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Universum Journal, 3.

Issue, June 2009


Dr. Ercan Gundogan

Universum Institute for Economic and Social Studies
Yugoslavia after the Second World War followed a Soviet style socialist build up.
However, after 1950s it began to create its own socialist democracy model. Abroad it
embraced and became one of the leaders of the non-alignment movement along with
India and Egypt. Inside it created socialist self-management. Choices of foreign and
internal policies were accompanied by the isolation of Yugoslavia from the Soviet Union
and the Eastern block countries. With market socialism adopted after 1950s it developed
its already strong relations with the Western capitalist countries. It did not de-link itself
from the Western Europe and the US during the cold war. It was a multinational socialist
federation, open to Western capitalist countries, implementing market socialist economic
policies. Yet, despite its relatively liberal socialist system, with the end of the cold war, it
could not escape the fate of dissolution as happened in the all socialist system. It turned
into geography of nationalism, economic collapse, civil wars, and foreign military
interventions. The proceeding tries to reveal the distinctive aspects of Yugoslavian
socialism. The proceeding shows the reasons behind its dissolution, which is an ironic
example of the faith of even a socialist country which has close western capitalist
relations, capitalist market economy and self-managing type of democracy.
Introduction: From Marx to Stalin1
Marxian theory of revolution requires the transcendence of the social, economic and
political power of the bourgeoisie, which first starts with the seizure of the state power
and continues with the social and economic transformation of bourgeois society.
Transformation is realized through the formation and mediation of the proletarian
dictatorship. The last one is envisaged as the opposite, antithesis, of the bourgeois
dictatorship. The unity of the opposition of the two forms of dictatorships is seen as the
socialist transformation of the bourgeois system. The main mechanism of the
transformation is the state power of the revolutionary proletariat. It is considered to end

For a critical and selective summary of Marxian and Marxist theory as whole, Part I of my book can be
applied to: Ercan Gundogan, 2009, Marxian Theory and Socialism in Turkey, A Critique of the Socialist
Journal Aydnlk, VDM Verlag. For original Marxian and Marxist texts, it can be applied to

up with the emergence of communist society, classless society without any oppressive
central political power.
Proletariat and its political party seize state power and introduce some radical measures
such as the abolishment of private property in the form of states public property. Then it
organizes production using central planning methods. Simply, capitalist market is
replaced by central planning as private property is transformed into state property.
First socialist revolutionary wave of the twentieth century produced the Soviet
Revolution, which was accepted as the classical revolutionary model on the base of
Marxism. Marxism turned into Marxism-Leninism, which meant the first successful seize
of political power by the working classs vanguard party. Marxism Leninism was based
on the fusion of state and party, central planning, abolishment of private property and
market economy, all of which were the medium and mechanisms of the establishment of
the proletarian dictatorship. The last one refereed to the economic, social and political
system of the working class as a whole. Proletarian dictatorship also meant the
transcendence of the bourgeois democracy, which was based on the voting power of the
electorate represented through parliament and other elective bodies. The Soviet model
introduced soviet, council model, which replaced parliamentary democracy. It was antiparliamentary and was based on democratic centralism that required down to top
formation of political power, that was democracy, and the top to down adoption and
implementation of the final decisions.
At the beginning, the soviet model can be seen as a Russian national model of revolution,
which was established over the ruins and territory of the Tsarist Empire having
oppressive and weak democratic tradition. However, Lenin wanted, theoretically and
practically, to reproduce the model of the Paris Commune of 1871 in Russia after
considering the failures and mistakes of the Commune. The Paris Commune was
centrally weak, did not attack the financial power of the bourgeoisie and could not
penetrate into countryside. Its power and experience was confined to Paris. Apart from its
weak sides, it was the first model of the proletarian dictatorship as described by Marx and
Engels later on. Commune was also not based on parliamentary democracy but on the
organized power of the working people in the army, public offices and work places.
Hence, the lessons of the Paris Commune pointed to a more centralist state system having
no concession to bourgeoisie and antiparliamentary representation of the masses as well
as closer relations with the countryside and the peasants.
Next stage of the Soviet revolution witnessed the establishment of socialist industrial
infrastructure and the collectivization of the agricultural production during Stalins
period. The system that had been outlined and designed during Lenins period was
consolidated and empowered under Stalin. However, the workers democracy was
replaced with the central political system of the communist party. All work places,
offices or workshops, were put under the control of directors appointed by the party

During and after the Second World War, the soviet revolution found the opportunity of
expanding its power towards the Eastern Europe and Balkans in which Nazi occupation
and anti-fascist struggle had prepared the ground for new socialist states or alternatively
social democratic regimes. The Soviet Union sometimes established new socialist
regimes for geo-strategic reasons and sometimes supported already existing socialist
parties for the seizure of political power.
Socialist Yugoslavia
The Communist Party of Yugoslavia was established in 1919 in the Kingdom of Serbs,
Croats and Slovenes, and became the member of the Comintern2. Party under the
leadership of Tito organized the Partisan against Nazi occupation and succeeded in its
guerilla form of resistance and struggle.
It is controversial subject of how much the Partisan gained the support of the Soviet
Union. However, the idea of the Yugoslavias new politicians is that the Partisans
success was mainly based on its own sources. On the other hand, one of the cold cases
between the Soviet Union and Yugoslavia was the alleged British-Soviet negotiations
held in Moscow between 9 and 24 October 1944, in which Churchill and Stalin agreed on
fifty-fifty say in Yugoslavia, which Yugoslavs never accepted3.
Turning point for Yugoslavia in terms of socialist transition was caused by SovietYugoslav rift which resulted in the expulsion of Yugoslavia from Cominform in 1948.
The Soviet Union accused Yugoslavia regime of being an agent of imperialist capitalist
countries. Here again, soviet accusations were controversial given the fact that
Khrushchev would reject all claims and accusations put forward by the Soviet communist
party led by Stalin. Nevertheless, it was seen that Yugoslavia repeated its loyalty to the
principles of Marxism-Leninism and Stalins leadership in the socialist system.
Despite early disputes between Yugoslav socialists and Stalin, at the beginning, new
socialist regime adopted Stalinist policies and applied to central planning and the
collectivization of agricultural production. However, early years of socialist experience
were not so successful. The failure was also caused by the isolation of the country from
the socialist countries after 1948.
One of the solutions to economic backwardness and isolation from the socialist countries
might have been to approach the Western capitalist countries as a foreign policy and to
apply market economy as a model of economic development. It is indeed the 1948
Soviet-Yugoslav rift that led into new preferences and solution for Yugoslavia both home (accessed in 25/5/2009)

