Requiem for the Yugoslav Economy
Horvat, Branko
It is sometimes said that Yugoslavia disintegrated because of its economic failures. Those who know a bit more talk about the failure of self-management. Still others say that social property...
...Everybody wanted a change...
...The economy suffered from continual disruptions, but no meaningful measures were taken...
...That, of course, can be achieved only by armed uprising...
...It is not just two sides fighting against each other...
...Your guess is as good as mine...
...Today the army and irregular troops do the same in the Dubrovnik region, where there are otherwise no ethnic conflicts...
...There is a complete ethnic separation only between the Serb (partly Montenegran) and Albanian populations in Kosovo...
...Genuine national and regional aspirations, characteristic of the present time, should have been taken fully into account (instead of being confused with chauvinism and jingoism...
...after all, was not Marxism-Leninism a most scientific social theory as Marshal Tito so often asserted...
...SUMMER • 1993 339...
...Nor are all of them listed...
...That psychological attitude, confusing individual and collective responsibility, is essentially the same as that underlying blood revenge among Albanians...
...Political programs are different, but that is a result of other factors...
...Any deviation from the prescribed course of action was immediately penalized...
...For 1980-1988, World Bank Atlas...
...Now they are ostrakeni, for which there is no English equivalent and means imbued with aggressive hate...
...Political survival in and of itself became the supreme goal...
...Still others say that social property was responsible for the failures...
...Not only was there a drastic change of occupation, but there was also a mass exodus from the countryside to the cities...
...The Growth of Conflict It is a somewhat strange civil war...
...In Croatia and Slovenia protodemocratic evolution started after 1860, after the fall of Bach absolutism in the Austrian empire...
...One item of consumption may highlight the results achieved...
...And they became an easy prey for jingoist politicians...
...By way of introduction, let me point to a few crucial economic facts.' Before World War II, Yugoslavia was extremely underdeveloped...
...The natural conclusion was that you needed a strong political party (which is true) that knows the truth (which is false), which would destroy all obstacles, if necessary by force (which is in conflict with socialist democracy) in order to realize socialism (which invokes a clash between bad means and good ends...
...However, you could not expect uneducated and illiterate people to understand that properly or to behave appropriately...
...Public opposition was absent...
...that is, all of them were in the forefront of economic development...
...More specifically, the enormous popularity of partisans after the war should have been used to educate people in democratic literacy...
...Robert Dahl3 points out that today's mature democracies were preceded by protodemocratic developments over a century or more...
...Bosnia had fewer than three million inhabitants and the other units fewer than two million, that is, they were like the larger European cities, and their output was on the order of large Western companies...
...The university is controlled...
...This economic transformation could not fail to have political consequences...
...Korea, Brazil, and Malaysia started to grow faster a few years later, and their rates of growth were 5.15, 4.68, and 4.16 percent for the period 1953-85 (Korea) and 1955-85 (the other two countries...
...People usually follow Hegel— unknowingly — and believe that it could not...
...in Serbia it occurred a generation later, after 1878, when Serbia achieved full independence from Turkish rule...
...They were unable and unwilling to act, much less to discuss the information and offer help...
...Other belligerent groups also engage in plundering, justifying their activities by the fact that this is the "enemy's property...
...The self-correcting effects of a multiparty system were absent...
...Millions of citizens watched the behavior of their top politicians on television...
...With the passage of time, the privileges of power eroded the old virtues and the new men showed themselves to be pragmatic politicians eager to advance their careers, not imbued with any ideals...
...that is, every act of aggression is called liberation...
...Managerial appointments are controlled...
...Only one thing is certain: it is necessary to start from a new beginning...
...In four decades they grew and were more developed in terms of GNP per capita...
...He should have retired in time, replaced by an able, younger person...
...We are prepared to eat grass, proclaimed a member of the Serbian government...
...If the war is prolonged for a few more months, Albanians will necessarily get involved, adding the element of an uprising by oppressed people fighting a colonial war...
...Economic democracy cannot exist without political democracy...
...They accomplished some of these tasks...
...A sort of collective thanatos is at work: an urge to self-destruction accompanied by some sort of masochistic enjoyment...
...Nor do the majority of citizens seem to have economic values on their list of priorities...
...Full democracy is surely not established in the former Yugoslav countries now...
...Planning in Yugoslavia," in M. Faber, D. Seers, ed., The Crisis in Planning, London: Sussex Univ...
