Never before Tito’s Yugoslavia was a system mirroring self- management ever tried and has since then never again been attempted or imitated. When Tito came into power he established the system of self- management. Yugoslavia’s self- management was a complicated and complex system introduced to Yugoslavia as a way to strengthen the economy, introduce democracy and to differ from Stalin and the Soviet Union Communist party.
Self- management was a system which brought profound changes to both the former political and economic structures. Often argued and debated are the effects of the system on the economy and society of Yugoslavia. Some critics contest that self- management was successful in a number of ways, while others argue that the system was overridingly inefficient and detrimental to the country. As a historiographical essay, this paper will examine various works dedicated to the understanding and analysis of self- management.
In an effort to fully understand the self- management system, it is important to recognize its historical context. An account of certain significant moments in the history of the Yugoslav political and economic systems will provide a fundamental understanding of the Yugoslav structure and enable further comprehension of the self- management system. In 1945 the Federal People’s Republic of Yugoslavia was formed, and was composed of the People’s Republic of Serbia, Croatia, Slovenia, Bosnia and Herzegovina, Macedonia and Montenegro”. In 1947 the Cominform was created, this included the Communist Parties of the Soviet Union, Yugoslavia, Poland, Romania, Italy, France, Czechoslovakia, and Bulgaria . The seat of the Cominform was established in Belgrade. Also in 1947, the National Assembly addressed economic issues in the First Five- Year Plan. The plan emphasized industrialization of Yugoslavia and “stressed the need for rapid improvement of the backward Yugoslav economy and a strengthening of the socialist sector of the economy”. Shortly after the Cominform was created, the Yugoslav Communist Party was expelled from the Cominform in 1948 for pursuing a “policy of nationalism, deviation from Marxism and Leninism, and hostile attitude toward the Soviet Union”. The first draft for the establishment of workers’ councils was issued: Instructions for the Establishment and Procedure of Workers’ Councils in State Economic Enterprises. In 1953, communist party leader Marshal Tito was elected president of Yugoslavia.
Tito, a Croat- Slovene, was a leader during World War II. He organized the anti- fascist party, the Yugoslav Partisans and later was a founding member of the Cominform. After World War II Tito organized a temporary government which he headed under the title as provisional Yugoslav prime minister. Following Tito’s election as president, in 1953, the Sixth Congress of the Communist Party of Yugoslavia was held and the name of the party was changed to the League of Communists of Yugoslavia. The League of Communists of Yugoslavia adopted measures to increase decentralization and liberalization in the country. The system of self- management was not simply a revolution imposed from above. For Tito’s plans of revolution to be accomplished, popular backing was necessary. This proved not to be a problem for Tito, “there was plenty of genuine enthusiasm, particularly among the younger generation, for reconstruction and a new political and economic system”.
Self Management was an elaborate system which introduced profound changes to the existing political and economic structures. Yugoslav leaders focused on returning to the core of their philosophy, the writings of Marx. Their aim was to reassess their ideology and lay the groundwork for a new economic and political mechanism called self- management. The congress declared that the party management would separate itself structurally from the state. As opposed to directing government and economic activity, the party was meant only to influence democratic decision making, through certain forces, including, education, propaganda, workers councils’ and other organizations.
Self- management drastically changed the way in which the political structure functioned. Predominantly, self- management aimed at decentralizing the political structures. Politically, self- management introduced self- government. The new constitution was seeking to expand the sphere of direct and indirect government and the influence of individuals by extending the rights of self- government from the work communities. The primary principle of political self- government was to broaden the influence of the individual in the decision making process. Self government also intended to represent all citizens politically and bring democracy to the factory floor. In an effort to include all citizens in the political process, the “Principle of Rotation” was instituted. This limited the number of terms that individuals could serve as members of councils, assemblies, and executive bodies. No one individual was permitted to serve in any office for longer than two consecutive terms. Political self- government was promoted as a means to increase the control each individual had. The structure of the self- management political system was autonomous, highly organized and authority was decentralized with power widely shared. Yugoslavia was broken down into six autonomous republics. Within each republic, the process of self- management stressed representation at every level beginning with the local level and progressing through the functional groups to the federal level. The first level of the system was that of the worker’s self- management. The workers’ councils were elected by all the workers and employees in an enterprise. The workers’ council was responsible for representing the workers in the enterprise. Workers’ councils listen to the opinions, suggestions, criticisms and directions and report them to the management board. Initially, workers councils were involved only in general policy matters such as the aggregate wage bill and the fringe benefit package. Over time however, because of a series of statutes, constitutional revisions and evolving customs the power of the workers’ councils have increased to include matters of hiring, firing, discipline and wage setting. The workers’ councils were also responsible for electing the management boards.
