Understanding self-management in Yugoslavia

ÆpF -'t9 DOMESTIC FNANCE STUDI2S NO. 44 Understanding Self-Management in Yugoslavia by Shahid Yusuf November 1977 Public and Private Finance Division Development Economi±cs Deparaen, Development Policy Staf9 FOREWORD In recent years, workers have begun to demand the right to participate in the making of decisions within the enterprise. As a consequence, management in the industrialised countries has started experimenting with a wide range of schemes. The Yugoslavs are pioneers in this field. Self-management was introduced almost twenty five years ago - in a period of considerable political and economic stress, but it has survived and flourished. Given the prevailing sentiments within the labour market, policy-makers in both the advanced and the developing nations, can benefit from a deeper knowledge of the institutional inno- vations which the Yugos,lavs have made. This paper analyses three aspects of self-management: (a) the distribution of decision-making power within the economy; (b) the discretionary authority enjoyed by individual enterprises; and (c) the manner in which the activities of various economic units are coordinated. There is a wealth of descriptive material on the Yugoslav economy but grey areas remain and it is the purpose of this paper not only to indicate what it is we know, but also the gaps in our under- standing. This paper is an integral part of the research project on Public Enterprises, undertaken by the Division of Public and Private Finance in early 1977. V. V. Bhatt Introduction In a complex economy, the activities of individual units are coordinated and regulated by institutions. , They mark the limits of individual discretion and taken together they determine the potential- ities of the system. Institutions cover a very broad spectrum, with simple administrative mechanisms at one end and implicit understandings at the other. Each economy has institutions drawn from every segment of the spectrum, but it is possible to group systems using the criterion of institutional dominance. A pure administered economy - in effect an organization writ large - does not exist. Administrative arrangements simply cannot cover all the significant areas of economic activity, they must necessarily coexist with other institutional forms of a more general nature. Similarly, implicit agreements alone would sustain only a very small and primitive community. Anything higher up the ladder of complex- ity would require the leavening of rules. It is my opinion that the manner in which individual choices are structured and the discretion enjoyed by decision-makers is dependent upon "institutional dominance and institutional mix". Hence, I feel that our ability to explain particular economic phenomena or understand the evolution of an economy requires a thorough knowledge of the many kinds of rules, formal and informal, applying to classes or to particulars, which constrain individual acts but also affect the general direction in which the entire system moves. There is much uncertainty regarding the manner in which the Yugoslav economy is managed. On the surface, it appears as a conglomeration of autonomous self-managed units, whose actions are coordinated through the market and numerous other mediating bodies - social and governmental. Coordination, it seems,is practiced at two levels: on one market,forces are decisive; on the other, committee interaction is what counts. I have been unable to find the stairway connecting these levels, or to reconcile the apparently powerful influence exercised by these bodies with the autonomy supposedly conferred by law and the existence of a (relatively) free market. Neoclassical economics rest on strong institutional assumptions, which are barely sustained by the reality of the free enterprise system today and that appear to be wholly out of place in the context of the Yugoslav economy. Any analysis,-therefore, that is based on conventional neoclassicism will be largely irrelevant. To understand what is happening in the Yugoslav economy requires, at the very minimum, that we apprehend the interrelationship of market forces and other bodies and their bearing on economic decisions. This calls for a knowledge of rules, conventions and implicit understandings, which constitute the institutional bedrock of the society and which must serve as the basis of an analysis of economic phenomena. Furthermore, coordination can take a variety of forms. In some cases, the rules recognise the autonomy and dependence of individual units and thereby preserve a large domain of discretion. In others, coordination shades into control; enterprises are required to follow instructions, instead of being left to make arrangements, they think are suitable, given the matrix of rules. If the preferred mode of economic management is one in which economic units are allowed a limited discretionary space, then it is important to concentrate on the rules and behaviour of socio-political organizations and government agencies. The decisions taken within these bodies are the source of rules, understandings and directives by means of which economic activity throughout the system is orchestrated. If, on the other hand, the control exerted by the state and political organizations linked to the state is minimal, the limits of choice and the scope of discretion must be sought in the socio-economic institutions impinging on economic activities. To make analytical bricks, one has to find -institutional straw. Both Alexander Bajt and Branko Horvat7 two of the leading Yugoslav economists, have complained that there is a surfeit of descriptive material on the eco- nomy of Yugoslavia, but precious little analysis. And this state of affairs will persist as long as we continue to be satisfied with testing trivial hypotheses distilled from some farfetched micro-economic model: and as long as the Yugoslav's are reluctant to revealthe rules of the game. I do not wish to spend my time on some micro-economic side show. With people like Ward, Vanek and Pejovich around, self-management will never be short of neoclassical admirers, brandishing their rigour. I am bored with institutional taxonomies. It is terribly difficult to find willing occupants for the kind of taxonomic edifices social scientists are inclined to construct. What I want to find is not a disincarnate collection of rules but a sense of rules being interpreted, a sense of people responding to their institutional environment and slowly, bit by bit, modifying this environment to bring it in line with changing needs and shifting intellectual currents. 1/ See Horvat 1971b. A study of Yugoslav institutions exposes us to situations of great complexity which often resists the cutting edge of conventional economic analysis. Unfortunately, that is life, however, much we as economists may want to ignore it. In this paper, I have tried to determine from the existing litera- ture the manner in which economic management in Yugoslavia differs from that in the mixed economies of Western Europe and the centrally planned systems within the Communist bloc. Rather surprisingly, it is far from easy to distinguish the Yugoslav vintage from the traditional varieties. Yugoslav enterprises seem as autonomous as any in France or the U.K., while at the same time, the Yugoslav League of Communists appears quite similar to Communist parties of a more orthodox bent, both in terms of its political convictions, its economic objectives and the degree to. which it has penetrated the centres of decision-making within the society. It is reassuring to encounter so many familiar notes in this supposedly radical symphonic creation but while the self-managerial approach resembles other systems in certain ways, the total effect of ideological eclecticism gives the impression of novelty - an impression which is quite strong and yet not sustained by the scholarly work that has been done on the country. I am prepared to believe that self-management is a distinctive blend of laissez faire and Communistic ideologies and I am receptive to the idea that it has produced a managerial style, a mode of economic interaction and a degree of political involvement which is quite unique. I have to admit though, that we are still being asked to take this uniqueness on trust. iv Specialists on Yugoslavia have laboured diligently at