The Functioning of the Yugoslav Economy

Radmila Stojanovic, Radmila Stojanovic

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351544443
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

In this volume, Stojanovic draws together several essays by Yugoslav economists to an English audience. Originally published in 1982, these works present and analyse the issues that faced Yugoslavia's economic development and the functioning of their economic system at the time of writing through a wide selection of views. Not only does this work provide an insight into Yugoslavia's economic policies, the reader is also granted an insight into the social climate under which these essays were written. This title will be of interest to students of Economics and History.

1

The Social and Economic
Basis of Socialist
Self-Management
in Yugoslavia

Kiro Gligorov

1. Historical Background

The roots of self-management in Yugoslavia can be found in the nature of the country’s revolution, in the strong support it has had among the working masses — workers and peasants alike — in the social changes successfully brought about, and in the experience gained during the first years of socialist development.

Throughout the war of liberation there existed national liberation committees which operated on the freed territory as bodies of governmental authority. They took care of economic, educational, judicial, and other social matters. Their democratic nature, independence, and operating efficiency in work and decision-making provided valuable experience for many participants. Later on it was this cadre and its experience that made it possible to set up the essentially new governmental and social foundations of a socialist community. For this reason the study of the national liberation committees’ activities during the war and immediately after its end is a valuable source of knowledge about the creation of a new society from the bottom up and about the committees’ enormously significant initiative and work methods, which relied on independent activity and mobilization of the masses, who directly took part in social events.

With the nationalization of almost all the more important means of production and the creation of the governmental authority of the new state, administrative management of the economy was introduced. The ruined condition of the country and its reconstruction required a high degree of centralization of governmental powers and authority in managing the economy. This was particularly evident in the centralization of accumulation and all other financial resources, in detailed centralized planning, and in giving priority to the development of basic industries and the industrialization of the country. Such an approach required the full mobilization of material and human resources. State ownership over the means of production, centralized economic power and decision-making, together with centralized control over almost all of national income, became the basis for the growing power of the state in the Federation and in its authorities and bodies in the republics and autonomous provinces. The governmental apparatus expanded very rapidly and became very influential in regulating economic life in particular. In addition, the development of production relations based on state ownership was considerably influenced by the experience and example of the USSR.

Taking into account the multinational nature of the Yugoslav community and the different levels of development of the republics and autonomous provinces, the strengthening of the state in general and of its center in particular had, inevitably and rather promptly, to entail considerable economic, political, and national repercussions. After centralism, with its mistakes and usurpations, had been exposed to criticism, attention was very quickly directed to analyzing the nature of state ownership, state management of economic enterprises, and the consequences for social relations resulting from the strengthening of bureaucracy and the danger of the state becoming a power over and above the society. Thus under centralism the worker could remain a wage laborer and become the object of an omnipotent state instead of continuing to be the subject of revolution.

Neither the very significant economic results achieved in the reconstruction of the ruined country nor the great initial successes in industrialization were sufficient to eliminate contradictions in the creation of socialist types of social relations. Centralism, on the one hand, and the multinational nature of the Yugoslav community and its federal constituents, on the other, inevitably came into conflict with every act of strengthening the center of the state. These were the developments which, together with the state management of economic enterprises at all levels and the strengthening of the state in general, not only suppressed the independent decision-making and democratic regulation of social matters widely practiced since wartime. These factor s also provoked resistance in the working class, among working people in general, and among the cadres still unaffected by the process of bureaucratization and still accustomed to more independent activity adapted to the particular local conditions and the national, cultural, and social characteristics of the places in which they worked.

After greater excesses of bureaucratic deterioration occurred, the Communist Party of Yugoslavia and its leadership began to critically appraise the experience in the administrative management of the economy, the role of the state, and the place and role of the party. It was time to return to the original texts and ideas of the classics of Marxism and to examine methods of liberation of the working class in its struggle to control all economic relations and the entire social organization and to decide on its own about the conditions, means, and results of its work. The conflict with the Cominform and a closer acquaintance with current practices of building socialism in other countries were additional factors which speeded up the process of formulating our own judgments about the past development of socialism and of searching for answers to the growing contradictions in Yugoslav society.

The ensuing conflict had its roots in earlier periods of the revolutionary movement in Yugoslavia, especially after Comrade Tito came to head the party in 1937, in the war and postwar periods, and in the peculiarities of the Yugoslav revolution. Under the new circumstances of conflict with the Cominform and the need for Yugoslavia to rely on its own strength in the struggle for bare existence, social thought, faced with the need to seek solutions to emerging contradictions, considered all issues intensively and critically, lifting taboos and freeing itself from prejudices and dogmas. Statism, centralism, state ownership, and the wage-labor status of the worker, who depended on the state and who had removed the private capitalist only to find the state as his new ruler, a state that assumed control, in his name, over the means of production — all this was subjected to thorough criticism. On the basis of this criticism the idea of workers’ self-management was gradually born.

