JPRS ID: 9370 EAST EUROPE REPORT ECONOMIC AND INDUSTRIAL AFFAIRS

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~ POR OF'NIC'IA1. USi~: ON1.1' . -
JPRS L/9370
28 October 1980
- East Euro e Re a?rt ~
p p
ECONOMIC AND INDUSTRIAL AFFAIRS
(FOUO 8/80)
_ Fg~$ FOREIGN BROADCAST INFORMATION SERVICE
F~K UFr [C1AL USE ONI.Y
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JPRS L/9370
28 October 1980
EAST EUROPE REPORT
ECONOMIC AND Iy~lJSTRIAL AFFAIRS
(FOUO 8/80)
,
CONTENTS
CZECHOSLOVAKIA
Trends in Agroindustrial Integration Management
(Frantisek Zahlava; POLITICKA EKONOMIE, Aug $0) 1
Effect of Technology on Agricultural Production Costs
(Jan Burian; EKONOMIKA POLNOHOSPODARSTVA, Aug 8Q) . 16
YUGOSLAVIA
West German Comment on Economic Problems
(Viktor Meier; EUROPA-ARCHIV, 10 Aug 80) 23
- a - [III - EE - 64 FOUO]
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= CZECHOSLOVAKIA
- TRENDS'~~TN AGROINDUSTF.IAL INTEGRATION MANAGEMENT
Prague PO~ITICKA EKONOMIE in Czech Aug 80 pp 781-789
[Article by Frantisek Zahlava: "Trends in Agroindustrial Integration
_ Management"]
[Text] Scientific-technic~al development--as the determining factor in the
- production process--places new demands on economic management, the purpose _
- of which is to utilize the advantages of socialism for the balanced growth
of society. The study of socioeconomic conditions and the relationships
of scientific-technical development is the starting point for all con-
siderations regarding increasing *_he efficiency of social labor. The
dialectic of the development of produc~tive forces and production relations
at the same time dictate~ the necessity of analyzing and managing both
processes as�a unified system, subordinated to the realization Qf the goa.ls
of socialist society.
Chan~es in the character of cooperation and integration are a flexible -
- element of the developmen~ of individual aspects to production relations
which stem from the level of development of productive forces. From the
originally two-sided relations tied to parts of the production process,
they gradually expand to all sectors of economic activity, all phases of
praduction, and pass through on the basis of many-sided relati~ns. They _
thus constitute the conditions for the development of new forms of the
- organization and management of production in dialectical connection with the
advance of the socialization of labor and forces of production.
From this stems the sig.,nificance of the social management of the cooper.a-
tive and integrational processes and the improvement of the economic rela- .
- tions among economic entities and branches of the national economy, with -
a view to tncreasing the sccountabilitq and co~anitment of the participating
elements of the production process in guaranteeing the goal-directed func-
tions of social production.
A special place in the integration processes and their management is
occupied by agroindustrial integration as a form of the socialization of
- production corresponding to developed socialism, accompanied by the
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gradual overcoming of socioeconomic differences between the working class
and the cooperative peasantry, as well as the merger of two forms of
socialist ownership. The study ~f the new legalities of socialist produc-
tion, and the develepment of economic relationa in the process of agro-
industrial integration which is connected with it, has become a pressing
- task of economic science, the solution of which is contributing, in the
~ current stage, to an increase in the efficiency of the management of tf~e
p;-oduction process.of the n~tional economy and to the implementation of the
Leninist cooperative plan.
The level which has been achieved in the elaboration of the problem is a
reflection of the complexity of the related theoretical and methodological
questions, but also of the level and dynamics of the material conditions of
. the development of agroindustrial integration. In the current stage, the
microeconomic expression of agroindustrial integration is the formation of
- agroindustrial production units and the merger of various forms a:~d direc-
tions, while at tiie macroeconomic level it is the structural optimalization
of the development of branches which have been participating in the produc- -
tion of agricultural raw materials, their processing, and on the imple-
- mentation cf final production.
Agroindustrial Integration and Scientific Technic~l Progress
The immaturity of the manifestations of agroindustrial inte~ration leads
to modifications of viewpoints even in ~saues of the basis and definition
of the framework for the development of economic~~rganizational ties and
socioeconomic relationships within the agroindustrial complex (hereafter
ZPK) which is being formed within the national economy. It would not be
correct t~ limit this to the ties between agriculture and the foodstuffs
industry, because a significant trend of the current scientific technical
revolution is a shift in the center of gravity of expended labor value added
, to the preproduction stages. This means that the social effect of _
agroindustrial integration is conditioned by the guaranteeing of a rapid -
transferral of the newest results of ~he development of science,and tech-
nology to agriculture, above all from branche3 assuring the production of
- the means of production. ~
- These brances are displaying the moat rapid dynamism among the ZPK's of the
CSSR, as demonstrated by these data of the interbranch accounts of the
Federal Office of Statistics.
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Production flows among 1967 1973 1977 Index
ZPK's (including imports) 1.967/1977
millione of Kca,
in use prices
1. Deliveries from -
industry to agriculture 14,051 23,429 30,176 214.8
2. Deliveries from
~ agriculture to industry 35,470 46,437 59,446 167,6
(all sectors)
- of which the food-
stuffs and delicacies 30,791 38,079 47,908 155.6 -
industry-received
Industry's share in the formation of agricultural product already reaches
74 percent, while the share of labor value added in agriculture has fallen
to 26 percent. By the same token, in the material consumption of agricul-
ture tfie industrial share (56 percent) predominates over the agricultucal
share (44 percent). The necessary systematic concentration of the newest..
results of science and technology, their further development and elabora-
tioa into the form of new proc~uction technologiea and the corresponding
organizational and management systems, preaupposes the unification of the
activity of the research, development and production-technological base of
all sectors guaranteeing a relevant production proceas.
It is also possible to conclude from an analys3s of development trends of
the production-economic ties within the ~PK's that with the growth in the
forces of production and with the progress of the socialization of produc- ~
tion the forms of the manifestation of this complex will undergo changes
which signify a strengthening of the element of wholeness of the production
process assembled under them. The need for the planned management of the
� ob~ectively occurring changes in the fundamental m~nagement components of
individual elements of the ZPK's, with the goal of increasing their par- � -
ticipation and commitment to the fulfillment of the social function of the
complex, is related to this. -
Even though industry, which.,is delivering the means of production, is not
yet fulfilling the production-organizational function in agriculture, its
influence of technology, and thereby as well on the organization of agri-
cultural production, will grow constantly with the development of science
and technology.
Scientific-technical development in agriculture has reached a level which
makes possible the technological and organization shfft of agricultural
production into a special type of industrial production. It is not only ~
the process of production and circulation which is changing, but also the
additional phases of production (exchange, distribution and coneumption).
At the same time, these may be considered the material basis of the
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integrational processes and overall structural changes within the ZPK's.
The improvement of the economic relationships within the ZPK's is therefore
~losely connected with the social management of the scientific-technical -
development of agriculture, with a view to the solution of the mutua].l.y
related technotogical, economic and social objectivea of this aector and
of the whole ZPK. In this sense, the socioeconomic impact of scientific-
Cechnical development in agriculture is taking on an ever-broader char-
= acter.
