File spoon-archives/marxism-international.archive/marxism-international_1997/97-01-21.060, message 41

Subject: Re: M-I: Susan Woodward on Socialist Yugoslavia
Date: Mon, 20 Jan 1997 15:58:55 -0500 ()

     Most of what Louis P. says below is reasonably
accurate.  One error is the claim that Yugoslavia followed
a Friedmanesque monetarist policy.  It didn't and let
monetary control devolve to the republics who let it expand
to play soft-budget constraint games within their
republics.  This was a major factor in the hyperinflation
that resulted in the late 1980s, and which was gotten
under control just before the final collapse after central
monetary control was reasserted.
    Also, I would suggest that a major factor in the reason
for the high unemployment in much of Yugoslavia was its
failure to follow the recommendations of Vanek and others
to allow free entry into the socialist markets by new
firms.  There is indeed a well-known tendency for existing
firms to not expand their hiring, even if they avoid laying
off.  Thus the solution to the unemployment problem is new
entry which was blocked.
     Hayek's book _Road to Serfdom_ is far away his worst
book, although it is his best known.  Yes, he claims that
the Nazis were socialists, partly on the basis of the
party's name, partly on the basis that it did have a
socialist faction, purged early on by Hitler, and partly on
the basis of many former socialists having become Nazis.  I
note that by the ownership criterion I keep pushing, the
Nazis were not in fact socialists.  BTW, on p. 115 or 116
or thereabouts, Hayek actually comes out for national
health insurance, something that has caused hardline
Misesians to accuse Hayek of being a social democrat.  A
much better book is Hayek's last, _The Fatal Conceit_. 
What is useful about Hayek is his analysis of information
problems in planning, not his broader
political/philosophical/social/economic arguments, many of
which are out to lunch.
     Let me be clear that Yugoslavia had serious problems
including unemployment, hyperinflation, foreign
indebtedness, and regional inequalities.  Some of these are
arguably systemic with MS, some are peculiar to how it was
handled in Yugo.
     There was always a Stalinist opposition to Tito in
Yugo.  I know nothing about the 1970 strike.
     As for me, I have never claimed to be a "Titoist,"
although perhaps that is "objectively" what I am.  However,
in my youth, I was a wild and crazy guy, :-).
Barkley Rosser
On Mon, 20 Jan 1997 12:11:10 -0500 (EST) Louis N Proyect
<> wrote:

> Today I want to turn my attention to the 1991 Socialist Register article
> "Soviet Rehearsal in Yugoslavia? Contradictions of the Socialist Liberal
> Strategy" by Susan Woodward. She was a visiting scholar at the liberal
> Brookings Institute when she wrote this article, a bit of a surprise since
> the article presents a trenchantly Marxist critique of the Yugoslav
> economic model.
> She differs from most analysts of the Yugoslav model in that she
> attributes its peculiarity to the *liberalism* of the dominant faction in
> the CP rather than as a reaction to Stalin. She uses liberalism in the
> correct sense that I used it yesterday, as an economic term rather than in
> the mushy way that Justin Schwartz uses it as a catch-all term for
> ameliorative governments.
> The liberal "reform" program that Tito instituted, according to Woodward,
> originated before WWII among Communists from the regions of Slovenia and
> Croatia, where there was an industrial working-class employed in
> processing and light manufacturing. There also was significant external
> trade, communications, and cultural links with Western Europe. In the
> countryside, there were neopopulist agrarian parties that had created
> successful peasant cooperatives.
> These material conditions helped to foster a Bukharinist development model
> that stressed modern manufacturing and commercialized agriculture. She
> concludes that "material self-interest and cultural preference have
> reinforced this coalition over time with a shared orientation to the west
> and resentment at large expenditures on developing capital goods and
> primary commodities at home."
> Since these were the prevailing sentiments based on class self-interest
> prior to the ascendancy of Tito, the political and economic decisions of
> the new Communist regime must be seen in this light. Yugoslavia faced a
> series of economic problems following WWII that had to do with its place
> in the world order. Primarily these had to do with serious balance of
> payments deficit and unfilled trade agreements.
> Military and financial aid from the West relieved these pressures and
> tended to reinforce the power of the Slovenian and Croatian liberal
> faction in its desire to expand manufacturing for export. What better way
> to create a market for the goods of these regions than to cement relations
> with a friendly Western Europe.
> The development model of the Yugoslav liberals was radically different
> from the Soviet model in the way that labor was viewed. They sought to
> reduce socially necessary labor time in order to make manufacturing more
> competitive on the world market. Woodward describes this approach in the
> following terms:
> "The source of accumulation at the level of the firm and of society is
> higher marginal productivity of labour and lowered costs of labour in
> production. Relative labour cost can be reduced within production by
> increasing mechanization and technological modernization, labour's skills
> ('human capital), the efficiency of the productive process, and work
> effort."
> In tandem with this economic model, there was an associated political
> vision:
> "Although the blueprint of constitutional reform actually looked very much
> like this ideal, the structure of society it imagined could also have been
> designed to satisfy the members of a coalition of the political forces put
> together for revolution in Yugoslavia. The core was to be a socialized
> public sector of firms producing final goods for domestic consumption and
> export with the most advanced machinery available, managed by a staff of
> engineers and economists kept in check by representatives of skilled
> industrial workers. The core is surrounded by efficient private farmers
> and craftsmen organized into local cooperatives, producing for the market
> and for socialized sector firms on long term contract. Movement of people
> and goods across borders is free with few regulations."
> What would be the best way to realize these economic and political goals?
> The Yugoslav liberals agreed with the Hayekian perspective that the
> solution lies in individual and material self-interest. "Decisions on the
> use of economic resources should be made by those who have a direct
> economic stake in how they are used. Those who actually produce value,
> therefore, should be given the autonomy to make economic decisions.
> Workers will produce more per unit of labour if they expect a
> proportionately higher wage, and they will contribute to reducing costs if
> they are given a voice in production decisions."
> While this logic would work for individual firms, the coordination of the
> entire economy required a somewhat different method. What would be the
> carrot and the stick that would make sure that the *entire* economy was
> efficient basically involved the use of financial instruments. The
> liberals adopted a monetarist policy that was almost something that Milton
> Friedman and the Chicago School could have worked up. They resolved that
> the money in circulation never be greater than that supported by real
> value produced by Yugoslav firms and that the total wage fund be kept in
> balance with the fund of commodities available for purchase.
> Sounds pretty good, doesn't it. It's not my cup of tea, I have to admit.
> The whole thing seems kind of bloodless and pecuniary to me, but I am an
> old fashioned sort of socialist. I identify with people like William
> Morris, but that's just me.
> Yet if I focus my brain real hard, I can sort of understand why Barkley
> Rosser is proud to call himself a Titoist. I mean if you have dozens of
> SDSers running around in your dormitory rapping down the glories of
> Castro, Ho chi-Minh or Mao tse-Tung, what better way to one-up them by
> talking about how cool Yugoslavia was. Nothing romantic or idealistic
> about Yugoslavia, just hard-nosed self-interest and a balanced budget.
> Was that the way it was, Barkley? You must have driven those student
> radicals nuts.
> Yugoslavia is also the country that David Schweickart says that comes
> closest to his market socialist ideal. Since Justin Schwartz proposes that
> nothing short of world market socialism is good enough for him, I won't