However, this is an rgument stated by Churchill in his memoirrs. For example, Y. Gurenko rejected this
idea by saying that a letter written in 1945 June by Churchill to Stalin, repeating the agreement between
two leaders made in 1944, were never delivered to Stalin. See the renewal of this old debate, Slobodan
Stankovic, (accessed in 4/20/2009)

and abroad, and into a new socialist experience4. One writer mentions that the
involvement of Yugoslavia into Non-aligned Movement (NAM) is seen as the extension
of self-management implemented at home5.
Workers Self-management
Despite the fact that first examples of workers self-management was given by some
enterprises in 1949, the full implementation of the system was introduced by the laws
enacted by the Federal Assembly in 1950 and 1951. These laws replaced state ownership
with social ownership over the means of production. The workers were transferred
managerial responsibility. Workers councils had the authority over production goals and
financial supervision whereas directors appointed by the government had veto rights over
the decision of the councils. Besides the government adopted free market fluctuation of
some prices according to supply and demand. But monopoly of the government over
foreign trade was kept intact.
The fact that self-management system replaced central command economy needed the
loosening power of the communist party over decision-making processes. In November
1952, the communist party was renamed The League of Communists of Yugoslavia
(LCY). The name signals the break with Stalinist model and implies a new party model,
which does not direct but influence democratic life in different parts of social, economic
and political life. Nevertheless, the party had the final say and political monopoly and
principle of democratic centralism was retained. In addition in the same period, the
Peoples Front was renamed the Socialist Alliance of Working People of Yugoslavia
(SAWPY). Despite these ideological and political changes, communists still occupied
important governmental and managerial positions.
Constitutional amendments in 1953 nearly changed 1946 Constitution, included changes
about workers self-management. The amendments introduced Federal Executive
Council as well as reducing the autonomy of the republics. More importantly in the same
year, collective and state farms were abolished. Socialist share over land property
decreased from 25 percent to 9 percent. Landless peasants were supported by reducing
the legal limits on land property from 25-35 hectares to 10 hectares. This change began to
prevent development of efficiency of farming. Government also reduced some taxes,
encouraged cooperatives and increased agricultural investment. As agricultural
production increased, the government focused on industrial development. Accordingly,

Yugoslavia was expelled from Cominform in 1948 and the latter also called upon the communists in
Yugoslavia to overthrow Tito. The rift was caused by the fact that Yugoslav communists insisted on their
national independent path to socialism, which contradicted with the control needed by the Soviet Union
over the Eastern Europe after 1947. In addition, it is argued that during the Second World War, the Soviet
Union did not permit free initiatives of the Partisans, did not give military support to them in the early
phase of the war, and it negotiated with Britain and the United States over the division of Yugoslavia into
spheres of influence among themselves. See,
(accessed in 4/23/2009).
Alpaslan Ikl, Alpaslan Ikl, Kuramlar Boyunca zynetim ve Yugoslavya Deneyi, Alan Yaynclk,
1983, stanbul, p:93, 99, 102.

industrial production boomed and manufacturing exports doubled before 1960.

Yugoslavia had the second highest growth rate in the world between 1957 and 1960.
As living standards improved along the lines of economic and political reforms,
consumption items increased in the domestic market. On the other side, the state
abolished some restrictions on religious activity, public criticism and traveling. Western
thoughts began to penetrate into the country. However, as a reaction, party emphasized
democratic centralism more and in order to raise discipline, it established party organs in
factories and academies. It was not surprising that one of the ideologues of the system,
Milovan Djilas published in 1957 his book The New Class and argued that new
communist elite replaced the old bourgeoisie6.
Renewal, 1963 Constitution and 1965 Reforms
Introduction of market socialism and abolishment of the government monopoly over
foreign trade in 1961 led into inflation and foreign-trade deficit. But, anti-inflationary
measures subsequently resulted in recession in 1962. Economic problems required some
reforms such as more decentralization of the decision-making process. Demands for
economic reform was accompanied and deepened by the renewal of interregional
conflicts and nationalist claims. The state could not have solved the inequality between
the developed northern republics and the poor southern regions. It was also argued that
some regions obtained more shares than the others. Liberal party members such as
Eduard Kardelj and Vladimir Bakaric, who were mainly from Slovenia, Croatia and
Belgrade, advocated decentralization measures that would be beneficial for already
developed regions. On the other side, conservative members, who were mainly from
Serbia and Montenegro, supported centralized measures and investment in the
underdeveloped regions.
New Constitution of 1963 expanded the principle of self-management by introducing
local councils into social sphere such as education, culture, welfare, health and
administration. Party offices were separated from governmental offices and rotation
system was adopted for government tenure. During 1960s, the parliament became more
active and witnessed the use of liberal ideas especially. The assembly in addition enacted
the legal framework of market socialism between 1964 and 1967, reducing the authority
of the state in economic affairs. In this time, currency was devaluated, foreign credits
were obtained and Yugoslavia signed the General Agreement on Tariffs and Trade
The economic reforms in the line of liberal market economy created unemployment,
inflation, liquidity problems, stagnation and more income disparity as well as new reform
demands. Some regions such as Serbia, Macedonia and Montenegro tried to prevent the
closing of unprofitable enterprises. Developed regions such as Slovenia and Croatia
criticized the heavy investments made in the less developed regions. Workers began to
migrate into Western European countries. Foreign currency reserves were filled by these
6 (accessed in 4/23/2009)