...It seems to be much easier to accumulate economic wealth than to change a political culture, tradition, and collective memory...
...These changes have transformed an entire way of life...
...In 1948, only 21 percent of the population lived in cities...
...Press, 1972...
...Now, it is only Montenegro and Serbia that qualify fully...
...Development That said, we can proceed to a summary of development in somewhat more detail...
...The Swedish Social Democratic party performed exactly that feat...
...That, of course, was a false assumption...
...Since there is no democratic tradition of political negotiations, the outcome is a civil war...
...Within the scope of this essay, I will limit myself to a few general remarks...
...godini, Belgrade: Savplan, DAMZ, 1962...
...At that time they were extremely popular...
...I have only a tentative answer...
...334 • DISSENT Table 3 The Development of the Yugoslav Federal Units 1952-1988 Index of per capital GNP Yugoslavia = 100 rates Population of growth (in millions) 1952-1988 Rates of growth GNP GNP per capita 1953 1988 1952 1988 1952-1988 Developed regions Slovenia 161 200 1.49 1.95 0.75 5.7 4.9 Croatia 116 129 3.91 4.68 0.50 5.3 4.8 Vojvodina 100 118 1.70 2.05 0.52 6.0* 5.5* Serbia (without provinces) 97 100 4.40 5.84 0.79 5.2 4.4 Less-developed regions Bosnia and Herzegovina 86 65 2.79 4.48 1.32 4.9 3.6 Montenegro 75 71 0.42 0.64 1.20 5.3 4.1 Macedonia 68 65 1.28 2.11 1.40 5.6 4.2 Kosovo 46 24 0.79 1.94 2.52 5.5 3.0 Yugoslavia 100 100 16.80 23.69 0.96 5.5 4.5 * The rates of growth are not fully comparable with the others because the base year was exceptionally low...
...Prewar Yugoslavia, like czarist Russia, was a backward country...
...The Political Economy of Socialism, New York: M.E...
...Conscripts from all the nationalities are deserting the army, expressing the genuine popular feeling about the war...
...I am not so sure about culture and political progress...
...Nevertheless, the spread between most developed Slovenia and least developed Kosovo increased from 3.5:1 to 8.3:1 in terms of GNP per capita...
...Yugoslavia reversed the historical sequence, failed to develop political democracy, and ruined economic democracy as a consequence...
...Productivity growth was probably the highest in the world during that period...
...Civil rights groups appealed to international organizations asking that refusal to participate in civil war be treated as a fundamental human right...
...See Table 2.) At the beginning of the period, Yugoslavia shared the last place in Europe with Romania (Albanian data are not available...
...It is also apparent that all developed regions increased their relative standing (particularly Slovenia) and all less-developed regions decreased them (particularly Bosnia and Kosovo...
...When this task was essentially completed, when the country was modernized, the regime became dysfunctional...
...Apart from Serbia and Croatia, the federal units were minuscule before 1952...
...The state of Serbia wants to conquer parts of the territory of Croatia, Bosnia, and, perhaps later, Macedonia, which used to be called Southern Serbia...
...Ambitions widely outran the possibilities of the existing society...
...They were expressed in violent assertions of national identity and an urge to become more independent politically...
...Eastern Germany had a per capita growth of 4.13 percent, but a growth of only 3.85 percent in total GNP because so many people left the country...
...The new parliaments and 336 • DISSENT governments function like the old ones, that is, as in the one-party state...
...having saved Swedish society from the worst consequences of the world depression in the early 1930s, it remained in power for half a century...
...As the fastest growing European economy, Yugoslavia was gradually overtaking other countries in a comparable group of South European countries...
...1952 was the worst postwar agricultural year...
...Was a formerly illegal party able to do that...
...2 Miroslava Momirski-Marjanovic, Brzi razvoj nerazvijenih podrucja kao preduvjet za ubrzavanje rasta razvijenih (Zagreb: Faculty of Economics, unpublished doctoral dissertation), 1991...
...Democratic countries were relatively rich...
...Dahl then proceeds to note that the mature democratic countries achieved a substantial degree of national unity and a sense of nationhood before the twentieth century...
...The causes are political...
...With the benefit of hindsight, we now see that they had to complete protodemocratic development, gradually nurture democratic institutions, and see to it that these survived for at least a generation...
...Communist leaders do not do that...
...It seemed that the only way to get out of the vicious cycle of poverty and brutality was to engineer a violent social revolution...
...Now everything is being done to homogenize one's own nation and to demonize others...
