What are the features of Yugoslavian market socialism ?

The features of Yugoslavian market socialism are :

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Features of Yugoslavian market socialism

(1) Workers’ self-management :

The most unique and distinctive feature of market socialism in Yugoslavia is workers’ self-management. The basic ideological principle of the system of workers’ self-manage­ment is laid down in Article – 1 of workers’ council law, as follows : “The factories, mines, transport, commercial, agricultural, forestry, com­munal and other state economic enterprises, as the common property of the whole nation, are administered in the name of the social community by the working staffs, within the framework of the state economic plan and on the basis of rights and duties established by the law or by other legal participation.”

According to the Titoists, the state begins to wither away when the proletariat assumes power : This process of withering away is gradual and begins first of all in the economic functions of the state. According to Tito, state ownership is lower form of social ownership and net the highest. The Management of the means of production by the workers themselves is a higher form of social ownership. Thus, workers self-management ushered in a new period of socialist development.


Thus under the new system, the workers are not the legal owners of an enterprise. But they have the ultimate authority in its affairs. The remuneration received by the workers depends on the profits earned by the enterprise. More accurately speaking, the workers receive dividends and not wages. Each individual enterprise operates under a workers’ council. The council is a free and autonomous unit, elected by ail the workers of an enterprise. The council decides how and what to produce, prices, wages, etc. The workers’ council functions through a management board, whose members are elected from the council. The day-to-day affairs of the enterprise are looked into by the director or the manager who is an ex-officio member of the management board.

As the workers’ earnings depend on the enterprise’s net income, there is a powerful incentive on the part of the workers to put forth their best effort and efficiency.

Now a question arises about the establishment of new enterprises. Since each enterprise is run by its workers, who establishes a new enter­prise ? Who provides the initial capital. A new enterprise, sometimes, is started by an old enterprise. A group of persons may come forward to start a new venture. The initiative to start an enterprise may also come from the federal republic or local government or the co-operatives. The initial capital is provided by the Government or the banks.

(2) Free market mechanism :

There is a high degree of freedom of consumption and employment in Yugoslavia. More than a million Yugoslav worker are working abroad. There is no state restriction on choice of job. Individual enterprises are largely guided by market prices. Similarly at the macro level, the activities of the firms in the aggregate are primarily coordinated by the operation of the market forces. The economy is highly decentralized.


All decision-making units, firms, households and the public sector decide freely without direct interference from the state planning, and economic policy may be implemented through use of indirect policy instruments, discussion or moral suasion and not through a direct order to the firms. With Yugoslavia’s basic commitment to market socialism, there has been a tendency ten­dency for the price mechanism to play an increasing role.

(3) Private domination of agriculture :

In most of the communist countries, initially conflicts develop between the state and the peasants. Peasants usually lose and agriculture is largely collectivized. Yugoslavia presents a unique case. The peasants have won there. After coming lo power in 1945 the Titoists also followed the Soviet system of collectiviza­tion of agriculture. But it met with severe opposition from the peasants, leading to reduced agricultural production.

So the policy of collectivization was scrapped in 1953. Since 1954, another liberal agricultural policy known as “Intensified agriculture” was followed. At present more than 90 per cent of the total farm area is privately owned. The peasants enjoy the freedom to produce anything they wish and to sell their produce. Instead of fighting with the peasants, the state collaborated with them.

The non-private sector consists of peasant work co-operatives (collective farms), state owned farms and General co-operatives. The General co-operatives constitute an important institution in the field of Yugoslav agriculture. The small size of the holdings is the biggest pro­blem of the private peasants. About 30 per cent of the private holdings are less than 2 hectares in area. So a majority of private peasant owners cultivate their land as members of General co-operatives, without losing their ownership rights.

4) Liberalized foreign trade :


International economics and inter-national politics are closely related to each other. For a country like Yugoslavia, with her market socialism, foreign economic relations were of utmost importance. Besides, her history, geography and changing socialist structure etc., also have shaped Yugoslavia’s foreign economic relations.

Immediately after the second world war, Yugoslavia had very close economic ties with the Soviet Union. The political developments in 1948 compelled Yugoslavia to have a rapid geographic reorientation so far her foreign trade was concerned. New trading channels were opened and her economic relations with the capitalistic countries increased tremendously. One of the most important aspects of Yugoslavia’s foreign economic ‘relations has been the special aid agreements between the U.S.A. and Yugoslavia. Since 1954, Yugoslavia’s trade with the Soviet bloc countries was again normalized. Her trade with other East Euro­pean countries also vastly improved.

With the gradual transformation of the Yugoslav economic structure, overseas markets play an ever-increasing role. With the development of the decentralized economy, state trading was almost abolished. The restrictions become remarkably few.

Yugoslavia’s liberal foreign trade relations stand in contrast to those of the other communist countries. Thus in case of the Soviet Union, about 53 per cent of her trade relations are with the socialist-countries. But in case of Yugoslavia, this ratio is hardly 30 per cent.

(5) Social democratic State :

Marx and Engels were of the view that the state would wither away once die proletariat had assumed power. Till 1949, in Yugoslavia, there was an over-centralized state which a number of evils. The new state followed the Soviet pattern. But the Titoists soon realized that centralization created “State capitalism. The state became the sole owner of the means of production and distribution of income. Such a centralized state became a privileged, self perpetuating, bureaucracy, transforming itself into a force above society.

But this was not the role of the state as visualized by Marx. According to the Titoists, once the first stage of revolutionary struggle was over, the withering away process of the state could start. The various measures of economic, political and social decentralization were the steps in that direction. The state cannot completely wither away in the fore­ seeable future. Certain important functions such as “coordination, control, the army and foreign policy” will remain the responsibility of the Yugoslav state.

(6) Different role for the Party :

Titoists also argue that the communist party would wither away gradually. This view is against the Leninist principle of the party, in 1952 “the objective of the party was  changed from intimidation to persuasion. There is a single political party, no doubt, but it is explained as the “embryo of the partyless sys­tem”. It implies that the party also is to wither away gradually. The party at present also plays a secondary role. The number of Govern­ment economic and management bodies is too large to be controlled by the party. The party tolerates criticism and opposition. The attitude of the youth in Yugoslavia is hostile to rigid conformity.

The Titoists found that “when the party, regardless of its purity and devotion to communist doctrines, becomes synonymous with the state bureaucracy, the revolution loses its fervour in proportion as the bureaucracy ossifies inter-party dictatorship over and not for the working class”. So they wanted to separate party from state bureaucracy. The party was to raise the “level of socialist consciousness” only.

(7) Liberalism :

Totalitarianism is usually considered part and parcel of a communist system. Relaxation of totalitarianism is a factor that distinguishes Yugoslavia from other communist states. Although by western standards Yugoslavia has less of the features of democracy, yet judged by communist standards the Yugoslav system is quite liberal and “humanized”. Their legal system is based on the process of law.
Government functions have been decentralized. A broad section of population takes part in administering public affairs. This relaxation is reflected in the stress on the individual and his “natural rights”. Strikes are tolerated. Freedom of the press is quite high. Travel to and out of Yugoslavia is free than is the case with any other communist country. The Government does not oppose religious practices. Even anti-regime demonstrations have been tolerated. Death penalty for economic crimes has been abolished. According to the Titoists “Socialism must ensure each individual the right to a comfortable, pleasant and independent, personal family life”.

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