workers and tourism sector as well. In addition, foreign capitalists were allowed to invest
49 percent to domestic firms and return their profits to their countries. Moreover,
Yugoslavia signed a long-termed trade agreement with the European Economic
Community in 1970. The recession ended, unemployment decreased with increases in
living standards. Nonetheless, inflation began to increase and profitability remained the
problem for many enterprises.
Centralist party members and mid-level bureaucracy tried to prevent the implementation
of the reforms which would weaken party control and the country as well. The main
figure of critical approach to the reforms was Aleksandar Rankovic, Serbian vicepresident and the head of the secret police and party cadres. However, after some
investigations for secret police he leaded, he resigned. His resignation meant the defeat of
the conservatives. With the additional reforms in it, party as a central force lost its
prevailing position. Leaders outside of the center obscured Belgrade and began to use
authority for party appointments. Election law also was changed and permitted the
election of the candidates who had not been approved by the party. With the weakened
power of the party, liberals argued far more that the party should influence rather than
direct the self-management based decision making process. Media and universities
became the centers of critical ideas. The praxis circle, circulated between 1968 and 1975,
established by a group of Zagreb and Belgrade intellectuals, interpreted Marx in an
unorthodox manner and criticized party positions.
With the Warsaw Pacts invasion to Czechoslovakia in 1968 August, all attention was
directed to foreign policy. Tito supported Alexander Dubceks regime and criticized the
invasion. The Soviet-Yugoslav relations got worse and Tito stated that in case of any
Soviet invasion of Yugoslavia, they would resist. In addition to this international
problem, between 1968 November and 1969, Yugoslavia witnessed the demonstrations of
Albanians in Kosovo and western Macedonia, demanding republican status for Kosovo.
As a concession, with the 1968 constitutional amendment, Kosovo obtained local
economic and social planning authority as well as local financial control. This new status
of Kosovo was criticized by Serbian and Montenegrin intellectuals, arguing that
concessions would increase Serbian migration from Kosovo. Furthermore, these
intellectuals, together with religious men in Serbia, also pointed to raising Muslim
nationalism in Bosnia and the establishment of a different Macedonian Orthodox Church.
Political discussions were followed by new amendments of the constitution in 1971,
which turned Yugoslavia into a weak federation. The amendments reduced federal
responsibilities in defense, foreign policy, maintenance of a single national market,
collective money and trade policies, self-management system and collective and civil
rights. Provinces and republics were empowered over other functions, and more
significantly, they obtained veto power over federal governments decisions7.
Yugoslavias economic planning during 1960 aimed at integrating economy into
international market. National currency was devaluated and tariffs and import restrictions
were reduced. In addition, workers were permitted to work abroad. Foreign currency
7 (accessed in 4/23/2009)

sources were tourism and remittances of the guest workers. When third five year plan
was abandoned in 1962, imports and inflation increased, exports stagnated, while wages
increased at the expense of productivity. The failure of third five years plan led into the
preparation of annual plans between 1952 and 1957. Conservative sections of society
warned that socialist values would be lost because of decentralization of investment
decisions and markets dynamics, which were considered by the liberals as the sole
solution to economic problems.
It is seen that liberals defeated conservatives when 1963 constitution adopted market
socialism. The decision making power of the central government were far more loosened
over investment, prices and incomes. The central government would intervene just in
case of crisis8.
The 1963 Constitution was designed by the main ideologue of the system, Eduard
Kardelj, who benefited much from liberal ideas. The constitution however recognized the
need for some centralization. In order to soften the regional conflicts and empower the
national representation, it was embraced that republic would be represented only in the
Chamber of Nationalities, which was a part of the Federal Chamber. The aim was to
support federal funds for the development of poor regions and republics. However, other
articles reduced centralization and far more separated the state and the party. In addition,
the principle of rotation was adopted so as to prevent more than eight years period for
executive positions. The other significant change was the introduction of court
procedures for human and civil rights, which were absent in the other socialist states.
During these political and economic changes, the Tito advocated economic reforms while
resisting against decentralizing state power more9.
Despite all developments towards market socialism until then, legal framework would
remain uncompleted without the thirty laws of 1965 economic reform. The purpose of the
reform was to leave to the enterprises instead of the government the greater part of their
income through tax reductions, limitation of the central control over investment
decisions, adjusting national prices to the world market, devaluation of national currency
and lower customs and export supports a part from credits for peasants. Unlike successful
economic performance ten years before 1965 reforms, however, now economic
performance would be weaker since the reform increased the demand for resources,
inflation and balance payments deficit as well as unemployment. Between 1965 and
1974, economy as a whole was shrunk10.
The 1974 Constitution
It is observed that the adherents of market socialism began to lose power at the beginning
of 1970s and after 1974, and centralist tendencies became more influential. Autonomy of
8 (accessed in 4/23/2009) (accessed in 4/23/2009) (accessed in 4/23/2009)


