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The Dialectics of Decentralization: Economic Reform and Regional Inequality in Yugoslavia

Published online by Cambridge University Press:  18 July 2011

Nicholas R. Lang
Nicholas R. Lang
Affiliation:
Indiana University
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Abstract

Economic reform in Communist states is usually evaluated in terms of a dichotomy between traditional “command” economies and systems in which production and investment decisions are “decentralized” in the hands of immediate producers. This distinction tends to be misleading, especially when applied to multinational and/or federal states. This is the case for two reasons. First, the concept of decentralization may be disaggregated into a number of political and economic policy packages whose goals are not necessarily compatible. Second, differences in policy preferences among sub-national leaders are resolved in favor of a particular set of alternatives by the form of decentralization chosen at the national level. In Yugoslavia, decentralist reforms have subordinated the goal of reducing interregional economic inequality to the goals of rapid and stable economic growth, despite the fact that both “decentralist” goals have been equally espoused by federal planners.

Type
Research Article
Information
World Politics , Volume 27 , Issue 3 , April 1975 , pp. 309 - 335
Copyright
Copyright © Trustees of Princeton University 1975

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References

1 For a useful summary of the issues involved in this view of decentralization, see Egon Neuberger, “The Legacies of Central Planning,” Rand Corporation Memorandum #RM-5530-PR (Santa Monica 1968).

2 See Furniss, Norman, “Decentralization,” in Journal of Politics, xviii (November 1974), 958-82CrossRefGoogle Scholar; quote from p. 975.

3 Ibid.

4 See Neuberger (fn. 1),28.

5 For a concise discussion of this theory, see Spulber, Nicholas, Socialist Management and Planning (Bloomington, Ind.: Indiana University Press 1971), 111-13Google Scholar.

6 See Hamilton, F. E. Ian, Yugoslavia—Patterns of Economic Activity (New York: Praeger 1968), 98–101Google Scholar.

7 See Zakon o Petogodišnjem Planu Razvitka Narodne Privrede Federativne Narodne Republike Jugoslavije u Godinama 1947–1951 (Belgrade 1949), 23Google Scholar, and the Constitution of the Federal People's Republic of Yugoslavia (Belgrade 1947)Google Scholar, Art. 15, p. 43.

8 See Zakon o Petogodisnjem Planu (fn. 7), 23. Milenkovitch, Deborah D., in Plan and Market in Yugoslav Economic Thought (New Haven: Yale University Press 1971)Google Scholar, finds “barely perceptible” differences between the Kidrić formulation and Soviet theory which may have anticipated the new Yugoslav theory that began to develop after 1950. The most important of these were: (1) the suggestion that the market might serve as a means to achieve social objectives, and (2) the recognition that “commodity production” could occur within the state sector. See esp. pp. 58–59.

9 See Constitution (fn. 7), Art. 13, p. 43.

10 Boris Kidrić, “Report to the Fifth Congress of the Communist Party of Yugoslavia,” French edition (Belgrade 1948), 45 (emphasis supplied). See also Zakpn o Petogodišnjem Planu (fn. 7), 55–56.

11 See Spulber (fn. 5), 33–34.

12 As Rudolf Bićanić has observed, autarkic development strategies were also a holdover from prewar Yugoslavia, in which regions which had not had access to large foreign markets (especially Serbia) unrealistically sought to achieve total self-sufficiency rather than develop selected sectors in which they enjoyed a comparative advantage. Two points are notable in this respect: first, these regions coincide with areas of relatively low economic development; second, the prewar situation was strongly reinforced by the autarkic bias of Stalinist theory. See , Bićanić, Economic Policy in Socialist Yugoslavia (Cambridge University Press 1973), 1–20Google Scholar.

13 See Šesti Kongres Komunistićke Partije Jugoslavije, entitled “Borba Komunista Jugoslavije za Socijalističku Demokratije” (Belgrade 1952), 59. At the Sixth Congress, President Tito revealed that the Plan had counted upon Soviet-bloc imports in 1948 to cover 86% of Yugoslavia's coke requirements, 62% of its rolling stock, and 33% of all machinery.

14 Ibid., 204.

15 See Službeni List, No. 43 (July 5, 1950). For a later interpretation, see Edvard Kardelj, in Borba, April 2, 1952, p. 1.

