YUGOSLAVIA: TWENTY YEARS OF SELF-MANAGEMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A007400070002-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 20, 2016
• Document Release Date: March 15, 2006
• Sequence Number: 2
• Publication Date: November 21, 1969
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Yugoslavia: Twenty Years of Self-Management
Secret
N9 43
21 November 1969
No. 0397/69A
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YUGOSLAVIA: TWENTY YEARS OF SELF-MANAGEMENT
Twenty years ago Yugoslavia stirred the socialist world by giving councils
elected by all the workers in economic enterprises the power to manage their own
affairs. The principles of self-management, although never sharply defined beyond
the worker council setting, have nevertheless been adopted and fused with the ideal
of local self-determination. As a theory, self-management has become holy writ;
only its application is open to discussion.
Through the years Yugoslavia's leadership has introduced economic and social
reforms with at least one eye on self-management principles, but the system has
received additional impetus from the deliberate decentralization of the federal
government power structure during the past decade. The idea of self-management
now affects virtually every component of Yugoslav society, and has contributed to
the gradual liberalization of the country. Even the military and the party have been
affected by this spirit of self-determination, although both of these power structures
have retained their centralized machinery.
Self-management has proved successful in small factories. Larger enterprises,
however, have been forced by the complexities of organization for modern techno-
logical life and the built-in pressure of the market to pick the better educated
workers to play the decision-making role. The average Yugoslav, more interested in
improving his standard of living than in becoming a manager, is not visibly upset by
a trend, which, in the end, will lead to institutionalizing multiple power centers and
creating yet another elite class. The Second Congress of Self-Managers, scheduled for
1970, is supposed to promote the further development of the self-management
concept. Preparations for the meeting probably will be a focal point in the continu-
ing contest between conservative and liberal forces in the Yugoslav party. Many
party members are concerned about the diminishing authority of the party, but
others argue that the party does not need to monopolize power because its
foundations are strongly established.
The regime appears convinced that self-determination is the stimulus necessary
to spur the working force to build the competence required to enter world markets
on a significant scale and to avoid fragmenting the federation after Tito disappears
from the scene. The leadership will continue to proceed cautiously, however, and for
the foreseeable future, complete freedom of action and expression will remain
circumscribed by political expediency.
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DEFINITION
Yugoslavia's self-management system is
based on the theory that political, social, and
economic decisions should be made by those who
are directly concerned, with no need for specific
approval from above as long as such decisions
conform to national guidelines. In its embryonic
stage, self-management, or the workers' council
system, was limited to economic enterprises,* but
it has since been extended to social, scientific,
and political activities. It has not yet developed
equally or fully in all these areas and is still
feeling its way region by region.
WORKER COUNCIL MEMBERS 1968
Bosnia 57,848
Montenegro 8,966
Croatia 136,312
Macedonia 25,444
Slovenia 84,764
Serbia 181,698
Yugoslavia 495,032
BACKGROUND
Yugoslavia's self-management system was
born of necessity. It was essentially a reaction to
events and not a carefully planned program. After
World War II, popular morale was low because of
the regime's attempts to apply Stalin's methods
to Yugoslavia. The fear of Soviet military inter-
vention after Tito's break with Stalin in 1949
made it necessary to rally the people to defend
the country. To this end, Tito devised a softened
form of Communism that included social and
economic reforms and de-emphasis of the federal
system. Many of the federal government's powers
to tax, spend, and legislate were passed down to
the six constituent republics. This was a major
factor in checking rivalries within Yugoslavia's
multinational populace that could easily have
erupted into bitter political, economic, and cul-
tural feuds.
In June 1950 the "Basic Law on Manage-
ment of Enterprises by the Workers' Collectives"
was passed. Its purpose was to establish the prin-
ciple that state-owned enterprises should be man-
aged by the producers in order to further the
concept of self-government. The law gave official
recognition to a series of experiments that had
been under way in over 200 enterprises for about
a year, and marked the beginning of a new period
in Yugoslavia's economic, political, and social
development.