The management board elected by the delegates at the first level (workers’ council) became the communal assemblies which represented the laborers. Within these communal assemblies were two chambers. The first chamber was the Communal Chamber. This chamber represented man as a citizen and a political being. The second chamber was the Chamber of the Working Communities. This chamber represented man as the representative of the work organization. These communal assemblies acted as a parliament and decided on general policies, including voting to determine bosses, wages and investments. The assemblies also fixed the internal pay structures, supervised the recruitment procedures, allocated the surplus between wages and investments, and appointed key managers and specialists. Delegates elected from the two chambers within the communal assemblies were promoted further to function at the Provincial or Republican level. These Provincial or Republican functional groups were representative at the state level and were responsible for the collection of revenue and providing certain services. At the highest level within the self- management system were the federal assemblies.
Delegates from each republic and each autonomous province directly elected at the first stage (by the communal assemblies) joined to form the first federal chamber. The second federal chamber was formed by the delegates from the republican and provincial assemblies. These federal assemblies were responsible for the conduct of foreign affairs, maintenance of national defense and security, protection of the principles of self- management, and had the power to guarantee freedom of access to a single unified market. This development of self- management guided the process of decentralization and shaped social relationships encouraging to the humanization of labor and interaction in developing a socialist society. Economically, Tito’s general policy for reconstruction was to for Yugoslavia to develop its own heavy industries through industrialization and to become self sufficient. After a virtually complete collapse of the economic system during the war, the economy had to be rebuilt and the new leaders were determined to accomplish more than simply restore the old system. The new economic system under self- management highlighted three main areas of reform, including enterprises, foreign trade and banking systems. Enterprises gained the control to allocate their surplus between investment and wages. Enterprises also determined the level of production within their unit. Domestic trade was developed between enterprises and encouraged free exchange of goods and services.
The Self- management structure principally intended to expose Yugoslavia to the world market and encourage international trade. The self- management market system placed a dependence on the markets to guide all domestic and international production and exchange. Trade was encouraged with both eastern European countries and with the west, including the United States. The banking system was also radically ratified. A new banking system was instituted and ownership of banks was decentralized from state ownership to social ownership. This new banking system made banks personally responsible for loans and credits they made. Ultimately, the banks were made to responsible for the money in the system. The economic system assumed the characteristics of a new model of economy with expressed elements of an independent, decentralized economy.
Several equally important issues served as the motivation for the introduction of the self- management system into Yugoslavia. The most widely accepted impetus for the introduction of the Self- Management System in Yugoslavia is Tito’s split from Stalin and the Soviet Union in 1948. After several disputes with Stalin, Tito broke away from the Soviet Union, which Tito claimed had “degenerated into state Capitalism”. A classical scholar of the Winchester and Balliol college and who served as an ambassador to both Yugoslavia (1964- 1968) and the U.S.S.R. (1968- 1971), Sir Duncan Wilson advocates the perception that the break from the Soviet Union and expulsion from the Cominform inspired Tito’s establishment of a new form of Socialism in Yugoslavia.
Yugoslavia was determined to develop a system which distinguished it from the hegemony and bureaucratic practices of the Communist Party of the Soviet Union under Stalin. Wilson argues that the principal theme of Yugoslav theorists was, although the Soviet Union remained a Socialist country, it had degenerated through the excessive growth of bureaucracy and state capitalism and that this theoretical analysis of Socialist revisionism led to the development of Yugoslav theories of decentralization and self- management.
