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

6 Horvat’s Contributions to Economic and Social Theory
By the start of World War II, alternative economic models had been
narrowed to those of either the Soviet command economy or European
social democracy types. The former had its roots in Leninist pragmatic
adaptations of Marx’s ‘scientific socialism’ after the Bolshevik revolution
in the newly named Soviet Union. The latter was based in the
‘evolutionary socialist’ thought of such European parliamentary based
democrats as Edward Bernstein and Sidney and Beatrice Webb. In the
one, the means of production became appropriated by the state; in the
other, they remained substantially in private hands while the state
appropriated the regulatory and distributional means to re-allocate a
share of the proceeds from capital accumulation.
The irony of the naming of the post-Bolshevik society as ‘soviet’ did
not escape the young Horvat and his Yugoslav compatriots as they
embarked upon the project of a third way, between the anti-democratic
consequences of the command economy and the limited transformation
of society wrought by the capitalist economy of social democracy.
Their task – and Horvat became its primary theoretician – was to propose
a way to extend the democratic project beyond social democracy;
adapt the economic efficiency of capitalism to a market-socialist formation;
achieve, organically, a more just distribution of the proceeds of
capital accumulation, all the while remaining faithful to the fundamental
tenets of socialism. 1
The answer was in one principle, locating ownership with society –
not the state or the private – which came to be called social ownership
and economic management in workers’ councils. In the political realm,
the parliament remained as it was under European social democracy –
a regulator, adjudicator of economic conflict, investor in the public
goods societies need – while the decentralized workers’ council became
the arena in which all working members of society exercised the influence
denied them in both the command and capitalist economies.
‘Economic organizations’, argued Horvat, ‘are transformed into selfgoverning
associations and capitalism is replaced by socialism.’
(Horvat, 1969: 23). 2 And the central organizing proposition of this system
was social ownership – ‘this is the source of its unity’, writes
Horvat (1969: 92), who goes on to use Joseph Schumpeter’s characterization
of this arrangement as ‘associationist socialism.’ 3
Horvat has a deep and abiding belief in the ability of employees to
carry out the necessary functions of the enterprise be they managerial,
entrepreneurial or allocational. Technical decisions, he contends, can
be separated from other policy problems and properly assigned to professionals.
These premises need to be qualified, in my view. Horvat and