The evaluation of the economic efficiency of scientific technical develop- _
ment in agriculture requires on the one hand an accounting of the social
costa at all levels of the production proceas, and on the other hand the
determinatian of the broader connections and results of new technologies
over time and space, including the potential negative side effe~ts on the
quality of production and in the reproduction of the biosphere. In this -
manner it is possible to selectively expend resources on the most optimal
directions of 'technical developmer.t and planning variants. In the oppo-
- site case an evaluaton can purport to be favorable of a variant which -
minimizes the volume of direct labor costs and capital assets at the
expense of higher costs, such as lossea in natural-ecological resources.
This means that the requirement of the fundamental economic law of social-
ism cannot be adhered to by seeking an immediate economic maximum, but
from finding the optimum from the point of view of a long-term perspective. -
The method of natural resource utilization should be consistently under-
_ stood as a component of the system of the ~anagement of aocial development, _
that is from the viewpoint of fulfilling all functions, from which it is
possible to separate the prod4ction function in particular, related to the
raw material ar.d biological base, wate.r management and nonproduction func-
tions. From the practice of a narrowly define3 branch evaluation which
- manifests itself, for example in ?_mphasizing criteria for the growth of
labor value added productivity in a branch, it is necessary to move to an
evaluation based on criteria of the socioeconomic efficiency of overall
- social production.
, Tne current level of scientific-technical development in Czechoslovak
agriculture has altered numeroua qualitative aspects of the material-
natural side of the production process. Their results have an effect on
' the phenomenological forms of production relationships, and condition a
higher level of their maturity.
Tt is not only a matter of chang~ea in the relationships among branches,
*_he manifestation of which is the formation of national economic com-
plexes, but also of corresponding changes in the socioeconomic relation-
_ ships within branches, manifested by newer and higher forms of the social- `
ization of production, i.e. in particular new and higher forms of concen-
tration, specialization, cooperation and integration. It must be pointed
out in this regard that the effect of scientific-technical development in
a~riculture, and the reYated pro~esses of concentration and production
~t -
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specialization, cannot be based solely on an optimal combination of factors
of production from the viewpoint of the production-economic results of the
management of i.ndividual enterprisea. The achievement of greater national
economic efficiency ie dependent on the compatability of enterpriae epe-
cialization with the requirements of the relocation of agricultural produc-
tinn with a view of natural conditions and to the connections with the
proceasing industry and consumption centers. In this sense the proceases
of aectoral and territorial division of labor come together, modified,by
the diff~rentiated conditions of individual production sectors.
The 15th CPCZ Congress emphasized the requirement for the social manage-
ment of these processes: "It is always necessary to have in mind that
every step toward a strengthening of concentration, toward the develop-
ment of specialization and cooperation, must be in accordance with that
basic quality which we seek in our overall activity; it must contribute
~ to higher eff iciency for society and cooperativea and deepen socialist
_ production relationships in our agriculture."2
Under conditions of a correspondence between the forces of production and
, ~roduction relationships in a socialist society, the state and cooperative
forms of socialist social ownership provide a broad area for the improve-
ment of. production relationships. The basic causes and factors speeding
up or slowing down the development of intere~iterprise cooperation and
agroindustrial integration stem not only from the contact of two forms
of socialist ownership, but also from their internal development. Inter-
enterpriae cooperation and agroindustrial int~gration develop the state and
cooperative forms of ownership and at the same time bring thAm mutually
closer together.3 They are also closely connected with an, increase in the
efficiency of all components of the system of planned management in relation
to the optimal utilization of natu~al, material, labor and f3nancial
_ resources.
' Concept of Combination of Terrj.torial with Vertical Structure
Proceeding from the needs for .~iilutions to the aforementioned tasks, the
analysis of trends in the process of the socialization of pr~duction is
focusing on the conclusion that the possibilities for cooperation and
integration ar.e not exhausted by the framework of cooperativ~ groupinga
(having an average area of roughly 7,000 hectares of agricultural land).
The n~~ed to c~evelop bc*_h proceases a*_ a higher level--in cooperative
boroughs (with an average size of ro~~ghly 25,000 hectares) and administra-
tive districts (with an average area of 60,000 hectareF)--is already evi-
dent, at a given level of development of production forces, in livestock
production, in the area of food and plant preservation and in other activ-
ities having the character of production services, and additionally in
contacts between agriculture and industry.
The greater demands on management forms within the framework of such terri-
_ torial agroindustrial complexes has its territorial and branch aspects.
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Tt~e deepening division of labor in the interest of the quantitative develop-
_ ment of production requires the application of elements of unif ied vertical
- mana~ement~ whether from the branch, profeaeional, or production viewpoint.
Un Che other hand, ties are expanding among epecialized enterprises of. a
apecif ic territorial unit durin~z the resolution of production, economic and
social. problems.4 There is a strengthening of the elements of wholeness
of these ties as an attendant phenomenon of the social coordination of spe-
cialized activities under conditions deepened by the division of labor.
, Theae viewpoints, together with additional requirements for the management
of the production processes, justify the opening of the system of terri- _
torial administration to vertical ties guaranteed by the relevant agencies
of branch management. Such a solution makes poseible the corresponding
development of territorial and vertical bonds in accordance with needs for
the development of the forces of production and production relationships
within individual branches and ZPK's as a unit.
i
The development of the management system in the ZPK is a long-term task.
The emphasis on the long-term charact~~r of this process includes the elab-
� oration of relevant measures from a prospective viewpoint,
In this sense, "Prir.ciples of the Further Development of Concentration and
_ Specialization in Agricultural Production and in Integrational Relations
with the Foodstuffs Industry in the Sixth Five-Year Plan," approved by the
CPCZ Central Committee Presidium and the CSSR government Presidium in 1975,
directs the Ministries of Agriculture and Nutrition "...to verify experi-
mentally the perapectives of the further developtnent of concentration and
specialization and their organizational forma and interenterpriae rela- _
tionshipa, and to ~oin them with a unif ied plan of scientif ic-technical
development."
We perceive one of the prospective possibilities for the rational use of
the natural, material, labor and financial reaources of the ZPK on the
microeconotr.ic level to be the formation of a production economic sqstem
functioning on the basis of interenterpriae khozraschot within a broader
territorial unit than covered by the cooperative groupings. This presumes
an increased influence of individual ZPK elements on the development of
agricultural production. At the same time it muat be taken into considera-
tion that the sectors of the foodstuffs induatry apply in many instances
differing influences, even within the framework of a single agricultural
production sector (for instance the differing demands of enterprises of
the milk and meat processing industries on the development of cattle hus-
_ bandry). In order to synchronize these ~nfluences under concrete produc-
t3on conditions, and to guarantee a unified influence for management
- directives, it appears reasonable to integrate Che activities of agricul-
tural and induatrial enterpriaes also on a territorial scale (within the
framework of a combination at the level of the administrative district,
that is, region).5
Such combinea would include all socialist agr.icultural enterprises o� this
broader territorial unit, along with a complex of production services,
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and would assure the linking and gradual integration of agricultural devel-
opment with supplying and processing sectors of industry. It wou].d be
founded on the principles of the Leninist cooperative p1an, which has been
verified in the practice of socialist conetruetion, and to which Uelongs
voluntary cooperation, the retention of economic status by the individua]
enterprises entering the cooperative, and democratic centraliem in the -
management of its activity.