Another perspective, offered by Dr. Vladimir Velebit, a Serbian communist turned partisan and historian, claims that the introduction of self- management meant to bring democracy to Yugoslavia. He admits, “The former bourgeois democracy played a significant and progressive role, but that Yugoslav society was seeking further stages of development”. Democracy in Yugoslavia was considered to be a process which was to unfold within a society that has reached a certain level of development and will continue to develop and change in substance and in form until it disappears together with all forms of government in a classless society. Although Western democracy is considered by Yugoslavia as a “significant and valuable achievement of human society” democracy in Yugoslavia was not intended to imitate Western style democracy. American historian, Woodford McCellan agrees with Dr. Velebit. The introduction of self- management was an effort made to bring democracy to Yugoslavia. Additionally, he argues that Milovan Djilas was the creator of the self- management idea. Milovan Djilas was born in Montenegro, Yugoslavia. In 1932, while he studied at Belgrade University he joined the Yugoslav Communist Party. Later he joined Tito in the establishment of the Partisan resistance fighters. When Tito became premier of Yugoslavia in 1945, Djilas was assigned as the vice president of the new government. After being exposed to Stalin and his methods during his numerous meetings with Stalin, Djilas criticized the Communist techniques and rejected the Communist party because of the dictatorial, bureaucratic, and inflexible nature of the party. Djilas believed himself to be a social democrat as opposed to a communist. Djilas influenced Tito to attempt to create a unique form of socialism which included profit sharing workers’ councils that managed industrial enterprises. The reforms introduced between 1952 and 1953 seemingly moved towards a democratic, humanist kind of democratic socialism which Djilas supported and tried to accelerate.
Alternatively, other critics argue that self- management was introduced primarily for economic reasons. Rudolph Bicanic, a Croatian scholar, promotes the image that self- management was created purely from an economic standpoint. Yugoslav leaders thought it necessary to adapt their system of government to prevent an economic breakdown. Yugoslav leaders, including Djilas and Kardelj realized that a new socialist system had to be developed which would ultimately facilitate the economy to work. Bicanic also describes the onset of self- management as a means of exposing the Yugoslav economy to support from the west. Self- management was meant to provide an open way to gain support from the west, which seemed during the early 1950’s to be increasingly necessary. Yugoslavia was compelled through economic measures to introduce self- management and essentially to allow involvement and to increase assistance from the west. The unique nature of self- management has prompted an interest and examination of the process by numerous scholars. Many scholars have formed judgments and opinions about the formation and execution of the self- management system. More specifically, several intellectuals have individually researched Yugoslavia’s self- management structure and provided detailed critiques on the effects of the elaborate system on the country’s economy and society. The scholars all attempt to reach a conclusion as to the effectiveness of self- management. The scholars are largely torn; some declare self- management was a positive force in Yugoslavia while others found self- management to have a negative effect on the country, and still others determined the system had both positive and negative effects on Yugoslavia.
In his article, “Self- Management in Yugoslavia”, Duncan Wilson claims that the system was ineffective and describes the major faults of the economic structure developed by the self- management system. Wilson focuses on the results of the system’s inability to provide sufficient incentive for the laborers. Within the local communities there was a lack of interest from the workers because of confusion about self- management and the banking system. Workers’ confusion about self- management and the new banking system led to furthered confusion about income distribution within individual enterprises. Workers also felt as though their questions, concerns and needs were not being addressed by the management boards. Wilson comments on the systems inability to control directors, managers, and bankers: “It is unlikely that the LCY had been able to bring under totally effective control those directors, managers, or bankers who had been attacked for exercising arbitrary, bureaucratic, or technocratic rule”. Additionally, workers began to lose interest in the system because of the principle of rotation. The principle of rotation stated that each individual must serve on a council at least once for two years.
Workers grew to resent this because they worked all day in the factories and after a full day of working long hours the laborers were not enthused about serving on a council. Workers were not interested in spending their free time in meetings reading reports and making decisions. The outcome of this lack of provided incentive resulted in a low productivity from the laborers. Wilson largely argues that the long term difficulty for the LCY was ensuring that the economic self- interests of the enterprises were congruent with the economic development of Yugoslavia. Saul Estrin, senior lecturer at the London School of Ecnomics, carefully analyzed the Yugoslav condition. In his article, “Yugoslavia: The Case of Self- Managing Market Socialism”, Estrin claims that although Yugoslavia profited briefly, the economy under self- management suffered and consequently negatively affected the country. Estrin summarizes that while the macro economy performed well into the late 1970’s, problems within the system had been accumulating since the 1960’s. One of the initial economic problems emphasized by Estrin was the lack of balance of the domestic and international trade. The exports grew fast; however, the imports grew faster, resulting in a deficit of gross material product in the balance of payments. The article also stresses the effect of the relaxed financial discipline. State control over banking was removed and the bank employees were able to decide where and to whom the money went. Essentially, the banks became credit unions controlled by their debtors. These banks continually overextended credit to both industries and consumers alike.