> even try to blame him for his hero's poor judgement. (By the way, I picked
> up Hayek's "Road to Serfdom" last night at the neighborhood Barnes and
> Noble right after seeing the monster movie "The Relic" and took a quick
> look at it. Are you aware that Hayek describes fascist Italy and Germany
> as "socialist"? Don=92t you find this analysis laughably stupid? Should I
> skip around these chapters? Are there any other imbecile passages in this
> tract that are worth passing over?)
> Hell, I only have two distinct memories of Yugoslavia. When I was working
> at the First National Bank of Boston in 1970, my boss had made plans to
> take a vacation in Yugoslavia. Was she a communist and making a pilgrimage
> of the kind that people made to Managua in the 1980s? No, it was just a
> good, cheap place for a vacation. This was around the same time that
> students at the University of Belgrade launched a big anti-government
> protest and called for a Red University. They flew banners of Che Guevara
> and denounced Tito. Unlike Barkley, they thought he was a creep who was a
> socialist in name only. Were you there then, Barkley? Did you try to break
> the strike?
> So what happened to this socialist Nirvana? Barkley tends to look at the
> Yugoslav civil war as some kind of natural catastrophe that has little to
> do with the economic model that was in place there. Everything was going
> great until this typhoon rolled on shore and caused the Tito's sand-castle
> to collapse. If it only weren't for the damned weather...
> Actually, the Yugoslav model had contradictions from the very beginning.
> What made the liberal model successful at the outset was the investment in
> mining, agriculture, and producers' goods in order to build military
> self-sufficiency right after WWII. This dovetailed with American foreign
> policy aims which targeted development aid to poorer countries and
> especially military and economic aid to countries with anti-Soviet agendas
> like Yugoslavia. Thus American investment flowed to nascent Yugoslav
> industry and promoted rapid growth.
> By the late 1950s, the terms of foreign financing had started to change.
> Loans came with shorter maturities and higher interest rates.  The Common
> Market and Yugoslav membership in GATT did not mitigate against this
> tighter financial environment.
> Even though the West proved less generous as the 1960s wore on, the
> liberals of the Yugoslav Communist Party did not swerve from their
> international orientation. Instead of making an adjustment by orienting to
> COMECON, they decided to cut labour costs in order to keep their national
> books in balance. This meant that Yugoslav workers emigrated in record
> numbers in this period. They took meager jobs in Western Europe. This
> proved beneficial for the Yugoslav economy in the short run because the
> wages they sent home provided desperately needed foreign currency. Also,
> by depleting the ranks of the unemployed within Yugoslavia, they reduced
> political pressure on the employers: the socialist state.
> The pain of these measures caused resentment to grow. Popular anger was
> directed against the liberals in Yugoslavia yet this did not result in the
> growth of an authentic socialist movement at the top. Instead what
> developed was an increasing reliance on microeconomic fixes that boiled
> down to more and more belt-tightening and search for efficiencies.
> Some sectors of the Yugoslav economy made the adjustment more easily than
> others. Slovenian firms which had an historical orientation to western
> markets did the best at technological modernization. The Slovenian
> political leaders, still part of the ruling coalition of the united
> Yugoslavia, pushed for expanded exports in order to reduce the national
> deficit. They also called for more austerity to stabilize the economy. At
> this point Yugoslav socialism began to appear more and more as a chimera
> as Slovenia and Croatia sought tighter integration with the West and
> Serbia desperately tried to work through solutions in the context of a
> weaker industrial base.
> The centrifugal forces keep eating away at the Yugoslav republic until
> the whole thing collapsed and a civil war ensued. Yugoslavia's success was
> very much a product of class relationships on an international scale after
> WWII and its failure are tied to the same relationships. It would be as
> ridiculous to point to the happy days of Yugoslavia as a model for
> socialism as it would be to point to Eisenhower's United States of 1956 as
> a model for capitalism, the way that Ronald Reagan used to.
> The Tito regime was very much a creature of history, a history that can
> not be repeated. There will not be a repeat of WWII with an aftermath that
> favored pro-Western socialist states. There will not be a period of
> economic expansion that favors Yugoslav manufacturing. The success of
> Slovenia, relative to Serbia, has nothing to do with compliance with some
> sort of flawless economic model. It has more to do with its positioning
> within the European economy prior to the formation of the Yugoslav
> republic and after.
> It is a sterile exercise to compare economic figures from one country to
> another. Unless you factor in the sum total of qualifying social and
> political factors, you are just deluding yourself if you think you are
> proving anything. Nicaragua's economy was a basket-case during the
> Sandinista era. Does this disqualify it as a development model? Sadly
> there were any number of "democratic socialists" who jumped to this
> conclusion, especially in the pages of publications like In These Times
> and the Village Voice. Sandinista failure has much more to do with
> imperialist success than anything else.
> The next time we hear panegyrics to Slovenia on this list from Barkley
> Rosser, the least that we should ask for him is to place its "success"
> within the *total* framework of international and national class
> relationships. I know that this can be a big bother and involve research
> he's never done before, but it might turn out to be kind of interesting
> for the rest of us.
> Louis Proyect
>      --- from list ---

Rosser Jr, John Barkley

     --- from list ---


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