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

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Jozae Mencinger 141 Extensive price reform was not needed either. The liberalization of prices for certain products, considered the first stage of price reforms in Eastern Europe, was the core of the economic reform of 1965. Since then, price controls (including the exchange rate policy) have only been used as anti-inflationary measures. Yugoslavia was a relatively open economy. The nature and the extent of Yugoslavia’s links with the rest of the world through commodity, factor and financial markets, and the structure of its foreign trade and exchange rate systems resembled those which characterized developing market economies rather than centrally planned economies. Exports to countries with convertible currencies by far exceeded exports to the clearing areas. The opposite was the case in other East European countries – CMEA mutual trade was predominant in them. Less was achieved in the diversification of the ownership structure, although land was predominantly privately owned, and the private sector grew fast in services. The systemic reform was accompanied by a ‘shock therapy’ stabilization program launched in December 1989. Fixed exchange rate, tight monetary policy, and wage control, were to be the pillars of the program. In fact, initial overvaluation of the Dinar, weakness of the wage controls and fiscal overhang existed from the very beginning. In the first two quarters of 1990, economic performance was satisfactory: in April 1990, the rate of inflation was even negative. In June, fatal mistakes were added to those of December 1989 which made price stability unsustainable. Policy makers started to pump money through selective credits for the agricultural sector and nearly doubled the wages of federal employees. The program was thus left without consistent built-in nominal anchors except for the fixed exchange rate. Private consumption and public sector spending increased dramatically in the summer and stayed on the same level till the end of 1990, while economic activity dropped to less than 90 per cent of 1989 economic activity. In the last two quarters of 1990, prices jumped up again. Severe monetary restrictiveness that followed in the last quarter pushed the economy into critical illiquidity, large scale bartering, and recession without deflation. With a fixed exchange rate at a highly overvalued Dinar, exports were left without support, imports were pushed up, and the trade deficit started to grow. In October, politically incited speculative attacks on foreign exchange deposits started. Finally, foreign currency reserves, the last resort of the stabilization program, started to vanish. The federal government tried to stop further deterioration of economic performance by undertaking institutional changes. They were blocked by the republics; however, even without this blockade, systemic changes could not have had significant effects on economic performance in the
142 Market Socialism in Yugoslavia short run. In autumn 1990, Yugoslavia actually ceased to exist as an economic entity – taxes were not collected, money was ‘printed’ elsewhere, tariffs and special levies were introduced for ‘imports’ from other republics. In addition, the republics started to build up their own economic systems which differed considerably from the very beginning. The collapse of the economic reform and of the stabilization program, which were launched in an acute economic crisis and carried out during a political crisis, was unavoidable. The agony of the political system became evident during 1988. Then, public demonstrations that were more or less organized began to escalate dramatically, both in number and ferocity, expounding contradictory economic, social and political demands. In Vojvodina and Montenegro, the political demonstrations in favour of a stronger Serbia caused the resignation of the entire Party and government leadership; overthrow of the party leadership was, however, for a short time only, prevented by similar public demonstrations in Kosovo. The political demonstrations in Slovenia were in support of political pluralism emerging in the republic: demands for the abolition of the one party system were growing. The Peasants’ Party, the Slovene Democratic League and the Social-Democratic Party were established. The legalization of political parties in 1989 created necessary conditions for free elections and parliamentary democracy. Pre-election campaigns and elections were peaceful and the transition of power from the old to the new governments was similar to the best traditions of European democracies. The outcome of these elections, as well as elections held in other republics, divided Yugoslavia into two parts: one part remained a system of the communist/socialist type (Serbia and Montenegro), and another (the rest of the country) emerged with the Western-type systems. This, together with emergence of nationalistic governments and the collapse of economic reform, finally led to the civil war and to the breakdown of the country. Notes 1 The combined employment in manufacturing, mining, construction, and transportation, or in the so called material sectors, as a share of total non-agricultural employment (sL) were regressed against the per capita GNP and a dummy variable D for the economic system, where D equals 0 for a capitalist and 1 for a socialist country. Data for 22 European countries, Yugoslavia excluded, in 1980 produce the following equation: sL58.790.1816 * GNP/cap14.90 * D R20.86 (16.9) (3.46) (7.47) SE3.61
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Equality, Participation, Transition
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First published in Great Britain 20
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vi Contents 9 Self-Management, Empl
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List of Figures 02.1 First Law of O
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x Foreword institution most dear to
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Notes on the Contributors Ivo Bića
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xiv Notes on the Contributors membe
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xvi Notes on the Contributors done
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xviii Notes on the Contributors pri
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Introduction: Branko Horvat - Beyon
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xxii Introduction Dame (1978), Univ
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xxiv Introduction theory led him to
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xxvi Introduction though friendly,
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xxviii Introduction The second pape
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xxx Introduction disciplines such a
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Branko Horvat: Select Bibliography
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xxxiv Branko Horvat: Select Bibliog
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xxxvi Branko Horvat: Select Bibliog
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xxxviii Branko Horvat: Select Bibli
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2 Horvat’s Contributions to Econo
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10 Horvat’s Contributions to Econ
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2 Individual Initiative, Entry and
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28 Egalitarianism On Its Own Thomas
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30 Egalitarianism On Its Own projec
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32 Egalitarianism On Its Own absenc
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34 Egalitarianism On Its Own tithin
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36 Egalitarianism On Its Own what s
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38 Egalitarianism On Its Own 100% 9
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40 Egalitarianism On Its Own contri
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42 Egalitarianism On Its Own anothe
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44 Egalitarianism On Its Own politi
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46 Egalitarianism On Its Own Eckel,
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4 Determinants of Cross-Country Inc
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50 Determinants of Income Inequalit
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56 GINI GINI 65 60 55 50 45 40 35 3
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Table 4.2 The regressions: dependen
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5 Illyrian Theories of Cooperative
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Page 129 and 130: 90 Illyrian Theories of Cooperative
Page 131 and 132: 92 Employee Participation in Enterp
Page 137 and 138: EMPLOYEE RETURN ONLY PROFIT PROFIT
Page 139 and 140: 100 Employee Participation in Enter
Page 141 and 142: 7 Employee Involvement and the Mode
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Page 157 and 158: 8 Uneasy Symbiosis of a Market Econ
Page 159 and 160: 120 Market Socialism in Yugoslavia
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Page 185 and 186: 146 Self-Management, Employee Owner
Page 189 and 190: Table 9.1 Methods of privatization
Page 201 and 202: 10 Privatization and Enterprise Per
Page 203 and 204: 164 Privatization: Evidence from Es
Page 223 and 224: 11 Growth Theory and Transition Eco
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192 Growth Theory and Transition Ec
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202 Index economic growth - continu
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204 Index Horvat, Branko - continue
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206 Index neoclassical economics -
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208 Index ‘third way’, 88, 104
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Equality, Participation, Transition: Essays in Honour of Branko Horvat

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