Yugoslavian Socialist Experience

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Universum Journal, 3.Issue, June 2009

YUGOSLAVIAS SOCIALIST EXPERIENCE

Dr. Ercan Gundogan

Universum Institute for Economic and Social Studies

ABSTRACT

Yugoslavia after the Second World War followed a Soviet style socialist build up. However, after 1950s it began to create its own socialist democracy model. Abroad it embraced and became one of the leaders of the non-alignment movement along with India and Egypt. Inside it created socialist self-management. Choices of foreign and internal policies were accompanied by the isolation of Yugoslavia from the Soviet Union and the Eastern block countries. With market socialism adopted after 1950s it developed its already strong relations with the Western capitalist countries. It did not de-link itself from the Western Europe and the US during the cold war. It was a multinational socialist federation, open to Western capitalist countries, implementing market socialist economic policies. Yet, despite its relatively liberal socialist system, with the end of the cold war, it could not escape the fate of dissolution as happened in the all socialist system. It turned into geography of nationalism, economic collapse, civil wars, and foreign military interventions. The proceeding tries to reveal the distinctive aspects of Yugoslavian socialism. The proceeding shows the reasons behind its dissolution, which is an ironic example of the faith of even a socialist country which has close western capitalist relations, capitalist market economy and self-managing type of democracy.

Introduction: From Marx to Stalin1

Marxian theory of revolution requires the transcendence of the social, economic and political power of the bourgeoisie, which first starts with the seizure of the state power and continues with the social and economic transformation of bourgeois society. Transformation is realized through the formation and mediation of the proletarian dictatorship. The last one is envisaged as the opposite, antithesis, of the bourgeois dictatorship. The unity of the opposition of the two forms of dictatorships is seen as the socialist transformation of the bourgeois system. The main mechanism of the transformation is the state power of the revolutionary proletariat. It is considered to end

1 For a critical and selective summary of Marxian and Marxist theory as whole, Part I of my book can be

applied to: Ercan Gundogan, 2009, Marxian Theory and Socialism in Turkey, A Critique of the Socialist Journal Aydnlk, VDM Verlag. For original Marxian and Marxist texts, it can be applied to http://www.marx.org/history/etol/document/icl-spartacists/prs4-yugo/pci-res.html

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up with the emergence of communist society, classless society without any oppressive central political power.

Proletariat and its political party seize state power and introduce some radical measures such as the abolishment of private property in the form of states public property. Then it organizes production using central planning methods. Simply, capitalist market is replaced by central planning as private property is transformed into state property.

First socialist revolutionary wave of the twentieth century produced the Soviet Revolution, which was accepted as the classical revolutionary model on the base of Marxism. Marxism turned into Marxism-Leninism, which meant the first successful seize of political power by the working classs vanguard party. Marxism Leninism was based on the fusion of state and party, central planning, abolishment of private property and market economy, all of which were the medium and mechanisms of the establishment of the proletarian dictatorship. The last one refereed to the economic, social and political system of the working class as a whole. Proletarian dictatorship also meant the transcendence of the bourgeois democracy, which was based on the voting power of the electorate represented through parliament and other elective bodies. The Soviet model introduced soviet, council model, which replaced parliamentary democracy. It was anti-parliamentary and was based on democratic centralism that required down to top formation of political power, that was democracy, and the top to down adoption and implementation of the final decisions.

At the beginning, the soviet model can be seen as a Russian national model of revolution, which was established over the ruins and territory of the Tsarist Empire having oppressive and weak democratic tradition. However, Lenin wanted, theoretically and practically, to reproduce the model of the Paris Commune of 1871 in Russia after considering the failures and mistakes of the Commune. The Paris Commune was centrally weak, did not attack the financial power of the bourgeoisie and could not penetrate into countryside. Its power and experience was confined to Paris. Apart from its weak sides, it was the first model of the proletarian dictatorship as described by Marx and Engels later on. Commune was also not based on parliamentary democracy but on the organized power of the working people in the army, public offices and work places. Hence, the lessons of the Paris Commune pointed to a more centralist state system having no concession to bourgeoisie and antiparliamentary representation of the masses as well as closer relations with the countryside and the peasants.

Next stage of the Soviet revolution witnessed the establishment of socialist industrial infrastructure and the collectivization of the agricultural production during Stalins period. The system that had been outlined and designed during Lenins period was consolidated and empowered under Stalin. However, the workers democracy was replaced with the central political system of the communist party. All work places, offices or workshops, were put under the control of directors appointed by the party officials.

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During and after the Second World War, the soviet revolution found the opportunity of expanding its power towards the Eastern Europe and Balkans in which Nazi occupation and anti-fascist struggle had prepared the ground for new socialist states or alternatively social democratic regimes. The Soviet Union sometimes established new socialist regimes for geo-strategic reasons and sometimes supported already existing socialist parties for the seizure of political power.

Socialist Yugoslavia

The Communist Party of Yugoslavia was established in 1919 in the Kingdom of Serbs, Croats and Slovenes, and became the member of the Comintern2. Party under the leadership of Tito organized the Partisan against Nazi occupation and succeeded in its guerilla form of resistance and struggle.

It is controversial subject of how much the Partisan gained the support of the Soviet Union. However, the idea of the Yugoslavias new politicians is that the Partisans success was mainly based on its own sources. On the other hand, one of the cold cases between the Soviet Union and Yugoslavia was the alleged British-Soviet negotiations held in Moscow between 9 and 24 October 1944, in which Churchill and Stalin agreed on fifty-fifty say in Yugoslavia, which Yugoslavs never accepted3.

Turning point for Yugoslavia in terms of socialist transition was caused by Soviet-Yugoslav rift which resulted in the expulsion of Yugoslavia from Cominform in 1948. The Soviet Union accused Yugoslavia regime of being an agent of imperialist capitalist countries. Here again, soviet accusations were controversial given the fact that Khrushchev would reject all claims and accusations put forward by the Soviet communist party led by Stalin. Nevertheless, it was seen that Yugoslavia repeated its loyalty to the principles of Marxism-Leninism and Stalins leadership in the socialist system.

