Yugoslavia in Crisis

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in Crisis HAROLD LYDALL

CLARENDON PRESS · OXFORD 1989

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Uni¥..Ublary, UC Santa Crua ltlt Oxford University Press, Walton Street, Oxford OX2 6DP Oxford New York Toronto Delhi Bombay Calcutta Madras Karachi Petaling Jaya Singapore Hong Kong Tokyo Nairobi Dar es Salaam Cape Town Melbourne Auckland and associated companies in Berlin lbadan Oxford is a trade mark of Oxford Universiry Press Published in the United States by Oxford Universiry Press, New York

© Harold Lydall rg[Jg All rights reserved. No part of this publication may be reprod#Ced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press British Library Cataloguing in Publication Data Lydall, Harold, 1916Yugoslavia in crisis. 1. Yugoslavia. Economic conditions I. Title 330.9497' 0 2 4 ISBN ~1!}-828695-3 Library of Congress Cataloging in Publication Data , Lydall, Harold. Yugoslavia in crisis I Harold Lydall. Bibliography: p. Includes index. 1. Yugoslavia- Economic conditions. 2. Yugoslavia-Politics and government-19453. Management-Yugoslavia-Employee participation. I. Title. HC407.L95 1!J89 338.9 .497-dc19 88-7633 ISBN ~1!}-828695-3 Set by Hope Services, Abingdon Printed in Great Britain at the Universiry Printing House, Oxford by David Stanford Printer to the University

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Yugoslavia is a country of many languages. In a population of nearly 23 million there are five major languages which are spoken by at least one million people. These are Serbian, Croatian, Slovenian, Albanian, and Macedonian. In addition, in the province of Vojvodina, Hungarian is spoken by about half a million people; and in Yugoslavia as a whole there are many thousands of people who speak Turkish, Romany, Slovakian, Romanian, Bulgarian, Czech, Ruthenian, Italian, Wallachian, and Ukrainian. About two-thirds of the whole population speak Serbocroatian as their mother tongue. Serbocroatian is the name for two very similar languages, nearly as similar as British and American English. aut Serbian is written in the Cyrillic script (rather like Russian), while Croatian is written in a Latinized script. This latter script, which is used for Serbocroatian words in this book, contains some letters additional to the Latin alphabet; and some of the letters are pronounced differently from their pronunciation in English. The main differences are as follows: The The The The The The

Croatian Croatian Croatian Croatian Croatian Croatian

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letter c is pronounced ts. letters c and i are pronounced tch. diphthong di, is pronounced as j in jam. letter j is pronounced as y in yet. letter s is pronounced sh. letter f, is pronounced as s in leisure.

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Preface

When I was working on my previous book on Yugoslavia (Lydall 1984), I came to realize that the Yugoslav system of 'socialist self-management'· suffered from a number of serious defects. A large part of that book was, in fact, devoted to an attempt to elucidate the nature of those defects. But up to 1979, which was the terminal year for most of the annual statistics then available to me (in 1982 and 1983), the Yugoslav economy had done rather well. What I did not then know, or did not fully grasp, was that, precisely from 1979, the Yugoslav economy had entered a prolonged period of stagnation and decline. As I write these words, the rate of decline is, at least in some respects, accelerating, although the new anti-inflationary programme of the government (agreed with the IMF) offers the hope of a partial recovery. It is now clear that for the past nine years Yugoslavia has been in a state of economic crisis. This is accepted by everyone in Yugoslavia: in the Party, in the government, and among the population generally. The number of Yugoslav books with titles containing the word 'crisis' is already -large, and growing. It is no wonder. For the greatest claim of socialist (or communist) regimes-especially in poorer countries-is that they are able to raise the standard of living of their subjects. A socialist regime that produces only a declining standard of living is, therefore, in danger of losing its legitimacy. The Yugoslav story has become a tragedy. So many high hopes were raised by the idea of 'self-management', not only in Yugoslavia but also among sympathizers in the West. Even now, there are Western socialists who hope to rescue their ideology by renouncing 'state' socialism in favour of some vaguer concept of social ownership, which would include 'self-management'. Not surprisingly, there are still many Yugoslavs of the older generation who continue to insist that 'self-management' is, in theory, an ideal system, and that the only trouble is that it has not been operated as it should be. The wiser, and hence the more

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PREFACE

disillusioned, have come to realize that it is a system designed, in Professor 2:upanov's words, 'for angels and not for men' . Unfortunately, the creators of Utopias too easily end by putting humanity in an intolerable material and mental straitjacket. An analysis of the underlying causes of the present crisis of the Yugoslav system, such as is attempted in this book, can yield important lessons for all who are interested in the future of socialism. But the people who have m·o st to lose from a failure to learn those lessons, and the most to gain from.,t correct analysis of the situation, are the people of Yugoslavia itself. By their heroic resistance to foreign occupation in the Second World War, and by their defiance of Stalin's attempt to absorb them thereafter, they have earned the right to a better life. In my judgement, if only their present shackles could be removed, they would rapidly create a thriving and prosperous society.

In the preparation of this work, I have received assistance from many quarters. First and foremost, I must acknowledge the indispensable help of the Leverhulme Trust, which ga~ 'm e an Emeritus Fellowship grant to cover the expenses of the study. But that alone would have been insufficient without the aid of a number of Yugoslav scholars, who were kind enough to send me copies of their articles or books, or to explain puzzling aspects of their country's institutions, laws, or behaviour. Behind them, also, stands a much larger number of Yugoslav economists, sociologists, political scientists, journalists, politicians, and directors of enterprises, who have published valuable articles, books, and interviews. The reader will find quotations from many of these sources in this book. There is little that is written here that has not been said or written by one or more Yugoslavs themselves. I stand on their shoulders; and I am deeply indebted to them. More specifically, I should like to express my gratitude to Professor Aleksander Bajt, of Ljubljana University, for reading a first draft of Chapter 4; and to Professor Wlodzimiercz Brus, of Wolfson College, Oxford, for reading the whole text. I have made a number of changes in the light of their comments, but they cannot be held responsible for the final version. I am also grateful to Professor Laura Tyson, of the University of California at

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VIII

YUGOSLAVIA IN CRISIS

Berkeley, for drawing my attention to a previously unpublished paper by Professor Joze Mencinger. Thanks are also due to the Oxford University Institute of Economics and Statistics for the use of its library and other facilities, and to the Bodleian Library and St Antony's College, Oxford, for access to their Yugoslav materials. Finally, I owe a great debt, as usual, to my wife for many kinds of assistance with this project.

Oxford University 1'1.stitute of Economics and Statistics August 1988 •

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H. F. L.

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Contents

List of Tables 1. Introduction 2. The Yugoslav Economic and Political System 3. The Main Symptoms of Crisis 4. The Decline of the Economy and the Government Response 5. Underlying Causes of the Crisis 6. Enterprise Self-management 7. Enterprise Income and its Distribution 8. Taxation and Money g. Foreign Trade 1o. Regional Problems 1 1. Politics 12. General Conclusions Appendix Adjusted Estimates of Social Product References Index

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