_ We perceive the socioeconomic significance of such combines to be their
ability to balance and to unify gradually the production-economic condi-
tions of specialized production during specific production stages, as well
as the ability to apply more conaistently the socialist principles of the -
planned and proportional nature of management. The unification of -
production-economic conditions would fulfill at the same time an important
f unction in the formation of the prerequisites for additional progress in
the concentration and specialization of production. -
Given the varied character of production conditions in Czechoslovak agri-
culture, the gradual balancing of the production-economic conditions of
management is one of the basic advantages of combination. The poesibility
_ of improving all.ocation of the ob~ectives of the atate plan through a more
consistent integration of its material directivea with economic links is
also one of these advantages. The possibility of fuYler subordination of
economic instruments to social needs under the concrete territorial con- -
ditions of production represents the potential for increasing the produc-
tion activity of production resources.
The formation of new economic relationships in the sphere of immediate
- production is understood as an organic component of the improvement of the
system of planned management of the national economy in the period of the
current scientific-technical revolution. It is in accordance with the
task "...of further deepening the unified approach to the planning and
management of the ZPK at all management levels and to verify experimentally
= its progressive forms, while at the same time verifying suitable economic
systems which support the process of integration between agriculture and
ttie foodstuffs industry, including combine typea."6 The above concept
underlines the significance of a comprehensive systemic approach to plan-
ning and management which respects the mutual connection of the develop-
ment of the linked branches, and which at the same time makes possible the
� assur.ed aynchronization of all parts ~f the management system. The
achievement of greater efficiency in planned management in the relevant
sector presupposes the inclusion of all phasea of the production process, -
- i.e, from scientific development to design activity, capital investment
- and production itself, and circulation from exchange to distribution and .
consumption; the comprehensive management of ecottomic activity in its
= mutual connections with social and overall politicoeconomic processes,
as well as the conservation of the natural environment; the flexible reac-
tion to newly forming conditions and ob~ectives of the production process
related to scientific-technical progress and limited resources, i.e. with
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the requirements for the development of factors of intensive growth, which
assure an increase in the efficiency of social production on the basis of
higher labor productivity and the productive activity of capital assets.
The improvement of economic ties and proportiona in the indicated direc-
tions would al.so enabl.e a lowering of production losses, an increase in '
the qual.ity ofraw materials and final products, a shortening of the period
of their circulation, and more consistent flow of supply. Excess capacity
in this area exists, above all, in places of contact between individual
- phases of the production process.~ Their discovery and utilization is
realizable through a reduction in multiplicity, i.e. through a simplifica-
tion of intersectoral supplier-conaumer relationships through changes in
the arrangement of the production-technical base which would make possible -
the vertical integration of interrelated stages in the production of spe-
cific final products into production and marketing verticals. Therefore,
~ in our view, strengthening elements of branch management within the frame-
- work of the proposed territorial agroindustrial combinations ought to take
place in connection with a higher management ].evel.
The formation of new organizational structures for the material-technical -
base and the management of production, which simplifies related elements 4
of the production process during the assurance of final production, is one
of the ob,jective trends in the development of the forces of production and
the growth of the level of their socialization. It is also a manifesta-
tion of the planned character of socialist economics implemented through
the formatinn of proportions between the volume and atructure of social
tabor on the one hand, and the volume and structure of aocial needs on
the other.
The subordination of social production to the satisfaction of social needs
is expressed by the diversion of relevant proportions from the needs for
auCput of final production to ~he preceding elements of the production
process.
_ By utilizing findings concerning tlie activitq of industrial and scientif ic
research combines in the USSR, the conditions are being formed in the CSSR,
in accordance with the Directives for Economic and Social Development
from 1976 to 1980, approved by the 15th CPCZ Congress, for the change of
economic production units (VHJ), i.e. the uiiddle management element, i.nto
the basic element of management. This proceas is taking place as well in -
the VHJ's of the foodstuffs induatry, which haw-e to date been adminiatered `
according to the sectoral and, partially, according to fi.he combine prin-
ciple, however so far without.perceptible influence on agricultural produc- _
tion or on the additional elements of the production process which aesure
the outputs of f inal production.
Production conditions of a material-t~chnical character are developing in
individual sectors of agroinductrial production in a differentiated manner
in connection with the development of the forces of production and changes
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in the character of production. In addition, the prerequisites are gradu-
ally forming for a closer production-economic unification of specialized
- production with the application of unified management or coordination.
Tl~e creation of theae prerequisites, in our opinion, eatablishea, in
perapective, the ~ustif ication for the appearance of unl.fied production-
economic systems of the agroindustrial combine type at the level of the
naCional economic ZPK as well, which would integrate territorial combines
with induatrial, commercial and other organizationa responaible for the
produ~tion process in the totality of apecific agroindustrial production.
In the current stage these prerequisites are being created especially in
the sectors for the production of animals for slaughter and eggs, and
the raising of fruit, vegetables and several other apecial plants.
The socioeconomic importance of such a production-economic system may be
perceived in the unif ication of the commitment tieing the constituents of
the ZPK to final produ~tion, in the development of direct cooperative and
integrative relationships of the member organizationa, and the relevant
material-technical basis of production from the viewpaint of social needs, -
as well as in the possibilities for increasing the efficiency of planned
management.
New Views on Effect of Plan and Economic Instruments
- The effect of management activity of the propoaed production-economic sys- -
tems within the framework of the planned management of the national economy
is condiCioned by the degree of khozraschot commitment of all the conetitu-
ents to the economic performance of the unit. Tt-~is presumes the elimina-
tion of. exieting differences in the systema for economic incentives in
agriculture and in industrial sectors, and their unification with a view
to the social requirements f or the quantitative and qualitative develop-
ment of final production.
The achievement of harmony b etween the position of the higher economic
~lnit and the actions of its parta under the conditiona o� the retention
of the economic status of the enterprises and institutions ~ustifies the =
application of khozraschot within the framework of combines of a terri- =
torial and national economic character. The need �or a harmonious uni-
fication of the sectoral and territorial management view~oints at the same _
_ time presupposes that plans for combine development become components of
plans for economic and social development at the national economic level
- as we].1 as at indi-vidual levels of tine state administrative hierarchy.
At the national economic level the leading position belongs to long-term
plans which define the directions and tempo of seientific-technical progress
and the influence of socioeconomic factors. ~
The creation o~ the optimal proportions in the development of ind3.vidual
co~istituents of the ZPK which belong to various institutions of central
administration, presupposes in our view the assurance of an increased role
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. -
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for central planning in the proceos of_ diatribution and redistribution of _
_ social resources In this sense, the role of the central planning apen-
- cies would be t~ evaluate the developr?ent plans of the combines and their
mutual coordination. particularly in relatiivn to the plar.a of the other
sectora of the national economy, -
,
The effectiveness of the eystem of planned management in the guarantee-
ing of the needs of socioeconomic development ie influenced by the degree ~
of compatability of its components and the smoothness of ~he transforma-
tion of nation~al economic approaches to the direct productinn sphere,
'The unequal level of socialization of the forces of production and labor -
in individual national economic sectoYS establishes at the same time the
necessity for modifying general principles, approaches and ob3ectivea.