In 1963, Yugoslavia adopted a new consti-
tution that was popularly hailed as the "Workers'
Self-Government Constitution." This document
established the ground rules for the election of
enterprise management boards; the appointment
and basic functions of enterprise directors; the
rights of enterprises with regard to bank credit;
the rights and duties of workers connected with
the organization of production; the sale of prod-
ucts and services; the hiring and firing of em-
ployees; the regulation of working conditions; the
distribution of the enterprises' net income; and a
variety of other administrative matters.
The constitution gave a firm legal basis to
the self-management system, but Yugoslavia's
central authorities surrendered their powers only
*In Yugoslavia an enterprise includes all economic organizations in the socialist sector, whether engaged in production,
trade, services, orfnance.
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MILESTONES IN YUGOSLAVIA'S ATTEMPTS TO ACHIEVE SELF-MANAGEMENT
1949 Experimental workers' councils set up by directive of
Yugoslav Government and Central Trade Union Council.
June Basic Law on Management of Enterprises by Workers'
1950 Collectives enacted.
January Constitutional Law adopted giving constitutional recogni
1953, , tion to working collectives and conferring upon them "the
plans.
December A series of laws enacted closely tying each worker's
1957 income to his individual and to his enterprise's economic
performance.
1963 New Constitution adopted making workers' self-govern-
ment a state system.
1965 Economic reform implemented.
rights of self-government on the basis of this Constitution
and the laws and within the framework of the economic
Second Congress on Self-Management scheduled,
very reluctantly. This and the fact that there were
not enough workers qualified to manage their
own enterprises kept self-management in various
stages of experimentation until recent years.
The economic reform launched in 1965 with
the aim of converting Yugoslavia's centrally
planned system into an economy increasingly re-
sponsive to the laws of the market has helped
release the self-management system from bond-
age. The reform put teeth into the program by
allowing enterprises to dispose of substantial
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funds previously taken by the government in
taxes and redistributed to enterprises with strings
attached. Self-managers finally had something to
manage.
POPULAR ATTITUDES TOWARD
SELF-MANAGEMENT
Contrary to what one might expect, self-
management and the economic reform have not
always been received with great joy by the aver-
age citizen. Early in the program worker
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prerogatives to manage their own enterprise, espe-
cially with regard to the apportioning of net in-
come, were severely circumscribed by government
regulations. These restrictions dampened incen-
tive and interest for most employees.
Later, when the effects of the economic
reform were felt, market forces beyond the con-
trol of workers' councils created disparities in
rewards and opportunities and increased unem-
ployment. As a result, there was widespread dis-
content with the system. This situation has ame-
liorated somewhat with the improvement in the
economy. Nevertheless, the workers often seem
to value traditional labor solidarity more highly
than their own role as managers, even though
they are the "stockholders." As a result they tend
to oppose firing fellow workers even when it is
evident that the dismissals would ultimately im-
prove their own income.
Despite the obstacles to effective func-
tioning encountered by workers' councils, self-
management has become a way of life in Yugo-
slavia. Many enterprises provide their own
schools, gymnasiums, apartments, and shopping
centers. The generation now entering the labor
force has "grown up in self-management" and
regards making decisions and free expression as a
natural right and not a privilege. The younger
generation takes self-management more seriously
than its elders and is very interested in a success-
ful fusion of self-management principles into all
aspects of Yugoslav society.
It is also clear by now to many of Yugo-
slavia's youth that self-management gives talented
people outside the party a rare opportunity to
influence vital decisions and to challenge the bu-
reaucracy. Indeed, workers' councils provide an
excellent avenue to political power for a nonparty
man.
Workers' Council Meetings at a Machinist Shop and Garment Factory
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TRADE UNIONS AND STRIKES
IN A SELF-MANAGED SOCIETY
As the self-management concept has become
more firmly established in practice and theory,
trade unions have become less essential. Trade
unions cannot represent the workers' interests
against management because, in theory at least,
workers and management are identical-there is
no one for a militant union to oppose. As a result,
the trade-union domain has become limited to
such activities as the management and distribu-
tion of housing, vacations, and other fringe bene-
fits, and the unions are now in danger of becom-
ing irrelevant.
