very profound about the
way in which, in his opinion, socialism should be constructed and progress
towards communist society. (F. Castro, 2003, 4023.)

Referring to the AFS on January 20, 1962, Guevara told colleagues

in the MININD: In no way am I saying that financial autonomy of the
enterprise with material incentives, as it is established in the socialist countries, is a formula which will impede progress to socialism
(Guevara, 1966, 147). However, by 1966, in his critique of the USSR
Manual of Political Economy, he concluded that the USSR is returning
to capitalism (Guevara, 2006, 27). Guevaras analysis developed in
the period between these two statements as the result of praxis: the
practical experience of managing Cuban industry and engagement
in a theoretical debate on socialist political economy. This debate was
referred to retrospectively as the Great Debate. The following sections
of this article explain the context in which it took place in early 1960s
Cuba and summarize Guevaras contribution.

The Great Debate

Many Cubans were reluctant to accept the audacity of Guevaras
challenge to Soviet orthodoxy, especially in the context of a young
revolution blazing its own trail to socialism 90 miles from the United
States. The revolutionary governments first re-distributional measures
spurred a period of economic growth, but by 19623 national output
and worker productivity began to decline as the shocks of profound
structural change set in: new institutions, new social relations of production, new trade relations, the exodus of professionals and the
imposition of the U. S. blockade. This was also the result of the rash
implementation of policies whose consequences had not been fully

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analyzed. For example, eager to industrialize their way out of monocrop dependency, Cuban revolutionaries neglected the sugar harvest.
The resulting fall in export earnings, exacerbated by the blockade,
severely reduced Cubas capacity to import the raw materials and
spare parts required for industry. Labor shortages in the countryside
led to increased reliance on voluntary labor for agricultural work.
Inevitably, some Cuban economists and planners blamed Guevaras
economic management model, claiming that these problems resulted
from excessive centralization and the lack of financial incentives to
individuals and enterprises. They hoped that by adopting the tried
and tested Soviet system this trend could be reversed. This juncture
coincided with increasing integration into the socialist bloc via trade
and personnel exchange; Cuban students went to Eastern Europe
on scholarships while the socialist countries sent technicians and
economists to Cuba. These advisors advocated the USSRs AFS with
decentralization and financial autonomy for enterprises, rejecting
the BFS model of centralized control of administration and finance.
The AFS was adopted in INRA and the Ministry for Foreign Trade
(MINCEX). Under this system enterprises functioned as independent accounting units responsible for their own profits and losses. In
INRA its operation was similar to the khozraschet model of cooperative
farms in the USSR. On August 23, 1963, both the BFS and the AFS
were endorsed by law, although they had been implemented prior to
that. There were now two competing economic management systems,
operating under one Central Planning Board (JUCEPLAN), one central bank and one treasury. This created the institutional conditions
for the Great Debate.
All ministries received a state budget allocated by JUCEPLAN,
but the economic management system they operated had practical
implications affecting their organizational structures, the financial
relations among state institutions, relations between producers and
consumers, and so on.3 However, because the proponents of the different systems sought corroboration in Marxist texts the discussion
between them assumed the character of a theoretical rather than a
practical debate. Inevitably, there were discrepancies between the
theory and the reality of implementation of both systems. The theory
3 JUCEPLAN worked according to the national development strategy which was formulated
by the governments Economic Commission on which sat Guevara (MININD), Carlos Rafael
Rodrguez (INRA) and Osvaldo Dortics (President of Cuba).

CHE GUEVARA AND THE GREAT DEBATE

19

was the conceptual paradigm that guided the practical policies, while
daily experience also fed back into the theoretical constructs.
The Great Debate took place concurrently with a broader discussion within the socialist bloc as part of a rightward push to liberalize
the planned economy, advocating market socialism and increasing
reliance on capitalist mechanisms to solve problems of economic
stagnation and bureaucracy. Yugoslavia, Czechoslovakia and Poland
led this reformist drive in the 1950s and early 1960s. In 1962 Evsei G.
Liberman, a Soviet professor in the University of Kharkov, Ukraine,
published an influential article in Pravda recommending that the
profit motive, not the production plan, become the main driver of
productive efficiency, pursued via material incentives. Libermans
proposals, like those of many others, were a response to low productivity and efficiency, particularly in comparison with economic growth
in the developed capitalist world. It was not yet historically evident
that market socialism was a step towards the restoration of capitalism. Indeed, the reformists asserted that the key premise of their
proposals was to strengthen the socialist economy in the transition
to communism.
The protagonists in Cuba were well-informed about the broader
debate on incentives and financial autonomy contemporaneously
underway in the eastern European socialist countries. In addition to
his study of Capital and other classic Marxist texts, Guevara immersed
himself in contemporary literature, from east to west, both in favor
of market socialism and against the use of capitalist mechanisms.
He concluded that the Soviets had created a hybrid system, lacking
the efficiency of the free market with its aggressive fight for profits,
because the state plan and legally defined relations of production
prevented exploitation and capitalist accumulation, while failing to
foster collective consciousness in workers.
On July 11, 1964, Guevara told colleagues that he had been reading analyses from the socialist bloc, including the resolutions of the
14th Congress of the Polish Communist Party: The solution that they
are proposing for these problems in Poland is the complete freedom
of the law of value; that is to say, a return to capitalism (Guevara, 1966,
505). For Guevara it became imperative to initiate a serious study of
the political economy of the transition to socialism. The more people
were involved in collective debate, the more comprehensive and solid
would be the theory that emerged. He appealed to MININD directors