describing the institutions without penetrating as far as the engine room. The economy hums along and presumably this signifies that the engine works but we do not know what the machine is like and whether it is unique. This paper tries to show where economic research on Yugoslavia has failed, it suggests a direction of advance but the theme I have alluded to in the concluding section is something I am developing elsewhere. I have spent a little time in reaching this stage of the story and I must quicken my pace. However, I can draw comfort from the fact that a number of books and articles describing the Yugoslav system are available and hence, there is no need for me to linger over the details on which oters have written chapters or entire articles. Any- body with an appetite for ideological issues can, if he has the patience, obtain all the nourishment he desires from a dozen issues of "Socialist Thought and Practice". I imagine that if one wishes to apprehend the epistemology of self-managment in Yugoslavia, every page of this journal must be digested. I have done no such thing, satisfying myself with a sample drawn from a period spanning about three years. Not used to strong ideological fare, I found the articles hard going.l/ What are the origins of self-management? What are the intellectual and social currents explaining the developments which have occurred during the last twenty five years? Let me try and respond to these questions. A law passed on the 25th of May, 1946 established a system of planning and economic control along the lines of the Soviet model. For the next, approximately, four years, the Yugoslav economy was 2/ managed by a highly centralised bureaucratic apparatus,- when another law, this one legislated in June 1950, ushered in the era of workers' self-management. It took fifteen years for the transfer of power, from the agencies of the State to the enterprises, to reach the point where firms 1/ It is with a sense of wonderment that one observes Kardelj (1976) write thirty pages on planning and come out of this exercise with all his options still open. 2/ See Bicanic (1973, Ch. 4). -2- became significantly autonomous. Since then, efforts have been made to achieve the right balance between autonomy and guidance; there has been public debate, political scuffles and dramatic purges but the extent and nature of control remains unclear. II The idea of self-management has been in the air for a long time- but it seems that the Yugoslavs began to consider it as a serious alternative to orthodox communist doctrine, only after the Cominform resolution of 1947, which expelled Yugoslavia from the bloc. The initial impact of this decision was to put the country even further down the road 2/ to centralization.- The long-term consequences was more benign. Yugoslav leaders realized that if the country was to successfully withstand the pressures exerted by the Soviet Union and its satellites, it would need an enlightened social policy, which would prevent the masses from becoming restive. Further, this policy would hare to rest on an ideology sufficiently Marxist to satisfy the committed within the country but which was far removed from the one adopted by the members of the Communist. bloc./ The country 1/ See the articles in Horvat et al (1975, Vol. I) Vanek (1975) which discusses various modes of participation. The Yugoslav system is different from Syndicalism as Wiles explains (Wiles 1977, p. ). 2/ In 1949, an effort was made to collectivise agriculture. A year later, when the effects of this decision started, became apparent, the program was abandoned. 3/ A. Ross Johnson (1972) has shown convincingly that the Yugoslav initia- tive with regard to self-management was taken quite independently of the thinking on socio-economic issues within the Communist World at that time. -3- could not do without an ideology in an ideological age and it needed one that was distinctive so as to strengthen its independent stance in the arena of Communist politics. Finally, and this is my own long shot, the leadership possibly believed that the masses would be more inclined to support an ideology carrying liberal overtones than one which was un- compromisingly authoritarian.- The earliest proponents of workers self-management amongst Yugoslav leaders, were Kardelj and Djilas. Their arguments eventually prevailed with Tito, who adopted their slogan of "workers Councils". (&les 1977, p.h2) By the end of 1949, a set of "Instructions for the Establishment and Work of Workers Councils in State Economic Enterprises" carrying the signature of Boris Kidric (President of the Economic Council), brought into existence advisory bodies out of which the prototype worker's councils emerged. (Singleton 1976, p.126) It is a little uncertain whether Kidric, who was the architect of Yugosla7 economic policy in the imnediate postwar period, ever favoured the devolution of decision-making power proposed by Kardelj and Djilas. According to 'Ales, "Kidric wanted to use the market in order to alleviate the rigidities of central planning.... He never came out publicly for self-management.... It was rather the 1/ Denitch (1976) has argued that the wartime experience taught people to act independently and the individualism which germinated within the world of guerilla bands made the Yugoslavs very receptive to the new ideology proposed by the regime. 2/ Wiles also mentions that Tito may have gotten the idea from Mussolini. (Wiles 1977, p.43) 3/ A brief description of economic reforms that have been introduced since 1949 is contained in the Annex. energies of trained managers he wished to liberate. His own slogan was socialist commodity production, which is virtually the translation into Marxian of 'market socialism'." ( iles 1977, p.h2) Whatever Kidric's reservations regarding the ideas of his more politically oriented colleagues, he, as well as Kardelj, played a major part in elaborating the new ideological position and giving it the blessings of Marism. There is little support, in Marx's writings for the notion of self-owned or self-managed enterprises within a socialist milieu and this necessitated an imaginative and elastic interpretation of what Marx had said. Kardelj drew upon such Marxist- Leninist classics as "The Paria Cormune" and "State and Revolution" to buttress his arguments for "populal participation soviets' and 'workers management of factories'. He maintained that socialist democracy was possible after the disappearance of the State and the creation of organi- zations based on mass participation. He saw workers consultative meetings as a preliminary step and called for a further development of this "spontaneous form... into a continuous form of direct cooperation of the workers in the management of the enterprise." (Kardelj,in Milenkovitch 1971, pp.65-6) The congruence between the Yugoslav doctrine and Marxian thinking was explained by Kidric in the following way - I once again depend on Milenkovitch. "In the lower stage of the transition to socialism, socialist property assumes the form of state property. In the higher stage social property is under the management of freely joined direct producers.... 