In the ZPK it is above all a matter of the more effective adherence to
social priorities and the creation of balanced proportions in the production -
process by means of closer economic relationshipe among the linked con-
stituents. Making their activities compatible according to the principles
of democratic centralism requires the management of the production process
from production to consumption with the aid of a system of evaluat~ve
- indicators and criteria which combine the social needs for quantity, ~
structure and quality of production as well as the utillzation of natural ,
and overall production-economic conditions. The problem is being con-
cenCrated on the creation of harmony between the material-natural and th~e
evaluative procedures of the ZPK. One of the essential requirements is _
the commensurate alteration of economic instrumente for the conditiona of -
production specialization, such as cooperative and integrational rela-
tionships.
Economic instruments related to the universal production structure of CSSR -
agricultural enterprises have been conetructQd with the intention of
- eliminatin~ the influence of differing natural conditions of costliness
and production-economic performance. Statistical data for the period of
the past year ahow that dif�erencea in production costs under differing _
natural conditiona have lessened under the influence of scientif ic-
technical development and the intensif ication of production. On the other
hand, the trend has continued towarda a deepening of the differences in
the economic level of production units within areas of comparable natural _
conditions and with comparable performances in production costliness, As
a consequence of these trends, production costs of main products display _
a significant span of variability which is, however, under differing naCural
conditions bound~d by almost the same limits: "
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Produ~ction Zone
potato- mountain
Product corn sugar ~otato oat area
I
Wheat
Production coats
in Kcs per quintal
l.owest 55.70 36.70 42.00 46.40 45.50
highest 117.60 154.80 150.20 161.40 195.90
Mil.k -
Production costs
in Kcs per liter
_ lowest 2.30 1.80 2.10 2.20 2.50
highest 3.80 3.90 3.90 3.70 3.90
Source: JZD Statements, Research Institute of Agrfcultural and Nutri-
tional Economics, Prague, I974.
Under conditiona of differing degrees of coverage of production costs,
the structure of production.and the"degree of ita specialiaation comes to
the foreground as a factor influencing to a great extent economic per-
formance, ae shown by the following data.
Degree of Prof itability of Production of Ma~or Agricultural Products in
the United Agricultural Cooperatives of the CSSR.
_ Sugar Pigs for Cattle for
Year Wheat Beet Potatoes Mi1k Slaughter Slaughter Eggs ~
1972 73.1. 24.8 13.8 -7.9 5.9 8.8 19.4 -
1975 63.3 10.4 -10.5 -7.3 8.1 -0.7 24.9
1978 55.0 10.7 22.3 0 1.0 14,3 13.4
Source: Production Costs and Econnmic Performance of JZD in the CSSR
- from 1972 to 1.978. Research Institute of Agricultural and Nutritional -
Economics.
. It is a matter, therefore, of an improvement in the system of economic
instruments by which rational relations in product profitability can be
created. At the same time, we do not have in mind the assurance of a
_ single profitability level for all agricultural products. The extent
of profitability is not the sole criterion of how favorable specific
production is for an agricultural enterprise. Production efficiency is
determined as well by the amount of net income obtained per unit of the
production base and per unit of labor costs. Besides this, the amount of
realized gross income has significance for agricultural enterprises, and
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~
especially JZD's, connected with the requiremen.ts f or work force utiliza-
tion and the assurance of the necessary level of compensation for labor.
The creation of simil.ar production-economic conditions in specialized
enterprises is influenced by sectorally apecific requirements and possi-
bilitiea for the creation of production reaources by means of individual
ecnnomic instruments. The development of cooperative and integrational
relationshi~s in the horizontal and vertical directions determines for
prices the task of more fully reflecting the socially necessary costs both
of production and of process~ng of agricultural production, and of adher-
- ing as well to the qualitative level of the consumer's qualities of produc-
tion. The goal is to strengthen the khozraschot commitment of enterprises
of the agricultural production and procesaing spheres to an increase in
the qualitative level of production.
An organic component of the problem is the stimulation of a rational allo- _
cation of agricultural production by establishing purchase prices and
supplementary price instruments in relations which will create the essen-
tial economic conditions for the develogment of production under the moat
favorable conditions. The improvement of price formation in this direc-
- tion is one of the paths for the mo~vement of prices towards socially _
necessary costs, which serve as their objective basis.
The development of the material-technical base of agriculture, including
the application of induatrial methods of organization of production is
creating the preconditions for the gradually more consistent application of
- the general. principles of the system of planned manag~ment in this branch.
The nature of the production process is becoming closer to the character
of industrial production, above all under the conditiona of the incorpora-
tion of several agricultural production sectors into highly specialized
enterpriaea operating without land, and its social management must tie freed -
from several practices necessitated by the peculiarities of agricultural
production, among which is, ~or example, the functioning of differentiated
rents.
- The more rational placement of agricultural production from the viewpoint
of natural conditions will lead to the relatively high specialization of
whol.e areas in specific products to an extent which fully or to a large
degree guarantees social needs. With this the extent of inf luence of
differential rents will decrease even for a portion of the products of
plant production, and purchase prices can be the source of a fuller
coverage of production costs. The objectivization of a socially ~ustified
level of expended production resources eases the possibilities, under the
above conditions, for utilizing norms of investment and labor intensive-
ness, as is the case ~ith products produced in enterprises which operate
without land.
The improvement of purchase prices, and especially their internal rela-
Cionehips, is creating important conditions for the development of
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concentration and specialization, as well as the achievement o� the material
directives of the plan regarding volume and atructure. However, the wider
- connections of the effects of the prices of agricultural and f~odatuff
products in the overall social production procesa, which 3ustify the need
for the relative stability of their levels, limits the possibilities for
a more fundamenta~ alteration of internal price relationships. Trom this
- atems the aignificance of managing the production proceae with a view both
to the costs of production and their relation to the provieions of social
needs for foodstuffs within a rati~nal structure, and to the utilization
of production, and particularly natu.ral resources. The alteration of the
prices of the means of production and the differentiated utilization of
~ economic instruments of a nonprice character represent an efficient path
' to the merging of product profitabilities in thie sense,
The above consideratons regarding the creation of more favorable links
- between plan goals and the effects of the economic mechanism may be linked
as well with a more consistent application of the principle of reward
commensurate with work within the combine framework. The progress of the
development of cooperation and integration, as manifested in the economic
relations among enterprises, reflects the overall trend of the evolution
of forms of profit distribution from the realization of f inal production _
among the participants in the cooperation, leading from contractually
agreed upon prices which lack a necessary degree of economir_ ~ustification
to cooperation prices which guarantee the one time economic balancing of
the cooperation participants and, f inally, to cooperation prices aupple- `
mented by the effect of the social, so-called balancing, fund.
Changes in economic-organizational links are reiated to the growing extent -
of agricultural production. Elements of integration are being strengthenPa
in the form of the installation of common interenterprise production
equipment and the quantitative and qualitative development of commonly
organized production within the framework of a cooperative unit on the
ba~is of common production and financial plans which are increasing their
influence on agricultural production and their authority in relation to
the individual cooperation participants. A trend is becoming evident of
a merger of the character and principles of economic-organizational
~ links and economic relations in cooperative and integrated production
activities, and a strengthening of elements of the economic status of
rooperating units of a combine nature. The extension of khozraschot -
relationships from the enterprise level to that of the combine does not
mean a weakening of the khozraschot interests of enterprises and produc-
tion collectives; it is in accordance with the increasing level of
socialization of production.