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to take up this challenge: Then we need to help ourselves, you should

help more, think more, collaborate, read all the fundamental texts
that are within everyones reach (Guevara, 1966, 567). Study and
analysis were essential to facilitate the resurgence of creative and dialectical Marxism to shatter the dogmatic and mechanistic approach
in the USSR which had turned the USSR Manual of Political Economy,
not Marxs Capital, into the Bible (ibid., 566). Guevara explained that:
[t]he theory is failing because they have forgotten that Marx existed
and the whole previous epoch and they base themselves on nothing
more than Lenin; we should say on one part of Lenin, from 1920
onwards, which are just a few of his years, because Lenin lived many
years and studied a great deal (Guevara, 1966, 569). The allusion to
Lenin from 1920 onwards is a reference to the implementation of the
New Economic Policy (NEP), introduced in the USSR as a practical
solution to concrete problems and openly articulated by Lenin to be
a major concession to capitalist mechanisms and a step backwards
for socialist construction. References to the NEP were made by both
sides of the Great Debate.
The following summary of Guevaras position in the Great Debate
is divided into three themes: the law of value; money, finance and
banking; and consciousness and incentives.

The Law of Value

Central to understanding Marxs critique of political economy
is his analysis of the operation of the law of value, which emerged
as human societies progressed from subsistence to petty commodity production. This involved private ownership and production for
exchange, which required an increasing social division of labor. Every
society adopts a method by which to regulate the distribution of the
social product. The law of value is the social mechanism by which
the principle of equal exchange among private owners is enforced.
Marx demonstrated that the law of value has a peculiar and paradoxical function. As an economic law, it predates but is then developed
under capitalism, so that its operation is initially transparent but then
obscured. Yet it provides the regulating law of motion of capitalism,
in which it finds its most developed expression.
The activity of human labor (labor power) itself must become a
commodity in order for capitalist production to develop. Commodities

CHE GUEVARA AND THE GREAT DEBATE

21

are the product of concrete human labor, but their constant and
complex exchange gives the human labor expended a particular
abstract, social, character. This abstract quality is thus a historical
characteristic. Marx showed that under the law of value the quantity
of abstract human labor embodied within commodities is the basis for
their exchange. The commodity must be desired in exchange (it has
a use value) and the labor time it contains must be socially necessary
that is, consistent with the average conditions of production.
Marx began Capital by stating that the wealth of societies in which
the capitalist mode of production prevails presents itself as an immense
accumulation of commodities. Because the commodity form is most
developed under capitalism, its complete analysis was only possible
under that system. However, under capitalism, commodities are no
longer exchanged directly in relation to the labor time embodied in
them, so their price no longer expresses that value in a simple, straightforward fashion. This change arises because different capitalists use
different ratios of labor to means of production (machinery, plant,
raw materials), producing different quantities of surplus value from
a given capital investment. But capitalists are guided by a concept of
equal returns to capital, refusing to invest where the rate of return is
below the average. Marx showed that because the operation of the law
of value has to provide for an equalization of the rate of profit, the
historically earlier form of simple prices is modified. Prices adjust to
form a general rate of profit and are affected in this process by other
factors such as rent, interest, final demand and competitors supply,
to establish the eventual market price. The result seems to contradict
the law of value. Marx set himself the task of demonstrating how under
capitalism, profits, rent and interest are also regulated by the law of
value, and how market prices are ultimately determined by the same
law. His analysis included the discovery of the actual mediating function of prices of production (D. Yaffe, 1976, 3149).
The dispute about the law of value in transition economies is at
the heart of the question about the feasibility of constructing socialism
in a country without a fully developed capitalist mode of production,
where development has been stunted by imperialist exploitation. The
debate is integral to the problems of production, distribution, investment and social relations. The notion of an eventual communist stage
requires a highly productive society in which the political conditions
exist for social production to be directed towards the needs of the

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masses rather than the generation of private profit; it implies societies

with huge accumulations of wealth and technology, which the working class appropriates to liberate itself from exploitation. From each
according to his ability, to each according to his need the essence
of communism implies that socialism has already been constructed
and that societys products are no longer subject to rationing through
market mechanisms.
However, the countries that have experimented with socialism
have lacked the necessary productive base to complete the process
and create the material abundance guaranteed by communism.
Under such conditions, the problem of how to organize and direct
the use of the social product is intrinsically linked to the problem
of underdevelopment and scarcity. Communism will permanently
block the reappearance of the law of value. The questions for transition economies are: 1) how far they are from the point where work
is remunerated on the basis of need; 2) why this is the case; and 3)
how they should strive to move towards a communist society. One
answer which emerged in the socialist bloc by the 1950s was to
utilize methods of production and distribution that allowed the
operation of the law of value through the spontaneous and centrally
unregulated processes of exchange with the aim of hastening the
development of the productive forces. This urgent material concern
was seen as a precondition to developing a socialist consciousness.
Guevara warned that depending on the law of value to foster development would undermine collective consciousness, obstructing the
construction of socialism and communism. Socialist countries had to
find alternative levers to develop the productive forces, such as the
national plan, investment in research and technology, administrative
mechanisms and socialist consciousness itself.
The expression the law of value under socialism has been used
variously to denote the existence of: petty commodity production,
as in the USSR prior to collectivization; a socialist countrys foreign
trade, where goods are exchanged as commodities proper; and the
constraints imposed by economic necessity on a socialist country.
All the participants in the Great Debate in Cuba agreed that the law
of value continued to operate because commodity production and
exchange through a market mechanism continued to exist after the
Revolution. The social product continued to be distributed on the
basis of socially necessary labor time. However, they disagreed about