16 For accounts of the early evolution of the doctrine of workers' self-management, see Bilandzić, Dušan, Upravljanje Jugoslavenské Privrede (1945–1966) (Belgrade 1967)Google Scholar; Vladimir Bakarić, “Planning and the Law of Value in Yugoslavia,” in Socialist Thought and Practice, No. 34 (July-September 1969), 23–34; McVicker, Charles P., Titoism (New York: St. Martin's Press 1957), pp. 61–106Google Scholar; Neal, Fred Warner, Titoism in Action (Berkeley: University of California Press 1958)Google Scholar, esp. pp. 123–34; and Milenkovitch (fn. 8), 66–90.

17 See Bakarić (fn. 16), 27.

18 See Milenkovitch (fn. 8), 85.

19 See Shoup, Paul, Communism and the Yugoslav National Question (New York: Columbia University Press 1968), 230–35Google Scholar.

20 Jerzy F. Karcz has advanced the interesting thesis that some Communist governments have pursued nationalistically inspired economic policies which enjoyed popular support despite the availability of other policies that might have produced faster growth. This concept of “psychic income” as opposed to material income might well be extended to explain particularist practices within governmental subunits of a multinational state such as Yugoslavia. See , Karcz, “Reflections on the Economics of Nationalism and Communism in Eastern Europe,” in East European Quarterly, v (June 1971)Google Scholar. The eradication of “particularism” became a major concern of the LCY, especially after the Seventh Party Congress in 1958. For representative opinion by party leaders, see the articles of Milentije Popović in Socijalizam, vii (July-August 1964)Google Scholar, and Dragomir Drašković in Gledišta, vii (January 1966). See also Kardelj, Edvard, “Odvogori Na Pitanja iz Oblasti Našeg I Političkog Čivota na Sastanka sa Političkim Aktivom Beograd,” in Problemi Naše Socijalističke Izgradnje, vii (Belgrade 1968), 320–21Google Scholar.

21 See Neuberger (fn. 1).

22 See Kongres Radničkih Saveta Jugoslavije (Belgrade 1958)Google Scholar, esp. pp. 13–18, 43.

23 Ibid., 659–80.

24 See Milenkovitch (fn. 8), 90–94.

25 See the speech by Edvard Kardelj to the Eighth LCY Congress, as reported in the English-language edition, Practice and Theory of Socialist Development in Yugoslavia (Belgrade 1965)Google Scholar.

26 See Milentije Popović (fn. 20), and Mijalko Todorovic, “Report to Second LCY Plenary Session,” June 17, 1965, in Borba, June 18, 1965, p. 1.

27 Program of the Seventh Congress of the League of Communists (Belgrade 1958), 198Google Scholar.

28 See Egon Neuberger, “The Yugoslav Visible Hand System: Why is it No More?,” International Development Research Center Working Paper (Indiana University, Bloomington 1971), 5–7.

28 The texts of the Constitutional amendments and a concise analysis are contained in Kovacević, Milivoje, Ustavni Amandmani XX do XLII (Belgrade 1971)Google Scholar.

30 See Hamilton (fn. 6), esp. pp. 133–36; and Fisher, Jack C., “The Emergence of Regional Spatial Planning in Yugoslavia—the Slovenian Experience,” in Hoffman, George W., ed., Eastern Europe: Essays in Geographical Problems (London: Methuen 1971), 306–19Google Scholar.

31 See Najdan Pasić, “Integration Based on Self-Management and the Political System,” in Socialist Thought and Practice, No. 39 (April-June 1970), 19. See also Kubović, Branko, Regionalni Aspekt Privrednog Razvitka Jugoslavije (Zagreb 1961)Google Scholar. Kubović has proposed the eventual division of Yugoslavia into twenty-five planning regions, many of which cut across existing republican boundaries. If implemented under the current system of self-management, such a plan would reduce the republics, and some communal structures, to anachronisms.

32 Additional critiques of the role of republic organizations in limiting economic growth may be found in Zivojin Rakočević, “Planning as a Unifying Factor of Social Labour in Socialism,” in Socialist Thought and Practice, No. 34 (April-June 1969); Bozidar Glusčević, “Regionalni Problemi Zaposlenosti i Produktivnosti Radne Snage,” in Ekonomska Misao, No. 2 (June 1968); and Kosta Mihajlović, “Odnos Izmedu Sektora i Regiona u Procesu Strukturnih Promena,” in Ekonomska Misao, No. 3 (September 1968).