It is possible, on this basis, to resolve a number of pressing problems `
concerning increasing the eff iciency of the economic relationships within
the ZPK, among which is the balancing of the productian-economic condi-
- tions of specialized production. The distribution of the economic-
financial effect of commonly. organized production among the member
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= enterprises according to their common production and financia] plan is
proving itaelf in social practice to be the basic form of this balancing.
To this end common financial funds are being eatablished to guarantee
planned production, and which includ~ the utili~-~ion of resources gained
from levies from enterprise profits.
Raieing the quality of the standard planning base, for which favorable
conditions are being created within the combine framework, presents new
possibilities for improving the links between economic inatruments and
the requirements of material plan directives. Given the retention of
unified purchase prices, the planning process may be supplemented by a
system of accounting prices, which would be the basis for the provision of
supplementary forms of coverage of production costs or of payments from _
prof.its, and for the determination of the level of management efficiency
at relevant lsvele of production processes.
The possibility of preventing un~ustified differences in the creation of -
enterprise incomes by balancing their production-economic conditions within _
combines represents a precondition for the more efficient stimulation of the
khozraschot interests of production collectives, as well as for a strength-
ening of their accountability for production performance. The existing -
economic atanding of enterprises, after all, orients them to assure produc-
tion within a necea3ary structure, but does not eliminate inequalities in
Che distribution sF~here. Deepening the mutual links of specialized branches
estab lishes, in our opinion, the reality of the ~2xpanaion o.f management
from the production sphere to the sphere of excha~nge and distribution. The
expansion of the economic relatione between agricultural and industrial
enterpriaes appears reasonable within this context. The unification of
the interests of specialized production cGllectives in agriculture and in
, industry for the quantitative and qualitative eatisfaction of needs for
- final production places in the foreground the requirement of gusrantee-
ing an equal degree of their commitment as the fundamental diatribution
crit.~-rion. =
We'perceive the path to the improvement of the management of the ZPK _
p~oduction processes in the devel.~pment of economic relationships accord-
ing to the above principles. AY: the same time we have in view the com-
prehensive requirements of socio-economic development, which include both
the merger of two forms of socialist ownership and the shift to a higher
phase of integration which unites a11 stages of production.
FOOTNOTES
1. For more information see, for instance, Gofman, K. G.; Lemesev, M.
Ja.; Re3mers, N. F., Socioeconomic Issues of the Utilization of -
Nature, EKONOMIKA I MATEMATICHESRIJE METODY 5, 1973.
- 2. Report on the Main Directions of Economic and Social Development of
the CSSR between 1976 and ].980. RUDE PRAVO, 14 April 1976.
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. 3. See "Agrarian Problems in Light of the Resolutiong of the 25th CPSU
Congress." Economics InstituCe, Academy of Sciences, USSR, Moscow,
1977.
4. Compare J. Bartunek, S. Szesany, J. Pytiel, K. Srubar: "The Formation -
~ of the ZPoK, Its Function and Ob~ective in the Deve~opment of the
~conomic Structure of the CSSR." Prague: VITPR, 197b.
5. Compare R~umel, A. F.: "The Vi~~and Experiment," EKONOMICHESKAJA
GAZETA, No 38, Moscow 1977.
6. "Principles of the Further Development of Concentration and Spe~ializa-
tion in Agricultural Production and in Integrational Relations with ~
_ the Foodstuffs Industry in the Sixth Five-Year Plan," approved by the
CPCZ Central ~~mmittee Presidium and the CSSR Government Presidium in
1975.
7. For more detail see I. Rubik, "Agroindustrial Combination." Prague:
Svoboda, 1978.
8. Compare R~umel, A. F.: "The Viljand Experiment," EKONOMICHESKAJA
GAZETA, No 38, Moscow, 1977.
COPYRIGHT: ACADEMIA, Pi~ague, 1980
9276
CSO: 2400
_
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CZECHOSLOVAKIA
_ EFFECT OF TECHNOLOGY ON AGRICULTiJRAL PRODUCTION COSTS
Bratislava EKONOMIKA.POLNOHOSPODARSTVA in Czech Aug 80 No 8, pp 356-358
[Article by Engr Jan Burian, CSe, Research Institute of Agricultural and
Food Economics, Prague: "On the Infl-uence of Technology on P'~roduction Costs
of Agricultural Producta"] ~
[Text] The cost of production in the varioue branches of agricultural
production is increasingly a~fected by the applted form of the technological
eyetem aiia 1vvri~iii~ YivCcuiiicb.
An analysis of the differencea r~nong eneterprises in the level of actual
costs for individual agricultural products shows that under comparable ~
natural conditions and with tr~e same level of per hectare yield~or utility
value of farm animals the production coats vary markedly, whether in terma -
of 1 ha [hectare] or 1 day's feed or in terms of a unit of production. The
~ reason for these cost differentials among enterpriees is found in the form
of technological and working procedures employed.
This thes~e may be illustrated by an actual example of the difference in
coat of production of sugar beets in the beet growing region with a yield
range of 40 to 45 t/ha'~ (1975 to 1978). The cost for this range came to ~
Kcs 12,460 per ha'1. But in agricultural enterprises using the most modern
_ technology for cultivating sugar beets, with a~minimal use of manual labor ;
and providing a whole complex of technological operations in preparing the i
soil and in sowing, cultivating and tending, harveating and poat-harvest ~
operations and employing efficient modern technology and transportation, the i
actual cost for the same le~el of yields in terme of 1 ha of sugar beets
fell to under Kcs 11,000 per ha"1. In comparison, agricultural enterprises ~
in which traditional technological procedures predominate, with a high j
proportion of manual labor and in which mechanical equipment is inadequate
and improperly utilized, the cost level per ha of sugar beets increasea to
more than Kcs 15,000 per ha-1. The situation is si~milar with other crops ~
and the various branches of animal production. _
~
Improved technology and the associated reduction of costs vary with
individual branches. For example, in the production of wheat, rye and _
barley, technological procedures in the great ma~ozity of enterprises are
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far the most part uniform. Nevertheless, even in these branches there are
actually considerable cost c~ifferences among enterprises. These are due
to the technological levels of grain production, eapecially savings in the
use of labor, fuel.a and oils, and tranaportation coeta affected by efficient
utilization og technology in all phaees of technological procesaes. These
cost differences in grain production are approximately 10 percent above or
below average costs. For example, in the beet-growing region the average
coat for a wheat yield of 4.5 to 5 t/ha 1 in terms of 1 hectare came to
Kcs 4,846, although in enterprisps with developed technology in grain
~ production the cost approximated Kcs 4,000 per ha-1, whereas in enterprises .
with low technological levels costs even exceeded Kcs 5,30Q per ha'1 (from
J'GD [Unified Agricultural Coopprative] figures, ].975 to ].978).
In a number of branches there are substantial cost differences among
enterprises atemming from differing levels of technological development.
This is especially true in the branches producing sugar beets, potatoes,
- vegetablea, wine grapea, fodder planta and small-sized cropso In animal
production these differences ahow up mostly in the cattle-producing -
branches.