CHE GUEVARA AND THE GREAT DEBATE

23

the conditions explaining the laws survival, its sphere of operation,

the extent to which it regulated production, how it related to the
plan and, finally, whether the law of value should be utilized or
undermined, and how to achieve this. This discussion was linked to
practical questions such as how enterprises should be organized, how
workers should be paid and whether means of production should be
exchanged among enterprises as commodities. The Great Debate
reveals a lot about the conditions and contradictions within the Cuban
economy in the early 1960s. The starting point of the discussion,
however, was defining the law of value.
As value is brought about by the relationships of production
and exists objectively, Guevara agreed that the law of value continues
under socialism, but added that: The laws most advanced form of
operation is through the capitalist market. . . . variations introduced
into the market by socialization of the means of production and the
distribution system brought about changes that obstruct immediate
clarification of its operation (Guevara, 1971, 234). In which spheres
did the law of value continue to operate and why?
The socialist state is the owner of the bank and its revenue, the
factories and the goods they produce. Consistent with Marxs stipulation that commodity exchange involves property exchange, Guevara
insisted that products transferred among state-owned enterprises do
not constitute commodities because there is no change in ownership.
Commodity-exchange relations among factories threatened transition,
via market socialism, to capitalism. He stressed central planning and
state regulation as substitutes for such mechanisms. Cuba, he argued,
should be considered as one big factory. Since the law of value did
not operate in exchange among state production units, the workers
themselves should decide what socialist, nonvalue-oriented economic
policies to pursue in safeguarding society against capitalist restoration
and achieving economic abundance. Guevaras speeches to workers
are replete with appeals for the masses to step up to this challenge.
The Belgian Marxist Ernest Mandel, one of two foreigners to publish contributions to the Great Debate, agreed with Guevara, pointing
out that if the means of production in Cuba were priced in relation to
their inherent values during the initial phase of industrialization they
would cost more than their foreign equivalents because of Cubas low
productivity. Arguing against the AFS, Mandel stated that the logic of
giving freedom to enterprises to maximize profits would lead them

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to purchase means of production from overseas suppliers. But the state

monopoly on trade prohibited this; this was further evidence that the
law of values sphere of operation was restricted (Mandel, 1971, 82).
French Marxist Charles Bettelheim intervened to argue that the
existence of the commodity and money categories in socialist Cuba
necessitated the existence of a market and some freedom of exchange.
Stating that the economic organization could never be more developed, or higher, than the forces of production, Bettelheim concluded
that the low technological level of production in Cuba explained the
continued existence of the law of value and capitalist categories and
attempts to legislate against this, or to change the relationships of
production in advance of the productive forces, would be detrimental
(Bettelheim, 1971). Guevara accused Bettelheim of analytical errors:
He [Bettelheim] mechanically translates the concept of necessary
correspondence between relationships of production and development of the productive forces, which is of universal validity, into the
microcosm of the relationships of production in concrete aspects
of a specific country during the period of transition. . . . He makes
the same mechanical analysis of the concept of property (Guevara,
1971, 109).
For Guevara, Bettelheims formula was dangerously close to the
earlier historically deterministic interpretation of Marx that communism will evolve organically out of fully developed capitalism; that no
social order ever perishes before all the productive forces for which
there is room in it have developed (Marx, 1977). Such determinism ignores Marx and Engels later observations about how British
imperialism underdeveloped Ireland and India, together with Lenins
view that imperialism blocks the development of the forces of production in the colonies (Reed, 1984, 326). Revolutionary socialism,
Guevaras tradition, takes up Lenins analysis to argue that in seizing
state power, defeating imperialism is a precondition for economic
development and the transition to socialism (Guevara, 1971a, 1001).
Hence, he concludes, there may be no such mechanical correlation
between productive forces and relations of production in the transition period. Mandel agreed, stating that during the period of transition from capitalism to socialism there is no integral correlation among
the mode of production, the relationships of production, the mode
of exchange and the mode of distribution; on the contrary, there
is a combination of contradictory elements (Mandel, 1971, 90). Mandel

CHE GUEVARA AND THE GREAT DEBATE

25

pointed to Marxs Critique of the Gotha Program to demonstrate that the

principal contradiction during the transition period is between the
non-capitalist mode of production [the socialization of the means of
production] and the bourgeois standards of distribution [the worker
receives according to his labor] (Mandel, 1971, 92).
The Cuban proponents of the AFS adopted the Soviet view that
commodity production, the law of value, and money would disappear
only when communism was achieved, but that to reach that stage it
is necessary to develop and use the law of value as well as monetary
and mercantile relationships while the communist society is being
built (USSR Manual of Political Economy, cited by Guevara, 1971b,
142). 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. (Guevara, 1971b, 142.)

Guevara believed that the task of a socialist country was not to use, or
even hold in check, the law of value, but to define very precisely the
laws sphere of operation and then make inroads into those spheres
to undermine it; to work towards its abolition, not limitation. In June
1963, Guevara questioned: How can one consciously use the law
of value to achieve a balance in the market on the one hand, and a
faithful reflection of real value on the other? This is one of the most
serious problems the socialist economy faces (Guevara, 1971c, 114).
By February 1964 he had concluded:
We deny the possibility of consciously using the law of value, basing our
argument on the absence of a free market that automatically expresses the
contradiction between producers and consumers. . . . The law of value and
planning are two terms linked by a contradiction and its resolution. We can
therefore state that centralized planning is characteristic of the socialist
society, its definition. (Guevara, 1971b, 143.)