...George Washington did so two centuries ago, as did Julius Nyerere in our day...
...For all these reasons plundering, vandalism, and killing are not considered great crimes...
...Some economists admit that economic development occurred but maintain that this was because of foreign aid...
...By 1980 it reached the average per capita GNP of the group of eight countries...
...The opposition is hardly heard...
...According to various estimates, they would then have gotten at least two-thirds of the vote in any free election...
...they would not even have considered them necessary...
...Stagnation, rising unemployment, falling living standards, and lack of perspective led to general frustration...
...Top politicians were mediocre men (or worse), lacking any vision or ability to act productively...
...Instead of trying to preserve its monopoly of power, the party should have been subject to public restraint in free elections and retained its power only through competent and honest rule...
...Sharpe, 1971...
...I have elaborated a complete political economy of socialism elsewhere, and I will not repeat it here...
...Means should be compatible with ends, and violent means cannot produce desirable ends...
...Table 3 presents the essential data for the thirty-six-year period for which data are available...
...Specific social and political dynamics must be considered...
...Rates of growth of GNP among the regions were roughly equal, and they clustered around 5.5 percent per year in a comparably narrow interval...
...Finally, democracies seem to become stable after a generation of creating a full set of democratic institutions...
...However, population growth was much faster—the percentage rate was more than double—in less developed regions, and that depressed their per capita growth in GNP...
...Mass media and education should have been free (as opposed to enforcing "correct" views...
...On the other hand, communists were convinced that they knew the laws of history...
...Political democracy can exist without economic democracy...
...Development was slow, the regimes were repressive...
...It is only partly an ethnic conflict, because Serbs live peacefully with Muslims in Sarajevo and with Croats in Zagreb...
...But physiology takes its toll...
...Yugoslavia was composed of eight federal units (six republics and two autonomous provinces) whose levels of development varied widely...
...One more aspect of growth has to be explored...
...The requirements for success are, no doubt, formidable...
...But were they able to accomplish everything—even if they wished to do so...
...Peasants made up 79 percent of total population in 1921 and decreased only about 12 percent in the next twenty prewar years...
...Contrary to its declared aims, the army gradually allied itself with those who are bombing and destroying villages and cities, killing the inhabitants of their own country...
...Since the ruling parties involved are national chauvinists, and therefore right wing, the conflict can hardly be described as ideological...
...The authorities do not care about economic priorities...
...Formerly people were frustrated...
...From 1953 to 1965, the annual rate of productivity growth was 4.7 percent, as compared with that of European capitalist economies (3.3 percent) and statist economies (3 percent...
...An additional element of confusion is added by the federal army, which wanted to save the country from falling apart...
...In the terminology of the Balkan wars of 1912-1913, they are "liberating" Dubrovnik (and Vukovar and Pakrac and so on...
...2 New Economic Considerations Economics is not the proper discipline to explain Yugoslav events...
...However, although necessary, they are not sufficient...
...General cultural conditions suddenly became a barrier to further development...
...It is a rare phenomenon, and there exists no theory to explain it...
...By 1981, this percentage increased to 47...
...If only in popular imagination, social differences became more noticeable...
...development plans proposed speeding the growth of underdeveloped regions, particularly of Kosovo, which was singled out for special treatment...
...That, of course, was a false assumption, particularly as the interpretation of "the most scientific theory" depended on half-educated political leaders...
...and in Vojvodina agriculture was particularly important...
...In the sixteenth century Montenegran (and Albanian) highlanders were plundering the caravans of Dubrovnik merchants...
...Macedonians, Bosnians, and Albanians developed a full sense of nationhood and won independence in a federal state only after the national war of liberation, 1941-1945, in which they actively participated...
...207-62...
...The lengthy 338 • DISSENT process of predemocratic development lasts for many generations and is followed by a gradual inauguration of democratic institutions "accompanied by a deepening of the country's democratic culture, beliefs, habits, practices, folkways, customs...
...3 Robert Dahl, "Transitions to Democracy," in G. Szoboszlai, ed., Democracy and Political Transformation (Budapest: Hungarian Political Science Association), 1991...
...Business Cycles in Yugoslavia, New York: M.E...
