Crisis in Yugoslavia: The failure of 'market socialism'

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Yugoslavia is made up of six national republics and two autonomous provinces. In recent months, Slovenes, Croatians, and Serbians have poured into the streets to protest discrimination by a government that has failed for 40 years to build a multinational state with equality for all. 12 SOCIALIST ACTION OCTOBER 1988 looked like a system of workers' selfmanagement. With workers' councils in the plants and self-management councils in community and government agencies, a network of self-managed institutions cover the entire country. The workers would appear to have the reins of power in their hands.

Workers do not control But self-management was born with grave bureaucratic deformations. A plan designed to energize the initiative of the workers was imposed on them from above —without their direct participation. A monopoly of political power was retained •Ljubljana SLOVENIA Republic Autonomous province by Tito and the Yugoslav CP.

The CPY, trained in the school of Stalinism, followed many of Stalin's methods of political control. Repression of political dissidents—to the left of the CPY as well as to the right—has been a constant feature of the regime for 40 years.

Tito limited the power of the workers' councils by imposing an appointed director to run the plant. Workers' control over wages and the budget was circumscribed by federal decrees and directives. Some workers felt they had so little power it was scarcely worth the time they spent in endless meetings.

Nonetheless, 1950 marked a turning point in Yugoslav history. All Soviet aid was withdrawn and Yugoslavia was left to its own resources. As one of the least developed countries in Europe, Yugoslavia had to make a tremendous leap to catch up. The first five-year plan, dictated by the Soviet leadership, was only half fulfilled, but it laid the basis for the industrialization that turned a backward peasant nation into a modern state.

The peasants were permitted to withdraw from the Soviet-style collectives and cultivate their own small farms individually. The rural population began to decline as newly built factories turned former peasants into industrial workers.

Economy grows rapidly

Despite Stalin's sabotage, the Yugoslav economy expanded at a rate of 13 percent a year from 1950 to 1960. But much of this Mass protests are shaking the state of Yugoslavia, the first workers' state established in defiance of Stalin and his Red Army.

Workers by the thousands have gone on strike. These are workers who presumably control their factories under the system of "self management." Slovenes, Croatians, and Serbians have poured into the streets by the tens of thousands to protest national or ethnic discrimination by a government that has failed for 40 years to build a multinational state with equality for all.

In 1987, Yugoslavia had 1570 strikes, involving 365,000 workers. On June 17, 1988, over 4000 workers from the Zmaj machinery factory marched seven miles to AUSTRIA HUNGARY the parliament building in Belgrade to protest wage cuts and corruption among high-placed bureaucrats. As they invaded the building they yelled, "Throw the thieves out!"

Fueling the unrest is an economy that is in shambles. There is a $20-billion foreign debt, a federal debt of almost the same size, CROATIA and an inflation rate of 200 percent. Three regions have declared themselves bankrupt, unable to pay their share of the foreign debt BOSNIA HERZEGOVINA or maintain their industrial plant.

Meanwhile, over a million workers-15 percent of the workforce-are without jobs. Many are young people who have never had Sarajevo a job. Those who are working earn wages that fail to meet basic living costs. Average wages are the equivalent of $150 a month. A four-member family must spend that much on food alone. There is a pervading sense that "Things simply cannot go on like this."

This conclusion is all the more bitter to Adriatic Sea those who have believed the "Yugoslav way" to socialism was the answer to the Stalinist regimes in the Soviet Union and other Eastern European workers' states. Yugoslavia is also an object lesson to ITALY ALBANIA those workers' states trying "market socialism" to get out of economic difficulties.

The Tito-Stalin break At the end of World War II, Tito and the leadership of the Yugoslav CP (CPY) had undisputed leadership and authority in the country as a result of their record in the struggle against Nazi occupation. Stalin, however, demanded that the CPY maintain capitalism and a bourgeois government in Yugoslavia. This was the result of the agreements between Stalin and the major imperialist powers at Yalta and Potsdam.

But Tito and the Yugoslav CP refused to be tied down to Stalin's agreements. They drove out the capitalist representatives from the government and, in 1947, proceeded to nationalize the major sectors of the economy. At the same time, Tito moved to establish greater independence from Stalin and the Soviet Union. This helped spur Stalin to break with Tito in 1948 and launch an all-out effort to isolate and break Yugoslavia.

The Yugoslav CP had to move fast to firm up its political and social base. The ideology of the party leadership, however, was nationalist rather than internationalist. They claimed that Yugoslavia could arrive at socialism by its own national path, similar in essence to the "socialism in one country" established in the Soviet Union under Stalin, although different in form.

Historians say Tito and other leaders reread the Marxist classics after their break with Stalin. They ran into references to the state "withering away" on the road to socialism. But after decades of workers' power in the Soviet Union, they observed, the state was more powerful and repressive than ever. Yugoslav socialism must take another road, they determined. Decision-making must be put in the hands of workers at the point of production, on the factory floor.

Thus, in June 1950, was born what growth was based on capitalist money.

Pursuing an anti-Soviet policy, the United States lent or gave Yugoslavia $40 million in this period. (By this time, Tito had endorsed imperialist aims throughout the world. In the early 1950s, for example, Tito supported the U.S. war against Korea.) International loans were offered, and, later, nearly a million Yugoslavs working abroad sent foreign currency home.