In June 1964 he conceded only the possibility of using elements of

this law for comparative purposes (cost, profit expressed in monetary

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SCIENCE & SOCIETY

terms) (Guevara, 1971a, 109). He complained that the defenders

of the AFS never explained how the law of value is supposed to be
utilized through the plan.

Money, Finance and Banking

Following the nationalization of industry, Guevara observed from
the accounts of U. S. corporations that they did not send bills and
issue payments to their own subsidiaries. They developed techniques
of accounting, administration and analysis that relegated money to
the role of simply recording the value of what had been produced:
money of account. Guevara adopted this approach in the BFS.4
Under our system, [money] functions only as a means of measurement, as a price reflection of enterprise performance that is analyzed
by central administration bodies so as to be able to control such performance (Guevara, 1971b, 132). Enterprises in MININD had no
funds of their own, but separate bank accounts for withdrawals (from
two accounts, wages and general expenditure) made in line with
the plan and deposits which automatically came under state
control. They could not get bank credit, which Guevara insisted is a
function of private ownership and commodity exchange under the law
of value. He quoted Marx: As soon as the means of production cease
being transformed into capital (which also includes the abolition of
private property in land), credit as such no longer has any meaning
(Marx, Capital, Vol. III, cited by Guevara, 1971d, 303), adding that
the bank, as separate from the State, possesses nothing, despite the
fictitious patrimony granted it by law (Guevara, 1971d, 312).
There was even less place for interest under socialism, argued
Guevara, citing Marx to attack the National Bank of Cuba for charging interest to state enterprises for bank credit: The relations of
capital assume their most externalized and most fetish-like form in
interest-bearing capital (Marx, Capital, Vol. III, cited by Guevara,
1971d, 303). Guevara opposed the banks involvement in investment
decisions, which he regarded as political and economic issues for the
JUCEPLAN: What the bank does is to allocate the resources of the
4 Guevara pointed out that Marx did not anticipate the use of money in the transition from
capitalism to communism, although in the Critique of the Gotha Program he envisaged individual
rewards to labor, in the form of labor bonds received in exchange for socially necessary labor
time (Guevara, 1971b, 1245).

CHE GUEVARA AND THE GREAT DEBATE

27

national budget in the amounts established by the investment plan

(Guevara, 1971d, 304). Under the BFS, investment plans were submitted to MININDs Vice Ministry of the Economy for analysis and
finances were issued from the Ministrys budget account.
Because there were no financial relations among production units
or Consolidated Enterprises under the BFS, produce passed on from
one workplace to another was recorded as a delivery of products,
rather than a commodity sale or purchase, and accorded a price for
accounting purposes, which meant adjustments in enterprise accounts
held in the Treasury. Surplus means of production could not be sold
between enterprises, but were redistributed according to arrangements made by the Committees for Local Industry and approved by
Consolidated Enterprise management. Inventories were updated to
reflect these transfers.
In removing the element of control by the peso, the BFS aimed
to ensure that the plan, not financial mechanisms, functioned as the
determinant of production and investment. This required regulation by a strong apparatus of administrative control, which stressed
accounting, supervision and inventory control. This apparatus of control, along with the focus on technological and organizational innovations, moral incentives and raising skills levels, was the mechanism for
lowering production costs under the BFS, as a means of raising labor
productivity and increasing efficiency. Guevara aimed to develop an
entire system of cost accounting that would systematically reward and
punish success and failure in efforts to lower costs. . . . everything is
reduced to a common denominator: increasing labor productivity. This
is essential for building both socialism and communism (Guevara,
1971c, 1188). Cost control would be converted into a mechanical
operation, utilizing mathematical analysis to regulate the economy
and achieve the best allocation of resources between consumption
and capital accumulation, as well as among the various branches of
production (Guevara, 1971c, 12021).
The AFS, meanwhile, applied control by the peso. Money served
as a means of payment, an indirect instrument of control without
which enterprises could not operate. Guevara claimed that it replicated the relationship between a private producer and the bank
under capitalism and pointed out that the banks existence is contingent upon mercantile relationships of production (Guevara, 1971d,
298), which would gradually disappear as the development of the

28

SCIENCE & SOCIETY

productive forces and socialist consciousness created the conditions

to undermine the law of value. AFS enterprises could also obtain bank
credit, although they were prohibited from providing credit to each
other. There were financial payments for goods transferred among
state enterprises and surplus means of production could be sold by
one workplace to another to generate revenue for meeting financial
plans, paying back loans, funding decentralized investments not
included in the national plan, or financing material incentive schemes
for workers. The AFS relied on the profit motive, expressed through
market forces, to lower production costs.
The revolutionary government had frozen prices, introduced
rationing, benefited from export sales to the Soviet bloc above world
market prices and prioritized social justice goals, all of which undermined the market mechanism through which price is determined
under capitalism. As the operation of the law of value had been undermined, Guevara asked: How can prices be made to coincide with
value? (Guevara, 1971c, 114). How could demand and supply be balanced without giving free rein to the law of value? Proponents of the
AFS claimed that it set prices in relation to the law of value. Guevara
asked: which meaning of the law? His point was that socially necessary labor time, a concept intrinsic to the law of value, is a historical
and global construct. Prices could be internally determined, but they
could not be claimed to reflect the operation of the law of value unless
international production standards were applied. Indeed, Guevara
believed such a comparison was essential: the domestic price structure must remain tied to the price structure of the foreign market
(Guevara, 1971c, 116). He warned against the dangers of a closed
economy pricing structure, particularly given Cubas dependence on
foreign trade. Che arrived at a contradiction, explained Gonzlez,
with forty years hindsight: How do you create prices when there is no
market? . . . Che realized how complex this theme was and . . . made
suggestions, but they were not conclusive points (Gonzalez, 2004).
The financial, banking and pricing issues thrashed out in the Great
Debate remained unresolved and are key areas of discussion today.

