FACING BASIC CHOICES by C. VERLA Yugoslavia's balance of payments deficit to the developed capitalist countries declined during the early months of 1976 (this deficit is essentially responsible for the country's overall foreign trade deficit). Inflation, which had been running at an annual rate of 32% at the beginning of 1975, had fallen to 11% in April 1976. Nevertheless, these relatively rapid effects of the policy of economic recovery decided on by the government have their limits and countereffects: Industrial production slowed down at the end of 1975 and the beginning of 1976 (the index stood at 95.7 in April 1976) and on the eve of the adoption of the 1976-1980 five-year plan the government found itself facing fundamental policy choices. The recession in the capitalist countries sharply posed the question of Yugoslavia's dependence on these countries. After the break with Stalin and the Cominform in the 1950s, the Yugoslay economy obviously would have been unable to survive turned inward on its own poverty. Trade with the capitalist countries (and aid from them) played a very important role in Yugoslavia's development, but in return this created close relations of dependence. A third of planned increases in production depend on exports, and as of 1969 some 69% of Yugoslav foreign trade was with the developed capitalist countries, mainly those of the EEC. The world economic situation thus had considerable repercussions in Yugoslavia. For one thing, sion in the capita list countries led to a significant decline in Yugoslav exports to these countries and also posed the problem of the return of Yugoslav immigrant workers, many of whom remained unemployed in Yugoslavia (the total number of Yugoslav immigrant workers exceeds 1 million). In addition, the increase in the prices of raw materials had especially heavy effects on Yugoslavia's large imports of such materials. Finally, the opening of Yugoslavia's borders to competition from the economies of the capitalist West produced structural imbalances which are now being evaluated by the government.
All these factors have led to an evident modification of the country's policy on international trade. Essentially, the current aim is to seek new markets in the most industrialized countries of the Comecon on the one hand and in the underdeveloped oil producing coun tries on the other hand In 1973 exports to West Europe accounted for 46.5% of total Yugoslav exports. The figure fell to 28.3% in 1975. Imports from West Europe remain significant (with Yugoslavia seeking products of advanced technology, but they fell from 54.3% of total imports in 1973 to 50.5% in 1975. At the beginning of 1976 there was an even sharper reduction in imports from the capitalist West (down to 77% of last year's level for the first four months of 1976). On the other hand, exports to Africa rose from 3.9% of total exports in 1973 to 7.1% in 1975 (while the corresponding percentages for imports rose from 3.2% to 4.4% during the same period). Finally and most important, exports to the workers states rose from 32.3% of total exports in 1973 to 46.8% in 1975, and at the beginning of 1976 imports from these countries increased 10% compared with last year. Even more significant are the accords recently concluded with several countries of the Comecon, the terms of which last for five years. Trade with the USSR between 1976 and 1980, for example, is to amount to $14,000 million, an increase of 100% compared with the preceding five-year period. Beyond this international policy the question of the very structure of Yugoslav industry has been posed. The question that has been on the agenda in Yugoslavia since the beginning of the 1970s has been, if not a return to centralization of the type that prevails in the USSR, at least a sharp halt to the growing freedom of the laws of the market and a partial recentralization. The economic reform of 1965 had eliminated the central investment fund, replacing it with a decentralized banking system and with funds distributed to the enterprises, which were supposed to set their own investment policy. Concurrently, prices were supposed to be freed up (except in some sectors, mainly raw materials and energy) as well as foreign trade. The de facto elimination of the state monopoly of foreign trade was intended to confront Yugoslav enterprises with the world market, forcing them into a domestic and foreign competition that was supposed to stimulate the desired increases in proAlthough this policy was unable to be applied in its full logic (the federal government was compelled to intervene in both price policy and trade control), it nevertheless did provoke disasters: regional inequalities (and thus national tensions) increased, leading to a very serious conflict with the Croats in 1970 and 1971; 600,000 workers were officially listed as unemployed, apart from