Despite early disputes between Yugoslav socialists and Stalin, at the beginning, new socialist regime adopted Stalinist policies and applied to central planning and the collectivization of agricultural production. However, early years of socialist experience were not so successful. The failure was also caused by the isolation of the country from the socialist countries after 1948.

One of the solutions to economic backwardness and isolation from the socialist countries might have been to approach the Western capitalist countries as a foreign policy and to apply market economy as a model of economic development. It is indeed the 1948 Soviet-Yugoslav rift that led into new preferences and solution for Yugoslavia both home

2 http://en.wikipedia.org/wiki/League_of_Communists_of_Yugoslavia (accessed in 25/5/2009)

3 However, this is an rgument stated by Churchill in his memoirrs. For example, Y. Gurenko rejected this

idea by saying that a letter written in 1945 June by Churchill to Stalin, repeating the agreement between two leaders made in 1944, were never delivered to Stalin. See the renewal of this old debate, Slobodan Stankovic, http://files.osa.ceu.hu/holdings/300/8/3/text/85-3-49.shtml (accessed in 4/20/2009)

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and abroad, and into a new socialist experience4. One writer mentions that the involvement of Yugoslavia into Non-aligned Movement (NAM) is seen as the extension of self-management implemented at home5.

Workers Self-management

Despite the fact that first examples of workers self-management was given by some enterprises in 1949, the full implementation of the system was introduced by the laws enacted by the Federal Assembly in 1950 and 1951. These laws replaced state ownership with social ownership over the means of production. The workers were transferred managerial responsibility. Workers councils had the authority over production goals and financial supervision whereas directors appointed by the government had veto rights over the decision of the councils. Besides the government adopted free market fluctuation of some prices according to supply and demand. But monopoly of the government over foreign trade was kept intact.

The fact that self-management system replaced central command economy needed the loosening power of the communist party over decision-making processes. In November 1952, the communist party was renamed The League of Communists of Yugoslavia (LCY). The name signals the break with Stalinist model and implies a new party model, which does not direct but influence democratic life in different parts of social, economic and political life. Nevertheless, the party had the final say and political monopoly and principle of democratic centralism was retained. In addition in the same period, the Peoples Front was renamed the Socialist Alliance of Working People of Yugoslavia (SAWPY). Despite these ideological and political changes, communists still occupied important governmental and managerial positions.

Constitutional amendments in 1953 nearly changed 1946 Constitution, included changes about workers self-management. The amendments introduced Federal Executive Council as well as reducing the autonomy of the republics. More importantly in the same year, collective and state farms were abolished. Socialist share over land property decreased from 25 percent to 9 percent. Landless peasants were supported by reducing the legal limits on land property from 25-35 hectares to 10 hectares. This change began to prevent development of efficiency of farming. Government also reduced some taxes, encouraged cooperatives and increased agricultural investment. As agricultural production increased, the government focused on industrial development. Accordingly,

4 Yugoslavia was expelled from Cominform in 1948 and the latter also called upon the communists in

Yugoslavia to overthrow Tito. The rift was caused by the fact that Yugoslav communists insisted on their national independent path to socialism, which contradicted with the control needed by the Soviet Union over the Eastern Europe after 1947. In addition, it is argued that during the Second World War, the Soviet Union did not permit free initiatives of the Partisans, did not give military support to them in the early phase of the war, and it negotiated with Britain and the United States over the division of Yugoslavia into spheres of influence among themselves. See, http://www.country-data.com/cgi-bin/guery/r-14786.html (accessed in 4/23/2009). 5 Alpaslan Ikl, Alpaslan Ikl, Kuramlar Boyunca zynetim ve Yugoslavya Deneyi, Alan Yaynclk,

1983, stanbul, p:93, 99, 102.

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industrial production boomed and manufacturing exports doubled before 1960. Yugoslavia had the second highest growth rate in the world between 1957 and 1960.

As living standards improved along the lines of economic and political reforms, consumption items increased in the domestic market. On the other side, the state abolished some restrictions on religious activity, public criticism and traveling. Western thoughts began to penetrate into the country. However, as a reaction, party emphasized democratic centralism more and in order to raise discipline, it established party organs in factories and academies. It was not surprising that one of the ideologues of the system, Milovan Djilas published in 1957 his book The New Class and argued that new communist elite replaced the old bourgeoisie6.

Renewal, 1963 Constitution and 1965 Reforms

Introduction of market socialism and abolishment of the government monopoly over foreign trade in 1961 led into inflation and foreign-trade deficit. But, anti-inflationary measures subsequently resulted in recession in 1962. Economic problems required some reforms such as more decentralization of the decision-making process. Demands for economic reform was accompanied and deepened by the renewal of interregional conflicts and nationalist claims. The state could not have solved the inequality between the developed northern republics and the poor southern regions. It was also argued that some regions obtained more shares than the others. Liberal party members such as Eduard Kardelj and Vladimir Bakaric, who were mainly from Slovenia, Croatia and Belgrade, advocated decentralization measures that would be beneficial for already developed regions. On the other side, conservative members, who were mainly from Serbia and Montenegro, supported centralized measures and investment in the underdeveloped regions.

New Constitution of 1963 expanded the principle of self-management by introducing local councils into social sphere such as education, culture, welfare, health and administration. Party offices were separated from governmental offices and rotation system was adopted for government tenure. During 1960s, the parliament became more active and witnessed the use of liberal ideas especially. The assembly in addition enacted the legal framework of market socialism between 1964 and 1967, reducing the authority of the state in economic affairs. In this time, currency was devaluated, foreign credits were obtained and Yugoslavia signed the General Agreement on Tariffs and Trade (GATT).