'State communism' could represent only the 'first and shortest step of the 1/ See Milenkovitch (1972) for a discussion of this issue. socialist revolution'. The correct (and inevitable) path of development of socialism required the trantformation of state socialism into free associations of direct producers, If state socialism were retained longer than required, it would become 'state capitalism of the pure type (without ownership by middle classes but with a parasitic bureaucratic class)'." (Milenkovitch 1971, pp.78-9) The efforts made by Kardelj and Ki1dric to draw the Marxist- Leninist mantle over the ideology of workers management was necessary in order to render it acceptable to the Party rank and file. If it could be shown that Marx had anticipated this turn in the road, then it was right and proper to make the turn. The ideology gained stature by becoming part of the Marxian scheme but it derived its strength and ultimately its durability fran other factors. ,Kardelj felt that Yugoslavia could achieve its economic goals only through the introduction of self-management. The society was attempting fto effect the transition from extensive to intensive economic activityll. The system of self-managementwould allow it "to achieve a higher level of productivity, promote efficiency, increase competitive power in the international division of labour, achieve a higher degree of internal economic stability, convertibility of the dinar etc." (Kardelj 1969) A second reason was the fear of rampant bureaucratism. Yugoslav leaders had observed how the efforts of the State in the Soviet Union to telescope the stages of development,had brought into existence a state machinery of such proportions ,that it placed the rullers of the country 1/ See Milenkovitch (1971, p.80) for statements by Kidric on the place of socialist production in the Marxian scheme. O -6- beyond the reach of social disapproval and encouraged an arbitrariness that was little short of extraordinary. During the last years of Stalin's life, the bureaucracy was "making and unmaking ruling groups, making then into an appendage to itself, imposing forms of social and economic activity deeply influencing class relations, running the whole of the economy /rnd even it seemed7 transforming rulers and ruled alike into cogs of the state." (Leidn 1977, p.125) What was taking place in the Soviet Union appeared to confirm the iorst fears of men like Weber and Marx. The former believed that modern society was being progressively rationalised, and bureaucratic forms were the most important social manifestations of this tendency. There are several facets to "Miber's concent of rationalization; he used it to refer to the intellectualization or the disenchantment of the world. He saw rationality as the force explaining "the methodical attainment of a definitely given and practical rnd by the use of an increasingly precise calculation of adequate means." (Weber 1958, pp.293-4) Finally, rationality for him meant the formation of "ethics that are systematically and unambiguously oriented to fixed goals". (Weber 1958). Weber saw the lifeless machine as a 'materialization of the mind' so also was the bureaucracy which was a living machine; "with its trained specialized labour, its delimitation of areas of competence, its regulation and its heirarchically stratified relations of obedience. In union with the dead machine, it is labouring to produce the cage of that bondage of the future to which one day -7- powerless men will be forced to submit like the fellaheen of ancient Egypt". (Weber 1968, p. 140)1/ 2/ Marx's wish to be rid of the State arose from different premises. He saw the State as a tool of the capitalist class working to sustain the class interests. He warned that man's life would become steadily more impoverished and his sense of alienation more acute if the State continued to encroach on the citizens responsibilities and desision-making. If the activity of legislating, administering and judging is taken over by the organs of the state, the individual is left to manage his personal affairs, while his public activities are managed entirely by others. (Ollman 1971, pp. 215-217) A healthy participation by all in the affairs 1/ Wrong is, if anything, even harsher in his condemnation of bureaucracy "Machines systematic techniques of all kinds, formalized laws and operational codes and planned social organizations all embody the ra- tionality that went into their design. But in programing, the actions of men, they become self-maintaining, no longer dependent on the rationality and will to mastery of their creators but actually stunting and constricting the intelligence and self-determination of the men they dominate." (Wrong 1976, p.248) He then turns upon rationalization, the life blood of bureaucracy wich "drains the world of all non-utilitarian and non-material significance.... In identifying prgress with the increasing methodical conquest of the world, stretching forward into a receding future, rationalization denudes /the individuals life cycle7 of intrinsic meaning and robs death of aignity and fulfillment." 71rong 1976, p.249) Gosh! 2/ It is important not to ignore the advantages of bureaucracy which may be the reason why it continues to grow and dominate our lives. Dah1 and Lindblom (1976, pp.236-7) describe same of them e.g. coordination of * many by a few, the need to make complex decisions beyond the competence of a single individual, division of labour, etc. of the community called for the removal of the organizations which had flourished under the umbrella of the State and hence, of the State itself. These are good reasons for checking - and if it is still possible reversing - the growth of bureaucracy. After all, in spite of affluence, dissatisfaction - often in extreme forms - with some of the structural features of society, becomes ever more acute. There is constant fear of 'depersonalization' as information pro- cessing techniques join hands with rationalized organizations; the dread of manipulation of omnipotent yet faceless bureaucrats, the extreme futility of a life in which mechanical contrivances - whether organizational or other - have reduced the individual to a spectator.-/ 1/ The strain of individualism one finds in self-management is of the kind encountered in the writings of German social philosophers of the nineteenth century such as Fichte, Schelling and Schliermacher, rather than their Anglo-Saxon counterparts. They believed that self-expression and individuality was to be sought in the Volk. (Mosse 1966) State and Society were seen as "superpersonal creative forces which build from time to time out of the material of particular individuals, a spiritual whole and on the basis of that whole proceed from time to time to create the particular political and social institutions which embody and encarnate its significance." Troeltsch (1922, p. 204). Because of Marxist associations, the ideology of self-management is less inclined to emphasise the centrality of the State but the need to circumscribe individuality in the interests of community is quite evident. 2/ On this theme, there is a recent and very depressing article by Greisman and Mayes (1977). -9- But there are good practical reasons as well, why a nation's leaders may wish to avoid centralised contril structure and its bureau- cratic appurtenances. Such control is costly, requiring much specialized machinery for detection, enforcement and the meting out of punishment. Secondly, as was pointed out above, this system has a habit of slipping out of the grasp of its directors and developing a life and a power of its own which can eventually overshadow and destroy that of its creators. Finally, social controls which are sufficiently comprehensive and which lock the individual into a comunity, are equally if not more effective than a monolithic bureancracy. I have no way of determining the importance given by the Yugoslav leadership to each of these factors. It is clear, though, that bureaucratisam was seen as a real danger - and Kardelj speaks of a conflict between the working class and bureaucracy. (Singleton 1976, p.293) But as always, the 1/ ideological position retains its fundamental ambiguity. Kardelj leaves the door open. He thinks that "controlled bureaucratism" is necessary for the transitional period preceding the socialist democracy because the working class needs a weapon to fight.the remaining bourgeois evil spirits. This brand of bureaucratian is the 'lawful product of social relations' and therefore an ally of the workers. The dangerous kind of "socio-economic bureaucracy', - an alliance of managers and technocrats, which if allowed to develop can stifle self-management and the workers right to dispose their 1/ Wiles ironically remarks, "Ideologies tend to avoid definition and the specification of detail... for only by being vague can they survive the buffeting of rational enquiry and actual events." (Wiles 1977, p.38) - 10 - surplus product. (Singleton 1976, p.294) The convenient thing about the Yugoslav ideology as with any other self-conscious espousal of a secular faith, is its ability to accomodate a multiplicity of views. This allows the leadership to change course at will in almost any direction they desire, towards or away from liberalization, for centralization or against. It makes for a slipperiness of language which can baffle the researcher. The rulers of a country may wish to retain their power and this means keeping their options open, but their habit of shifting positions and the fact that their latest