'.fhe problem is how to interpret the economically substantial total cost
effect of technical development in planning actual expenditures. Technical
and organizational levels are closely connected. The application of progres-
aive technological meaeures is always associated with the organization of
- production and labor. Thus technological ineasurea do not influence the coet
of production in an isolated way, "all by themselves," but always quite
ob~ectively they call for appropriate changes and shifCa also in the
_ organization of production and labor. Thus it is better, from the viewpoint
of evaluating coat effectiveness, to consider these influenc~s as technical-
organizational influences, since with this broader concept it is poasible -
to draw conclusions for overall enterprise cost calculations.
This concept also corresponds to the actual state of affairs in which
technological-organizational pro~r.ress is materially pro~ected, and thus
also costwise, in all aspects of the production process, although always
- specifically in individual branches and differently in individual spheres -
of production.
_ 'Plie Influence oF Technological Progress on Individual Branches
It is a well known fact that, for example, in the fall heavy soils require
10 to r2--and in isolated cases up to 27--operations to prepare the soil.
Wi~h modern technology in agriculture the number of labor operations may be
reduced by 20 to 30 percent. Cost effects here are direct and show up in -
items of direct wages and outright internal enterprise costs. This effect -
at the same time causes a change in the cost atructure, too, since other
items of calculation are unchanged.
The application of modern technological procedures in the production of
sugar beets (with a minimum use of manpower and without manual labor)
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influences a broader range of cost calculations, since it appears in items _
Por seede, chemical protective agents, the purchase of fertilizers, direct
: wages, internal enterprise expenditures as well as the depreciation cost of
single-purpose machinery.
ImprovemenC in the composition and quality of seed vari~ties results in -
increased hectare yields and consequently in changes i~ the relationship
between yield and cost for every iCen of costing calculations.
In animal production, too, scientific-technical development always works
specifically. For example, controlled feeding of cattle showa up, on the
- one hand, directly in reduced costs of feed (in terms of a unit of weight
of the main product) and, on the other hand, in all items of calculation
(in the case of higher utility value). In the same way, too, the effect of
crossbreeding in cattle and hogs as a factar of increased utility value has -
the consequence of affecting most of the items of directand iadirect coats.
Efficiency in the use of inechanical and tractor equipment and agricultural
transportation in the enterprise is very clearly reflected in connection
with all production calculations as items of savinge in internal enterprise
costs.
Consequently, it is very diffieult to indicate all the possible variants of
cost effects of labor and technological procedures in indivic~ual branches of
plant and animal production and to estiamte exactly their effecta on coats.
Neverthelese, cost calculation must face up to this problem eince production
- and coat effects of technological procedurea even now have a very dafinite
impact and their influence keepe increasing.
'Lhe methodology of cost calculation muat be based on the fact that
technological-organizational advances must quite naturally be reflected in
greater productivity of labor, that is, in a reduced amount of labor.content
and labor value added in terma of a unit of production. Technological and
organizational advances must, therefore, (undez otherwise unchanged condi-
~ tions) be reflected in relatively reduced production costg.
This, however, presents a serious problem in methodology-~how to measure _
and estimate the degree of the technical-organization level of individual
branches in a given entexprise. The best gauge of the the degree of
technical-organizational branch p~rogress is indicated by the usage of labor
expended directly on a unit of productio~, that is, the usage of direct
labor in houYa in terms of a unit of weight of individual agxicultural
products. Thus we proceed on the assumption that increasing the technical- _
- organizational level is actually particularly xeflected in savings of labor
value with an ovexall reduction of total actual costs fox a unit of weight -
of production. This assumption is based on conditions that aze otherraise
constant, that is, on the assumption of stability of the cost levels of
purchased materials and services or on the assumption that development of
theae levels is consistent witii ch$nges in the.useful qualities $nd production
_ ~ ~ -
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paramerers of these investments. This also assumes a more rapid tempo o�
growth of productivit~ of labor compared with the gr.owth of average wages
_ (costs) and stabilization or savings in items of indizect cost.
IncreA~ing 'lect~ntcal-Organizational Levels--Savinga in L~bor Cos~s
I;xperiences in practice and observations from analysis of actual costs
within the framework of a selected group of JZDs (ViJEZVz [Research Institute
~ of Agricultural and Food Economics] Prague) almost exclusively show that the
implemenLation of modern technological proceduYes is organically connected
with savings in labor costs and consequently also with relative savings in
uv~ralJ. coste. The relationship of the savings in labor value and savings
in labor content is, however, considerably differentiated according to
branchea. Positive, neutral or negative values can produce an alternate
effect. That is also why the cost effects of the technical-organizational
_ level of the branches, depending on the usage of direct labor in time units
(hours), must necessarily be differentiated according to branches.
Kesearch into this difficult problem complex is not yet complete. It is
- possible to determine fairly closely the degree of technical-organizational
levela in time units of labor va?~ie. Planned and actual expenditure of
direct labor in time units can be derived from the direct wage calculation
entry divided by the average hourly earnings~ Although up to now we cannot
demonstrably measure the extent of these influences on the level of total
- unit costs.
'l'lius for purposes of cost planning this problem is, for the time being,
handled Uy means of coefficients (see Table No 1), based on the results of
statistical-economic studies on the relationship between consumption of
labor and the cost of individual products within the framework of the
selected group of JZDs (WEZlIz Prague, 1975-1978).
_ I.et us take the example of a wheat production branch. The average consump-
cion of labor currently`mbves within the range of 7 to 8 hours for 1 ton of
- wl~eat. It is Interesting to note that this interval of time consumption
sliows up most often in all production regions and in all yield ranges. _
'1'hus the level of 7 to 8 h/t'1 is considered reasonably commensurate with
tlie average technical-organizational level of wheat production in the
pr.eseiit period (1980-1981) and the coefficient~(Tt) standa for the level of
1.00, In a number of agricultural enterprises, however, the actual expendi-
ture of time for the production of 1 ton of wheat exceeds 8 hours. These _
enterprises also show higher overall costs far the production of wheat.
Insofar as this excess is ~ustified, that is, it reflects less technological
equipment or or,herwise limited possibilities of applying modern technology,
it is necessary to note this fact and the modification in costing calcula-
tions. The amount of this toleration should not, however, exceed +5 percent
- of the total cost for production of wheat, since the technology of wheat -
production is to a certain extent uniform among enterprises. Consequently,
the coefficient expressing the admissible negative cost effect of under-
average technological levels is also statistically estimated at a level of
1.05 in relation ta average or normative costs calculated for a given yield
range and under given natural conditions.
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'f}le teclinological equipment in a number of agricultural enterprises (approxi- ~
~ mately 20 percent of the total number) enables them to select such technical-
organizational procedures that their measurable expenditure of labor is
reduced below the level of 7 h/t-1� Certain advanced enterprises report a
time expenditure of under 6 hours and aome even under 5 h/t-1 of wheat.
'fhese enterprises have demonstrable conditions for reducing overall coste
for wheat production, in fact by at least 10 percent compared with the
average or normative level of costing claculations. Consequently, the
coeff.icient expressing the cost effects of modern technology is placed at -
tl~e level of 0, 90 (see Table No 2) .