The economic reforms in the line of liberal market economy created unemployment, inflation, liquidity problems, stagnation and more income disparity as well as new reform demands. Some regions such as Serbia, Macedonia and Montenegro tried to prevent the closing of unprofitable enterprises. Developed regions such as Slovenia and Croatia criticized the heavy investments made in the less developed regions. Workers began to migrate into Western European countries. Foreign currency reserves were filled by these

6 http://www.country-data.com/cgi-bin/guery/r-14787.html (accessed in 4/23/2009)

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workers and tourism sector as well. In addition, foreign capitalists were allowed to invest 49 percent to domestic firms and return their profits to their countries. Moreover, Yugoslavia signed a long-termed trade agreement with the European Economic Community in 1970. The recession ended, unemployment decreased with increases in living standards. Nonetheless, inflation began to increase and profitability remained the problem for many enterprises. Centralist party members and mid-level bureaucracy tried to prevent the implementation of the reforms which would weaken party control and the country as well. The main figure of critical approach to the reforms was Aleksandar Rankovic, Serbian vice-president and the head of the secret police and party cadres. However, after some investigations for secret police he leaded, he resigned. His resignation meant the defeat of the conservatives. With the additional reforms in it, party as a central force lost its prevailing position. Leaders outside of the center obscured Belgrade and began to use authority for party appointments. Election law also was changed and permitted the election of the candidates who had not been approved by the party. With the weakened power of the party, liberals argued far more that the party should influence rather than direct the self-management based decision making process. Media and universities became the centers of critical ideas. The praxis circle, circulated between 1968 and 1975, established by a group of Zagreb and Belgrade intellectuals, interpreted Marx in an unorthodox manner and criticized party positions.

With the Warsaw Pacts invasion to Czechoslovakia in 1968 August, all attention was directed to foreign policy. Tito supported Alexander Dubceks regime and criticized the invasion. The Soviet-Yugoslav relations got worse and Tito stated that in case of any Soviet invasion of Yugoslavia, they would resist. In addition to this international problem, between 1968 November and 1969, Yugoslavia witnessed the demonstrations of Albanians in Kosovo and western Macedonia, demanding republican status for Kosovo. As a concession, with the 1968 constitutional amendment, Kosovo obtained local economic and social planning authority as well as local financial control. This new status of Kosovo was criticized by Serbian and Montenegrin intellectuals, arguing that concessions would increase Serbian migration from Kosovo. Furthermore, these intellectuals, together with religious men in Serbia, also pointed to raising Muslim nationalism in Bosnia and the establishment of a different Macedonian Orthodox Church.

Political discussions were followed by new amendments of the constitution in 1971, which turned Yugoslavia into a weak federation. The amendments reduced federal responsibilities in defense, foreign policy, maintenance of a single national market, collective money and trade policies, self-management system and collective and civil rights. Provinces and republics were empowered over other functions, and more significantly, they obtained veto power over federal governments decisions7.

Yugoslavias economic planning during 1960 aimed at integrating economy into international market. National currency was devaluated and tariffs and import restrictions were reduced. In addition, workers were permitted to work abroad. Foreign currency


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sources were tourism and remittances of the guest workers. When third five year plan was abandoned in 1962, imports and inflation increased, exports stagnated, while wages increased at the expense of productivity. The failure of third five years plan led into the preparation of annual plans between 1952 and 1957. Conservative sections of society warned that socialist values would be lost because of decentralization of investment decisions and markets dynamics, which were considered by the liberals as the sole solution to economic problems.

It is seen that liberals defeated conservatives when 1963 constitution adopted market socialism. The decision making power of the central government were far more loosened over investment, prices and incomes. The central government would intervene just in case of crisis8.

The 1963 Constitution was designed by the main ideologue of the system, Eduard Kardelj, who benefited much from liberal ideas. The constitution however recognized the need for some centralization. In order to soften the regional conflicts and empower the national representation, it was embraced that republic would be represented only in the Chamber of Nationalities, which was a part of the Federal Chamber. The aim was to support federal funds for the development of poor regions and republics. However, other articles reduced centralization and far more separated the state and the party. In addition, the principle of rotation was adopted so as to prevent more than eight years period for executive positions. The other significant change was the introduction of court procedures for human and civil rights, which were absent in the other socialist states. During these political and economic changes, the Tito advocated economic reforms while resisting against decentralizing state power more9.

Despite all developments towards market socialism until then, legal framework would remain uncompleted without the thirty laws of 1965 economic reform. The purpose of the reform was to leave to the enterprises instead of the government the greater part of their income through tax reductions, limitation of the central control over investment decisions, adjusting national prices to the world market, devaluation of national currency and lower customs and export supports a part from credits for peasants. Unlike successful economic performance ten years before 1965 reforms, however, now economic performance would be weaker since the reform increased the demand for resources, inflation and balance payments deficit as well as unemployment. Between 1965 and 1974, economy as a whole was shrunk10.

The 1974 Constitution

It is observed that the adherents of market socialism began to lose power at the beginning of 1970s and after 1974, and centralist tendencies became more influential. Autonomy of




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enterprises was limited by giving additional authority to the state bodies. In addition, it was attempted to decrease some additional earning caused by privileged position in the market. The state was weakened, said by Kardelj11.

The new constitution introduced new political bodies, check and balance system in order to empower the party and to reduce the power of managers of the enterprises. The new constitution adopted delegation system of the associated labour, socio-political organizations and local citizens instead of direct election to legislature. It was stated that new system was based on direct workers democracy. However, the system increased the party control in the federal, republican and local assemblies. Nevertheless, the 1971 amendments decentralizing power to the republics was kept intact12.

Another important novelty was the creation of the state presidency within the federal structure. Its head was Tito who symbolized the unity of the state and party leadership. Nonetheless, central partys members were still elected by regional decisions13.