enterprises was limited by giving additional authority to the state bodies. In addition, it
was attempted to decrease some additional earning caused by privileged position in the
market. The state was weakened, said by Kardelj11.
The new constitution introduced new political bodies, check and balance system in order
to empower the party and to reduce the power of managers of the enterprises. The new
constitution adopted delegation system of the associated labour, socio-political
organizations and local citizens instead of direct election to legislature. It was stated that
new system was based on direct workers democracy. However, the system increased
the party control in the federal, republican and local assemblies. Nevertheless, the 1971
amendments decentralizing power to the republics was kept intact12.
Another important novelty was the creation of the state presidency within the federal
structure. Its head was Tito who symbolized the unity of the state and party leadership.
Nonetheless, central partys members were still elected by regional decisions13.
The 1974 Constitution did not change the decentralized power structure of the 1970s. It
reasserted the self-management system without central intervention and expanded
republican and provincial power in political and administrative contexts. According to the
constitution, the federal assembly was the highest level of the self-management system.
The political system started at the local level in which labour and political organizations
elected the members of the communal assemblies, which then elected the members of the
provincial and republican assemblies, which at the top determine the members of the
federal assembly. The highest one, federal assembly was composed of two equal
chambers, the Federal Chamber and the Chamber of Republics and Provinces. As in the
previous constitution, the aim was to balance economic and regional interests while
asserting the social unity idea of communism. It also redesigned the State Presidency by
reducing the number of its members from twenty-three to nine that would equally
encompass representatives from the republics, provinces and the ex-president of LCY.
The last member was considered that he or she would empower the role of the party in
the national decision making process. This system continued until 1988 when the state
and party were far more separated. It was seen that the constitution aimed to protect
individual rights and legal procedures too. The more important provision presented far
more autonomy to Kosovo and Vojvodina provinces within Serbia14.
Leadership role of the LCY was symbolized under the name of Tito and Kardelj in spite
of decentralization of power. Tito was elected as the president of the league for life and
his presidential position in 1974 was empowered more. The constitution also reasserted
the regime as defender of Marxism-Leninism15.

Alpaslan Ikl, ibid, pp:121 (accessed in 4/23/2009)

13 (accessed in 4/23/2009)





The chief ideologue of the system, Eduard Kardelj, formed the ideological framework of
the regime. His book The Directions of Development of the Political System of SelfManagement argued that Yugoslavian pluralism was different from bourgeois democratic
pluralism since the LCY was the framework for contenting interests and was based on
especially the self-management principle for economic and political life. These principles
would be empowered more with the Law on Associated Labour of 1976. This law and the
constitution were the codification of the decentralization of power and control and
supporting the interests groups outside the party. The political reforms during 1970s
fragmented far more than before the country wide interests, which suffered also from
regional differences. Communist cadres became divided in terms of loyalty and faced
weakening leadership of the center. In 1979 the presidium of the LCY began to be rotated
and after Tito died, presidium commission included regional party chiefs. Rotation
system was based on nationalities through 1980s and revolved around the eight federal
jurisdictions. But, after 1980, decentralizing forces supported for fifteen years had started
to destroy the single party regime16.
Classes and Planning
Yugoslav peasant population was reduced from 67.1 percent in 1948 to 16.7 in 1984 due
to economic policies withdrawing resources from agriculture and other social factors. In
1981, around 2.5 million agricultural population of 4.3 totals still cultivated small private
land parcels and 1.5 million of which were employed in other regular jobs elsewhere.
Collectivization program started in 1949 and stopped less than four years later and at the
end of the program small private lands remained the main form in agricultural areas.
Peasants covered the 95 percent of the agricultural workforce, holding 82 percent of the
arable land. Average peasant farm was 3.4 hectares. Property limits on flatlands would be
raised to 30 hectares in 1988. During the socialist period, land structure did not permit
large scale mechanization. Productivity was far lower than the Western Europe so that
one Yugoslav peasant farmer fed five people whereas one Western European peasant
sixty-five people. Even in 1990s, peasant forms of culture and living were still widely
observed in everyday life. Peasants formed a half of the guest workers in Europe. In
1970, 25 percent of the peasants had an industrial job and one member of half of the
peasant families had an industrial job. Remittances sent by the guest workers led into a
housing boom in rural areas17.
The socialist government started rapid industrialization program, which increased the size
of the working class. Between 1947 and 1952 industrial jobs increased 75.2 percent as
rural migration was attracted by urban industrial employment. Until 1975, industrial
employment increasing rate was annual 4.3 percent. The industrial workforce was 1.1
million in 1947 and increased to 6.3 million in 1985 when the state controlled social
sector employed 98 percent of the total workers. Economic reforms introduced after 1948
changed state property over enterprises into social ownership, officially transferred the

ibid (accessed in 4/23/2009)

control over the state property to workers who operated the enterprises. The socialist selfmanagement remained in force until the reforms of 1989. It ensured life-long job security
to the workers as long as the worker did not terminate the contract. In other case, he lost
the opportunity to work for another enterprise in the social sector. According to 1976
dated Associated Labour Act, each worker belonged to a basic organization of
associated labour (BOAL). The BOALs formed the workers councils, which appointed
executive bodies for the definition of wages, production goals, recommending investment
policy. Director or a board was appointed by the executive body for current operations.
Nonetheless, educated workers occupied the large share in the executive councils. From
1950s to 1970, the share of the skilled workers increased and occupied the half of the
seats in the executive body. However, we have to note that around a third of the workers
belonged to skilled workers. The connection and information possibilities the directors
had enabled them to influence the decisions of the workers councils. In time, workers
become more influential over wage issues while the directors decided more and more on
the investment and production decisions as well as current operations18.
As for the market relations of the self-managed enterprises, we see that, wage preferences
and social security concerns contradicted with efficiency considerations. In economic
slowdown, investments rather than wages were reduced. Without workers consent,
workers could not be dismissed. If this was preferred, alternative jobs, training for new
jobs had to be provided within a legal procedure. The economic reforms of the 1980s
changed the conditions of the workers dramatically. At the end of 1980 workers strikes
achieved a record level and many of the workers returned their membership cards to the
LCY. Around 1985 the League had only one of eleven semiskilled workers and one of
five skilled ones. The trade unions had no autonomy and hence could not protect
workers rights. On the other side, the workers considered the unions irrelevant.
Towards the end of 1980, independent trade unions were permitted19.
In the late of 1980, the laws limiting private enterprises became dysfunctional in terms of
taxes and number of workers demanded. The workers got the opportunity of working for
the private enterprises for better payments with longer hours compared to social sector.
These private enterprises also illegally employed skilled workers who worked for them
after working day in the social sector while many workers worked additional to the social
sector. During these years, unemployment became a serious problem for the workers.
Between 1965 and 1985, the number of unemployed workers increased from 237.000 to
1.039.000. Even more, regional rates were unequal. Slovenia had the lowest rate while
Kosovo the highest. A reform in 1989 permitted the elimination of unnecessary workers
and hence increased more the unemployment rate. In the first stage of reform, policy
planners predicted that unemployed workers would be re-employed by private
enterprises. But this was not realized20.

