Market Socialism in Eastern Europe
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A Spartacist Pamphlet $1.00 The Bankruptcy of the Yugoslav Model ______ PAGE 2 ______ Hungary: "Goulash Communism" Goes Bust ______ PAGE 9 ______ For Central Planning Through Soviet Democracy ______ PAGE 16 ______ PAGE 32 July 1988 .. ~~o!.~~;~X523 Spartacist Publishing Co., Box 1377 GPO, New York, N. Y. 10116 2 Part I reprinted from Workers Vanguard No. 444, 15 January 1988 RUVIOW Auto plant in Serbia (left). Serbian chauvinists in anti-Albanian march in Belgrade (right). Economic inequality fueled by "market socialism" has exacerbated regional and national divisions, threatening to tear Yugoslavia apart. The 8ankru ptcy of the Yugoslav Model As of New Year's Day 19S5, a major no longer command the productive road to economic chaos. It generates ity of factories and other enterprises in effort of Soviet workers and managers. unemployment and inflation, widens the Soviet Union began operating on Within the Stalinist framework of build ineLJualities within the working class the basis of market competition. "Self ing "socialism in one country," the bu and throughout society, creates depend management" is now all the rage in reaucrats see no alternative but to sub ency on international bankers. intensi Russia. Announcing a radical restruc ject workers and enterprise managers to fies national divisions and conflicts, and turing (perestroika) of the economy last the discipline of thc market, putting the enormously strengthens the internal June, Soviet leader Mikhail Gorbachev ruble in command. For leftish intellec forces of capitalist restoration. Just look called for "full profit-and-loss account tuals in groups such as thc Socialist at Yugoslavia! ing and self-management of the basic Clubs, self-managemcnt is vicwed as a The Yugoslav Road to links of the national economy." A few step toward frceing society from the IMF Austerity months later a manifesto issued by the deadening hand of the apparatchiks, newly formed unofficial Federation of allowing the masses to participate in The ghost of Marshal Tito might find Socialist Clubs called "to switeh the economic decision-making. ironic satisfaction in hearing Stalin's economy to self-management," even However, enterpri~e self-manage heirs in the Kremlin voice the same for demanding that the state "lease the ment is not the road to workers democ mulas he did after breaking with Stalin social means of prod uction, such as fac racy and socialism. Socialism means a m 1945. The Yugoslav leader declared: tories and workshops, to collectives of democratically administered, centrally "The transfer of the factories and mines self-managing enterprises." planned, egalitarian and internation etc. to management by workers' collec tive~ will prt:\ ent the infectious disease What we are seeing in Russia is a ally organized economy. Before the rise known as bureaucracy becoming en convergence between reform-minded of Stalinism practically no one who con demic in our economy .... Stalinism and the liberal prejudices of sidered himself a socialist disputed these "Well, therein lies our path towards much of the intelligentsia. If Gorba fundamental principles. The program of socialism, and it is the only right way since it is a matter of the withering chev renounces what bourgeois Soviet "market socialism" is basically a prod away of the functions of the State in ologists call the "command economy," it uct of liberal Stalinism. Enterprise self the -economy. Let the Cominformists is because the Kremlin bureaucracy can management and self-financing is the [Moscow-line Stalinists] bear in mind 3 that their slanderous uproar cannot " ... Mr. Abalkin points to the reaction ing of workers self-management is, darken our well-lit path of building of Soviet citizens who visit Yugoslavia. indeed, that the workers themselves socialism. " They are awed there, he said, by the vast -Josip Broz Tito, Selected selection of sausages even though they make decisions" (Der Spiegel, 23 March Speeches and Articles cost four or five times more than back 1987). 1941-1961 (1963) home. Do the Yugoslav workers really man "'You know, meat consumption per age? On paper the workers councils are Today, after four decades, the "Yu capita in Yugoslavia is lower than in the goslav path of building socialism" has Soviet Union: he observed. 