The membership demands that the unions
become more influential and independent by
vigorously representing workers' interests, both in
the enterprise and with the government. Many
trade union officials would like to carry out this
mandate and have in theory rejected their role as
errand boys for the party. The vice president of
the Central Council of Trade Unions resigned last
July because of frustration born of such an at-
tempt. When trade unions try to become more
independent, however, party organizations exer-
cise their authority directly through party mem-
bers of the workers' council, or within the ad-
ministrative staff of the enterprise, leaving the
trade unions with even less influence than before.
Although the role of trade unions in a self-
managed society may be a popular topic for theo-
retical discussion in Belgrade, the workers are
disenchanted with them and increasingly unwill-
ing to accept tutelage from them. Trade-union
discipline is on the decline even though strikes are
not illegal. Workers are becoming more articulate,
and strikes, or work stoppages as they are euphe-
mistically called, have become a highly effective
means of gaining demands. The increase in work
stoppages is the best indication that self-manage-
Special Report -6
ment really has not taken hold the way the party
planned. As long as strikes remain a relatively
minor problem, however, the regime will tolerate
them and continue to rationalize work stoppages
as a relatively normal part of the self-management
system and not as a form of protest against it.
Since 1966, the official view is that strikes rep-
resent an extreme form of struggle by workers to
obtain self-management rights. They therefore are
generally regarded as a legitimate means of bring-
ing bureaucrats to heel.
Tito Speaks on Strikes
27 August 1969
"Sometimes I cannot understand people who strike, for
the enterprise belongs to them. The producers there
create a better standard of living for themselves, and
yet they go on strike. Thinking about this I have
reached the conclusion that sometimes there really
exist such shortcomings that a worker believes he can
draw attention to them only with a strike so as to force
us in a way to liquidate the shortcomings ... to a great
extent their demands are justified. If we can solve them
under the pressure of strikes, I think we should
perceive them and solve them before. "
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EFFECTS OF SELF-MANAGEMENT ON
OTHER ELEMENTS OF YUGOSLAV SOCIETY
The self-management system has by this
time been introduced into virtually every element
of Yugoslav society. Even prisoners are encour-
aged to form councils in order to increase their
production and to prepare themselves better to fit
into a self-managed society when they are re-
leased. Party theoreticians claim that self-manage-
ment has improved the position of the church in
Yugoslavia. By proclaiming religion as the private
business of every citizen, the party claims it has,
in theory at least, freed the church from the state.
Legal Developments
The Yugoslavs are also developing the basis
for a novel juridical system. The draft of a new
civil code abolishes state ownership as the basis of
civil law relationships and provides that an enter-
prise can no longer be founded by the state but
only by the workers themselves. This does not
mean, however, that the workers own the enter-
prise in the Western sense, but only that they
have the right to use "social means of produc-
tion." The proposed code is unlike any other in
the East or West and probably will be subjected
to sharp challenge and amendment from those
who feel that the time is not ripe for the state to
abandon the right of ownership.
Education
The decentralization of Yugoslav education,
which began in the mid-1950s as part of the shift
in the country's over-all policy of "social self-
management," is also moving forward. A major
step in this direction occurred in 1967 when the
Federal Secretariat became the Federal Council
for Education and Culture. The council is re-
stricted to coordinating and drafting federal laws;
the direct administration of education was left to
the republics.
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The concept of self-management has also
taken hold in the universities, resulting in an
unbalanced division of power between the admin-
istrative staffs and faculty/students. The republic
assembly amended Serbia's public university law
last July to allow faculty and students a free hand
in the election of their deans and rectors. Bel-
grade University opened this fall without deter-
mining exactly how this was to be done, and the
resulting confusion has led to the establishment
of a special commission to draft a new law to be
submitted to the assembly.