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YUGOSLAVIA the 1 million workers abroad. But these features were topped off by those deriving from the very system of dividing investments among economic branches as a funation of the pressure of the world capitalist market on the one hand and of the character of the Yugoslav economy on the other hand (advanced decentralization, but. without application of the full logic of the market). When determining their own investment policy, the local enterprises and authorities naturally turned toward products that were most "profitable" in the short term, those that could be sold at the best price (income being linked to sales results). The freedom of international trade and the advantages accorded the exporting enterprises stimulated a turn toward products for the foreign market. Since the prices of raw materials and energy sources remained centrally controlled and were held relatively low, there was no great interest in production in these sectors, since it involved limited incomes (in addition to relatively high production costs). Finally, the whole system was marked by narrowness and localism of decision making. The result is clear: Yugoslavia ran short of meat and raw materials and had to import them (thus increasing both the trade deficit and foreign dependence), even though the country's internal resources could have satisfied domestic needs. But given the price meat was selling for on the world market, producers preferred to export it. And in view of the prices raw materials were fetching domestically, no one was inclined to exploit these resources. Hence the necessity to import, among other things, metals which exist in abundance under Yugoslav soil. At the same time, there was an energy shortage and the national railway system was only 10% electrified, despite the fact that here again there was no lack of national resources. In the industrial sectors that were being developed, however (such as the transformation industries), duplication was the rule. And the lack of coordination among regions led to such abberrations (which capitalist competition would not have permitted!) that it was easier for an enterprise to import what it needed from abroad than from another region of The de facto dissolution of planning thus began to have repercussions on the very structure of industry, provoking effects similar to those of the market while at the same time lacking the "efficiency" that comes of the social relations of a capitalist economy (for Yugoslavia is marked by such features as: social character of property; absence of a "capital market"; absence of capitalist-proletarian relations in the public sector, since, it must be recalled, directors are named and revoked by the workers; legal self-management, limited in real life but nonetheless weighing on employment policy, working conditions, and wages; state intervention in a framework that is hostile to the private sector overall). Thus, thousands of enterprises found themselves in a situation of "bankruptcy" but nonetheless did not close down and even continued to increase the wages of their workers. In fact, there was no obligation forcing the enterprises to close down; they simply did not pay their debts and diverted their available funds and the local resources of the communities to the payment of wages. (See Politika, January 24, 1976.)
In all, the non-application of the directives of the plan appear clearly in the table.
INVESTMENTS (in thousands of millions of dinar) 1971-75 Actual 1966-70 Plan Results Energy 31.5 37.5 23.5 Raw Materials 33.4 35.2 31.4 Other industries 35.1 27.3 45.1 (Source: Financial Times, June 11, 1976.) In an interview with the Zagreb newspaper Viesnik published February 1, 1976, Tito himself spoke of the discipline" that was raging within the League of Communists of Yugoslavia.
TITO Partial and administrative measures of centralization The new plan (for 1976-80), which has been under discussion for a year and a half now and is supposed to be adopted before the end of the year, explicitly alters the axis of industrial development, centering it on energy and raw materials (as called for but not carried out in the previous plan). The aggravation of the economic situation, the dependence on imports from the capitalist countries at a time when exports to those countries are diminishing, the balance-sheet on the non-application of the previous plan - all this is now compelling a shift
in orientation in the methods used to control application of decisions. Several laws have already been enacted and partially applied:
*In May 1975 a law was passed compelling enterprises to deposit 30% of the value of their imports in the National Bank. This was complemented in June 1975 by new restrictions on imports (of meat, durable consumer goods, construction materials, etc.). which obviously concerns the sectors of heavy industry primarily.
* On December 25, 1975, the credit system was completely recentralized. The enterprises were given until March to provide an accounting of their finances and debts. A central service for auditing of accounts was established. This agency is to control and register all monetary and commercial operations. The law provides for penalties to compel payment of debts and to punish fake profit reports. (In the current situation such a law certainly has the merit of countering speculation, but it also implies an increase in layoffs, which will inevitably give rise to protests.)