Consciousness and Incentives

The Spanish word conciencia is translated into English as both
conscience (morality) and consciousness (awareness). The word

CHE GUEVARA AND THE GREAT DEBATE

29

consciousness is used here reflecting the idea of socialism as a

historical stage in which human beings plan production and distribution of the social product in a reasoned and deliberate way. It should
also be understood in the sense of a social conscience transcending
individual interest. For Guevara consciousness meant a principled
commitment to the social and economic justice aims of the Revolution
to socialism. For him, international solidarity was the highest expression of consciousness, because it means giving apparently disinterested
assistance to people on the basis of shared humanity.5
The debate about the law of value and capitalist categories in the
transition to socialism and communism was integrally linked to the
discussion about the use of incentives to increase efficiency and productivity and develop socialist consciousness. Guevaras emphasis on
moral incentives and collective consciousness has been caricatured as
idealist by those who fail to understand the significance of this link.6
To move away from capitalist laws of motion, socialist society has to
distribute the social product in a way that does not require distribution
on the basis of equal exchange in terms of labor time. The absence
of the law of value in many areas of economic life in the process of
transition to socialism presents the challenge of how to compensate
workers for their labor power; how to increase productivity; how to
overcome the dichotomy between mental and physical labor; and
how to allocate investment between capital goods and consumption.
For Guevara these questions had to be resolved by the conscious
action of the workers whose objective was to construct socialist society.
Moral incentives, including voluntary labor, were a tool to create this
consciousness.
Guevara believed that mobilization of the masses could become an
objective factor, even in the economic sphere. During the Bay of Pigs
invasion by U. S.trained exiles in April 1961 and the Cuban Missile
Crisis of October 1962, overtime work, voluntary labor, innovations,
production and productivity increased, while bureaucracy and absenteeism decreased, despite the mobilization of many workers for military defense. Guevara observed that in moments of extreme danger
5 For a discussion of the incentive systems and policies introduced by Guevara within MININD
to promote socialist consciousness, see chapter 8 on Consciousness and Psychology in
H. Yaffe, 2009a.
6 For example, Mike Gonzalez, Che Guevara and the Cuban Revolution. London: Bookmarks,
2004.

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SCIENCE & SOCIETY

it is easy to activate moral incentives: To maintain their effectiveness,

it is necessary to develop a consciousness in which values acquire new
categories (Guevara, 1971e, 343).
Marx described the sociological or psychological manifestation
of the capitalist mode of production as alienation and antagonism,
the result of the commodification of labor; a function of the law of
value. Communism proposes the opposite: man as a fully developed
social and collective being. The challenge is to replace the individuals
alienation from the productive process, and the antagonism generated
by class relations, with integration and solidarity. During the socialist
transition to communism social relations must change, labor must
cease to be a commodity and man must develop a collective attitude
towards the production process: the concept of work as a social duty.
We are doing everything possible to give work this new category of social duty
and to join it to the development of technology, on the one hand, which will
provide the conditions for greater freedom, and to voluntary work on the
other, based on the Marxist concept that man truly achieves his full human
condition when he produces without being compelled by the physical necessity of selling himself as a commodity. (Guevara, 1971e, 346.)

Capitalist competition creates the drive to increase productivity

through technological innovations and increasing exploitation. Alienation and antagonism increase with productivity. Under socialism,
argued Guevara, the development of the productive forces could be
less accelerated, but it should be accompanied by a growth of consciousness and integration.
The question of whether the law of value, which predates capitalism, necessarily leads to the development of capitalist social relations
is vital. Both sides of the Great Debate agreed that moral incentives
reflect and produce socialist consciousness, and that material incentives are necessary in conditions of scarcity and underdevelopment.
But the pro-Soviets in the Great Debate believed that the law of value
and the way people are conditioned to its functioning could only be
undermined with an abundance of material wealth; economic rationality would automatically lead to social rationality. Guevara disagreed.
A socialist economy without communist moral values does not interest
me. We fight poverty but we also fight alienation. One of the fundamental
aims of Marxism is to eliminate material interest, the factor of individual

CHE GUEVARA AND THE GREAT DEBATE

31

self-interest and profit from mans psychological motivations. Marx was

concerned with both economic facts and their reflection in the mind, which
he called a fact of consciousness. If communism neglects facts of consciousness, it can serve as a method of distribution but it will no longer express
revolutionary moral values. (Guevara, cited by Tablada, 77.)7

Guevara argued that the use of capitalist mechanisms in the production process in socialist Cuba risked reproducing capitalist social relations and a capitalist consciousness, despite state planning and state
ownership of the means of production. Guevara believed that moral
incentives should be developed to undermine the law of value as early
as possible during the transition process. Socialism must develop an
economic management system that finds a harmony between two
goals; production and consciousness must be fostered in parallel: To
build communism, a new man must be created simultaneously with the
material base (Guevara, 1971e, 343). He recognized that the underdevelopment of the productive forces and the fact that the consciousness of the Cuban people had been conditioned by capitalism meant
that there was an objective need to offer them material incentives.
But he opposed their use as the primary instrument of motivation,
because they would become an economic category in their own right
and impose individualist, competitive logic on the social relations of
production: Pursuing the chimera of achieving socialism with the aid
of the blunted weapons left to us by capitalism (the commodity as the
economic cell, profitability, and individual material interest as levers,
etc.) it is possible to come to a blind alley. . . . Meanwhile, the adapted
economic base has undermined the development of consciousness
(Guevara, 1971e, 342).
Guevara concluded with his most succinct exposition on the
theme:
If material incentives are in contradiction to the development of consciousness, but on the other hand, are a great force for obtaining production
gains, should it be understood that preferential attention to the development
of consciousness retards production? In comparative terms, it is possible
within a given period, although no one has made the relevant calculations.
7 If communism neglects . . . Here Guevara is clearly referring to the so-called communist
countries; he is not contemplating the idea that communism could be reached without a
new consciousness developing, along with new social relations.