The students themselves are divided on how
they should participate in the self-management of
universities. Many display very little interest in
administrative, financial, and personnel problems,
presumably because they are preoccupied with
their studies. Other students, often supported by
professors, are deeply concerned that they are
being deprived of their self-management rights by
default. This latter group claims it is tired of
being treated as "obedient schoolboys" and ad-
vocates a major reform that would allow for di-
rect participation by students in the management
of the university.
The spirit of self-management also is re-
flected in the general lack of restriction in the
cultural field. Party control over this area
amounts to a form of self-censorship and is some-
times referred to as "social self-management con-
trol." The system operates by placing key person-
nel in positions of influence and, although in-
formal, has been fairly effective.
The extent of the party's permissiveness in
cultural matters can be illustrated by the coun-
try's playbills. The city of Belgrade, for example,
launched its annual theater festival last September
with the American production "Dionysius 69," in
which the cast danced in the nude. This is to be
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followed by "Saved," an English play that was
banned in London several years ago. The Ameri-
can musical "Hair" opened in Belgrade earlier this
year in a Serbo-Croatian translation.
In spite of the very liberal controls exercised
over the distribution of films-no Yugoslav mo-
tion picture has been prohibited since 1962-
there is strong sentiment to eliminate film censor-
ship completely. Last June a meeting of artists
and cultural workers met to discuss film censor-
ship and concluded that even self-censorship of
domestic films is outdated and should be abol-
ished.
The subject carne to a head last June when
the Belgrade public prosecutor issued a temporary
ban on the distribution of the film "Rand Radovi"
on the grounds that it contained unacceptable
political and ideological material. The president
of the Belgrade District Court overruled the deci-
sion, however, stating that the Yugoslav "socialist
society based on self-management has been suffi-
ciently affirmed so that a film cannot endanger"
Yugoslavia's policies and achievements.
Communications Media
Generally speaking, there is very little legal
restriction on the freedom of the press except on
sensitive political and social issues. Criticism of
Tito or other leading officials is still off limits,
but even in this area there has been a small
breakthrough in the humorous treatment in car-
toons of other political figures. Occasionally the
self-censorship system breaks down. This usually
occurs in the intellectual press and more and
more frequently in the student press.. In these
cases the party intervenes and takes whatever
action is necessary to restore responsiveness to
party guidelines.
It is evident that the criteria of what is
permissible in the communications media are
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broadening, but it is also clear that party leaders
are not advocates of complete freedom of expres-
sion. This applies especially when the subject mat-
ter complicates foreign policy or stirs up Yugo-
slavia's youth or nationality tensions. Having dis-
mantled the formal censorship apparatus, how-
ever, the party, which is committed to a general
liberalization in society, is not likely to reimpose
direct controls over artistic expression or press
media. It is more likely that freedom of expres-
sion will continue to grow, although slowly and
with temporary setbacks, under the self-censor-
ship system.
SELF-MANAGEMENT AND THE PARLIAMENT
As self-management became an intrinsic part
of Yugoslav life, its vital principles and independ-
ent spirit were introduced into the Federal As-
sembly (parliament). Proposed legislation is no
longer automatically greeted with cheers and fan-
fare. Parliament has changed from a propaganda
forum to a body where free debate is the rule and
Students Following Proceedings in Parliament
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opposition to the government often is strongly
enunciated. Premier Ribicic, after his appoint-
ment last May, said that his government would'be
responsible to the parliament and implied that it
would resign if parliament did not sanction the
government's programs. This actually happened
on the republic level in Slovenia. Although Yugo-
slavia still does not have a genuine parliamentary
democracy, its leadership thinks twice before at-
tempting to impose unpopular measures.
In its earlier stage, the influence of the work-
ers' council system was limited to communal as-
semblies. Each national election, however, has
increased the percentage of deputies in parliament
who have been active in workers' councils in the
communes and republics. These men are not con-
tent to be part of a rubber-stamp institution.