pronouncements affect ones appreciation of the existing institutions, is at the very least, disconcerting; at worst it makes institutional analysis a very treacherous affair. Reading the more enthusiastic articles on self-management is a slightly unreal experience; and for someone with a skeptical frane of mind. The wide eyed exuberance and unreflective commitment is a trifle unsatisfactory. As is usually the case with thought that is still immature, the effort is to convince through ever more glowing definition and the repeated incantation of belief. Many of the writers on the subject have only just seen the light and they are full of hope. So much so that they sometimes forget that there is such a thing as depth and subtlety to argument - it is not enough to wave a club but to engage with a rapier. . - 11 - Self-management is the attempt to spread decision-making power as evenly as is- possible over the entire working population. "It aims at abolishing professional political representation which is remote from the electoral masses by introducing a delegational system... to enable associated producers and citizens to exert direct influence on decision-making.... It expresses the right of every individual to parti- cipate in making social decisions and to control them directly. Thus, the natural right to man's self-determination as a producer in production organi- zations is carried over to society as a whole." (Supek 1975, p.7. See also Pasic 1970, p.7) It makes possible the effective participation of workers rather than simply giving them formal rights. It ensures the disappearance of antagonistic class relations and it brings into existence a new community of producers. Since it involves the social ownership of the means of pro- duction along with worker control over the disposal of enterprise earnings it reverses the inexorable advance of alienation in modern society. (Garandy 1975, p.29) In short, self-management is based on the simple premise that individuals are happiest when they can actively participate in making decisions affecting their economic and social existence. For self- management in the above sense,to become a reality there must be a dissolution of class boundaries through the socialization of property and a vigilant effort to prevent the monopolization of power by a group or organization. The distribution of power over the population is not a significant as is the subsequent aggregation into functional decision-making units. It is the institutional manner in which this is achieved that detenmines the democratic complexion of the society and the degree of actual participation as distinct from formal rights. - 12 One way of describing the Yugoslav attempt at translating self- management into practice, is to say that it is nested system of committees at the core of which is the Basic Organization of Associated Labour (BOAL).1 This is admittedly a rather inaccurate picture and I will attempt to remove obvious distortions, without going into the voluminous and stupefying details which would be necessary if my account were to pass muster with the draftors of the Law on Associated Labour.-2 In the production sector, the fundamental self-managerial unit is the BOAL. It 'enables workers directly and on equal terms to realize their socio-economic and other self-management rights and decide on other questions concerning their socio-economic status'. A somewhat more illumi- nating definition of the BOAL goes as follows. 'It is a component part of an organization of associated labour which makes up a technologically rounded whole, an independent economic and self-managing unit which can have the character of a legal entity'. A small work unit within a factory or any work organization would constitute a BOAL. The various BOALs (assuming there 1/ Broekmeyer gives a nice account of the BOAL. It allows self-management to be performed at the lowest feasible level. "Only the powers that cannot be exercised /there7may be wielded at the next higher level. In other words, the enterprise is no longer to be regarded as divided from above into a number of units; instead, it is the units at the base - the BOALs --which decide to form an enterprise." (Broekmeyer 1977, p.135) 2/ Details on the managerial structure of the enterprise are available in a number of places. There is the latest Bank Basic Report, Vanek (1972), Wachtel (1975), Denitch (1975, Pejovich (1966). There is an article by Velimirovic (1977) although it does not try to explain the most recent modifications. - 13 - are more than one) comprising an enterprise select a Workers Council itself selects an executive committee, three quarters of whose members are workers, which meets more frequently than the Workers Council and works in close cooperation 4ith the Director. The management of the work organi- zation forms yet another committee called the Collegium which includes the heads of all the departments in the work organization and is presided over by the Director. It aids the latter administering day to day operations of the enterprise arO mapping out an investment, production and sales stra- tegy. The Collegium has no formal decision-making power. The Politikal Aktive draws members frn all segments of the self-managed enterprise - top management, the heads of all governing bodies and the secretaries of the Plant Committee of the League, the Trade Union and the Youth Brigade. (Denitch. 1975, p.70) The committees form a heirarchy of sorts,although in theory, deci- sion-making power resides in the workers' council. Neither heirarchy nor nesting are very appropriate giving the absence of a symmetrical arrangement, whether in terms of size or power. They seem even less suitable when one realizes9that the BOAL and the Worcers Council are interlinked with a host of other conittees and organizations. These linkages vary in their degree of importance and they are horizontal rather than vertical interconnections - by which I mean that the Workers Council is not formally subject to the authority of any of these bodies. Some have already been named viz. The League of Comunists, Youth Organization, Trade Union. Others include the self-managing communists of interest - the basic comunity being the -14- commune - the Economic chambers and Banks ; beyond lie the Republican and Federal agencies. If Bogdan Denitch statistics and my own impressions are at all reliable, self-management has been woven into the very fabric of society and some 800,000 out of a total labour force of approximately 4 million actively participate in decision-making through the organs of self-management. 1/ (Denitch 1975, p.46)- The system3 fluidityis maintained and the opportunities of participating left open to all by requirements which restrict the time an individual may serve on a committee to two years. Another source of dynamism is the fact that the practice of self-management has been extended to the sall TOOrk unit through the creation of BOALs. In theory, this preets self-management frm becoming frozen into formal routines, in which there is a nominal participation by many,but actual decision-making devolves on a few individuals or key committees. (Leman 1967, p.192) Lastly, the self-management bodies have to act since every decision taken within the enterprise must arise out of the deliberations within the various committees. If the committees do not meet, discuss and decide, the activities of the work organization would come to a standstill. Aside from the day to day decision-making, the rules and regulations governing the activities of enterprise members crystallise out of committee sessions. (Vanek 1972, J/ Singleton refers to Tito telling the Tenth Congress in May 1974 that over 700,000 citizens, or one in twenty of the eligible voters were serving on some kind of delegation. (Singleton 1976, p.275) - 15 - Ch. 4) The Yugoslav Constitution bestows 'autonomous law'making power on the enterprises. Therefore, the self-management organs can "pass charters and rules governing the organization of work, the composition and respon- sibility of self-management and other organs, etc... the rules and regulations are legally binding on all pesons to whom they are addressed within an enteiprise and disputes are settled by the enterprise organs except in some specific cases." (Horvat 1976, p.162) By giving the en terprise law making powers, the Constitution increases its self-containedness and lessens the scope for inter7ention by other organizations and agencies of the State. It makes for a finer subdivision of the society into self-managing cells, held together by strong communal, social and national obligations,yet given the strongest encourage- ment to develop autonomous decision procedure through the active partici- all embes ofthe1/ pation of all members of the enterprise. 