...The government was aware of that, and all Table 2 Gross National Product Per Capita of South-European Countries in International Dollar Prices of 1975 1952 1964 1980 1988 Hungary 1717 2732 3861 4453 Spain 1400 2402 4179 4896 Bulgaria 1074 2083 3437 — Greece 946 1842 3922 3953 Turkey 863 1151 2048 2594 Portugal 859 1400 3047 3542 Yugoslavia 769 1584 3318 3262 Romania 747* 1444 2766 — Average for the group 1038 1830 3322 3800 Yugoslavia in percent of the average 74.1 86.6 100.0 85.8 * 1950 Sources: R. Summers, A. Weston, "Improved International Comparisons of Real Product and Its Composition," Review of Income and Health, 1984, pp...
...The party, having a political monopoly, degenerated, as has happened to all one-party regimes in the world without exception, regardless of the social system...
...One wonders how such brutal "folkways" could survive so far into modernity...
...Socialism is about freedom and is incompatible with repression...
...In the thirty-five-year period from 1950 to 1985 the Yugoslav economy expanded at a relatively high rate...
...Teaching is controlled...
...Mass media are controlled, particularly television, over which the ruling party has a monopoly...
...And about 3 percent of the rural population has been turning to various urban occupations...
...The latecomers apparently had to be absolutely rich, which means that they had to achieve a standard of living higher than that of the pioneers, incorporating a relatively equitable distribution of income...
...In five of the six republics the presidents are former Communist party leaders...
...Besides, the former ruling class would fiercely oppose an egalitarian society...
...Something less than 2 percent of GNP was transferred yearly for that purpose from developed to undeveloped parts of the country (leading to a reverse complaint that the less developed regions were an economic burden and that they used transferred capital inefficiently-and so they did...
...The system that resulted was a sort of enlightened populism, not socialism...
...At any rate, that is a treacherous hypothetical question...
...As a great Montenegran, Marko Miljanov, described it a century ago, it is a sort of sporty attitude, an exhibition of courage...
...Workers' management was a positive innovation, but its role was not properly understood...
...Finally, Tito was an excellent political leader until about the 1960s...
...Although not universally true for all regions, it is generally true...
...For this reason it is not included among the top six...
...It is a fight among many groups with shifting coalitions...
...With the benefit of hindsight, I would say, first of all, that two contradictions of Yugoslav politics had to be openly exposed and false assumptions corrected...
...In fact, he is considered one of the great world leaders of our time...
...While the commanding positions were still in the hands of those who had been partisans (that is, those who had made the revolution), and before they succumbed to old age, the partisan ethos was alive...
...National independence seems also to have played an important role...
...Their vision contained two crucial contradictions and one crucially false assumption...
...Let me add two additional conditions...
...You have to dare, to have the guts to do it—similar to the way the Wild West was pictured in the past...
...The average rates of growth of 5.5 and 4.5 percent meant that GNP and GNP per capita expanded 4.5 and 3.3 times respectively...
...It is clear that economic rationality has no place in such a social context...
...Then the crisis set in, and the country began to fall behind in the rate of economic development...
...and, when the time came, they quietly surrendered power...
...A high rate of growth is not just a statistical artifact...
...What would have been the probability of achieving them...
...The war can also, perhaps primarily, be described as a war between states...
...Finally, there is a strong element of hajdu'ija, which mixes Robin Hood fantasy with ordinary brigandage, particularly among highlanders, either in their native regions or in the regions where they were colonized...
...Sharpe & Oxford: M. Robertson, 1982...
...In the end, they were powerless to do anything, except to quarrel among themselves...
...At the same time the relative indices of the basic welfare of the population (life expectancy at birth, education, and health services) were much higher than those of capitalist countries, but also substantially higher than those of welfare states...
...In fact, it was one among the six fastest growing economies in the world, as Table 1 indicates...
...The former regime inherited a critical attitude toward jingoism from partisan times...
...Partisan revolutionaries were unaware of the formidable tasks before them...
...High rates of growth caused radical social SUMMER • 1993 • 333 Table 1 Rate of Growth of Per Capita GNP (in percent) 1950-1985 Taiwan 6.64 Yugoslavia 4.46 Japan 6.26 Greece 4.41 China 5.10 Romania 4.04 changes...
...If three generations ago some member of a SUMMER • 1993 • 337 different group (ethnic, religious, national, whatever), said Croat or a Serb committed a crime against someone of your group, you were entitled to retaliate, although the individual in question may have been long dead...
...Croatia and Slovenia are old nations, but they regained their national independence only in 1918...
...One example will suffice...
...In fact, around 1971 they were the highest in the world...
...However, because of rapid development, by 1968 Yugoslavia had surpassed the prewar level of production and consumption of the most advanced European countries...