'1'he integration of technological progress and production costs is fundamental
~ Lrom the viewpoint of f.urther development of agricultural production, its
intensification and ita economics. The management and planning syetem must
insist on achieving the economic effects of this integration and reducing
unit costs by means of pressure that is technically and economically ~ustified.
[See Table 1 on next page]
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Table 1. Coefficiente of Cost Effects Differentiated by Technical-
Organizational Level (T2 = 1.00 = average or normative production
; coat of a given product in a given yield range and under given
natural conditions)
Degree of Tech- Org. Level
Product -use of labor h t-1 . Coefficient Tt)
Underavg. Average Above avg.
u to from-to over Tl. T2 T3
Wheat 7 7-8 8 0.90 1.00 1.05
Kye 10 10-11 11 0.90 1.00 1.05
Barley 7 7-8 8 0,90 1.00 1.05
Oats 11 11-12 12 0.90 1.00 1.05
Kernel corn 12 12-15 15 0.85 1.00 1.14
Other grains
Peas 14 14-17 17 0.90 1.00 1.03 -
Beans 12 12-15 15 0.95 1.00 1.02
Kape . 10 10-14 14 0.95 1.00 1.02
Poppyseed 13~ 130-200 200 0.87 1.00 1.12
- Sunflower 30 30-40 40 0.85 1.00 1.05
Sugar beets 5 5-7 7 0.85 1.00 1.13
Isarly potatoes 20 20-30 30 0.95 1.00 1.02
Other potatoes 13 ~3-18 18 0,88 1.00 1.05
Seed potatoea 18 18-24 24 0.89 1.00 1.02
Canned potatoes 13 13-15 15 0.84 1.00 1.06
Indust. potatoes 7 7-10 10 0,97 1.00 1.02
Flax 40 40-50 50 0.75 1.00 1.02 -
ToUacco 100 700-1000 1000 0,92 1.00 1.10
Caraway 40 40-60 60 0.97 1,00 1.03
Hops (cwt) 35 35-50 50 0.85 1.00 1.15
� Wine grapes 100 100-120 120 0.85 1.00 1.15 -
Root fodder 8 8-12 12 0.87 1.00 1.13
Corn for fodder 0,8 0.8-1.0 1 0.98 1.00 1.02
Other annual fod. 1 1.0-1.5 1.5 0.97 1.40 1,02
Perennial fodder 0,9 0.9-1.1 1.1 0.92 1.00 1.02 -
}fay from fielda 7 7-10 10 0.85 1.00 1.15
Hay from pastures 2,5 2.5-3.0 3 0.85 1.00 1.15
Milk (100 1.) 5.5 5.5-6.5 6.5 0.87 1.00 1.06
Fattening cattle 120 120-140 140 0,85 1.00 1.05
- Calves 150 150-200 200 0.85 1.00 1.05
- Yng breeding cattle 190 190-240 240 0.85 1.00 1.05
- Sows 280 280-320 320 0.90 1.00 1.05
Other hogs 55 55-65 65 0.95 1.00 1.04
~:gga (per 1,000) 3 3-S 5 0.97 1.00 1.02
l~'attened chickens 1.3 1.3-1.7 1.7 0.97 1.00 1.02
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Table 2. Cost Effects of Technical-Organizational Levels on Wheat
Production Coefficienta of Cost Effects (Tt)
Use of Direct Costa* for
Level of Tech-Org. Lab:,r to Produce Coefficient (in Kcs)
bevelo ment 1 ton in hours (Tt) 1 ha 1 t~n -
Progressive (T1) 8 1.05 5439 1018
*--Normative costs for basic production region (beet growing) and atandard
yield range (4.5-5 t/ha'1)
COPYRIGHT: PRIRODA, Vydavatelstvo Kniha Casopis, Bratislava, 1980
8491
CSO: 2400
I~
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. YUGOSLAVIA `
W~ST GERMAN COI~II~IENT ON ECONOMIC PROBLII~IS _
Bonn EUROPA-ARCHIV in German No 15, 10 Aug 80 pp 484-487
(Article by Viktor Meier: "Yugoslavia After Tito"~
[Excerpt] The Unsolved Problems of the Economic System
At present, the concrete political activities and the formation of opinion
within the new leadership are focusing on two complexes, namely the economy
and the domestic policy, i.e. the attitude toward the real or potential
lnte rnal pluralism in all fields--national, cultural, intellectual,
political-economic and even ideological. These formulas stand for basic
- problems concerning the future orientation. In this regard, there is a -
certain pent-up demand as well. Tito--a monument of a policy exclusively
ori.ented toward the exerc ise of power--had never familarized himself with
economic problems, even though he was so pragmaric ae to give others free
rein in this f.ield. Similarly, at heart Tit4 had never accepted
Yugoslavia's reality as a multiethnic state. A Communist partisan leader,
he though~t that the nationality problem--as a reflection of a"bourgeois"
society--would be solved automatically through the introduction of social- -
ism. Even though it was not exclusively Tito's fault, it was ultimately
due to his annoyance about the fact that this was not the case that nothing
came of that attempt at socialist constitutionalism, which culminated in
1970. ~
Ln Tito's lifetime, the world largely accepted the nimbus of uniqueness,
_ which Yugoslavia had successfully estab lished after 1948. The country was
not primarily judged by its concrete conditions and accomplishments, but on -
the basis of its political claim, which in turn was almost entirely sup-
ported by Tito's personality. Today this is changing rapidly. The new
leadership was prcjbably well advised, when it made the economy its primary
concern. It certtiinly was high, time, for the 1979 payments balance deficit
of over $6 billion~was the maximum of what was tolerable for Yugosl'avia.
This cons{~deration of economic problems began when Tito was still alive;
it was V~adimir Bakaric' who urged, even implored, the functionaries to
underst~nd that economic problems are political problems as well. -
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, 1'l~ere is no doubt ~hat remarkable economic reaults have been produced in
Yugoslavia. In the 1960's, the Yugoslav economy geared up to the produc-
tion of consumer goods; at the same times, there began an energeCic exten-
sion af the infrastructure. However, in comparieon with other countries
tiucti as Greece or Spain that had to start at approximately the same level,
tlie Yu~oslav accomplishmenta are cleari y inferior, probably on accaunt of
tlie system. '1'oday Greece can afford--although not with~ut some difficulty--
to seek full membership in the Common Market, even, though its reconstruc-
cion af ter World War II did not begin until after the suppression of the
communist rebellion, 5 years after the beginning of reconstruction in -
Yugoslavln. In Yugoslavia, a aimilar arrangement--based on reciprocity--
_ with ttie European communities would result in a catastrophe . In some
r.espects, the agreement concluded in the spring of 1980 between Yugoslavia
and the EC can be considered downright charitable. Although the agreement
for the most part follows the arrangements made with other Mediterranean
states, it does not even insist on implementation--in return for the con- -
cessiona granCed--of those insignificant measures concerning freedom of
movement that are taken in other comparable cotmtries. The financial
support simultaneously granted by the European Investment Bank in
Luxembourg--specifically the credit extended to the Yugoslav electricity
~ sector--even goes to the very limit of the credit margin granted to the
bank by its atatutes in regard to non-member states. According to state-
ments made in Brussels and in the capital3 of the EC countries, the
determining factors underlying the agreement were not economic criteria,
btit tl~e need for political support of Yugoslavia's independence.