1/Some of the obligations to which the enterprise is subject are detailed by Milenkovitch (1971, p.98). Once it acquired the productive property, the firm is obligated to maintain the value of its productive property (book value) by amortization payments and replacements. The firm can alter the form, but not the value, of social property. The enterprise is not permitted to depreciate or use up the value of property, to liqui- date the enterprise, or to sell shares in its earnings. The property rights denied the firm remained vested in society. Society retains the rights to liquidate social property and to determine to whom shares of enterprise income could be assigned. Subject to these limitations, the firm may use social property for market production and it can receive the proceeds of its sales. For this right the firm pays a fee in the form of interest on the book value of enterprise assets. - 16 - On paper, the self-management rights that have been granted are quite impressive; what they amount to in practice, I will come to later because autonomy within the context of strong social commitments is rather different from the autonomy of atomistic units in a liberal capi- talist economy. The Yugoslav system is sustained by an individualistic ethic rather different from the one espoused by Western liberalism. In this section, I will discuss some of the economic advantages and disadvanta- ges of self-management. Let me start with the latter. a) Among managers, there is a strong suspicion that self- management leads to-indiscipline, and lowered productivity. The authorita- rian heirarchical model is preferred because it facilitates decision-making and promotes efficient operations. There is no evidence to suggest that Yugoslav enterprises are on the verge of anarchy; on the contrary, sample surveys indicate high worker morale and every sign that plants are operating in a tolerably efficient manner. It may be as Peter Wiles suggests that "where labour is less alienated, it is mostly and in the short-run less efficient... and... genuine capitalist competition within Yugoslavia would bankrupt its self-managed'enterprises." (Wiles 1977, p.136) But it is a small price to pay for industrial tranquility. b) Many years ago, Benjamin Ward (Ward 1958, 1967)developed a simple model which showed that straightforward income maximization by the members of a self-managed firm would discourage investment with a consequent withering of the industrial sector. (Ward didn't talk about withering but this would be logical outcome of such shortsightedness on the part of workers.) - 17 - This result was challenged on a numberof grounds. It assumed that workers attached no weight to future income. With less prohibitive time preference rates it was easy to show that behaviour would be different. (Vanek 1971, Furbotn and Pejovich 1970) Similarly, the removal of the single factor assumption changed the outcome predicted by the model. Ward's theoretical conclusions were also contradicted by the empirical findings. During the sixties, according to Horvat, under- investment was never a problem, if anything, enterprises were investing too much. A certain amount of unhappiness with this finding remains. Furbotn and Pejovich (1974) claim that in theory, the fact that investing in the firm does not give the worker property rights over.the assets created 1/ 21 3/ Furbotn, after combining fact with should discourage investment.- - 1/ Yugoslav .enterprises are required by laws to keep the value of their capital assets intact by putting aside sufficient funds to cover depreciation. 2/ Neuberger and James (1953) add two qualifications. Firstly, investment in the enterprise enlarges the fins ability to borrow additional funds at pegged interest rates. Secondly, investment probably safeguards the firms competitiveness and the worker's job. 3/ While the nonvesting property rights does not, apparently, dampen investment, it may discourage labour mobility. Since workers cannot "sell-off" their stake in the fLn they may be reluctant to move else- where. - 18 - geometry finds that the"availabily of bank credit exerts a markedly adverse effect on self-finance activity and is very likely to cause workers to stop all personal investment in the firm. If the members of a Yugoslav Collective are rational and truly free(!) to seek their own best interests without govern- mental interference they should seek to allocate funds in accordance with the pattern of incentives present in the system. But the incentives are unfavourable to self-finance." (Furbotn 1974) Wiles is also uncertain. He feels that the young worker thinking of Munich would probably prefer to plough back very little into the firm. The elderly, wb are on the verge of retirement will also prefer a higher income. "Only the enterprise establishment will be really enthusiastic- to 1/ them, it means promotion and the Veblenian satisfactions of achievement.- So there would be very little ploughback were it not for the League of Communists ... the local authority... and the fiscal restiaints on actually distributing revenue to members." (Wiles 1977, p.83) Wiles is prepared to go farther in his assertions than others. Neuberger and James do not go beyond question begging. Commenting on the removal of administrative guidelines for the distribution of profits in 1965, they write. "It would, of course, make little sense for the government to do away with guidelines for the division of profits unless it had confidence that the typical Yugoslav firm would continue to distribute some of its profits to the Business Fund." (Neuberger and James 1973, p.295) Goldsmith (1975) worries about the limited number of financial assets available to households and 1/ See also Furbotn and Pejovich (1970, p.432). 2/ Vanek (1970) has a model of a self-managed system in which demand for capital and returns are higher, than in competitive capitalist economy. The effect on accumulation is shown to be strongly positive. -19- firms - about a half-dozen types of deposits with business banks - without seeking the implications of this arrangement for the decision to invest. These are a few straws, but they give rise to suspicions about the actual autonomy enjoyed by the self-managed enterprise. The manner in which autonomy is reconciled with the need to corrdinate and plan, I will dis- cuss a little later, once I have completed my assessment of the self- managed system. c) The level of participation conducive to effective self- management requires small units. This has been observed in the proliferation of small sized firms and in the unwillingness of enterprises to merge when it was justified by the optimal scale of operation. It has been mentioned on a number of occasions that firms are disinclined to amalgamate or expand employment because it would mean sharing income with others and not only because it leads to administrative difficulties. Many enterprises,. according to Horvat, have surplus labour and this would give rise to an under- standable reluctance to hire more.- There is a positive argument for smallness of size; it should lead to a more competitive industrial structure. (Vanek 1970, p.272) A recent article by Stephen Sacks (1972) has looked into this possibility. 