The 1974 Constitution did not change the decentralized power structure of the 1970s. It reasserted the self-management system without central intervention and expanded republican and provincial power in political and administrative contexts. According to the constitution, the federal assembly was the highest level of the self-management system. The political system started at the local level in which labour and political organizations elected the members of the communal assemblies, which then elected the members of the provincial and republican assemblies, which at the top determine the members of the federal assembly. The highest one, federal assembly was composed of two equal chambers, the Federal Chamber and the Chamber of Republics and Provinces. As in the previous constitution, the aim was to balance economic and regional interests while asserting the social unity idea of communism. It also redesigned the State Presidency by reducing the number of its members from twenty-three to nine that would equally encompass representatives from the republics, provinces and the ex-president of LCY. The last member was considered that he or she would empower the role of the party in the national decision making process. This system continued until 1988 when the state and party were far more separated. It was seen that the constitution aimed to protect individual rights and legal procedures too. The more important provision presented far more autonomy to Kosovo and Vojvodina provinces within Serbia14.

Leadership role of the LCY was symbolized under the name of Tito and Kardelj in spite of decentralization of power. Tito was elected as the president of the league for life and his presidential position in 1974 was empowered more. The constitution also reasserted the regime as defender of Marxism-Leninism15.

11 Alpaslan Ikl, ibid, pp:121



14 ibid

15 ibid

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The chief ideologue of the system, Eduard Kardelj, formed the ideological framework of the regime. His book The Directions of Development of the Political System of Self-Management argued that Yugoslavian pluralism was different from bourgeois democratic pluralism since the LCY was the framework for contenting interests and was based on especially the self-management principle for economic and political life. These principles would be empowered more with the Law on Associated Labour of 1976. This law and the constitution were the codification of the decentralization of power and control and supporting the interests groups outside the party. The political reforms during 1970s fragmented far more than before the country wide interests, which suffered also from regional differences. Communist cadres became divided in terms of loyalty and faced weakening leadership of the center. In 1979 the presidium of the LCY began to be rotated and after Tito died, presidium commission included regional party chiefs. Rotation system was based on nationalities through 1980s and revolved around the eight federal jurisdictions. But, after 1980, decentralizing forces supported for fifteen years had started to destroy the single party regime16.

Classes and Planning

Yugoslav peasant population was reduced from 67.1 percent in 1948 to 16.7 in 1984 due to economic policies withdrawing resources from agriculture and other social factors. In 1981, around 2.5 million agricultural population of 4.3 totals still cultivated small private land parcels and 1.5 million of which were employed in other regular jobs elsewhere. Collectivization program started in 1949 and stopped less than four years later and at the end of the program small private lands remained the main form in agricultural areas. Peasants covered the 95 percent of the agricultural workforce, holding 82 percent of the arable land. Average peasant farm was 3.4 hectares. Property limits on flatlands would be raised to 30 hectares in 1988. During the socialist period, land structure did not permit large scale mechanization. Productivity was far lower than the Western Europe so that one Yugoslav peasant farmer fed five people whereas one Western European peasant sixty-five people. Even in 1990s, peasant forms of culture and living were still widely observed in everyday life. Peasants formed a half of the guest workers in Europe. In 1970, 25 percent of the peasants had an industrial job and one member of half of the peasant families had an industrial job. Remittances sent by the guest workers led into a housing boom in rural areas17.

The socialist government started rapid industrialization program, which increased the size of the working class. Between 1947 and 1952 industrial jobs increased 75.2 percent as rural migration was attracted by urban industrial employment. Until 1975, industrial employment increasing rate was annual 4.3 percent. The industrial workforce was 1.1 million in 1947 and increased to 6.3 million in 1985 when the state controlled social sector employed 98 percent of the total workers. Economic reforms introduced after 1948 changed state property over enterprises into social ownership, officially transferred the

16 ibid


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control over the state property to workers who operated the enterprises. The socialist self-management remained in force until the reforms of 1989. It ensured life-long job security to the workers as long as the worker did not terminate the contract. In other case, he lost the opportunity to work for another enterprise in the social sector. According to 1976 dated Associated Labour Act, each worker belonged to a basic organization of associated labour (BOAL). The BOALs formed the workers councils, which appointed executive bodies for the definition of wages, production goals, recommending investment policy. Director or a board was appointed by the executive body for current operations. Nonetheless, educated workers occupied the large share in the executive councils. From 1950s to 1970, the share of the skilled workers increased and occupied the half of the seats in the executive body. However, we have to note that around a third of the workers belonged to skilled workers. The connection and information possibilities the directors had enabled them to influence the decisions of the workers councils. In time, workers become more influential over wage issues while the directors decided more and more on the investment and production decisions as well as current operations18.

As for the market relations of the self-managed enterprises, we see that, wage preferences and social security concerns contradicted with efficiency considerations. In economic slowdown, investments rather than wages were reduced. Without workers consent, workers could not be dismissed. If this was preferred, alternative jobs, training for new jobs had to be provided within a legal procedure. The economic reforms of the 1980s changed the conditions of the workers dramatically. At the end of 1980 workers strikes achieved a record level and many of the workers returned their membership cards to the LCY. Around 1985 the League had only one of eleven semiskilled workers and one of five skilled ones. The trade unions had no autonomy and hence could not protect workers rights. On the other side, the workers considered the unions irrelevant. Towards the end of 1980, independent trade unions were permitted19.

In the late of 1980, the laws limiting private enterprises became dysfunctional in terms of taxes and number of workers demanded. The workers got the opportunity of working for the private enterprises for better payments with longer hours compared to social sector. These private enterprises also illegally employed skilled workers who worked for them after working day in the social sector while many workers worked additional to the social sector. During these years, unemployment became a serious problem for the workers. Between 1965 and 1985, the number of unemployed workers increased from 237.000 to 1.039.000. Even more, regional rates were unequal. Slovenia had the lowest rate while Kosovo the highest. A reform in 1989 permitted the elimination of unnecessary workers and hence increased more the unemployment rate. In the first stage of reform, policy planners predicted that unemployed workers would be re-employed by private enterprises. But this was not realized20.