18 (accessed in 4/23/2009)





As for capital ownership, we see that collectivization of agriculture was abandoned in

1952 and agricultural land was left to small peasantry. Small peasant farming dominated
rural areas until 1980s. In 1984, 83 percent of cultivated land belonged to private
farming, with 84 percent of live stocks, 72 percent of net agricultural production. These
were the facts despite official hostility to private and small economy. Small enterprises
were seen as independent ownerships. At the end of 1980s, many Yugoslav economists
suggested the small business to be recognized and supported officially and that ceiling
limit to private property on land had to be increased from ten to thirty hectares. It was
thought that these regulations would support entrepreneurial spirit and hence increase
efficiency. At this point, we have to remind that despite Titos objections, Yugoslavia
was tolerant toward market dynamics. Nonetheless, market liberalization slowed down in
1970 due to federalist tendencies and the adoption of the social compact system of
1974 constitution, which limited decision making and competition of BOALs in the
communes and republics. In addition, decision making power of the republics limited the
expansion of markets across republics. This limitation weakened the market at the end of
1980s. It was already in 1990 that Yugoslavia started again the incorporation of the
Western economy into socialist self-management system. Then, profitability had to be
concerned by the enterprises as unprofitable ones had to be faced with bankruptcy. In
1990 also, workers were permitted to become shareholders of the enterprises and the
workers strikes were tolerated and legalized. Looking at 1990s reforms, it was predicted
that Yugoslavia would be a kind of Western market economy if large amount of state
enterprises were not considered21.
As for the conception of planning in Yugoslavia, it is seen that it was not effective.
During 1960s and 1970s, federal government prepared detailed plans with specific targets
without taking information from below. In 1976, social planning based on consent and
voluntary system was adopted. All parties had to participate in and agreed on the plan
formulations. After the general program of the government is made, enterprises prepared
microplans as self-managed communities and local governments formulated
macroplans. Plans were prepared at all levels simultaneously with no planning
hierarchy. After the discussion of the plans by all parties, the resultant document was
turned into binding social contracts and then self-management agreements, regarding
the materials and new capacity required. With annual evaluations, changes were made.
Because of the dependence on imported machinery, international market made the
changes necessary. However, plans were not applicable due to its consensual base and to
the decentralized nature of the system, which made the cooperation and coordination
impossible among the republics and provinces. As regards price controls, the system
determined only the selling prices of raw materials and the retail prices of the final
products. The intermediate pricing was made by the demand and supply dynamics of the
market. In 1964, price controls were removed. Coming to 1990s reforms, controls on 85
percent of all goods were lifted, with the exception of essential goods such as electricity,
oil and some raw materials and communication services22.

21 (accessed in 4/23/2009)

22 (accessed in 4/23/2009)


Regional Inequalities
Autonomy of the republics and the loose federal structure of the country prevented
mutual integration of the different economic units through the exchange of commodities.
Serious regional economic disparities, until 1980s, could not be overcome although the
raw materials of poor regions such as Kosovo were integrated to the national economy.
While Slovenia, Croatia and the large part of Serbia had capital intensive technologies
and attracted foreign investment, the economies of Kosovo, Macedonia, Montenegro and
Southern Serbia remained labour intensive and traditional regions. This capital based
division led into differences among eight federative units as regards employment,
income, investment and social services. Poor economic and social conditions in Kosovo
and Macedonia in particular provoked already existing ethnic problems and uprisings.
However, the federal government still transferred financial resources extracted from
Slovenia and Croatia to the Fund for Underdeveloped Regions in the 1980s. Slovenia
which earned the 25 percent of national hard currency from exports contributed around
its 20 percent income to other republics. One of the reasons behind secessionist attitudes
of Slovenia was this contribution. In 1990, the Republic of Slovenia reduced its
contribution to the fund, because of its concerns over the profitability of the investments
and the decline of the local economy. Croatia would follow the suit if it could not get
concessions. On the other hand, EEC and more autonomous status became more
attractive for these relatively developed republics23.
One of the main problems of socialism in Yugoslavia was the regional income
differences, which existed before socialism, but were not overcome through socialist
policies. For example, according to statistics of regional (national) incomes between 1947
and 1976 and if the average of Yugoslavia is accepted as 10024:
Only Serbia













The striking facts are that especially first Slovenia and second Croatia improved its
respective shares in the period. Serbia and Montenegro sustained their initial shares while
Macedonia slightly improved its starting point. However, first Kosovo and second
Bosnia-Herzegovina stayed even behind their respectively low level of development.
Difference between Kosovo and Bosnia-Herzegovina is more than twice where as the
23 (accessed in 4/23/2009)