For a long time, Yugoslav propagandiats had been presenting the alleged
discrimination on the part of the EC as the principal cauae of Yugoslavia's
economic difficulties; toward the end of 1979, however, the press, too,
began to adopt the view that the problems were located in Yugoslavia -
itself. Of late, qualified sources have even been conceding--privately,
i.f not openly--that the shortcomings are to a large extent "system-related."
A Yugoslav enterprise entering Western markets under competitive conditions
is yubject to considerably greater strain than is a comparable Western
firm. As a socialist country, Yugoslavia incurs higher costs for so-called
"social management," i.e. costs for the state and state-affiliated institu-
tions. To cite just one example: Whereas in the WesC the state restricts ~
its financial control over the enCerprises almost exclusively to fiscally
relevant cor~cerns, in Yugoslavia its huge apparatus controls--through the
"social accounting"--the enterprises' entire business activities. In
- ,justification of this approach, the state claims that Che Yugoslav enter- -
prises manage "social funds" that have to be protected in every poasible -
way.
- Howevcr, the Yu~oslav enterprise not only ha.s to pay higher state taxea;
under the system of administrative a~stonomy--which has been propagated witil
much ideological-political fanfare--it is sub;ect to ~trong pressure on the
part o� the employees, ~rho demand full di.stribution of the profits realized
and overall protection of their interests in other respects as ~�~ell.
2L~
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,
Clnally, thc enterprises and their managera are confronted with permanent
dLstrust on tt~e part of the Communist functionaries; the muna~ers are re-
~arded ~s "Cechnocrats" posaibly holding "liberaliatic" views and the poli- -
ticians fear their competition. In consequence of this, the Yugoslav
enterprises have difficulty in obtainin~ conceaeioas at ' sufficient capital
resources; in re~ard to investmente, they are dependent mucll more than are
Western �irms on expensive bank loans. As a reault of all this, the pro- '
duction costs of a Yugoslav enterprise are as a rule much higher than the _
- costs of a Western firm. The price level of the aocialist sector in _
Yu~osluvi.a is excessively high; consequently, the Yugoslave enterprisea
l~ave been oreferring--at least before the devaluation--to sell tltezr output
on Che more profitable domestic market rather than to try to export their -
products. Before the devaluation, exports constituted no more than 10 per.- -
cent of the Yugoslav GNP. But on the other hand, the elevat~d domestic
price level favored the import sector, affecting even the choice of in-
vestment projects; without there being a genuine need for it, the enter-
prisea frequently preferred equipment dependent on foreign supplies.
_ YuEoslav economists have for a long time been saying that these internal
- obstacle~ hAmpering the Yugoslav economy, including--~r above all--the
~ system-related ones, could externally be easily neutralized through mani-
- pulation of ttie exchange rate. This view met with ogposition, since such
~ an approach would have aggravated the other affliction of the Yugoslav
- economy, i.e. inL�lation (in 1979, approximately 24 percent). However, the
devaluntion h~s noo~ been effected after all and attempts are being made to
check inflation by means of price controls. According to some Yugoslav
experts, tlie development of the Yugoslav economy actually is not nearly as
unsatisfactory as could at first glance be assumed: They argue that a
- ~rowtll r~te of 4 percent such as is stipulated by the new, revised plan is
ciuite respectable in the European.framework. While acknowledging that
_ unemployment--witti 800,000 people out of work--is high, they point out that '
the unemployment rate is stable and that the only truly alurming problem,
tlie sl~ortage of forei~n e:cchan~e, which has been one of the principal
cnuses of tlie difficulties in regard to supplies, has now--for the time
l~ein~--been checked. In anticipation of the results of the devaluation and
oL the EC A~reement, Yu~o~lavia has nlready be~un contractin~ nev~ We~tern
l.ouns. _
A~ to inflution, ttie Yugoslav economists tlke an ambivalent position and in _
- tl~i : re;nrd tlley are not alone: Many people, above all the politicians,
actunlly welcome inflation, since it enables the populntion to make anti-
cipatory purchases and thus helps to check dissatisfaction; in additi.on,
_ it eases the ~train on the enterprises. To be sure, it also stimu2gtes
inve3tment on credit and creates a mentality that is conducive to anything
but ~tability. In a socialist country, however, stability is important
- only in an indfrect way, because,in such a country the impulses are not
~;enerated by private economic agents. Bat in regard to the general climate,
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ttie inflation mentality naturally has a devastating effect. Likewise, tl~e
- dev~luation will not sblve, but merelg~ cover up, the basic problem of the
- Yu~;osllv economy, numely the enterprises' ineufficient productivity and
competitiveness. ApparentLy, it is only through permanent devaluation and
inflation thnt a socialist country such as Yugoslavia--even though in com-
- parison ~rith the planned economies of the Soviet-dominated Eastern Illoc
its position is Ruite strong--can to aome extent participate in the eco-
nomic lifc of the West.
~dlii.le ttic differences of opinfon in regard to the devaluation have been
~ettled, tl~iere is continuing conflict in regard Co another proUlem con-
cernin~ economic policy, and here the differences are actually turnin~
into ideolo~ical touchstonea: The question at issue is the position to be -
talcen vis-a-vis ttie private sector, including private agriculture. The
private sector could not only decisively improve the provision of the popu-
lation t�~ith consumer goods, but could also absorb a large number of un-
_ employed. In terms or foreign exchange, a rationally mana~ed agricultural
system--blsed on efficient private enterprises with sufficient land, on
cooperative a,soci~tions and on a realistic price system--could even ruisc
Yu~oslavia's agrarian sector�~rom its present deficitary position and turn
it into an asset. P~epeatedly, certain politicians have requested that a
- "po~itive attitude" be adopted vis-a-vis the private a~rarian aector. Ovcr
~l~e year~, ccrtain measures have been taken alon~ these lines, abovc All in
tl~e ~~Iestern renublics and, not least, in regard to tourism, but therc has
- not Ueen uny real brealcthrough. At present, certain political leader~ such
a~ Dragoslav Marl:ovic, but also some pro~resaive functionaries in Croatin,
a~e a~;~zin culling for stronger support of private tradesmen and farmer.:~.
It ap~cars, tio~~ever, that there is tremendous resistance on the part of
dog,matic functionaries, ~unon~ whose ~pokesmen are fi~ures sucfi a3 the
:.~ecretary of Croatia's Central Committee, Milutin Baltic, wlio, incidentally,
i3 a ~erb. Tlie local functionaries seem to have retained a deep hAtred
a~;~~In~t the private farmers; the functionaries cannot for~et that durin~
L�lie collectivization campai~n at the end of the 1940's they suffered a de-
ci3ive defeat and lost Lace. In Kosovo, the leader~hip of ~~~hich frequently
turns to the ottier republics for developmental aid--of ten in an almost ex-
= Lortionary manner--the private farmers continually have to thro~~~ a~ac~y rnost
of tt~eir produce, since tlie leadership--for reasons of incompetence and
- do;;mntic narrow-mindedness--does not talce any steps toward developin~ a =
= Purcliaain~ system �or the private agricultural sector.
COPYI:IGHT: 1980 Verlag fuer Internationale Politik GmbH, Bonti~�'i:980
8760
CSO: 23Q0 ~D
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