1/ Vanek believes that one of the virtues of self-management Yugoslav style is that workers are not immediately fired when they become redundant. (Vanek 1970) A prolonged surplus is handled through re- training schemes, often financed by the commune, and attempts at finding workers employment in other enterprises. A corollary to the above is that by dampening fluctuations in wage earnings, it reduces economic instability. (Vanek 1970, Horvat 1975, pp.233-4) - 20 - He found that there was increase in competitiveness (defined as an enlargement in number of firms for a product category) during the period 1954-63 and possibly a slight decline in the next five years. Part of the explanation can be found in the growth of the economy which was 53% in the first period and 30% in the second. I am not sure as to what Sacks has shown. He is, of course, unable to support the theoretical con- tention that self-managed economies have more competitive industrial sectors - I am not even sure how this could be proven. He himself admits that his "data deal with legally defined enterprises and do not reflect the creation of business associations or various types of informal collusive agreements which may have a strong effect on the quality of competition. Casual review of Yugoslav newspapers reveals a plethora of market sharing and price fixing agreements which are at least condoned and often actually encouraged by the government." (Sacks 1972, p.566) My'own information on the manner in which prices of industrial goods are determined strongly re- inforces the view that firms have every opportunity to collude under the benign eye of the Price Review Board and so far, the consumer councils are much too weak to be able to prevent price fixing. If these suspicions are correct, the Yugoslavs may have the worst of all possible worlds: plants . which are of suboptimal size, enterprises saddled with redundant labour; 1/ widespread collusion, cartelisation and price fixing.- 1/ To this, Wiles adds the capitalist malaise of excessive advertising. (Wiles 1977, p.135) - 21 - 'a) The Yugoslav system may exacerbate inequality between enterprises because it does not attack rents or quasi-rents. This is a point put forward by Wiles. A visit to Belgrade or Ljubljana leaves one with the superficial impression of a substantial skewness in the distribution of income, but I am unable to find evidence that income distribution (within republics) is giving rise to problems. e) Inflation. Not all the blame for the rapid increase in prices during the past decade and a half should faLL on the system of self-management, but its contribution has been quite sizable. According to Horvat (1971, about four fifths of the rise in prices can be explained in the rise of personal incomes above the rise in the productivity of labour. Given that there is no shortage of investment, one wonders how much of the inflation is due to the pricing behaviour encouraged by cartels and oligopolistic practices. Horvat's claim must be placed alongside more conventional explanations: excessive investment spending by the Republics and the Federal goverment; an overexpansion of credit by the banks. (Goldsmith 1975) Singleton (1976, p.286) refers specifically to short te=m credit 'Which the banks are politically obligated to extend to illiquid enterprises 1/ 2/ so as to enable the latter to cover their wage payments. 1/ I was under the im=ression that it was the commune which paid the workers when the enterprise was in distress, but it may be that the commune does so indirectly by leaning on the banks. 2/ Laura Tyson (1977) tries to show that cost push factors - more speci- fically a rapid increase in wages - had inflationary consequences which were as important as those arising from a growth in aggregate demand. - .22 - I am unable to dredge up any significant economic advantages of introducing a system of self-management, at least from my sample of one country. I discount Vanek's crude econometric attempt to show that "the rate of change of total productivity is somewhere in the order of magnitude twice as high for Yugoslavia than for the various observations stemming from the capitalist system", (Vanek 1977) It is terribly easy to obtain the results one wants by fitting the production function he is using - and it is rather meaningless to go through routines that have been so tarnished. He has also found that the Yugoslav rate of accumulation was somewhat higher than in the other countries included in his sample, but the overall per- formance was ccrparable to the market economics. Vanek is at 'pains to point out that Yugoslavia did not do better because of distortions in L/ two prices (rate of interest and foreign exchange) . He manages, somehow, by force of belief and diagrammatic manipulation to arrive at his foregone conclusion that "the laborer managed economy appears as a superior performer to the other two market systems". (Vanek 1977b) The other argument - which originated from same earlier work by Vanek that because labour managed enterprises retain redundant labour, they minimize fluctuations in earnings and in effective demand. This prac- tice supposedly enhances the stability of the economy. There may be many other - 1/ Of course, market economics never suffer from such distortions. - 23 - advantages stemming from this policy but I do not immediately perceive its superiority over the more traditional devices of unemployment compensation and countercyclical spending, used in other countries. The advantages lie elsewhere* in the area of social relations. I have already stated rather briefly what these are, I will here repeat just the key terms using Jerovsekl(1975 summary of an earlier piece by Zipanov as my guide. Self-management is sensible industrial and social policy because it increases (i) participation in decision-making (ii) cooperation amongst Workers (iii) awareness of happening within the enterprise 1/ (iv) the efficiency of resource allocation 2/ 3/ (v) the workers sense of power. 1/ Workers control over investment decisions undoubtedly improves their sense of well-being but it does not always lead to good decisions. They are primarily interested in investment guaranteeing an immediate increase in earnings,more stable employment or better working condi- tions. They are less inclined to favour long-tern investments, or changes that would reduce the demand for manpower or investments in other parts of the enterprise or other areas of the country. (Kamusic 1970) From the point of view of long-term .development, there is little to recommend self-management. 2/ A discussion of the causes of alienation and the effectiveness of the self-managerial purgative can be found in Leman (1967). 3/ Broekmeyer offers some further advantages of self-management. "It responds to some fundamental human needs... people do want to be informed ... on how decisions vital to them are being implemented.... Self- management has provided a new mechanism for upward social mobility.... 11t7 has taught many workers some rudimentary notions about the struc- ture of the enterprise, the economy and society as a whole." (Broekmeyer 1977, p.139) It may have helped to bring about a smoother transition to industrialization and may assist in the process of democratization. He also lists a few bads. -24- As I have said earlier, many studies reveal the workers' approval of this system. There are also signs that reality, as usual, is still some distance from the idealised model of self-management and there are indications that even greater participation by workers in the activity of self-management may be unlikely. Firstly, the influence of professional management in the form of the director and the heads of the various departments within the enter- prise, rivals and possible exceeds that of the workers council.- The management dominates because of its special skills in particular areas of decision-making and its access to information concerning economic and political conditions external to the enterprise makes it difficult for the workers to challenge recommendations from that quarter.-2 In practice, policy is woven around the suggestions of the Director and other members of the Collegium. Rus feels that "the domination of managerial personnel. over self-management organs is strengthened still more by the practices of local government bodies /who/ usually contact the directors or the managerial personnel... and through them, try to regulate relations with the work 1/ See Rus (1970), Koloja (1965), Zupanov aind Tannenbaum (1958) and the Economist (1971, pp. 22 & 23). A study by Josip Obdradovic, "Partici- pation and Work Attitudes in Yugoslavia", Industrial Relations, Vol. 9, February 1970, is sumarised by Wachtel (1973, pp.92-93). In addition there is the work of Bogosavljevic and Pesakovic (1959) Kavic et al, 1969, Raskovic (1967). 