19 ibid

20 ibid

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As for capital ownership, we see that collectivization of agriculture was abandoned in 1952 and agricultural land was left to small peasantry. Small peasant farming dominated rural areas until 1980s. In 1984, 83 percent of cultivated land belonged to private farming, with 84 percent of live stocks, 72 percent of net agricultural production. These were the facts despite official hostility to private and small economy. Small enterprises were seen as independent ownerships. At the end of 1980s, many Yugoslav economists suggested the small business to be recognized and supported officially and that ceiling limit to private property on land had to be increased from ten to thirty hectares. It was thought that these regulations would support entrepreneurial spirit and hence increase efficiency. At this point, we have to remind that despite Titos objections, Yugoslavia was tolerant toward market dynamics. Nonetheless, market liberalization slowed down in 1970 due to federalist tendencies and the adoption of the social compact system of 1974 constitution, which limited decision making and competition of BOALs in the communes and republics. In addition, decision making power of the republics limited the expansion of markets across republics. This limitation weakened the market at the end of 1980s. It was already in 1990 that Yugoslavia started again the incorporation of the Western economy into socialist self-management system. Then, profitability had to be concerned by the enterprises as unprofitable ones had to be faced with bankruptcy. In 1990 also, workers were permitted to become shareholders of the enterprises and the workers strikes were tolerated and legalized. Looking at 1990s reforms, it was predicted that Yugoslavia would be a kind of Western market economy if large amount of state enterprises were not considered21.

As for the conception of planning in Yugoslavia, it is seen that it was not effective. During 1960s and 1970s, federal government prepared detailed plans with specific targets without taking information from below. In 1976, social planning based on consent and voluntary system was adopted. All parties had to participate in and agreed on the plan formulations. After the general program of the government is made, enterprises prepared microplans as self-managed communities and local governments formulated macroplans. Plans were prepared at all levels simultaneously with no planning hierarchy. After the discussion of the plans by all parties, the resultant document was turned into binding social contracts and then self-management agreements, regarding the materials and new capacity required. With annual evaluations, changes were made. Because of the dependence on imported machinery, international market made the changes necessary. However, plans were not applicable due to its consensual base and to the decentralized nature of the system, which made the cooperation and coordination impossible among the republics and provinces. As regards price controls, the system determined only the selling prices of raw materials and the retail prices of the final products. The intermediate pricing was made by the demand and supply dynamics of the market. In 1964, price controls were removed. Coming to 1990s reforms, controls on 85 percent of all goods were lifted, with the exception of essential goods such as electricity, oil and some raw materials and communication services22.



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Regional Inequalities

Autonomy of the republics and the loose federal structure of the country prevented mutual integration of the different economic units through the exchange of commodities. Serious regional economic disparities, until 1980s, could not be overcome although the raw materials of poor regions such as Kosovo were integrated to the national economy. While Slovenia, Croatia and the large part of Serbia had capital intensive technologies and attracted foreign investment, the economies of Kosovo, Macedonia, Montenegro and Southern Serbia remained labour intensive and traditional regions. This capital based division led into differences among eight federative units as regards employment, income, investment and social services. Poor economic and social conditions in Kosovo and Macedonia in particular provoked already existing ethnic problems and uprisings. However, the federal government still transferred financial resources extracted from Slovenia and Croatia to the Fund for Underdeveloped Regions in the 1980s. Slovenia which earned the 25 percent of national hard currency from exports contributed around its 20 percent income to other republics. One of the reasons behind secessionist attitudes of Slovenia was this contribution. In 1990, the Republic of Slovenia reduced its contribution to the fund, because of its concerns over the profitability of the investments and the decline of the local economy. Croatia would follow the suit if it could not get concessions. On the other hand, EEC and more autonomous status became more attractive for these relatively developed republics23.

One of the main problems of socialism in Yugoslavia was the regional income differences, which existed before socialism, but were not overcome through socialist policies. For example, according to statistics of regional (national) incomes between 1947 and 1976 and if the average of Yugoslavia is accepted as 10024:

Regions 1947 1952 1957 1962 1964 1976 Slovenia 175.3 186.7 181.5 198.5 198.3 201.7 Croatia 107.2 116.4 120.3 121.3 118.3 124.3 Vojvodina 108.8 89.3 109.2 103.4 110.8 116.6 Only Serbia 95.6 92.8 94.5 96.0 96.2 98.3 Montenegro 70.8 63.6 64.3 66.3 75.5 70.3 Bosnia-Herzegovina

82.9 87.6 74.2 72.7 70.2 64.2

Macedonia 62.0 59.3 60.0 57.1 74.2 68.1 Kosovo 52.6 49.3 42.5 34.0 36.2 32.2

The striking facts are that especially first Slovenia and second Croatia improved its respective shares in the period. Serbia and Montenegro sustained their initial shares while Macedonia slightly improved its starting point. However, first Kosovo and second Bosnia-Herzegovina stayed even behind their respectively low level of development. Difference between Kosovo and Bosnia-Herzegovina is more than twice where as the


24 Alpaslan Ikl, ibid, pp:138

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difference between the latter and Slovenia is more than three times. Serbia, autonomous provinces excluded, forms the average generally. Ikl compares these figures with Italy and the USSR. The difference between the most and least developed regions in Yugoslavia, Italy and the USSR were in turn: more than 5; 2.8; 2.4. Regional inequality in Yugoslavia was far more than Italy and USSR25. To these regional income differences, it should be added that a similar capitalist division of labour was seen between Serbia which was superior first in bureaucracy and then banking and foreign trade and Slovenia and Croatia which were specialized in industrial production. Serbian companies realized 70 percent of all foreign trade. Ikl correctly observed that national divisions especially between Serbia and Croatia stemmed from the competition between industrial capital, and banking capital and foreign trade26.

At this point, national and nationalities question in Yugoslavia, which first demonstrated themselves as national demands and demonstrations after 1960s and played a decisive role in the breakup of the country were caused mainly by the regional economic differences. In addition, secessionist movements and demands that clearly emerged after 1980s were resulted simultaneously by the attitudes of the wealthier and poor regions.