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SCIENCE & SOCIETY

We maintain that the development of consciousness does more for the development of production in a relatively short time than material incentives
do. We take this stance because our societys development is generally projected to lead
to communism. This presupposes that work will cease to be a painful necessity and become an agreeable imperative. Such a statement is loaded with
subjectivism and requires sanction in the experience we are gaining. If in
the course of experience it proves to seriously block the development of the
productive forces, then the decision must be made to act quickly in order to
get back on familiar paths. (Guevara, 1971b, 1345.)

The familiar path was the AFS with its use of capitalist categories. The
italicized sentence above is vital because it expressly states the qualitative objective of constructing a new society, a goal that cannot be
reached by increasing production alone. This defines the paradigm
within which Guevaras conceptions of consciousness and incentives
should be discussed.8
The question of incentives to workers remains central to the contemporary debate in Cuba, which is focused on increasing productivity
and efficiency.9 In different periods, Cuban socialism has had greater
or lesser dependence on material incentives to production; however,
moral incentives have continued to be valued and applied. Orlando
Borrego, Guevaras deputy in Cuba from 1959 to 1964, asserted that
without the development of consciousness in our country we would
not have been able to survive until now. In no country in the world
do material incentives lead people to a revolutionary consciousness,
much less a humanist consciousness with ideas about cooperation
and good relations within and outside the country (Borrego, 2008).

Critique of the Soviet Manual of Political Economy

In April 1965, Guevara left Cuba to lead a Cuban military mission
in the Congo. The guerrillas were defeated and Guevara stayed in Tanzania and the Czech Republic between 1965 and 1966, where he began
work on a comprehensive analysis of the political economy of socialist
transition. In preparation for this work Guevara took notes on the
USSR Manual of Political Economy, applying his theoretical arguments
8 Carmelo Mesa-Lago quotes this paragraph from Guevara, but omits this key sentence (MesaLago, 1972, 62).
9 See Steve Ludlams article in this issue of Science & Society.

CHE GUEVARA AND THE GREAT DEBATE

33

expounded in the Great Debate to those notes, with his criticism of

the use of capitalist categories as economic levers to development:
material incentives, profit, credit, interest, bank loans, commodity
exchange, competition, money as payment, financial control and
the operation of the law of value.10 All the residues of capitalism are
used to the maximum in order to eliminate capitalism, complained
Guevara. Dialectics is a science, not some joke. No one scientifically
explains this contradiction (Guevara, 2006, 188).
The notes were not written for publication, nor compiled into a
manuscript, but are comments responding to specific paragraphs of
the Manual; they are notes to himself, including indications of areas
for further study. They were not published until 2006. Guevara recognized the value of Soviet assistance and had great respect for the
achievements of the USSR. His criticisms were intended to be constructive. Guevara believed that by carrying out a thorough critique
of the AFS he would be able incontrovertibly to highlight the dangers
inherent in a hybrid system; socialism with capitalist elements. The
Soviets had neither liquidated capitalist categories nor replaced them
with new categories of a higher character, stated Guevara: Individual
material interest was the arm of capital par excellence and today it is
elevated as a lever of development, but it is limited by the existence
of a society where exploitation is not permitted. In these conditions,
man neither develops his fabulous productive capacities, nor does he
develop himself as the conscious builder of a new society (Guevara,
2006, 10). Guevara hoped to convince the other socialist countries to
reverse the prevailing trend towards market socialism.
In 1921 Lenin had been forced to introduce the New Economic
Policy (NEP), which imposed a capitalist superstructure on the USSR.
Lenin called this stage state capitalism but, Guevara argued, in reality this could also be called pre-monopoly capitalism as far as the
classification of economic relations is concerned. The NEP was not
installed against small commodity production, Guevara stated, but
at the demand of it. Small commodity production holds the seeds of
capitalist development. He was certain that Lenin would have reversed
the NEP had he lived longer. However, Lenins followers did not see
the danger and it remained as the great Trojan horse of socialism,
10 For a fuller analysis of Guevaras critique of the USSR Manual of Political Economy, see H. Yaffe,
2009a, 233256.

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SCIENCE & SOCIETY

direct material interest as an economic lever (Guevara, 2006, 112).