2/ The control of information by the technostructure is emphasized by Neuberger and James (1953, p.277). organizations". (Rus 1975)L Although the attitudinal studies are fairly unanimous up to this point, they diverge in their presentation of the views expressed by the workers. One set of studies reveal that enterprise members would like to see an increase in the influence of all groups other than management. The Workers Council has given its members a "feeling of self-administrationn but their decision-making is limited to the area of housing credits. (Granick 1975, PP-371-2) Having become aware of their relative impotence the self managerial bodies would like to see the situation changed. Surveys carried out by Arzensek and by Rus have produced very different results. The workers they interviewed felt they would like to influence working conditions, income distribution and the hiring and fiing of imnediate superiors. A small group showed an interest in production and sales policy. However, the workers while inclined to express their opinions 1/ Rather surprisingly given their de facto powers, managerial positions are not especially attractive. This is partly due to the impact of the prevailing egalitarian sentiments on the salary structure. Yugoslav managers receive financial rewards which are low in comparison even with other East European countries (Granick 1975, P.354). Further, there are no statusadvantages to being a manager, again, because of the nation's ideological predispositions. (Adizes 1971) Secondly, the managers bear a disproportionate amount of the time costs involved in attending the multitude of meetings which are part and parcel of the self-management - system. (Granick 1975, p.361) Broekmeyer stresses the same point- it -- has become difficult to find people to fill the senior managerial posi- tions in the enterprise. But their work on comittees is boring, repetitive, time consming and frustrating. (Broekmeyer 1977, pp.136- 139) Nevertheless, only a small percentage of Yugoslavs living abroad have a university or a high school degree - 3.3% according to Kolic (1972). If their numbers are declining it must be due to occupational mobility since an abnormal suicide rate has not been reported. - 26 - on these issues, were, not anxious to participate in decision-making and such participation was always at the bottom of their list of objectives, after such items as interesting work, higher eanings, pramotion and con- genial superiors. W2ile the workers seem to want to place limits on 3/ the extent of self-management, the executive personnel would like to expand their legitimate power and professional autonamy. If this is the way the wind is blowing, Neuberger and James think, that the evolving de- sires of the two groups may complement one another, "and represent a movement from the existing normative models- of self-management towards more conventional models of power distribution in enterprises". (Neuberger and James 1973, p. 281) 1/ The results of these studies are reported in Neuberger and James (1973, pp.280-1). They seem to be in line with Kolaja's observation that workers were often disinterested in going through with the tedium of committee meetings (Kolaja 1965). A very lukewarn desire to partici- pate was also evident in a study of Norwegian enterprises reported in Blumberg (1968). 2/ Jerovsek (1975) who also refers to Rus' work writes that "employees want to participate in determining their own work process - where their fund of knowledge and experience is greatest - but do not so much want to participate in decisions concerning the entire enterprise where their fund of knowledge is lowest". / Broekmeyer echoes the same note. People are becoming less and less willing to participate in interminable committee sessions, which generally take place after working hou rs and for which there is no financial renume- ration. Almost 3 million people, out of a total labour force of about 4.5 million hold a second job and this constrains their participation on meetings still further. Besides, the physical presence at the council comittee members must read the material on the subject to be discussed, prepase papers and form opinion. Little wonder that a small core of individualshas started to appear who rotate from one self-managing body to another and who are becoming the committee elite of the self-managing society. (Broekmeyer 1977, p.136) There is a brief discussion of the future of self-management in Denitch (1976, pp.178-84). - 27 - V In the preceeding section, I have sketched certain features of the Yugoslav economy, touching upon the complex and rather untidy cong.Lameraton of committees and social organizations which debate and decide on matters small and large. But this sketch gives no hint of how this system is made to work in a reasonably orderly manner. It stretches ones credulity to believe that a congeries of highly autonomous units, could mesh and coordinate their activities with just a little help frwm the Invisible Hand, so as to achieve an overall economic performance, which by world standards is quite respectable. What interests me the most about the Yugoslav approach is the institutional means by which the autonany of self-managed units is circumscribed, so that all the enter- prises taken together from an efficient economic whole. Those who harp on autonomy are missing four-fifths of the institutional landscape. By . concentrating on the structure of comittees within the enterprise, they neg- lect the machinery of implicit rules and finely differentiated levels of in- fluence which infuse dynamism into the basic, self-managerial bodies,limit their discretion and guide their decisions. It is my impression that a fascination with the self-managed enterprise has tended to divert attention from its institutional context. And it is the neglect of the latter which accounts for the surfeit of descripticn and lack of understanding which characterising research that has been done on the country. My effort here will be to try and point out gas of this nature in the best writings on the Yugoslav economy. I intend using some rather lengthy quotes from a nuboer of sources so as to avoid,as far as possible, the suspicion that I a deli- berately distorting the available evidence for some murky purpose of my own. I crave the readers' indulgence. - 28 - Twenty five years ago when the country took its f1rst tentative steps in the direction of self-management, it was apparent that an attenuation of the role of the bureaucracy would have to be offset by wide ranging social controls. "The solution, writes Milenkovitch (1971, pp.100-1) was sought in social control by the community, the forms of which were often complex. The political-economic system that came into effect with the 1953 Constitution had two bases: workers management of the primary economic units and political self-government at the commune, republican and federal levels. Government organs not only established the eplicit framewoerk within which the indepen- dent enterprises operated, they also exercised other,types of influence to that the enterprises were responsive to the interests of society. The linking of the interests of the enterprise and of society was accomplished in. a number of ways. These links foxmed an integral, although often implicit, part of the system. It is not surprising, then, that when many of-these forms of social control were removed in the mid-sixties, that the old problems of assuring the consistence of enterprise actions with the preferences of society reappeared." It was soon realised within the higher political circles that the limits of autonomy would have to be redrawn and the discretionary powers of the self-management bodies within the enterprise needed rei-terpretation. The philosophy of management which has since crystallised can be seen in some of Horvat's statements. -29- "Work collectives" he writes, "operate under certain conditions that are given to them as parameters for decision-making. Taking into account these parameters, they are led in their decision-making by their material interests. Precisely because the motivation for economic activity comes from material interests, bureaucratic subordination becomes unnecessary and real autonomy possible. But the satisfaction of some partial interests must not hamm other partial interests otherwise exploitation, which is incom- patible with socialism.will occur. Nhether the exploitation will occur or not and whether the decisions of self-managed work organizations will lead to economic equilibrium and growth depend on the parameters of