Completely different philosophies have nurtured
conflicts in parliament between self-managers
who acquired their political maturity in the sys-
tem and members who have never had direct
contact with workers' councils.
The highest levels of leadership continually
stress that it is the party's intention to make the
parliament more a part of the self-management
system. As early as 1964 in a speech before the
Federal Assembly, the party's theoretician,
Edward Kardelj, said that the party as well as
other organizations should not hold "any monop-
olistic position as an intermediary between the
people and the authorities, between the people
and the self-management agencies, between the
people and the Federal Assembly."
During the national elections last April a
campaign to get more workers elected to the
parliament was unsuccessful. There was consider-
able popular doubt about the average worker's
ability to perform adequately in parliament, and
the Federal Assembly continues to reflect the
interests and views of the economic manager and
Special Report - 9 -
Belgrade Citizens Nominating Candidates for
Municipal, Republican, and Federal Parliaments, 1969.
enterprise directors. The blame for failure to
break from this pattern is shared by the elec-
torate. Each district wants to be represented by
the strongest candidate possible. When, as is usu-
ally the case, the choice is between an uneducated
and politically inexperienced worker and an edu-
cated enterprise director of proven success and
with good Belgrade contacts, the voters will nor-
mally select the latter.
The average Yugoslav citizen does not want
to risk having his interests poorly represented for
the sake of a vague ideal of better representation
for the "working class." Local economic interests
defeat class interests, and probably the only effec-
tive way for the party to increase the percentage
of workers in parliament would be to pass a law
requiring that a certain minimum of direct pro-
ducers be elected to parliament. No one seems
interested in pushing the issue that far.
This does not mean, however, that the lead-
ership has given up trying to orient the parliament
to the special needs of a self-management society.
21 November 1969
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Yugoslav Parliamentary Elections, April 1969. Posters
Read, "For the Reform, Self-Management, and Socialism
Last July deputies to the parliament's Economic
Chamber considered a draft program proposing
that the Chamber itself develop into a kind of
workers' council. The proposal called for affirma-
tion of the entire parliament as a self-management
body and asked for intensive and systematic oper-
ative links and cooperation with the self-manage-
ment base. The draft program will be brought up
again at future sessions of parliament.
SELF-MANAGEMENT, THE PARTY,
AND FOREIGN PARTIES
Self-management and decentralization, if
carried to their logical extremes, would displace
the party and could even lead to complete an-
archy. There has been no disposition non the part
of the authorities to allow this to happen. Never-
theless, the thrust of the reforms continues in the
direction of more local autonomy, ai situation
orthodox Yugoslav Communists and some of
their Eastern European neighbors view as heresy.
The self-management programs were indi-
rectly criticized last June at the International
Communist Conference in Moscow. The confer-
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ence resolved that ruling Communist parties must
act as a controlling and motivating influence in all
state actions, a position contrary to the theory
and practice of self-management in Yugoslavia.
The leadership is very sensitive to any dero-
gation of its Communist credentials, but it does
not make any ideological apologies for self-man-
agement. Instead, self-management is character-
ized as a higher form of socialism-closer to pure
Communism than anything practiced in other so-
cialist states. Yugoslav theoreticians justify the
system by referring to what Engels and Marx
wrote about the "withering away of the state" as
the transition is made from capitalism to Com-
munism. Further ideological cover is provided by
invoking the principle, "to each according to his
work."
For many Yugoslav Communists, however,
the society they have created is profoundly dis-
tasteful and disquieting. The party itself is deeply
divided. At one extreme are those who have never
wholeheartedly endorsed self-management, regard
it as blasphemy against Marxist-Leninist principles -
and seize upon its excesses to justify attempts to
revive central administrative control. At the other
extreme are those who see nothing wrong with
the party's adopting a neutral position, loosely
overseeing a system in which pressure groups
would compete for economic advantage, and in
which ideology and policy would fragment into
competing platforms. Such a system would in-
creasingly resemble the multiparty institutions of
the West.