2. The Central Issue: The Position of the Workers in the New Production Relations

By nationalizing and expropriating the means of production owned by the private proprietor, the worker, as the subject of the new production relations based on social ownership and self-management, has made the state itself unnecessary as the owner of the means of production, the manager of economic enterprises, and in particular, the appropriator and distributor of the proceeds of workers’ labor. In this way it has been possible to start a historical process which should enable the worker to manage social means, exercise control over surplus value, and abolish the duality under which the wage portion of income has been disposed of by the worker and the surplus labor portion of income has been controlled by the proprietor.

Let us point out some of the most important economic and social consequences arising from the surrender of enterprises to worker management. In the first place, what is essential here is the change in the nature of ownership of the means of production and the ensuing "disempowering" of the state. The means of production managed by workers become social ownership. They are not, therefore, subject to any group or other form of collective ownership by workers but are owned by all of society, while the workers who work with them perform direct management, maintenance, and utilization of them. Therefore social ownership may be differentiated from the classic notion of private capitalist and state ownership in the sense that what is socially owned belongs to the whole society and does not belong to any individual or any group or collective of individuals. Ownership thus conceived provides the basis for the new socialist self-management relations in Yugoslavia.

The social character of the means of production and the worker’s labor determine his social status and enable him to control the income and surplus value he creates. The socially owned means of production and income are the material basis of self-management and of the dominant position of the worker in the self-managed socialist society. Without them he would not have a real basis on which to build his position and influence in society. Only in this way does the worker cease to be a materially dependent wage laborer unable to exercise decisive influence on the course of social events. For this reason the Yugoslav Constitution declares such rights of the worker inalienable because they constitute his material and social position and enable him to play a decisive role in society.

However, the realization of the workers’ inalienable rights does not end with their proclamation in laws and regulations. This process calls for social struggle, which has been underway for thirty years in Yugoslavia. Even so, a self-managed society is not immune to technocratic usurpations or to enroachments on workers’ income and meddling by the state in self-management. For this reason the state should be more a guardian of the inalienable rights of workers and of self-management relations in production than a direct regulator of such relations, which should be increasingly controlled by a consensus of participants in self-management. In the case of Yugoslavia, this is the way in which the state is withering away and in which its powers are being reduced to those areas in which they are still needed and will continue to be for a long time (defense, security, foreign policy, unity of the system, and the like).

What is new and specific in an organization of associated labor in comparison with an enterprise managed by a private proprietor or one managed by the state? In the Yugoslav system of self-management, an organization of associated labor is a free association of workers — of their labor and social means. On the basis of such association, each organization acquires a full economic and legal identity. Such a status results not only from the need to respect social division of labor but also from the need to determine as objectively as possible each organization’s results of business activity and its contribution to the growth of the social product and the social productivity of labor.

Since the means of production are socially owned, the right to exercise control over them entails the obligation and responsibility to preserve their integrity and renew them through simple or extended reproduction. For this reason, full respect has to be paid to the economic function of the means of production as well as to their rational utilization. The working collective (associated labor) may dispose of the means of production, replace them, or sell them, but always under condition that full attention is paid to preserving their undiminished value. Otherwise, the value lost must be replenished from the income of the working collective itself.

The same principle also applies to the valuation of work performed. It cannot be haphazard but must be justified by realized income and be based on the principle of distribution of income in accordance with work performed. Like any independent businessman, each organization of associated labor must also achieve a certain amount of accumulation, so that it can invest, either alone or with other interested organizations, its own or borrowed funds in the expansion of production. Investment decisions have to be based on prior feasibility studies, which should show whether a proposed capital investment will pay off in more products and higher income. In other words, all factors of production have to be duly evaluated and contained in the price which, in principle, should reflect general market conditions at home and abroad.

Each organization of associated labor is a complete businessman, an independent entity which under general economic conditions of production, and in accordance with its plan and market requirements, every day strives for income out of which it will satisfy the individual and common needs of its workers and the general needs of society. The income of each organization of associated labor is, at the same time, its own and social income. The income must be earned, and the distribution of that income must serve to satisfy the needs I just mentioned.

The state, in its various forms, has a limited right to impose taxes to satisfy general social requirements (defense, security, government administration, and the like), so that all other general social needs are covered by distribution which takes place either in the economy or in mutual relations (repayment of loans, etc.) or within the jurisdiction of each working collective (in case of distribution of net income to personal incomes and accumulation).

