Schweickart on Yugoslavia

[Chris Burford <cburford@xxxxxxxxxx>]

What were these 'structural flaws' in an economy that at least roughly
approximated the model proposed here? Vanek lists seven conditions for an
optimal self-managed economy and argues that Yugoslavia violated them all.
The four most crucial:

1. *Full democratic self-managment of independent, accountable and viable
firms*. In Yugoslavia, most directors were in fact chosen by local
politicans. Moreover firms losing money were almost always bailed out.

2. *Selling and buying of goods at competitive prices* The Yugoslav markets
were badly distorted by monopolistic price fixing, arbitrary government
price controls, and an unrealistic exchange rate.

3. *Free exit and entry of firms*. In Yugoslavia, failing firms were not
allowed to go under, and groups of individuals who wanted to form new firms
were prohibited from doing so.

4. *Hiring of capital by firms at scarcity-reflecting and equal interest
rates* For a long period, firms paid a negative real interest rate, and so
they borrowed excessively.

p309-10 Against Capitalism