'But there is masters of the enterprise. In reality they led to an unemployment rate approach a sense of abundance. If I want, 1 can seldom exercise mastery. The English ing 20 percent, an inflation rate always come and buy it, as much as 1 bourgeois economist Harold Lydall sees approaching 200 percent a year-the want, without a line. It's not simple to the Yugoslav experience as proof posi create that feeling here, but if we highest in Europe, East or West-and a succeed it will have a colossal psy tive of workers' universal incapacity to savage austerity program dictated by chological effect'." manage: the world bankers' cartel, the IMF -·New York Times, 4 July 1987 "The management of a modern enter (International Monetary Fund). And prise, even one of medium size, is a com The long lines for consumer goods in plex and specialized task, or group of the economic crisis has enormously the Soviet Union have nothing to do tasks, requiring the full-time attention intensified national conflicts which with centralized planning per se. For of a management team of specially qual threaten to rip the Yugoslav federation years the Kremlin bureaucracy has tried ified people. The ordinary worker can apart. Last fall, the defense minister, to create the illusion of rapidly rising no more take responsibility for man Admiral Branko Mamula, declared, agerial decision-making than he can incomes by increasing money wages perform a surgical operation, write a "The crisis is approaching the point at faster than production. The result is symphony, or play in a champion foot which the integrity of the country and suppressed inflation with people wait ball team." the existing social system may be en ing for hours to buy at official prices, - Yugos/GI' Socialism: dangered" (London Financial Times, alongside a flourishing black market at Theory and Practice (1986) 25 September 1987). far higher prices. Yugoslavia, by con This is, of course, the standard apolo Between 1981 and 1985 real earnings trast, is an extreme case of unsup gia for class rule. The lower orders are per worker fell 20 percent, fixed invest pressed inflation. deemed too ignorant, too narrowly self ment by 40 percent. To halt this slide, in interested to govern society: that is a late '85 the Belgrade regime moved to Workers Management or task for the qualified elite. stimulate the economy through expan Bankers' Management? Yugoslav workers have enough sense sive fiscal and monetary policies. The Despite the economic collapse, Bel of responsibility and economic savvy, predictable result: hyperinflation as grade officials continue to proclaim that however, to strike against the ruinous skyrocketing prices reached an annual the Yugoslav system uniquely empow austerity prescribed by the ever so qual rate of 140 percent in early 1987. The ers the working class. At the very time he ified savants of the International Mon dinar fell through the floor of the was announcing the 1M F-dictated aus ctary Fund. If these same workers do foreign-exchange market, Yugoslavia terity program, Yugoslav prime min not exercise their nominal power at the teetered on the edge of international ister Branko M ikulic reiterated: "We are enterprise leveL it is because the enter bankruptcy. To roll over the country's convinced that Yugoslavia has no future prises themselves are impotent. Their nearly $20 billion in foreign debt, the without self-management. The mean- major decisions on production, pricing, IMF demanded the kind of shock treat ment it usually prescribes for Latin American juntas. So last spring the Yugoslav Stalinists froze and even rolled back wages while raising the prices of consumer goods between 25 and 60 percent. In response some 150,000 workers in over 1,000 enterprises walked out (see "Yugosla via in Turmoil," WV No. 429, 29 May 1987). Coal miners in Labin, Croatia struck for two months, by far the longest strike in Yugoslavia's postwar history. Faced with working-class resistance of this magnitude, the regime backed off a bit by announcing a 90-day price freeze for certain basic necessities. In Novem ber wages were frozen again in the face of even greater price increases-over 30 percent for bread, 100 percent for milk, 70 percent for electricity, 60 percent for rail travel. Gorbachev and his advisers are, of course, well aware that the Yugoslav economy is a total mess, in every way far worse than Russia's. But Leonid Abal kin, a leading architect of perestroika, Workers council meeting in Yugoslav factory-"self-management" is a sham. still holds up Yugoslavia as a model: For central planning based on workers democracy! 4 investment, etc. are dictated by the sufficient; it is dependent on a long and management." The social pressure for forces of market competition on the one fragile chain of payments. It receives ever greater decentralization has come hand and the banks on the other. supplies from numerous firms on not from below-from workers in the The banks have become the real various terms of credit. Some suppliers shops-but from the bureaucracies in power in the Yugoslav economy. Dur are in other countries, thus involving the the richer republics, Croatia and Slove ing the 1960s fixed investment financed enterprise in foreign-exchange trans nia. The economic effects of devolution by bank loans increased from just 5 per actions. An enterprise, in turn, sells to have in turn given rise to virulent cent to over 40 percent by the end of the numerous customers in the domestic national resentment in the poorest decade.