Standing between these two extremes, the
party leadership has made a conscientious, if not
in all respects successful, attempt to design a new
role for the party. The party is to retain its
"leading role," but the nature of its leadership
must be adapted to a new environment. The vast
majority, led by Tito, is dedicated to keeping the
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party's primacy intact, but it is trying to change
the system of operation from a direct to an indi-
rect method of control-a more difficult task.
If this stratagem is to be successful, party
activists must now be deployed in places where
decisions are being made. Essentially, power re-
sides in the elective bodies that control govern-
ment, industry, trade, social welfare, health, and
education. Tito wants a leaner and harder work-
ing party organization to exercise its influence in
the self-management process everywhere. He set
the example during August and September by
touring the country calling for the "full engage-
ment" of all party members with the self-manage-
ment units.
The real test of self-management is still to
come. In large part, the system will stand or fall
on the qualifications of the employee-managers.
It can work in small enterprises, but whether it
can function economically and efficiently in a
highly developed industry with complicated prob-
lems is yet to be proved. The trend so far indi-
cates that the authority now vested in the work-
ers' councils will gradually be taken over by more
sophisticated management boards.
Administration by workers also tends to
complicate the solution of Yugoslavia's chief eco-
nomic problem, inflation. In the past, many en-
terprises, in the absence of competitors, have
raised prices in order to increase wages, and work-
ers' councils as presently constituted show no sign
of abandoning this practice. Proponents of the
system say that inflation is not the fault of self-
management and argue that it can be corrected by
introducing more free-market practices. But this
will require a decision by the central authorities
to divest themselves of more of their power, a
step that will be taken only gradually and
grudgingly.
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The increasing role of the market means that
technical knowledge and expertise must become
an integral part of enterprise policy-making. At
the same time, management committees made up
of people who are qualified in the technical as-
pects of the business will be criticized even more
than now for playing down the role of the un-
tutored worker. In any case, this dilemma appears
insoluble in the near future.
Make up your mind. Do you want
an oil refinery or a steel mill?
The role of workers in management will de-
cline even though the self-management system
itself may be a necessity. By helping talented
workers develop themselves, the system is provid-
ing a source of personnel for the managerial staff
but at the same time it is robbing the workers'
councils of competent people. An evolution to-
ward less actual participation by workers in enter-
prise decisions seems inevitable. Under this sys-
tem workers would remain in control, at least in
principle, by voting for the general operational
principles of the enterprise and by electing profes-
sionals to make the day-to-day decisions.
Those who support this view quote Karl
Marx's Das Ka ital to justify their claim:
All combined labor on a large scale
requires, more or less, a directing
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authority, in order to secure the har-
nmonious working of the individual ac-
tivities, and to perform the general
functions that have their origin in the
action of the combined organism, as
distinguished from the action of its sep-
arate organs. A single violin player di-
rects himself; an orchestra requires a
conductor.
The party has no intention of giving up its
predominant position in Yugoslavia, but it will
work harmoniously with a governmental appara-
tus manned by men of ability who may or may
not be Communist. The party will continue cau-
tiously to support the reallocation of decision-
making authority to lower level political and eco-
nomic administrators.
Self-management's revolutionary prescrip-
tion for the party's conduct-persuasion, not
command-will continue to befuddle the older,
more conservative members of the party. Time is
on the side of the progressives, however, because
they have had their way so far, with Tito's bless-
ing. In the event of Tito's death or retirement
from office, it is likely that the conservatives will
make a last-ditch stand for a strong central gov-
ernment, but the principle of self-management is
now so deeply ingrained in Yugoslav society that
they will have no chance of success.
Special Report
Approved For Release 2006/0 1 ; PIA-RDP79-00927AO07400070002-4
SEC I
 ApprogObtafttelease 2006/04/13: CIA-RDP79-00927AO07400070002-4
Secret
Approved For Release 2006/04/13 : CIA-RDP79-00927AO07400070002-4