33 For a detailed account of the seaport controversy, see Dennison I. Rusinow, “Ports and Politics in Yugoslavia,” in American Universities Field Staff Reports, Southeast Europe Series, xi, No. 3 (1964). For a discussion of the Belgrade-Bar Project, see Orme Wilson, Jr., “The Belgrade-Bar Railroad—An Essay in Economic and Political Geography,” in Hoffman (fn. 30), 371–87.

34 Sharp disagreement was expressed in 1969, for example, over which republic, Slovenia or Macedonia, most needed a $30 million loan from the IBRD for highway construction. Both had valid claims; Slovenia needed to expand highway links between Koper and the industrial centers of Kranj and Maribor, while Macedonia required funds to build the first paved road linking the trade centers of Ohrid, Kičevo, and Gostivar —a road essential to the development of an industrial infrastructure. A decision in favor of Macedonia was finally reached through intervention by the Party Presidium, and the IBRD loan was formally awarded on June 5, 1969.

35 This point of view is shared by some Western scholars. See, for example, Shoup (fn. 19), 250–53; Fisher, Jack C., Yugoslavia — A Multinational State (San Francisco: Chandler 1966), 177–86Google Scholar; and Rusinow (fn. 33).

36 There is a voluminous literature pertaining to growth pole theory, which forms a major strand of the literature of regional economics. For a brief introduction, see Perroux, François, “Note sur la Notion de ‘Pôle de Croissance,’” in Boudeville, Jacques, ed., Espace et Les Pôles de Croissance (Paris: Presses Universitaires de France 1968)Google Scholar.

37 Investment figures for industry in 1971 show that the less developed regions generally received a higher proportion of investment resources from the Federation than they did from commercial banks or other republics. The absolute levels of per capita investment in these regions, however, were as much as 600% lower than in Croatia and Slovenia. See Statistički Godišnak SFRJ (1972), 473.

38 Kosta Mihajlović, quoted in Hamilton (fn. 6), 142.

39 See Sokolov, Lazar, “Problema ‘Viška’ Radne Snage u Nedovoljno Razvijenim Podrucima Jugoslavije,” in Ekonomist, xxii, No. 1 (1969), 174–87Google Scholar; Horvat, Branko, “Pitanja Tempa Razvoja Jugoslavenske Privrede,” in Ekonomist, xvi, No. 3/4 (1963), 593–617Google Scholar; and Dragić Stojadinović, review of Drs. Kosta Mihajlović and Eva Berković, Razvoj i Životni Standard Regiona Jugoslavije, in Ekonomska Misao, iii (September 1970), 135–40.

40 For example, see Macura, Miloš, “Politika Zaposlenosti i Proporcije Radne Snage,” in Ekonomist, xvi, No. 3/4 (1963), 611–18Google Scholar.

41 See Hamilton (fn. 6), 144.

42 This point is made forcibly by Kiril Miljovski in his article, “Nedovoljno Razviena Područja i Sedmogodišnji Plan,” in Ekonomist, xvi, No. 3/4 (1963), 673. In criticizing the draft Seven-Year Plan for 1964–1970, then under discussion, Miljovski observes that low investment rates had created unemployment not only in rural areas of Macedonia, but also in more developed regions. He cites an average unemployment rate for 1962 of 13% for skilled workers in Macedonia, and notes that this figure represents a steep rise from the rates of the previous three years.

43 A good summary of these developments may be found in the OECD Economic Survey for Yugoslavia (Paris, November 1970)Google Scholar.

44 See Miljovski (fn. 42), 673.

45 Ninth Congress of the LCY, entitled “Socialist Development in Yugoslavia on the Basis of Self-Management and the Tasks of the League of Communists,” in Socialist Thought and Practice, No. 33 (January-March 1969), esp. p. 53.

46 For example, see Srebić, Borisav, “Neki Problemi Usavršavanja Metoda i Mehanizma Razvoja Nerazvijenih Podrucja u Jugoslavije,” in Ekonomist, XXII, No. 1 (1969), 158–59Google Scholar.

47 See Ninth LCY Congress (fn. 45), 55–56.

48 See Tito, Josip Broz, “Brže od Prosečnog Razvoja Jugoslavije,” in Jovanović, Voja and others, eds., Savez Komunista o Nedovoljno Razvijenim Područjima (Belgrade 1970), 8Google Scholar.