Equality, Participation, Transition: Essays in Honour of Branko Horvat

heavy industry. In short, two of the basic economic decisions, namely
the decision on income distribution and investment, remained under
strict government control, while consumers were to decide what to
produce, and enterprises were to decide how to organize production
and combine productive factors.
The political system and the policy of no social pluralism remained
firm. For example, while catastrophic results in agriculture compelled
the strategic decision to abandon forced collectivization, the socialist
transformation of the countryside as an ultimate aim was not given up.
Only the method was changed – under the Agricultural Land Pool Act of
1953, the maximum land allowed to individual peasants was reduced
to ten hectares, and the Constitution Act of 1953 proclaimed this restriction
as a constitutional principle. The principle has since become the
major obstacle to the development of the private agricultural sector.
8.2.3 Market socialism, 1963–73
Jozae Mencinger 123
Market socialism was initiated by the Program of the League of
Communists of Yugoslavia in 1958, which defined socialism as:
the social system based on socialized means of production in which
social production is managed by associated direct producers, in
which income is distributed according to the principle to each
according to his work, and in which, under the rule of the working
class, itself being changed as a class, all social relations are gradually
liberated from class antagonisms and all elements of exploitation of
man by man.
(Savez Komunista Jugoslavije 1958: 133)
In fact, the entire systemic development during the 1950s and the
1960s was a process of permanent reforms. All imaginable solutions
were tried, often in a very uncoordinated manner (Caicain-Saain, 1985).
Numerous and varied economic instruments were used, and each new
economic instrument tended to change the given structure and the
system as such. Nevertheless, throughout this period, the economy
was gradually becoming market-based, although neither the labour
nor the capital market were officially sanctioned, and both remained
rudimentary.
Among permanent changes, two reforms, in 1961 and in 1965,
should be noted as those that decisively reduced central control and
considerably increased the autonomy of economic units. In the 1961
reform, wage control was abolished, foreign trade was liberalized and