Alpaslan Ikl, ibid, pp:138


difference between the latter and Slovenia is more than three times. Serbia, autonomous
provinces excluded, forms the average generally. Ikl compares these figures with Italy
and the USSR. The difference between the most and least developed regions in
Yugoslavia, Italy and the USSR were in turn: more than 5; 2.8; 2.4. Regional inequality
in Yugoslavia was far more than Italy and USSR25. To these regional income differences,
it should be added that a similar capitalist division of labour was seen between Serbia
which was superior first in bureaucracy and then banking and foreign trade and Slovenia
and Croatia which were specialized in industrial production. Serbian companies realized
70 percent of all foreign trade. Ikl correctly observed that national divisions especially
between Serbia and Croatia stemmed from the competition between industrial capital,
and banking capital and foreign trade26.
At this point, national and nationalities question in Yugoslavia, which first demonstrated
themselves as national demands and demonstrations after 1960s and played a decisive
role in the breakup of the country were caused mainly by the regional economic
differences. In addition, secessionist movements and demands that clearly emerged after
1980s were resulted simultaneously by the attitudes of the wealthier and poor regions.
Foreign Policy, International Politics and Some Socialist Critics
After the Second World War, newly independent Asian and African nations conceived
the Cold War as a power struggle between the two super powers for world domination.
During this early period of cold war, the initiative of the non-aligned movement came
from Jawaharlal Nehrus India, Josip Broz Titos Yugoslavia and Gaman Abdel Nassars
Egypt. As one of the reactions to Cold War conditions of international politics, which
divided the world into socialist and capitalist power blocks and spheres of influence
respectively under the leadership of the Soviet Union or the USA, the Non-aligned
Movement (NAM) emerged as the biggest independent and informal association of
countries on a sui generis basis created by disavowing bloc divisions and the bipolar of
two super powers. It did not mean isolationism or neutralism, but a rejection of
commitments to a particular multinational military team led by a super power and the
preference for egalitarian and democratic trends in the world politics against
hegemonistic ones. In its later evolution, the NAM began to advocate a New
International Economic Order (NIEO) based on equality and justice. Its initial emphasis
on political imperialism was later shifted to economic and cultural imperialism. It was
also accepted that global strategy was dominated by the USA, which prepared conflicts in
the Third World for strategic purposes and policed the world27.
After Soviet-Yugoslav rift in 1948, Yugoslavia began a search for new relations. In
September 1949, Yugoslavia obtained loans from the USA and some international
institutions under the control of the Western Capital. And these relations would lead into
a radical change in foreign policy of the country. Yugoslavia left the idea of Balkan

bid, pp: 142-3

bid, pp:142
Pavithran K.S, 2008, Non-Algnment and Post-cold War International System: Problems and
Perspectives, in (accessed in 25/5/2009)


Federation with Bulgaria, stopped support to Greek communists in 1949 and also signed
Balkan Pact with Turkey and Greece in 1953 (Ikl, 1980, 101-2). However, when two
years later Stalins rule in the Soviet Union was replaced by Khrushchev in 1953,
Yugoslav-Soviet relations were rehabilitated and Yugoslavian road to socialism was
approved by the Soviet Union ((Ikl, 1980, 103). Nevertheless, zigzag policy of
Yugoslavia never stopped. Once Khrushchev was dismissed from his position in 1964
and in the same year once Nehru of India died, reforms towards market socialism was
accelerated and the relationships with the Western countries began to acquire new
dimensions. As the development of market economy sped up, consumerism created new
economic problems, the country needed more American aids. Inside, a new technocratic
generation under the influence of the Western ideas began to dominate the state (Ikl,
1980, 104).
During the new phase of the market socialism that was accompanied with the NAM in
international relations, Yugoslavia was sharply criticized by the socialist countries. For
example, in a report called Is Yugoslavia a Socialist Country? and prepared for the
Communist Party of China in 1965 to criticize the Soviets positive and friendly approach
to Yugoslavian socialism, it was stated that All Marxist-Leninists hold that Yugoslavia
is not a socialist country28. We can choose some of the counter-arguments about
socialist identity of Yugoslavia. It was mainly argued that the regime was guided by
modern revisionist theories and against the socialist camp and communist movement and
obtained credit from the head of the imperialist countries, that is, the USA. Economically
stated, it did not exclude private capital, private enterprises and capitalists. These entities
were also developed more and more. With the Tito cliques help and encouragement,
private enterprise and private capital have mushroomed in the cities in Yugoslavia In
addition, without touching petty-producer economy and individual economy, in the
countryside, capitalism was being restored. Workers self-government was nothing more
than the state capitalism under the dictatorship of the comprador bourgeoisie. It was also
argued by referring to Stalin, Marx and Engels, that slogans such as workers selfmanagement or the factories to the workers were not Marxist ones but the ones of
anarchist syndicalism, bourgeois socialism, opportunism or revisionism29. Regarding
public property, it was referred to Stalin, Lenin, Marx and Engels, stated that the first task
of the proletariat which seized political power was to turn the means of production into
state property30. With the existence of the workers self-government and the property
under their control, there could not be unified economic planning by the state, but the
use of the profits as the main incentive to enterprises, capitalist competition, as well as
the use of credits to encourage capitalist competition, and the capitalist characteristics of
the relationships among the enterprises, socialist planning was impossible31.
The Communist Part of China also argued that American-Yugoslav relations led into a
U.S. imperialist dependency. For example, between the end of the second war and 1963,
more than 60 percent of Western aids belonged to U.S, the large part of which was
28 (accessed in 4/20/2009)



granted after 1950. In return of this financial support, a serious treaties as regards military
and defense and economic cooperation as well as alliances with two NATO membersTurkey and Greece- were signed between two countries. From 1957 to 1962 Yugoslavia
signed more than 50 agreements leading into U.S. dependency from military affairs to
foreign trade. Through these treaties, western monopoly capital began to penetrate into
country, which also had abolished state monopoly on foreign trade32.
At this point, regarding Yugoslav-American relations, we have to add that for the USA,
Yugoslavia occupied a very special case. Kissinger states that after Yugoslav-Soviet rift,
Tito survived, with the aid of the Western democracies33, and more interestingly, he
said that Any Eastern European country that broke with Moscowcould count on
American aid, to be eligible for American aid, an Eastern European country did not
become democratic; it was enough for it to pursue the Titoist model, and to leave the
Warsaw Pact34. For the USA, Yugoslavia was a model which could be adopted by other
socialist countries in the East Europe.
The Communist Party of China gave some examples of the Yugoslav support to US.
imperialism by referring to revolution in Greece in 1949, the Korean war in 1950,
Vietnam War, subversion against Albania, the Soviet intervention to Hungary in 1956,
Lebanon war and the event in Taiwan Straits in 1958, U-2 incident in 1960, Cuban
Revolution in 1959 among the others. In the final analysis, the fact that capitalism has
swamped Yugoslavia in both town and country, the degeneration of an economy owned
by the whole people into a state capitalist economy and the decline of Yugoslavia into a
dependency of U.S. imperialism are all due to the degeneration of the Party and state
power in Yugoslavia.35 As regards the last political observation, it was stated that
between 1948 and 1952, a large part of the communist cadres, Cominform adherents and
more than 200.000 party members were liquidated, arrested or imprisoned. It was added
that in 1952 November the change of the name of the Communist Party of Yugoslavia
into the Leagues of Communists of Yugoslavia meant the abandonment of the partys
role as the vanguard of the proletariat. Moreover, in a clear fashion, it was quoted in
Eduard Kardelj stated that The means of the revolutionary dictatorship of the proletariat,
i.e., of the socialist state system, become increasingly unnecessary.
For Chinese communists, Titos state power was the dictatorship of the bureaucratcomprador bourgeoisie. The change occurred through peaceful evolution. Yugoslav
experience did show that within 15 years how a socialist state peacefully evolves into a

