Yugoslavia: The Case of Self-Managing Market Socialism

For many years the Yugoslav economic system appeared to offer a middle way between capitalism and Soviet central planning. The Yugoslavs' brand of market socialism placed reliance on markets to guide both domestic and international production and exchange, with the socialist element coming from the "social ownership" and workers' self-management of enterprises. The system seemed successful until the late 1970s. However, in recent years, many of the problems besetting other socialist economies like Poland and Hungary—like stagnation, international debt, enterprise inefficiency, and inflation—have emerged to bring the whole experiment into question. Reforms paralleling those elsewhere in Central and Eastern Europe are now on the agenda. This paper will first describe how the Yugoslav economy has been distinguished from those of its socialist neighbors. The following sections will describe the economic record of Yugoslavia since the 1950s and the lessons to be drawn from the long-standing Yugoslav experiment.