Foreign Policy, International Politics and Some Socialist Critics

After the Second World War, newly independent Asian and African nations conceived the Cold War as a power struggle between the two super powers for world domination. During this early period of cold war, the initiative of the non-aligned movement came from Jawaharlal Nehrus India, Josip Broz Titos Yugoslavia and Gaman Abdel Nassars Egypt. As one of the reactions to Cold War conditions of international politics, which divided the world into socialist and capitalist power blocks and spheres of influence respectively under the leadership of the Soviet Union or the USA, the Non-aligned Movement (NAM) emerged as the biggest independent and informal association of countries on a sui generis basis created by disavowing bloc divisions and the bipolar of two super powers. It did not mean isolationism or neutralism, but a rejection of commitments to a particular multinational military team led by a super power and the preference for egalitarian and democratic trends in the world politics against hegemonistic ones. In its later evolution, the NAM began to advocate a New International Economic Order (NIEO) based on equality and justice. Its initial emphasis on political imperialism was later shifted to economic and cultural imperialism. It was also accepted that global strategy was dominated by the USA, which prepared conflicts in the Third World for strategic purposes and policed the world27.

After Soviet-Yugoslav rift in 1948, Yugoslavia began a search for new relations. In September 1949, Yugoslavia obtained loans from the USA and some international institutions under the control of the Western Capital. And these relations would lead into a radical change in foreign policy of the country. Yugoslavia left the idea of Balkan

25 bid, pp: 142-3

26 bid, pp:142

27 Pavithran K.S, 2008, Non-Algnment and Post-cold War International System: Problems and

Perspectives, in www.pondiuni.edu.in/journals/ssas/10_pavithran.pdf (accessed in 25/5/2009)

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Federation with Bulgaria, stopped support to Greek communists in 1949 and also signed Balkan Pact with Turkey and Greece in 1953 (Ikl, 1980, 101-2). However, when two years later Stalins rule in the Soviet Union was replaced by Khrushchev in 1953, Yugoslav-Soviet relations were rehabilitated and Yugoslavian road to socialism was approved by the Soviet Union ((Ikl, 1980, 103). Nevertheless, zigzag policy of Yugoslavia never stopped. Once Khrushchev was dismissed from his position in 1964 and in the same year once Nehru of India died, reforms towards market socialism was accelerated and the relationships with the Western countries began to acquire new dimensions. As the development of market economy sped up, consumerism created new economic problems, the country needed more American aids. Inside, a new technocratic generation under the influence of the Western ideas began to dominate the state (Ikl, 1980, 104).

During the new phase of the market socialism that was accompanied with the NAM in international relations, Yugoslavia was sharply criticized by the socialist countries. For example, in a report called Is Yugoslavia a Socialist Country? and prepared for the Communist Party of China in 1965 to criticize the Soviets positive and friendly approach to Yugoslavian socialism, it was stated that All Marxist-Leninists hold that Yugoslavia is not a socialist country28. We can choose some of the counter-arguments about socialist identity of Yugoslavia. It was mainly argued that the regime was guided by modern revisionist theories and against the socialist camp and communist movement and obtained credit from the head of the imperialist countries, that is, the USA. Economically stated, it did not exclude private capital, private enterprises and capitalists. These entities were also developed more and more. With the Tito cliques help and encouragement, private enterprise and private capital have mushroomed in the cities in Yugoslavia In addition, without touching petty-producer economy and individual economy, in the countryside, capitalism was being restored. Workers self-government was nothing more than the state capitalism under the dictatorship of the comprador bourgeoisie. It was also argued by referring to Stalin, Marx and Engels, that slogans such as workers self-management or the factories to the workers were not Marxist ones but the ones of anarchist syndicalism, bourgeois socialism, opportunism or revisionism29. Regarding public property, it was referred to Stalin, Lenin, Marx and Engels, stated that the first task of the proletariat which seized political power was to turn the means of production into state property30. With the existence of the workers self-government and the property under their control, there could not be unified economic planning by the state, but the use of the profits as the main incentive to enterprises, capitalist competition, as well as the use of credits to encourage capitalist competition, and the capitalist characteristics of the relationships among the enterprises, socialist planning was impossible31.

The Communist Part of China also argued that American-Yugoslav relations led into a U.S. imperialist dependency. For example, between the end of the second war and 1963, more than 60 percent of Western aids belonged to U.S, the large part of which was

28 http://www.marx2mao.com/Other/IYS63.html (accessed in 4/20/2009)

29 ibid

30 ibid

31 ibid

15

granted after 1950. In return of this financial support, a serious treaties as regards military and defense and economic cooperation as well as alliances with two NATO members-Turkey and Greece- were signed between two countries. From 1957 to 1962 Yugoslavia signed more than 50 agreements leading into U.S. dependency from military affairs to foreign trade. Through these treaties, western monopoly capital began to penetrate into country, which also had abolished state monopoly on foreign trade32.

At this point, regarding Yugoslav-American relations, we have to add that for the USA, Yugoslavia occupied a very special case. Kissinger states that after Yugoslav-Soviet rift, Tito survived, with the aid of the Western democracies33, and more interestingly, he said that Any Eastern European country that broke with Moscowcould count on American aid, to be eligible for American aid, an Eastern European country did not become democratic; it was enough for it to pursue the Titoist model, and to leave the Warsaw Pact34. For the USA, Yugoslavia was a model which could be adopted by other socialist countries in the East Europe.

The Communist Party of China gave some examples of the Yugoslav support to US. imperialism by referring to revolution in Greece in 1949, the Korean war in 1950, Vietnam War, subversion against Albania, the Soviet intervention to Hungary in 1956, Lebanon war and the event in Taiwan Straits in 1958, U-2 incident in 1960, Cuban Revolution in 1959 among the others. In the final analysis, the fact that capitalism has swamped Yugoslavia in both town and country, the degeneration of an economy owned by the whole people into a state capitalist economy and the decline of Yugoslavia into a dependency of U.S. imperialism are all due to the degeneration of the Party and state power in Yugoslavia.35 As regards the last political observation, it was stated that between 1948 and 1952, a large part of the communist cadres, Cominform adherents and more than 200.000 party members were liquidated, arrested or imprisoned. It was added that in 1952 November the change of the name of the Communist Party of Yugoslavia into the Leagues of Communists of Yugoslavia meant the abandonment of the partys role as the vanguard of the proletariat. Moreover, in a clear fashion, it was quoted in Eduard Kardelj stated that The means of the revolutionary dictatorship of the proletariat, i.e., of the socialist state system, become increasingly unnecessary.

