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Decline Of Self Management In Yugoslavia:
A Report On The May 2001 Conference of the IIS in Dubrovnik

by Michael Howard

The 2001 conference of the International Institute for Selfmanagement (IIS) was held in Dubrovnik, Croatia last May. The conference focussed on what has become of the system of worker self-management since the breakup of the former Yugoslavia, as well as on developments in the Mondragon cooperatives and in cooperative and worker movements in Mexico, South Africa, and Russia. In this report I will summarize some of the issues in the discussion on Yugoslavia. A future issue of GEO will include articles on other topics.

In the former Yugoslavia, there is a significant fraction of worker ownership in privatized enterprises, but little evidence of a desire to maintain, let alone expand it; nor is it valued as a vehicle for economic democracy . The war has taken a heavy toll, though Dubrovnik has been largely rebuilt and tourism is returning to the Dalmatian coast. Hotels in Dubrovnik were full, and thousands of tourists poured into the old city from cruise ships one afternoon. On the road between Dubrovnik and Korcula only a trained eye would catch sight of the burned out remains of homes of Serb and Muslim former residents.

Some Economic Statistics

According to Branko Horvat, unemployment in Croatia is 23%, and per capita GDP is only 80% of the 1989 level. Corruption has been rampant, enterprises having been sold at cheap prices to supporters of the former HDZ government of Tudjman. Conflict between rival mafias resulted in a shoot-out in Zagreb recently, something unknown in the socialist era. There is a rising traffic in women. A startling 72% of those graduating from college hope to emigrate.

Janja Bec reported on the brain drain from Bosnia, and similarly claimed that 65% of young people—not just graduates—say they want to leave, and 84% of their parents want them to leave. According to Monika Kleck, living in Tuzla, the Bosnian economy is stalled. For five years there has been an attempt at privatization, but it must be redone because of extensive corruption. Factories are operating at only 20-30% of capacity. Start-ups are difficult because of burdensome taxation. There is no coherence among the laws at various governmental levels. The country only functions because of money brought in by the foreign military; the official currency is the Deutschmark.

Hope in Kosovo?

Iraj Hashi recently returned from Kosovo, where there is similar and more recent physical and economic destruction, yet, strangely, greater hope. After the suspension of Kosovo’s autonomy, the Albanian elite (managers, engineers, professors, etc.) had been sacked, Serb refugees were settled in Kosovo, and many enterprises and agricultural units were looted of their assets. Enterprises are operating on average at only 30% of capacity. There is high unemployment, with most getting only 20% of their former wages, and only half salaries for the employed. Privatization is stalled because the government is run by the U.N., which does not consider this part of its mandate. There is almost no sympathy with the self-management system, yet—and this seemed one vestige of hope—in the back of their minds workers consider the firms to be “theirs.” These firms are, however, deteriorating for lack of investment.

Politically, the Kosovo Liberation Army (KLA) got only 12% of the vote in recent municipal elections, compared to an absolute majority for the party of Rugova, the leader of the non-violent movement in the 1990s, the Democratic League of Kosovo. Kosovo is not (yet?) experiencing the brain drain like that from Bosnia; many returned after the war, and for now there seems to be optimism about the future. This includes hopes for independence, which clashes with the mandate of the UN. If privatization proceeds, it could well conform to the 1988-89 Enterprise Law, which called for 60% employee ownership and 40% ownership by investment funds saleable to other buyers. Thus, Kosovo could end up with one of the  highest percentages of worker ownership in the former Yugoslavia.

Former Days

All this contrasted starkly with the Yugoslavia of earlier decades, which some of us remembered from IIS meetings in Dubrovnik before 1992. Horvat reminded us that between 1950-80 Yugoslavia had the highest growth rate in Europe and a very high  quality of life index (relative to nations with comparable wealth, and measured by an index of life expectancy, health, medical services, literacy and education).

Gabi Herbert described travelling as a humanitarian worker in October 1993 from Medjugorje to Mostar in an armored car, and recalling that 20 years before there had been no hydroelectric dams, little development, only a high railway over a little river. In subsequent years, she watched the steady growth of hydroelectricity, housing, irrigation, fish farming, and other construction. Now all was sheer destruction, and the population of this once thriving region poorer than in Tuzla. In Mostar people don’t dare to cross the bridge, the opposing groups at a stalemate since 1993. There are no jobs (except in cafes, spending dollars from abroad) and no economic development.

Self Management in Slovenia & Croatia

What has become of the self-management system? We heard little about Serbia, Montenegro, or Macedonia. Slovenia, which has been less reactionary than Croatia, followed the Markovic law of 1988-89 for conversion of self-managed enterprises into joint-stock companies. Self-management is gone. Workers’ councils have been replaced by boards representing owners. Employee ownership is gradually declining. In a sample of 183 companies, from the commencement of privatization through 1999, the share of ownership held by the state, pension funds, and privatization investment funds declined from 48% to 33%. Ownership by employees and former employees declined from 40% to 38%. The percentage of ownership rose for managers (3.9% to 9%), and for domestic and foreign institutions and strategic investors, although privatization has not attracted much foreign investment. While the trend is toward an increase in outsider control, it appears that the insiders don’t want to sell, because of hopes for job security and eventual profitability despite poor performance.

In Croatia the initial plan was to privatize the socially owned enterprises by June 1992, but the process was subject to much illegality and corruption (eg., managers intentionally running losses to decrease sale value), followed by strikes and then nationalization. Many of the firms remain nationalized but are intended for privatization.

Dismantling Self Management

Why has it been so easy to dismantle self-management? Several reasons were discussed:

• nationalism and anti-communism; for many, ownership was not a priority compared with national sovereignty;

• self-management had been introduced from above; thus its dismantling was not felt as a loss;

• the lack of a democratic tradition and of political democracy;

• the aggression of Milosovic, which gave “socialism” and “Yugoslavia” a bad name;

• in Croatia, the atmosphere of fear created by a repressive government silenced critics;

• government control of the media;

• incompetence of the political leadership after the death of Tito;

• IMF and World Bank conditions including privatization (although Serbia accepted privatization without accepting those conditions).

Not on the list were failures of self-management or social ownership. Branko Horvat disputed the government’s claim that privatization was necessary for a market economy or that social ownership entails no responsible governance of the enterprise. He told a remarkable story of his lawsuit against the Tudjman government in Croatia for unconstitutionally depriving workers of the wealth which they had increased twelve-fold through their labor and investment. Nationalization (and transfer to HDZ supporters) was a theft of the property of the citizens. Judges deliberated for six years, finally failing to comment on a single charge. Gabi Herbert argued that self-management would never have been so thoroughly dismantled without war.

Michael W. Howard is Professor of Philosophy,

University of Maine, Orono, ME 04469;

207-581-3861 Michael_Howard@umit.maine.edu .

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