Henry Kissinger, 1994, Diplomacy, Simon and Schuster Paperbacks, New York, London, Toronto,
Sydney, pp:552
bid, pp:558
35 (accessed in 4/20/2009). As for the attitudes of the NAM
countries towards socialist and capitalist countries are also controversial. For example, one writer observes
that although they supported much more than the other in some cases, in all cases, they did not support
either of them. However, they were also criticized of acting together with the communist block and
criticizing the Western Block in the UN, and also, positions of Cuba, North Korea and Vietnam. See,
Tayyar Ar,2004, Uluslaras likiler ve D Politika, Alfa Yaynlar, stanbul, pp: 234-5


capitalist state36. Also in 1964, Branko Horvat introduced a semi-official economic

theory of the system in his Towards a Theory of Planned Economy. This book was seen
as the first official expression of the Yugoslav economic conception and criticized by
Ernest Mandel in 1967. Mandel there did show that For them, market economy is not a
necessary evil during the period of transition between capitalism and socialism; rather it
is here to say even after the end of the construction of socialism. The more consistent
theorists like Horvat daringly conceive of a communist society with commodity
production in full bloom37. It is seen that for Yugoslav socialism, even in theory, market
does not create any structural problem for the establishment of socialism and classless
society. However, we have to remind that here market is not capitalist but socialist one in
the eyes of Yugoslav socialists. Nevertheless, the idea of market, if it is not barter
economy, necessarily requires commodity production with or without capitalist mode of
production. Hence, with market, the idea of commodity was also preserved even for the
communist future.
Both as a support to and a critique of the Communist Party of Chinas observation about
capitalist restoration in Yugoslavia, we may take back the restoration to the earlier phase
of socialism in Yugoslavia. For example, Kardeljs book Roads of Development of the
Socialist Self-Management Political System, which gave the theoretical content of 1978
Congress of the LCY, argued that ever since the revolution (1941-1945) Yugoslav
Communists have recognized the need for certain forms of political pluralism . The
idea was that the party should not be a political force that has a monopolistic control
over society, but rather that, as the ideological and political vanguard of the working
class, it had a special social role but one that it could perform only in a democratic
alliance and in cooperation with all social and democratic forces38.
Here, it is clearly seen that Yugoslavs conception of the political party echoes Eurocommunist line39, which is widely associated with Antonio Gramscis theory of
hegemony and his view about the role of the party in the formation of socialist
hegemony. Here the party is given the role of democratic political cultural and
ideological leadership instead of proletarian dictatorship in Marxist-Leninist
36 (accessed in 4/20/2009)

Ernest Mandel, 1967, Yugoslav Economic Theory, Monthly Review, April 1967, pp: 40-49, in (accessed in 4/23/2009)
Quoted in Slobodan Stankovic, Will Yugoslavia Experience The Fate of Chile? in in 4/23/2009)


For the classification of the Marxist left, see Anderson, P., 1982, Batda Sol Dnce, Trans: B. Aksoy,
Birikim Yaynlar, stanbul

Here I suggest that although this conception of Gramscis theory of hegemony is widely observed and
accepted by Euro-communism, Gramsci can be interpreted in the lines of Marxism-Leninism as I tried to
do. See Ercan Gndoan, Conceptions of Hegemony in Antonio Gramscis Southern Question and the
Prison Notebooks, New Proposals: Journal of Marxism and Interdisciplinary Inquiry, Vol.2, No. 1
(November 2008) Pp. 45-60. For the connection between Yugoslavia experiment and Euro-communism, it
is stated that adoption of the idea and concept of self-management by the later seems to be influenced by
the popularity of the former over West European public opinion. In the formation of Euro-communism,


Socialist self-management in Yugoslavia was realized through associated social labour