For Chinese communists, Titos state power was the dictatorship of the bureaucrat-comprador bourgeoisie. The change occurred through peaceful evolution. Yugoslav experience did show that within 15 years how a socialist state peacefully evolves into a

32 ibid

33 Henry Kissinger, 1994, Diplomacy, Simon and Schuster Paperbacks, New York, London, Toronto,

Sydney, pp:552 34

bid, pp:558 35

http://www.marx2mao.com/Other/IYS63.html (accessed in 4/20/2009). As for the attitudes of the NAM countries towards socialist and capitalist countries are also controversial. For example, one writer observes that although they supported much more than the other in some cases, in all cases, they did not support either of them. However, they were also criticized of acting together with the communist block and criticizing the Western Block in the UN, and also, positions of Cuba, North Korea and Vietnam. See, Tayyar Ar,2004, Uluslaras likiler ve D Politika, Alfa Yaynlar, stanbul, pp: 234-5

16

capitalist state36. Also in 1964, Branko Horvat introduced a semi-official economic theory of the system in his Towards a Theory of Planned Economy. This book was seen as the first official expression of the Yugoslav economic conception and criticized by Ernest Mandel in 1967. Mandel there did show that For them, market economy is not a necessary evil during the period of transition between capitalism and socialism; rather it is here to say even after the end of the construction of socialism. The more consistent theorists like Horvat daringly conceive of a communist society with commodity production in full bloom37. It is seen that for Yugoslav socialism, even in theory, market does not create any structural problem for the establishment of socialism and classless society. However, we have to remind that here market is not capitalist but socialist one in the eyes of Yugoslav socialists. Nevertheless, the idea of market, if it is not barter economy, necessarily requires commodity production with or without capitalist mode of production. Hence, with market, the idea of commodity was also preserved even for the communist future.

Both as a support to and a critique of the Communist Party of Chinas observation about capitalist restoration in Yugoslavia, we may take back the restoration to the earlier phase of socialism in Yugoslavia. For example, Kardeljs book Roads of Development of the Socialist Self-Management Political System, which gave the theoretical content of 1978 Congress of the LCY, argued that ever since the revolution (1941-1945) Yugoslav Communists have recognized the need for certain forms of political pluralism . The idea was that the party should not be a political force that has a monopolistic control over society, but rather that, as the ideological and political vanguard of the working class, it had a special social role but one that it could perform only in a democratic alliance and in cooperation with all social and democratic forces38.

Here, it is clearly seen that Yugoslavs conception of the political party echoes Euro-communist line39, which is widely associated with Antonio Gramscis theory of hegemony and his view about the role of the party in the formation of socialist hegemony. Here the party is given the role of democratic political cultural and ideological leadership instead of proletarian dictatorship in Marxist-Leninist framework40.

36 http://www.marx2mao.com/Other/IYS63.html (accessed in 4/20/2009)

37 Ernest Mandel, 1967, Yugoslav Economic Theory, Monthly Review, April 1967, pp: 40-49, in

http://www.ernestmandel.org/en/works/txt/1967/yugoslav-ec... (accessed in 4/23/2009) 38

Quoted in Slobodan Stankovic, Will Yugoslavia Experience The Fate of Chile? in http://files.osa.ceu.hu/holdings/300/8/3/text/85-3-49.shtml(accessed in 4/23/2009)

39 For the classification of the Marxist left, see Anderson, P., 1982, Batda Sol Dnce, Trans: B. Aksoy,

Birikim Yaynlar, stanbul

40 Here I suggest that although this conception of Gramscis theory of hegemony is widely observed and

accepted by Euro-communism, Gramsci can be interpreted in the lines of Marxism-Leninism as I tried to do. See Ercan Gndoan, Conceptions of Hegemony in Antonio Gramscis Southern Question and the Prison Notebooks, New Proposals: Journal of Marxism and Interdisciplinary Inquiry, Vol.2, No. 1 (November 2008) Pp. 45-60. For the connection between Yugoslavia experiment and Euro-communism, it is stated that adoption of the idea and concept of self-management by the later seems to be influenced by the popularity of the former over West European public opinion. In the formation of Euro-communism,

17

Socialist self-management in Yugoslavia was realized through associated social labour and workers councils. However, as Alpaslan Ikl observes, this sort of social property, which was introduced as an alternative to both state property and private property, was nothing but the group property41. The system actually corresponded to the theoretical content of Proudhons anarchical socialism. Ikl stated that after 1964, self-management was accompanied with market (apart from federalism principle the Yugoslav state system adopted). He also reminds that Proudhon suggested a market economy based on workers control and states that To Gramsci the basis element is the factory while the element Proudhon saw as the center of the social life is market. In fact, market is important for the principle of competition to function42. Proudhon also echoed in the agreements and contracts signed between the enterprises in Yugoslav self-management43.

Concluding Remarks

The twentieth century socialism that was associated directly with the theory developed by Marx and Engels has been three main streams: Marxism-Leninism of the Soviet Union, Marxism-Leninism-Maoism of China and Euro-communism of the Western Europe. The last stream, I suggest, was widely represented especially by the Yugoslav socialist experiment. First, according to the main democratic premises of Euro-communism, Yugoslavia were not a proletarian dictatorship and not a friend of Soviet style communism. Second, despite formal single party domination (LCY in fact), pluralism of interest including mainly capital were represented in Yugoslavia. Third, related with the official rejection of the proletarian dictatorship principle by the Euro-communist parties after 1974 were associated and consistent with the socialist self-management experience of Yugoslavia. Fifth, the role attributed to party was again the ideological leadership in the line of a democratic interpretation of Antonio Gramscis conception of hegemony and the party in socialist struggle. Sixth, the conception of market, self-management and the state of Yugoslav socialism was closely associated with Proudhons market based, anarchical socialism, which had been criticized by Marx himself in his The Misery of Philosophy44.