This capitalist superstructure became entrenched; the entire legal
economic scaffolding of contemporary Soviet society originated from
the NEP, with its pre-monopoly capitalist relations and categories,
influencing the relations of production and creating a hybrid system
of socialism with capitalist elements that inevitably provoked conflicts
and contradictions that were increasingly resolved in favor of the
superstructure. In short, capitalism was returning to the Soviet bloc
(Guevara, 2006, 27).
Throughout his critique of the Manual Guevara argued that the
USSRs Kolkhoz collective farm system was not a characteristic of
socialism and that cooperatives were not a socialist form of ownership.
While cooperatives were progressive in relation to capitalist forms of
ownership, they would also retard the development of socialist forms
because they generate a capitalistic superstructure which clashed with
state ownership and socialist social relations, imposing their own logic
over society (H. Yaffe, 2009a, 243246).
Guevara also criticized the Manuals mechanistic adoption of classical Marxist conceptions of class relations between the bourgeoisie
and the working class for ignoring the effects of imperialism which
created a privileged working class in the advanced capitalist countries,
as well as beneficiary sectors in the exploited nations (H. Yaffe, 2009a,
2412, 2513). He denounced as opportunist the Manuals attempts to
air-brush the inherent violence of class struggle integral to the transition from capitalism to socialism. He condemned as dangerous the
Soviet policy of peaceful co-existence and economic emulation with
the advanced capitalist countries. He blamed the serious disagreements between the socialist countries on unequal exchange and the
imposition of capitalist categories in trade relations between them
(H. Yaffe, 2009a, 2535).
While Guevaras notes offer a profound criticism of Soviet political
economy, he warned against this being interpreted as anti-communism
disguised as theoretical argument. He asserted that the inability of
bourgeois economics to criticize itself, pointed out by Marx in Capital,
was seen in contemporary Marxism. Dedicating his work to Cuban
students who go through the painful process of learning so-called
eternal truths in Eastern European manuals, Guevara concluded:
Humanity faces many shocks before final liberation, but we cannot

CHE GUEVARA AND THE GREAT DEBATE

35

arrive there without a radical change in the strategy of the first most
important socialist power (H. Yaffe, 2009a, 2401).
Guevara hoped that his theoretical critique of the AFS, backed up
by the practical experiences of implementing the BFS in Cuba, would
convince the socialist countries to correct their mistakes. His critique
of the Soviet Manual was intended to consolidate these efforts, but
he was unable to complete this work. Following his departure for the
Congo in the mid-1960s, there was a misguided attempt in Cuba to
implement a new Registry System of economic management, believed
to be consistent with the operational principles of Guevaras BFS. In
reality it abandoned key premises of the BFS: economic analysis and
cost controls. Alfredo Gonzalez said that to associate the Registry
System with Guevara is a great historical injustice, because if there
was someone in this country who was concerned for costs and for
efficiency it was Che (Gonzlez, 2006). This concern for efficiency
within socialism frames the connection between Guevaras critique of
Soviet political economy and contemporary developments in Cuba.

The Contemporary Great Debate

Many commentators outside of Cuba have hastily declared that
every new policy or reform expresses an ideological impulse, categorizing Cuban developments into stages of idealism and entrenchment, vs. pragmatism and liberalization. Reality, however, is both
more complex and simpler. More complex, because every new measure must be assessed in relation to the global circumstances in which
Cuba operates and which determine the material conditions on the
island and the revolutionary governments room for maneuver. Simpler, because the problematic of the Revolution remains constant:
how to develop the productive forces in an underdeveloped, tradedependent and blockaded island, while simultaneously fostering a new
consciousness and new social relations for the transition to socialism.
When we build these considerations into our analysis of Cubas
past and present, we can understand what lies behind developments
in each period. Todays debate is expressed more in practical than
theoretical terms, reflecting Cubas isolation following the implosion
of the international socialist movement since the late 1980s, but it
continues to revolve around this essential problem. At the heart of

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SCIENCE & SOCIETY

the Great Debate in Cuba from the early 1960s and the measures of
the present period is the question: to what extent can the Revolution
replace capitalist mechanisms (profit motive, material incentives,
market-exchanges, competition) with administrative controls (the
plan, the budget, supervision and audits, workers democracy) to
advance towards socialist construction: increasing productivity and
efficiency along with consciousness? Different responses to this challenge in different periods explain fluctuations in Cuban policy: in
periods of economic crisis the Revolution has been forced to enact a
tactical retreat, allowing more operational space for expressions of the
law of value. Conversely, in periods of recovery the government has
closed down those spaces and reinforced the primacy of the centralized
plan, budgetary finances and the socialized economy (Yaffe, 2009b).
Two examples will be sufficient here to demonstrate this point. In
1990 with the collapse of the Soviet bloc, Cuba lost around 85% of its
trade and GDP plummeted by 35%, leading to the Special Period
of severe economic crisis. During the 1990s Cuban enterprises were
granted greater financial autonomy than the AFS enterprises in Cuba
which Guevara had opposed in the 1960s. They controlled their own
finances and those with hard currency purchased imports directly, ending the states monopoly on imports. However, in 2005, the year when
Cuban GNP finally recovered its preSpecial Period levels, financial
autonomy was removed from Cuban enterprises, including the Cuban
dividend from Cubanforeign joint ventures. Financial reserves were
transferred to the central bank, which became responsible for allocating finances and approving all future transactions. The result was
a degree of financial recentralization not seen since Guevaras BFS.
The policy of establishing joint ventures between the Cuban state
and foreign companies provides the second example. Contracts were
relatively short-term, enabling the Cuban government to terminate or
take over these businesses as those agreements ended and as conditions permitted. The number of mixed enterprises decreased by 41%,
from 403 in 2002 to 236 in 2006, when joint ventures accounted for
just one per cent of employment. Meanwhile, large investments have
increased in major infrastructural and development projects in strategic sectors like mining, energy, transport and telecommunications.
Largely carried out by joint ventures with fraternal state companies
from Venezuela and China, the result has been to limit the sphere
of operation of capitalist mechanisms introduced via foreign capital,

