Courtesy Reuters

Planning Through the Market


THE development of the Jugoslav economic system in the 1950 has puzzled many people in the world. No wonder. The fundamental principles of Marxist socialist economy have been applied in an unconventional manner, for it was decided that a solution had to be found simultaneously both for the problem of accelerating economic growth and for attaining an open economy in which the principle of economic coexistence could be implemented through the international market.

In accomplishing this complex task Jugoslavia often had to tread entirely unexplored ground. She had to rely for guidance partly on general theoretical knowledge, partly on the experiences of other countries, and partly on her own experiences both with the capitalist system between the wars and with the centralized administrative system in the period immediately following the Second World War. Stage by stage, by trial and error, she consolidated her achievements, each time in order to make further progress possible. Some people considered this a pragmatic approach, failing to see the consistency in the country's endeavor to attain its fundamental aims.


The capitalist system which had been in force in Jugoslavia in the interwar period had barely achieved a 1 percent rate of increase in the national income, and it had led to complete social stagnation. Similarly, the centralized administrative system in the early postwar period (1948-1952) also failed to secure a higher rate of growth. Although this system made possible the construction of some basic industries which served to promote further progress, the system itself created bureaucratic rigidity and economic inefficiency. Amid a turmoil of international events, the country had to find its answer to certain problems which it faced in common with others in the present epoch.

One basic problem was that of humanism in economic development. It was not just that under the bureaucratic centralized system economic development had become a matter of l'art pour l'art; more specifically, the conflict with the Cominform had led the Jugoslavs to give

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