Markets, Planning and Democracy

Markets, Planning and Democracy

Essays after the Collapse of Communism

New Thinking in Political Economy series

David L. Prychitko

The essays contained herein span over a decade and reflect David Prychitko’s thinking about the role of the market system, and its relation to planning and democratic processes. The collection consists of previously published and unpublished articles written not only for economists but also for an interdisciplinary audience.

Chapter 4: Perestroika in Yugoslavia: Lessons from Four Decades of Self-Management

David L. Prychitko

Subjects: economics and finance, austrian economics


4. Perestroika in Yugoslavia: lessons from four decades of self-management* We in the West tend to equate perestroika with the whirlwind of economic reforms in the USSR and the Eastern Bloc. But perestroika, as an attempt to fundamentally restructure socialist society, goes back much further. Yugoslavia launched a significant series of reforms beginning in the 1950s. Hungary followed in the late 1960s. The questions were the same then as now: how to decentralize a rigid, bureaucratic, planning apparatus? How to transform state-owned enterprises into efficient, profitable businesses? How to increase worker morale and improve productivity? In short, how could a market-governed economy be introduced without abandoning every aspect of socialism? The Yugoslavian experience with workers’ self-management and market socialism once appealed to its Eastern European neighbors. Western intellectuals called it socialism with a human face. Growth rates were respectable during the 1960s and 1970s, queues for consumer goods were virtually non-existent, particularly in Slovenia and Croatia, the most Western (geographically and culturally) republics of Yugoslavia. Workers were said to enjoy much greater control over enterprise decision making. In other socialist states, workers were herded like cattle by Communist Party authorities in a rigid, command planning structure. Yugoslavia officially recognized the right of self-determination in the socialist enterprise and in most other aspects of life, cultural and scientific. Moreover, Yugoslavia, outside the Iron Curtain, became a symbol and leader of the non-aligned movement. But the economy came to a halt by 1980. The yearly rate of...

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