CHE GUEVARA AND THE GREAT DEBATE

37

diminishing their impact on Cubans as producers and consumers,

while simultaneously strengthening the states economic resources
based on highvalue-generating activities, especially in nickel and
oil production.
There is a complex and contradictory process underway in Cuba
which leads to misunderstanding and misinterpretation: long-term
economic recovery, short-term budget and balance of payment difficulties and a series of measures since the mid-2000s applying a mixture of market and administrative mechanisms to improve efficiency
within socialism. Under Fidels presidency we saw the recentralization
of finances, de-dollarization, the raising of salaries and pensions, an
energy efficiency campaign and a campaign against corruption (Yaffe,
2006). Rals presidency has continued this process, promoting a
nationwide debate, extending the implementation of an enterprise
management system to improve efficiency, distributing idle land in
usufruct, reducing imports and tightening regulatory and auditing
controls (Yaffe, 2009b). The changes in the employment structure
announced in September 2010 are the latest measures in this process.
They are intended to provide an infrastructure in which all Cubans
can contribute towards socialist development, to forge the concept of
work as a social duty which Guevara promoted (Yaffe, 2010).
In 2009 Cubas unemployment rate was 1.7%, apparently the
lowest in the world. However, up to 20% of the state sector workforce is believed to be surplus to requirements. This situation has its
roots in the Special Period, when the government decided to protect
employment even while its revenues fell and scarcity soared. The
decision to protect employment meant subsidizing enterprise losses
and maintaining salary expenses in the state sector, despite the fall
in state revenues. Consequently the fiscal deficit rose to 30% of GDP.
Money was printed to finance it, leading prices to rise nine times while
real salaries and pensions fell by more than 70%. Work forces were
inflated and productivity declined, creating a cycle of low salaries and
low productivity. Breaking this cycle has been the objective of recent
reforms, but it has required a complex set of preconditions.
Echoing Marxs comment that every child knows that any nation
that stopped working, not for a year, but let us say, just for a few weeks,
would perish (Marx, 1868), Ral Castro declared: We have to bring
an end to the notion that Cuba is the only country in the world in
which you can live without working (R. Castro, 2010). The current

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SCIENCE & SOCIETY

aim is to restore macroeconomic equilibrium through fiscal adjustments, but the challenge remains to do this while limiting the reliance
on capitalist mechanisms.
Socialism is a dialectical process in which there are many complex
issues to resolve: the balance of responsibility for provision between
the individual and the state; how such class antagonisms as remain
under socialism are mediated; ensuring discipline with resources and
at work; how the wealth of socialist society should be distributed; and
how much control and centralization is appropriate. These questions
are being addressed in Cuba in the face of a brutal blockade and terrorist attacks.
It is neither right nor practicable that a significant number of
individuals in Cuba benefit from socialist state provision without contributing to it. This was recognized by Fidel Castro, who in November
2005, while still President of the Council of State, lambasted Cubas
new rich; a small percentage of the population with access to hard
currency, who benefited from free universal welfare and education
provision while refusing to contribute anything to society. There are
several dozens of thousands of parasites who produce nothing, he
said. Fidel highlighted the problem of widespread pilfering of state
resources, generated by low salaries and scarce material goods: The
Special Period aggravated it, because in this period we saw the growth
of much inequality and certain people were able to accumulate a lot
of money (F. Castro, 2005).
Highlighting the value of state subsidies for fuel, Fidel asserted:
No one knows the cost of electricity, no one knows the cost of gasoline, no one knows its market value. Introducing efficiency saving
and anti-corruption measures, he set Cuba on the path to achieving
what he called the dream of everyone being able to live on their salary or on their adequate pension.11 The long-term plan he revealed
was to eliminate the ration book, undermining the parasitic layer in
Cuban society, those who can work but wont. The state would reduce
its subsidy on energy consumption, inducing awareness of consumption levels and saving. Subsidies and free services will be considered
only in essentials. Medical services will be free, so will education and
the like (F. Castro, 2005).
11 Also echoing Marx: Accordingly, the individual producer receives back from society after
deductions have been made exactly what he gives to it (Marx, 1977).

CHE GUEVARA AND THE GREAT DEBATE

39

New debates are underway in Cuba, but the core issues are those
raised but not resolved in the 1960s. The current changes to the
employment structure intend to provide the infrastructure in which
all Cubans can contribute towards socialist development. This type
of major adjustment could not be risked in a period of vulnerability.
No one will be abandoned, and the measure does not represent an
ideological preference for liberalization, neither is it a rupture with
the socialist revolution, or with Fidel Castro and Che Guevara. The
recent measures reflect a valiant determination to preserve the gains
of the Revolution, while dealing with the problematic of development with equity. We are witnessing a further chapter in Cubas Great
Debate about socialist transition.
Department of History
University College London
Gower Street
London, WC1E 6BT
United Kingdom
h.yaffe@ucl.ac.uk

REFERENCES
Bettelheim, Charles. 1971 (1964). On Socialist Planning and the Level of Development of the Productive Forces. In Bertram Silverman, ed., Man and Socialism
in Cuba: The Great Debate. New York: Atheneum.
Borrego Diaz, Orlando. 2001. El Camino del Fuego. Havana, Cuba: Imagen Contemporanea.
. 2008. Interview (March 5).
Castro, Fidel. 1987. Discurso Pronunciado por Fidel Castro el 8 de Octubre de 1987.
www.cuba.cu/gobierno/discursos/1987/esp/f081087e.html
. 2005. Speech at the Commemoration of the 60th Anniversary of His Admission to University of Havana (November 17). www.cuba.cu/gobierno/
discursos/2005/ing/f171105i.html
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