...Or, perhaps, they failed to understand what was happening, surrounded as they were by apologetic and equally irresponsible officials on whose information they relied...
...For political reasons, I was prevented from participating in that commission...
...With its 2 9 million cars in 1986, Yugoslavia had twice as many cars as Turkey, which had twice the population of Yugoslavia...
...The Yugoslav Economic System, The First Labour Managed Economy in the Making, New York: M.E...
...The revolution should create a new society in which even the most underprivileged would be able to use democratic institutions, in which social justice would be guaranteed, and in which the standard of living would increase rapidly...
...That meant socialism...
...It was reflected in the increasing economic welfare of the population...
...whatever happened, it could not be worse...
...In a condition of complete control of the media by the governments, many people sincerely believe in their "liberation" mission...
...Source: SGJ-1981 and 1989, 1972 prices...
...The authorities dare not punish them (in Serbia and Montenegro) and are encouraging desertions (in other republics...
...Political democracy did not matter too much because partisans were disciplined, relatively honest, and highly critical of national chauvinism...
...One type of collectivism, based on class, was simply replaced by the only one available, based on nation...
...The army and the rebels in the seceding states (in Croatia and Slovenia) argue that they seceded from Yugoslavia by unilateral decision, hence they are unconstitutional and, therefore, must be crushed...
...I For more information, see Branko Horvat, ed., Uzroci i karakteristike privrednih kretanja u 1961...
...Sharpe, 1976...
...And, of course, no one has a scientific theory that guarantees absolute truth...
...The process of economic modernization seems to have been completed...
...Historically speaking, the new regime reduced the lag in development between a backward country and a more developed environment...
...But Albanians do not fight back with arms, although they are traditionally privately armed...
...The revolution would be worth sacrifice and would catch the imagination of people if it meant something really new, not only slightly higher wages and slightly better politicians...
...Socialism was an extremely powerful mobilizing idea, but it also bore the seeds of its own destruction...
...With the collapse of a liberalizing reform around 1970, which proved to be the last progressive reform, the economic and social systems began to decay...
...That is an old Turkish and Balkan tradition: property belongs to the conqueror...
...Such education involves not only the design of institutions but the education of free and independent people able to make their own decisions (but could that be achieved under collectivism...
...Socialism meant a free society in which the SUMMER • 1993 • 335 repressive "state would wither away" and in which the freedom of everybody was a precondition for the freedom of all (Communist Manifesto...
...Incompetent and irresponsible people remained in power if they were sufficiently adaptable and submissive...
...There are five of them, according to Dahl: popular election of the government, free and fair elections, protected freedom of expression, an effective right to form independent organizations, and access to alternative sources of information not under the control of the state...
...The opportunity arose during the war, and at great personal sacrifice, communists emerged victorious, and started to implement their vision...
...Employment policy is controlled...
...One cannot but remark that communists must have accomplished an extraordinary feat in assuring peace and prosperity in such a country for half a century...
...For this purpose the borders between the states, which in most cases are centuries old, are proclaimed "administrative borders" by the ruling Belgrade politicians...
...The society was not ripe for socialism...
...The text produced was not bad, but the program was never implemented...
...The rebels add: if Croatia and now Bosnia could take unilateral decisions and secede from Yugoslavia, they (the rebels) are fully entitled to secede from Croatia and Bosnia and create their own autonomous states...
...A huge commission of experts was convened to draft a stabilization program...
...In the meantime, the society we have been discussing had to pay an exorbitant price for what it has experienced...
...When, finally, democracy became available, citizens were not prepared for it...
...None of these explanations is correct...
...Could history have gone a different direction...
...One gets a definite impression that there is substantially less freedom of discussion and parliamentary opposition than under the former regime...
...and B. Balassa and T. Bertrand, "Growth Performance in Eastern European Economies and Comparable Western European Countries," American Economic Review, May 1970, p. 316...
...In other words, almost 1 percent of total population-2 percent of the rural population—has been moving to cities every year...
...They were suspicious and afraid of any initiative coming from outside their own closed circle...
...Of course, the less developed regions complained that they were being neglected...
...As the gap between Yugoslavia and developed countries widened, the brutality of its social relations became greater...
...It should have supplemented political democracy in order to achieve the radical democracy essential for socialism...
...They were 67 percent in 1948 but fell to below 20 percent in 1981...
...i 1962...
Vol. 40 • July 1993 • No. 3