This inflow of foreign money concealed, for a while, a basic contradiction. Tito set about to build socialism in one country. But he headed a state in which only the means of production were socialized. Distribution was still subject to bourgeois Mites VOJVODINA •Novisad Belgrade YUGOSLAVIA MONTENEGRO KOSOVO Titograd _ Dakovica • Skopje MACEDONIA norms of price and profit.

Moreover, the underdeveloped Yugoslav nation was subject to the more powerful capitalist world economy. As the country turned to the West, it found that Yugoslav productivity was too low to be competitive on the world market. By 1961 only 62 percent of Yugoslav imports were balanced by exports.

Control decentralized

Up to 1950, the economy was directed from Belgrade, and the enterprises, with their workers' councils, could only mechanically follow a national plan. But this proved unworkable. It was impossible to supervise every enterprise.

Plant managers usually limited their goals to meeting quotas. They often found it cheaper to buy parts abroad rather than manufacture them at home, and their plants became mere assembly lines for foreign products. The effect on the balance of trade was disastrous.

In the '50s, control was transferred to communes and districts. Producers' councils and people's committees supervised the operations of enterprises in their area. Workers were represented on these councils twice: once as producers and again as consumers. They were able to outvote the peasants who were more numerous.

Workers' self-management now had a much larger scope for operation. But here the managers and experts who dominated the factories reappeared as "technobureaucrats." They dominated council meetings by expertise and technical jargon that few worker delegates could understand; especially after eight hours on the job. So the power of self-management on this expanded level slipped out of the hands of the workers.

Control was also slipping out of the hands of the national regime in Belgrade. New five-year plans were still drawn up, but the six national republics decided how they would carry them out. Communes and districts preferred to push their own projects, ahead of national goals. The geopolitical nature of Yugoslavia has made relations between the republics and the two provinces a problem that has not been solved in 40 years.

For hundreds of years the area was dominated by foreign powers: Austria in the north and the Ottoman Empire in the south. Unity among the ethnic groups was discouraged by the conquerors. Language differences were fostered.

One language-two alphabets Serbia and neighboring Croatia have a common language but use different alphabets. Those using the Latin rather than the Cyrillic alphabet think of themselves first as Croatians, and only second as Yugoslavians.

This tendency is exacerbated by the higher level of development in the north. Croatia and Slovenia can generate the capital to expand their industries. Macedonia and Montenegro must be subsidized by national funds. These funds can only come from the surplus generated in the north, where local provincial interests collide with the needs of the nation as a whole.

Appeals to socialist consciousness have only limited effects. In the '50s a spirit of self-enrichment replaced the socialist elan of the civil-war days. Tito's own life style did not engender a spirit of sacrifice. He lived in splendor, on an island estate, in palatial townhouses, and hunting lodges.

Lavish life styles

Lesser bureaucrats emulated Tito with Mercedes cars and country villas. It is not surprising that the factory worker thought more about acquiring a car than aiding the poorer Yugoslavs in Bosnia.

At the district level, techno-bureaucrats engaged in empire building. They expanded their plants and built new ones with little regard to national needs. The result was low productivity and plants running at a loss. In one year losses ran to $600 million—to be made up by the national treasury.

Tito's answer to this problem was "market socialism," with the banking system holding industry's funds and making loans based on potential profits. Now plant managers had to cut costs and show a profit before they could get a loan for expansion. Unprofitable plants were allowed to go bankrupt.

This led to unemployment. Nearly a million workers left Yugoslavia to become guest workers in Germany and other countries. Their remittances home helped with the balance of payments, but these vigorous workers were building capitalism abroad instead of socialism at home.

Inflation set in when prices were left to market forces, and the foreign debt rose ever higher. The national plan was further undermined. The state monopoly of foreign trade was threatened as local enterprises made their own deals.

Federal control exerted

Actually the federal government could not leave the economy entirely hostage to market forces. It had to intervene to set price controls on some necessities. It had to intervene in the banks to direct investment to underdeveloped regions, and it had to take control of the foreign exchange earned by local enterprises.

Bureaucrats in Croatia and Slovenia protested any restrictions on their freedom to profit from market forces. In resisting,

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authority. However by yielding to the forces of "market socialism," it has already lost many of its levers of control.

One firm lever still in the hands of the government is the army. It is now being thrown into the fight—not directly, but through "Committees for General Peoples Defense" (SPD). Together with the policecontrolled "Social Self Protection (SSP), the army is exerting pressure in the factories and on public life in general.

Military in the workplace Police and military pressure is not primarily exerted on the Croatian bureaucrats but against factory workers and rank-and-file dissidents. They are reaching into the factories and arresting potential strike leaders. It is estimated that a thousand political prisoners are now in jail.

Workers must wonder how "self-management" could degenerate into military discipline. But self-management was not real so long as the workers had no real political power. The right to form independent trade unions and independent workers' political parties must be an immediate demand. Workers' councils that truly control the economy would then be possible.

Workers would distinguish between the right of the Croatian people to a national culture and civil rights, and the efforts of Croatian and Slovenian bureaucrats to cut