In addition, banks had the ability to create money themselves which resulted in out of control inflation. Estrin also argues that self- management and social ownership contributed to the failure to create an effective capital. Estrin insists, “The misallocation of capital led capital rents to abound. Under self- management these rents were absorbed into labor incomes, exacerbating misallocation in the labor market”. Self- management allowed the workers to allocate the surplus funds, and as opposed to investing those funds, majority of the surplus money went to increasing the workers’ wages. The wages within the system represented a marginal product of labor and the differentials indicated market misallocation: the absence in entry and exit of enterprise.
Estrin provides further insight as to why these failures took place in the self- management system. Estrin claims that the Yugoslavs never entirely resolved two fundamental issues in the self- management system. The first addresses the appropriate balance of employee and managerial prerogatives in democratically managed firms. Initially, Yugoslavia relied excessively on management and later they leaned excessively away from management, never able to find the correct balance. The second issue they failed to effectively address was the association of the decentralized capital market institutions with the self- managed enterprises. Yugoslavia gave control over the capital markets to the enterprises and political authorities, which was, “arguably the worst situation”. Estrin also argues that it is reasonable to assume that the Yugoslavs abandoned an adequate reliance on the market mechanism and a proper balance between self- management and effective corporate governance before there was sufficient evidence as to the efficiency of the system. Although Yugoslav market socialism had not been proven completely unfeasible, Estrin believes the system contained serious flaws concerning operation and organization.
In opposition to Wilson and Estrin, W.N. Dunn, American historian and professor at University of Pittsburgh, in his article, “Communal Federalism: Dialects of Decentralization in Socialist Yugoslavia”, argues that on a political level, self- management was a positive force for the peoples of Yugoslavia. The local communal bodies and the functional organizations in actuality shared a greater relative influence in shaping what happened in society than did the republic and federal assemblies. Dunn claims that it is evident in the political and cultural patterns, investments, budgetary flows, and the legal and institutional changes that the League of Communists and trade unions protected the roles of the workers as participants in self- management bodies. Dunn argues the League of Communists and the trade unions facilitated and encouraged economic and social integration not just for the elite mangers, but also for the workers: “Active involvement in formulating and executing policies aimed at economic integration, as well as those which promote values of equality and participation, has been largely assumed by functional organizations, not territorial ones”. Dunn also discusses the effect of the self- management system on Yugoslavia’s industrialization. The involvement of self- management in industry contributed to the assimilation of agricultural laborers to industrial and urban workers. In addition, self- management promoted the attachment and obtainment of economic goals for the people and the country. Self- management encouraged economic goals within society and it permitted the involvement of manual laborers in the decision making processes.
Similarly, Dr. Vladimir Velebit maintains that self- management had a positive effect on the people of Yugoslavia because of the educational opportunities and other freedoms extended to them. Velebit argues that the Yugoslav socialist revolution significantly contributed to the education of the citizens. The people of Yugoslavia were initially encouraged to become educated about the system when they realized that each citizen is essentially responsible for the fate of their society through the public actions devoted to benefitting their community. The political education of the people was promoted by their participation in the government, and their political experience and activity. The political education of the people had increased through the participation of the people as members of the various committees. Velebit also commends self- management for extending personal rights and freedoms to the Yugoslav people. The new penal code and procedure offered codes similar to those provided in the west, “Personal freedom (freedom of speech, press, and association) is guaranteed against any arbitrary act of authorities”. Generally, Velebit claims that self- management offered a more manifold political life and a greater participation in the settlement of all political, economic, cultural and social questions to Yugoslav citizens.
Marius J. Broekmeyer, a staff member at the East Europe Institute of University of Amsterdam studied law in Yugoslavia and wrote his doctoral dissertation on “Workers Councils in Yugoslavia, 1950- 1965”. In his article, Self- Management in Yugoslavia, he not only discusses the negative effects of self- management, but also discusses the positive effects of the system. Broekmeyer admits that there was growing concern over the social and economic differences within the system. According to Broekmeyer, the healthy development of self- management is dependent upon the rotation of management within the assemblies. However, workers and employees looked upon those positions on the board as a burden; the duties were performed after work hours, not to mention the time spent out of the meetings with readings, reports and forming opinions. Consequently, there was a core of committee workers that would rotate from one management board to the next. Broekmeyer emphasizes that because capable representatives for the top level posts were scarce, majority of the core members within the committees were incapable and inefficient. Broekmeyer believes that the system was also faulty in that there was a growing influence of technocratic tendencies and a decline in the representation of manual laborers in the self- management bodies. There was a definite break in the unity of the workers in the self- management bodies. The trade unions were not highly esteemed by the workers and they were unable or simply unwilling to compensate for this loss in popularity. Also, there were industrial strikes and conflicts. These conflicts were directed towards the management of the enterprises. The labor strikes and conflicts hurt the overall image of self- management as the dominant institution.
However, Broekmeyer also defines the positive outcomes of the self- management system. He argues that the system responded to fundamental human needs. Laborers, at early stages, were informed on impending changes, how these changes would affect them, and were included in the decision process about these changes. Also, laborers were naturally interested in how their superiors were chosen and again were involved in the decision making process. Self- management also allowed for the workers to become informed about the elementary notions of the structure of the economy, the enterprises and society as a whole. Broekmeyer insists that this new system was a mechanism which allowed for upward social mobility through the self- management bodies. The system of self- management also allowed for Yugoslavia’s smooth and rapid industrialization from an agricultural to a semi- industrial society. Lastly, Broekmeyer stresses that the structure of self- management constituted a serviceable instrument for democratization. Broekmeyer praises the system’s ability to industrialize Yugoslavia and encourage democratization and its attempts to involve the laborers in the decision making process. Overall, Broekmeyer determines that it is difficult to know to what extent self- managed industrial relations are responsible for the negative and positive outcomes of the self- management system.
Although several positive effects can be attributed to self- management, it proved to be an ultimately negative institution within Yugoslavia. From its conception, self- management as the dominant institution in Yugoslavia was faced with numerous structural and institutional problems. When Tito came into power he was determined to create national cohesion and a sense of one interconnected national Yugoslavian identity. However, this was seemingly impossible given that the defining element of Yugoslavia’s self- management was decentralization. The focus on decentralization within Yugoslavia made cohesion nearly impossible. The chief goal was to have national divisions disappear leaving Yugoslav patriotism; however, national divisions persisted beyond the expectations of the Yugoslav leaders. Additionally, self- management was institutionalized in Yugoslavia for the wrong reasons. Originally, self- management was introduced in Yugoslavia in defiance of Stalin and the Soviet Union model. Yugoslav leaders desperately wanted to disassociate themselves from Stalin and the Soviet Union model.
Unfortunately, leaders were only serious about distancing Yugoslavia from the Soviet Union when they originally implemented self- management; they may not have been serious about self- management as a lasting organization. Self- management sincerely lagged behind the intentions and principles expressed in the constitutions. It seems as though the implementation of the system in Yugoslavia, by the leaders at the time, was superficial. It is possible however, that in fact Yugoslav leaders were indeed most serious about implementing self- management with the intention of a complete revolution within the country. Perhaps Yugoslav leaders were not completely informed about the most effective means to put into practice a change of this scale. There is a possibility also that even if the leaders were conscious of how to implement this change, perhaps they were lacking the means necessary to bring about this change in their country. Yugoslav leaders were ineffective at successfully implementing the self- management system in Yugoslavia.
In conclusion, this paper sought to examine the self- management process in Yugoslavia and to evaluate the various works dedicated to analyzing the system and its outcomes and effects on the country. Tito’s system of self- management is unique to Yugoslavia and was an unprecedented experiment in the country. Although there were a number of positive effects, the system of self- management was primarily a negative institution which largely failed socially, economically, and politically. Perhaps, had the Yugoslav leaders been more educated or had access to means necessary to fully implement this system; self- management in Yugoslavia could have had a more positive outcome.
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