and workers councils. However, as Alpaslan Ikl observes, this sort of social property,
which was introduced as an alternative to both state property and private property, was
nothing but the group property41. The system actually corresponded to the theoretical
content of Proudhons anarchical socialism. Ikl stated that after 1964, self-management
was accompanied with market (apart from federalism principle the Yugoslav state system
adopted). He also reminds that Proudhon suggested a market economy based on workers
control and states that To Gramsci the basis element is the factory while the element
Proudhon saw as the center of the social life is market. In fact, market is important for
the principle of competition to function42. Proudhon also echoed in the agreements and
contracts signed between the enterprises in Yugoslav self-management43.
Concluding Remarks
The twentieth century socialism that was associated directly with the theory developed by
Marx and Engels has been three main streams: Marxism-Leninism of the Soviet Union,
Marxism-Leninism-Maoism of China and Euro-communism of the Western Europe. The
last stream, I suggest, was widely represented especially by the Yugoslav socialist
experiment. First, according to the main democratic premises of Euro-communism,
Yugoslavia were not a proletarian dictatorship and not a friend of Soviet style
communism. Second, despite formal single party domination (LCY in fact), pluralism of
interest including mainly capital were represented in Yugoslavia. Third, related with the
official rejection of the proletarian dictatorship principle by the Euro-communist parties
after 1974 were associated and consistent with the socialist self-management experience
of Yugoslavia. Fifth, the role attributed to party was again the ideological leadership in
the line of a democratic interpretation of Antonio Gramscis conception of hegemony and
the party in socialist struggle. Sixth, the conception of market, self-management and the
state of Yugoslav socialism was closely associated with Proudhons market based,
anarchical socialism, which had been criticized by Marx himself in his The Misery of
These theoretical essences of Yugoslavian socialism were completely opposite to
Marxist-Leninist tradition and rather close to Euro-communism. The former is obviously
opposite to capitalist market economy, anarchism, and, it can be argued, the party-state
division. Nonetheless, it is sure that search for alternatives to Marxism-Leninism should
be accepted as legitimate. However, this is legitimate as long as an alternative that is put
Yugoslavia can also be suggested as an old example of adopting a line independent from Moscow, see
Alpaslan Ikl, ibid, pp:74
The aim was the rejection of the narrow bureacratic control emerging the use of the state property and of
the bureacratic centralism and to introduce democratic centralism. However, this aim was not realised.
Alpaslan Ikl, ibid,pp:117.
ibid, pp: 41
bid, pp:45
For Marxs criticism of Proudhons socialist theory see Marx, K., 1992b, Felsefenin Sefaleti, Trans: A.
Kardam, Sol Yaynlar, Ankara


forward should be superior to Marxism-Leninism. On the other side, Yugoslav official

doctrine stated that the Yugoslavian system was the true follower of Marxist-Leninism.
Despite all differences as regards Marx and Lenin in terms of market and the role of the
proletarian state, the fact that the official conception favored Marxism-Leninism can
show that in the period when all different type of socialist lines were existed, open
criticism or rejection of Marxism and Marxism-Leninism was not a possibility.
Hegemonic position of the Soviet Union in the international socialist struggle prevented
the self-declaration of any non-Marxist socialist identities.
The other striking fact was the tragic breakup of Yugoslav socialist federal state.
However, it was not surprising after our presentation that Yugoslavia willingly or
unwillingly maintained and even supported regional and national differences through
market based economic policies so that even the forces which tried to prevent the
dissolution was based on national and imperialist aspirations and plans as seen in the
Serbian attempts to stop the dissolution, which rendered the breakup of the federation a
far more tragic process than the other dissolutions experienced in the socialist block after
The last but the most important characteristic of the socialist Yugoslavia was the close
relationships it established with the USA and the Western European capitalist countries.
The NAM movement was the rejection of the domination of the globe by any super
powers. However, in a confrontation of socialist block with the capitalist block in the
form of Cold War, all socialist countries, despite their differences, needed alliance with
the socialist hegemonic block under the leadership of the Soviet Union. First Yugoslavia,
and then China after 1960s followed the domestic and foreign strategies and polices
which would weaken the international socialist struggle against the capitalist countries
and their containment policy against socialist block. Independency concerns of the
Yugoslav socialists lacked the socialist internationalist perspective. At the end, first
Germany and immediately EU diplomatically attacked and recognized Slovenia and
Croatia as independent states in 199145 and the resultant USA-led NATO military
operations that were seen by all parties as necessary to stop violence in the country
officially put an end to the socialist Yugoslavia.
It can be asked that if Stalin of the Soviet Union could have kept Yugoslavia a part of the
socialist block under its leadership, and if Yugoslavia had not been based so much on
market based self-management inside and not been one of the leaders of NAM, could the
development pattern have been different and could the tragic end of Yugoslavia been
prevented. Economic and ideological support from the Soviet Union and COMECON
countries could have kept Yugoslavia in the socialist camp and prevented this country

ignoring reservations among a number of EC members, Germany unilaterally recognized Croatia and
Slovenia before Christmas 1991. Germany's recognition forced the EC to follow suit by January 15, 1992.
The United States, after initial opposition over the recognition policy, recognized Slovenia, Croatia, and
Bosnia and Herzegovina in April 1992. These developments led Chancellor Kohl to declare that the
recognitions represented a major "success for German and European policy. See (accessed in 4/23/2009). It is sure we can state that breakthrough
countries must have presented an invaluable opportunity for Germany to manifest his united power to the
EU and the USA in the post-cold war conditions.


from getting closer to capitalist market economy and the Western monopoly capital. The
case of Yugoslavia shows us that international side of the socialist struggle is one of the
sine qua nons of socialist transition in any country.
Anderson, P., 1982, Batda Sol Dnce, (Western Marxism) Trans: B. Aksoy, Birikim
Yaynlar, stanbul
Ar, T., 2004, Uluslaras likiler ve D Politika, (International Relations and Foreign
Policy) Alfa Yaynlar, stanbul
Gndoan, E., 2008, Conceptions of Hegemony in Antonio Gramscis Southern
Question and the Prison Notebooks, New Proposals: Journal of Marxism and
Interdisciplinary Inquiry, Vol.2, No. 1 (November) Pp. 45-60
Gundogan, E., 2009, Marxian Theory and Socialism in Turkey, A Critique of the Socialist
Journal Aydnlk, VDM Verlag
Kissinger, H., 1994, Diplomacy, Simon and Schuster Paperbacks, New York, London,
Toronto, Sydney
Ikl, A., 1983, Kuramlar Boyunca zynetim ve Yugoslavya Deneyi, (Self-Management
in Theory and the Yugoslav Experiment) Alan Yaynclk, stanbul
Marx, K., 1992b, Felsefenin Sefaleti, (The Misery of Philosophy) Trans: A. Kardam, Sol
Yaynlar, Ankara

Web References
Mandel, E., 1967, Yugoslav Economic Theory, Monthly Review, April 1967, pp: 4049, in
Pavithran K.S, 2008, Non-Algnment and Post-cold War International System: Problems
and Perspectives, in

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