* The new draft law on "associated labor" is supposed to detail the rights and duties of the workers in planning. It is sufficiently important to be treated in a separate article dealing with the questions it raises and the revelant discussions that are now being held in Yugoslavia. For the moment, let us point out that in principle it is supposed to detail the interrelationship of the various decision-making bodies in planning as well as the place of the private sector. Up to now, the draft law places decisions made at the local and central levels on the same level. It affirms "the obligation of the directors of planning in the other communities and self-managed organizations to base their plans on those of the rank-and-file organizations of associated labor." (Journal of Yugoslav Trade Unions, French edition, May-June 1976.) The June 11, 1976, Financial Times also stressed this aspect of the draft law: "The right and duty (of the workers in their rank-and-file organizations) to make plans that are neither subordinate nor superior to the plans of the territorial units (communes, republics). " "An organization must make its plan after obtaining the agreement of the other organizations to which it is tied as supplier, buyer, distributer, etc. " This principle has nevertheless not always been applied this year, for it stipulates too long and complicated a procedure. Some questions in regard to this law may legitimately be posed, for such a project manifests a will both to recognize the importance of the decisions made by the workers and at the same time to preserve the gap between the central organs and self-management. It leaves the question of conflicts aside. But more or less antagonistic localist and regionalist interests have inevitably developed in Yugoslavia given a system that is both bureaucratic and decentralized. Two years of discussions were required to get the agreement of all the regions affected by the adoption of the "green plan" for agriculture, and a series of essential questions concerning energy and transport policy remain in suspense because of the lack of convergent interests (or of unanimous points of view) among the bodies concerned. Not to mention the contradictions between the workers of an enterprise whose incomes depend on the sale at the highest possible market price of the products or services of their enterprise and a social policy that is aimed at maintaining these very products and services at a low price. (The workers of the postal system, for example, had demanded an increase in the price of stamps in order to get higher wages.) The contradictions exist and they are real. The government has recognized and denounced "localist and selfish" deformations as well as the impossibility of allowing the market free reign, for it has had to pay a high price for this policy: national tensions, many strikes, development of pro-capitalist social forces, breakup of the LCY, etc. The government intends to struggle against these "deviations, " which it has itself perpetvated, while essentially maintaining a policy that still excludes the working class from the central decision-making process. There is thus no hope that simple "socialist propaganda" and appeals to discipline, combined with some administrative measures, will enable the existing contradictions to be resolved. If the only power granted the workers is the power to manage their own enterprise (and we know that even this does not occur in reality, given the working hours, the feeble political education of the workers, and the weight of the technocrats), and if their incomes depend on the market, then they have no reason to have any spirit other than a "selfish" one. The bureaucratic character of the central decision-making process does not allow the workers to accept sacrifices whose effects they do not control. From an overall point of view, from the standpoint of the entire working class (and not enterprise by enterprise or region by region), no education is possible without direct participation of the workers in the central power. In reality, conflicts between the LCY and the workers will only increase, as has been recently underscored in an official report commented on in June 1976 by the major Yugoslay press organs: In 1974 fully 42% of people expelled from the LCY were workers. In 1975 the figure rose to 45.3%. (It is obviously surprising, and particular to Yugoslavia, that such statistics are published by the party itself and commented on publicly. See Viesnik, June 13 and Komunist, June 14; see also Borba, January 24, 1970.) It is thus not astonishing that the whole discussion on the current project turns around the real meaning of the dictatorship of the proletariat, conceived as the application of the broadest workers democracy. How is this possible under one-party rule with no tendency rights? On the other hand, how can the dictatorship of the proletariat be applied through decentralized self-management? What is meant by "social property" in the means of production? Can this really exist either exclusively at the level of the state or exclusively at the level of decentralized enterprises? These discussions lie at the core of the contradictions of Yugoslay society today. We will return to them in a future article on the new draft constitution. September 3, 1976
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SE As the world economy entered the biggest slump of the postwar period, Japan was also hit by its worst recession since the war. Following the onset of the recession in the first quarter of 1974, the Japanese economy recorded a decrease in the real GNP for the first time since the war: -0.6%. From the peak of the preceeding boom period (January 1973) to the low point of the slump (February 1975), mining and manufacturing production dropped 20%. By comparison, the largest drop recorded previously was 9.4%, during the 1957-58 recession. And while previous recessions were accompanied by a decrease in regular employment of about 1%, this time employment fell approximately 4%. This was also the biggest postwar recession from the standpoint of its unprecedented duration: more than fifteen months from the onset of the recession until it bottomed out. All of this clearly testifies to the end of the period of rapid economic growth brought about by the collapse of the international and internal conditions which had fueled that growth. The international conditions changed as follows:
1. The international currency system collapsed, giving way to a system of fluctuating exchange rates. In particular, the international monetary system collapsed and the yen was revalued. (1)
2. The world market, particularly the U.S. market, contracted and stagnated due to the generalized world 28
Japanese Economy: