Yugoslavia's labour-managed firms and labour-managed economy in the post-war period

Abstract

This thesis is concerned with the characteristics of the Yugoslav economy and the implications of the system of workers' self-management as it has developed in Yugoslavia. In the post-war period, the Yugoslav economy was gradually transformed from a centralized Soviet-type economy to a decentralized 'market-socialist' economy. In the course of this transformation, the locus of decision making shifted from planning agencies to the enterprises. As a result, Yugoslav enterprises which were once completely subordinated to the central planning agencies became autonomous units like the corporations in capitalist economies.
What has actually happened in the course of the evolution of this system, is the formation of a powerful technical/administrative strata composed of the managerial and supervisory personnel of each enterprise, which by concentrating the decision making power in their own hands, have in effect replaced the planning agencies of the early post-war years and deprived the majority of the work force of any significant influence over their conditions of work.
On the microeconomic level, the technical/administrative strata has increasingly dominated the objectives pursued by the enterprises, the distribution of their revenue, the remuneration of the work force, and the determination of the level of investment as well as its sources of finance.
Of particular importance is the growth-bias in the behaviour of this strata which leads to an over-investment tendency in the enterprises and an increased reliance on the use of external credit for investment financing. These tendencies are, of course, subject to constraints such as the provision of an acceptable wage level, the maintenance of a healthy balance sheet, etc., which limit the management in pursuit of their objectives.
On the macroeconomic level, the major indicators of economic activity show a sustained long term growth. In terms of secular trend, two adverse developments have emerged. Firstly, the level of unemployment has continually increased and, since the mid-sixties, has been accompanied by inflation. The rising level of unemployment, coupled with the large scale migration of the Yugoslav workers to Western Europe, casts serious doubt on the ability of the Yugoslav system to ever provide enough jobs for its work force.
Secondly, despite government efforts, regional unevenness - a natural by-product of a decentralized market economy - has developed and the disparities between the more developed and less developed areas have continued to survive.
In the short run, the Yugoslav economy has manifested a significant degree of instability and cyclical fluctuations. The industrial cycles in Yugoslavia, as in other market economies, originate from the absence of coordination between economic units. They are further influenced by the increased sensitivity of investment expenditure and the operation of ceilings, floors and external shocks. The availability of foreign exchange has been the most important ceiling imposed on the expansion phases of the cycles. The major economic reforms of 1950, 1960 and 1965 also affected the cyclical pattern of growth in an adverse manner due to their untimely implementation. They were introduced in the contraction phases of the cycles and resulted in prolonging the recessions of the early fifties and mid-sixties.