Thus an organization of associated labor in Yugoslavia is a specific entity which has managed to win autonomy with respect to the state. The new status of workers, which is based on social ownership, enables organizations of associated labor to be independent and to acquire economic power by having control over the means of production, their labor, and realized income. Therefore they may have inalienable self-management rights and at the same time be responsible both for their existence and for the progress and prosperity of the whole community. Their social status is obviously new, unique, and undoubtedly dominant in the society precisely because it is based on self-management and social ownership.

3. Economic Laws of Socialist Self-management

The new relations of production exert a decisive influence on the character of commodity production inherited from the past and make necessary the entire transitional period of the building of socialism. The contribution of each organization of associated labor is determined in the market through prices formed in accordance with economic conditions prevailing on domestic and foreign markets. To overlook such objectively given conditions of the development of self-management would lead to subjectivism, undermine the independence of organizations of associated labor, and impair the objective assessment of business results. Therefore the market and commodity production, with their favorable effects, do exist in the economy of self-management.

It should be pointed out, in this regard, that the changed relations of production make it possible to overcome, or at least mitigate, the impact of volatile market conditions by planning business activity, establishing closer cooperation among organizations of associated labor, or voluntarily combining them to form bigger entities.

In this way Yugoslav experience shows that associated labor possesses powerful resources which do not allow commodity production to transform self-management and its participants merely into group-owned enterprises competing in the market. With a meaningful application of planning and with the new relations of production, commodity production becomes an indispensable part of the whole economic mechanism because it stimulates the initiative of workers and of self-managed organizations and encourages economic competition for higher income on the basis of greater production, increased productivity, and improved quality. In other words, the means of production have been socialized; but the individual and collective contribution of workers, i.e., of organizations of associated labor, must be objectively measurable if the economic interest of producers is to be promoted as much as possible. In addition, the function of planning is to establish those conditions of work and income-earning which cannot be foreseen from a narrow perspective, to create conditions for balanced development, and to establish prerequisites for the elimination of economic and other contradictions by inspiring personal creativity and workers’ interest and by motivating their social responsibility for the entire material and social development of the community. Moreover, objective economic laws, social production powers, and ever more developed self-management social relations are simultaneously at work. They limit, gradually transform, and eventually eliminate the inherited laws, thus providing more room to express and substantiate new categories and institutions of self-managed socialist relations of production and the system of self-management itself, which is being built on the basis of such developments. To suppress commodity production, or even eliminate it, under present conditions would, now and for a long time, unavoidably lead to statism and to the limitation of workers’ self-management rights. This would mean turning away from self-management and going back to the state and state ownership.

The self-managed socialist economy in Yugoslavia pursues a policy of respect for the division of labor and strives for the widest possible cooperation with other economies. Its opening up to the world is seen as a condition for more rapid progress and as exposure to the favorable influence of higher productivity in more developed economies. It is seen as a chance to absorb the advances of scientific and technological progress through cooperation and exchange in the marketplace. Basically, the orientation of the economy is antiautarkic because it respects the need for free exchange of goods, knowledge, and technology, as well as the free flow of development capital.

However, one cannot forget the inequitable relations inherent in the present international economic order or the need to change it. The more developed economies of the industrialized countries use the existing economic order to acquire superprofits by means of unequal exchange of commodities and other forms of monopolistic activity on the world market. Therefore it is necessary to be more active in international markets and to make continuous efforts to increase work productivity and the profitability of business operations in the domestic economy in order to reduce the degree of inequity in trade with the economies of other countries. Simultaneously, continued efforts should be made worldwide to change unjust relations in the existing international economic order.

For this reason, planning of the domestic economy, as an ever more important factor in the establishment of long-term connections with other economies, particularly with the economies of developed countries, can be the right way to cause a gradual change in the present situation, to increase and strengthen the forces of those countries whose vital interest is to change the existing unjust relations by establishing new standards of behavior in international relations and world markets, and to make a practical contribution to changing the existing economic order by introducing new forms of business activity and more equitable relations in trade, the exploitation of natural resources, and technology transfer. The development of the self-managed economy in Yugoslavia is becoming a more integral part of such an approach to international economic relations.

4 Direct Self-management and Forms of Association of Organizations of Associated Labor

One of the major questions that arises in the self-managed organization of society concerns the size and nature of its basic self-managed cell — the basic organization of associated labor. The criterion for the appropriateness of such an organization is whether its size, rights, and obligations enable the worker to participate directly in making decisions essential for the life and development of the organization, and whether the necessary material and social conditions have been provided. The organization must be of a size that enables the worker to have direct insight into its condition and problems, while at the same time there must be full...