These theoretical essences of Yugoslavian socialism were completely opposite to Marxist-Leninist tradition and rather close to Euro-communism. The former is obviously opposite to capitalist market economy, anarchism, and, it can be argued, the party-state division. Nonetheless, it is sure that search for alternatives to Marxism-Leninism should be accepted as legitimate. However, this is legitimate as long as an alternative that is put

Yugoslavia can also be suggested as an old example of adopting a line independent from Moscow, see Alpaslan Ikl, ibid, pp:74 41

The aim was the rejection of the narrow bureacratic control emerging the use of the state property and of the bureacratic centralism and to introduce democratic centralism. However, this aim was not realised. Alpaslan Ikl, ibid,pp:117. 42

ibid, pp: 41 43

bid, pp:45 44

For Marxs criticism of Proudhons socialist theory see Marx, K., 1992b, Felsefenin Sefaleti, Trans: A. Kardam, Sol Yaynlar, Ankara

18

forward should be superior to Marxism-Leninism. On the other side, Yugoslav official doctrine stated that the Yugoslavian system was the true follower of Marxist-Leninism. Despite all differences as regards Marx and Lenin in terms of market and the role of the proletarian state, the fact that the official conception favored Marxism-Leninism can show that in the period when all different type of socialist lines were existed, open criticism or rejection of Marxism and Marxism-Leninism was not a possibility. Hegemonic position of the Soviet Union in the international socialist struggle prevented the self-declaration of any non-Marxist socialist identities.

The other striking fact was the tragic breakup of Yugoslav socialist federal state. However, it was not surprising after our presentation that Yugoslavia willingly or unwillingly maintained and even supported regional and national differences through market based economic policies so that even the forces which tried to prevent the dissolution was based on national and imperialist aspirations and plans as seen in the Serbian attempts to stop the dissolution, which rendered the breakup of the federation a far more tragic process than the other dissolutions experienced in the socialist block after 1989.

The last but the most important characteristic of the socialist Yugoslavia was the close relationships it established with the USA and the Western European capitalist countries. The NAM movement was the rejection of the domination of the globe by any super powers. However, in a confrontation of socialist block with the capitalist block in the form of Cold War, all socialist countries, despite their differences, needed alliance with the socialist hegemonic block under the leadership of the Soviet Union. First Yugoslavia, and then China after 1960s followed the domestic and foreign strategies and polices which would weaken the international socialist struggle against the capitalist countries and their containment policy against socialist block. Independency concerns of the Yugoslav socialists lacked the socialist internationalist perspective. At the end, first Germany and immediately EU diplomatically attacked and recognized Slovenia and Croatia as independent states in 199145 and the resultant USA-led NATO military operations that were seen by all parties as necessary to stop violence in the country officially put an end to the socialist Yugoslavia.

It can be asked that if Stalin of the Soviet Union could have kept Yugoslavia a part of the socialist block under its leadership, and if Yugoslavia had not been based so much on market based self-management inside and not been one of the leaders of NAM, could the development pattern have been different and could the tragic end of Yugoslavia been prevented. Economic and ideological support from the Soviet Union and COMECON countries could have kept Yugoslavia in the socialist camp and prevented this country

45 ignoring reservations among a number of EC members, Germany unilaterally recognized Croatia and

Slovenia before Christmas 1991. Germany's recognition forced the EC to follow suit by January 15, 1992. The United States, after initial opposition over the recognition policy, recognized Slovenia, Croatia, and Bosnia and Herzegovina in April 1992. These developments led Chancellor Kohl to declare that the recognitions represented a major "success for German and European policy. See http://www.country-data.com/cgi-bin/query/r-4994.html (accessed in 4/23/2009). It is sure we can state that breakthrough countries must have presented an invaluable opportunity for Germany to manifest his united power to the EU and the USA in the post-cold war conditions.

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from getting closer to capitalist market economy and the Western monopoly capital. The case of Yugoslavia shows us that international side of the socialist struggle is one of the sine qua nons of socialist transition in any country. References

Anderson, P., 1982, Batda Sol Dnce, (Western Marxism) Trans: B. Aksoy, Birikim Yaynlar, stanbul

Ar, T., 2004, Uluslaras likiler ve D Politika, (International Relations and Foreign Policy) Alfa Yaynlar, stanbul

Gndoan, E., 2008, Conceptions of Hegemony in Antonio Gramscis Southern Question and the Prison Notebooks, New Proposals: Journal of Marxism and Interdisciplinary Inquiry, Vol.2, No. 1 (November) Pp. 45-60

Gundogan, E., 2009, Marxian Theory and Socialism in Turkey, A Critique of the Socialist Journal Aydnlk, VDM Verlag

Kissinger, H., 1994, Diplomacy, Simon and Schuster Paperbacks, New York, London, Toronto, Sydney

Ikl, A., 1983, Kuramlar Boyunca zynetim ve Yugoslavya Deneyi, (Self-Management in Theory and the Yugoslav Experiment) Alan Yaynclk, stanbul

Marx, K., 1992b, Felsefenin Sefaleti, (The Misery of Philosophy) Trans: A. Kardam, Sol Yaynlar, Ankara

Web References

Mandel, E., 1967, Yugoslav Economic Theory, Monthly Review, April 1967, pp: 40-49, in http://www.ernestmandel.org/en/works/txt/1967/yugoslav-ec..

Pavithran K.S, 2008, Non-Algnment and Post-cold War International System: Problems and Perspectives, in www.pondiuni.edu.in/journals/ssas/10_pavithran.pdf

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Yugoslavian Socialist Experience