the system." And the community organs are the ones bearing responsibility for these para- meters which he calmly glosses over. Later, he goes on to say "The functioning of this economic system is based on the assumption /that the enterprise maximize their incomes within an environment created by the government7 in which autonomous decision-makers behave in accordance with general social- interests.W (Horvat 1976, p.57) We are all social animals and what we do is socially conditioned but this is not the same as saying that we "behave in accordance with general social interests." I fear that the notion of individual autonomy is completely lost in this reformulation. Even the autonomy of the group becomes quite hazy, unless the "general social interest" is so vague as to give social entities wide discretionary powers. But such is apparently not the case in Yugoslavia, "Between the center and the periphery (work organization), five types of gravitational forces are active in keeping the system in equilibrium and the economic agen-s on the predictive trajectories of social interest. These forces are - 30 - information-consultation ties,market ties, economic policy ties, adhinistra- tive ties ... and political ties.... /The last7 closes the whole structure connecting the work organizations with the parliament." (Horvat 1976, p.57) Social interest is a notoriously amorphous category and the people who usually give it a specific content are the political directors of the system. Once again, Aorvat is sailing very close to the totalitarian alternative. It is very easy to think of the Soviet bureaucracy 'maintaining equilibrium' and moving economic agents along "the predictive trajectories of social interest." The residual autonomj runs the risk of being squeezed out by the ambiguity of these statements. When I turn to Milenkovitch, I find little reassurance. She points out that the enterprise is responsible to the society and this "responsibi- .1ity ... is secured by the joint political economic decisions. In part, it is secured by taxes and regulations. The enterprise operates within a frame-. . work of complex legal and fiscal regulations. The enterprise is subject to 1/Ward*is more explicit than Horvat. "The Yugoslav firm is subject to political pressure from several sources. Because it is often exercised informally, this kind of pressure is very difficult to evaluate but it is clearly substantial." (Ward 1965, p.646). - 31 - stringent financial controls. It must maintain separate accounts at the bank for various funds (amortization funds, workers' housing fund, reserve Sfund, current expenses, etc.). Fnds once set aside can only be used for the purposes for which intended. In addition, the federal auditing service periodically inspects the books of the enterprise to assure that all legal regulations are being met. Manipulation of the regulations governing enterprise accounting is a major policy weapon in the hands of the planners. Regulations determine which items are included in costs and which are resi- dual, as we have seen. Other tools are the specification of anortization procedures and the method of valuation of capital goods. .In addition to these explicit regulations and controls, there are other forms of social control less explicit and less easy to evaluate." (Milenkovitch 1971, p.110 ) The dependence of the enterprise on the commune enables the latter to exert its.pressure on policy. Wachtel mentions that the links between 2/ the commune and the work organizations make the latter fpotentially subject to substantial communal influence." (Wachtel 1973, p.82) And Milenkovitch 1/ The Social Accounting Service, which is a Federal agency, maintains direct administrative contact with the enterprises. The SAS acts as an inspector and a verifier and it publishes over 1500 different items of information concerning the performance ofthe economic unit each quarter. -It also serves as a source of information of monetary flows and thereby its activities exercise a strong influence on the govarnment's monetary policy and the nature of instructions passed on to the Banks. 2/ The comunne is often the source of investment funds and is the body which bails out a fi:-f in difficulties. - 32 - states that although the recommendations of the communal council "are advisory and not binding ... and the enterprise is under no legal obligation to accept them? the political and moral influence is considerable." (Milenkovitch 1971, p.112) I can feel the meaning of the term influence slowly slipping through my fingers but let me soldier on. Granick adds another twist. "By far, the most important reason for republic and commune influence on enterprise behavior is the informal pressure which both government and social organs at this level can place upon managers. Social pressure, including that of publicity, is important hexe; for example, this can be Zluite important in restraining the degree of disparity in the average income per head distributed by different enterprises of the same commune. Equally important, leading personnel of enterprises tend over time to move horizontally to similar-level posts in other organizations, and such moves are restricted to a considerable degree to the same commune, and almost certainly to-the same republic." (Granick 1975, p.349) Just when matters were beginning to appear a trifle clearer, Granick suddely does a backflop- the Yugoslav firm, he says, vehemently, is as self-directed as any capitalist enterprise - both are subject to government and social pressures and influenced by them. (Granick 1975,p.350) Nobody doubts the existence of these pressures in the capitalist economies but it would blur fundamental differences between systems if we were to say that in the U.S.S.R., Yugoslavia and the U.S.A., enterprises are influenced by government and society. This leaves no room for analysis and it ,completely obfuscates the notion of autonomy, of discretion and ultimately of freedom. Let me turn to the Trade Union. Some of the sample survey data suggests that it is assigned a low position on the scale of power within the work organization. One point of view is that the Trade Union merely explains the management's position and reconmendations to the workers instead of acting as their representative on the councils of decision-making. (Granick 1975, - 33 - p.372) Wachtel refers to a widely held belief that the influence of the Trade Union on routine operations of the enterprise is considerable. (Wachtel 1973, p.77) In the past, it seems the Trade Union "substantially influenced" the selection of members for the work council. The practice has apparently declined but Wachtel is not very forthcoming about the practical significance of decline. (Wachtel 1973, p.65) The Trade Union is not yet a toothless old dog because it continues to "play an active role" (achtel 1973, p.78) in inducing workers to accept the offical wage guide- line, which makes wage increases dependent on changes in average productivity "The unions incessantly propagandize on behalf of this wage guideline." (Tachtel 1973, p.78) And "they take an active interest in the relative shares paid to labour and set aside for reinvestnent in the enterprise...." (Wachtel, p.79) After this futile juggling of terms,.Wachtel fnally gives in. ?The amount of influence exerted by the unions has yet to be discovered and cannot be with the empirical research now available." (Wachtel-, 1973, 1/ p.79) The economic chambers, another obtrusive institutional presence within the firm's economic environment is as inscrutable as any of the others so far encountered. Naturally, it is forbidden by law to encroach upon the autonomy of the enterprise - in theory, all it does is integrate enter- prise plans and make recommendation embracing many areas, including wage 1/ The articles of the Trade Union are no help whatsoever. The statements can be interpreted whichever way one wishes. One construction could be be that the Trade Union is a toothless old dog; another that it is a cleverly disguised wolf. In Denitch's version, the Trade Union appears as an old dog beginning to turn into a wolf. He vrites, "The Trade Unions as an increasingly autonomous organizations, are pressing for more direct representation of the producers on the federal level and new constitutional changes provide for direct representation of the trade unions at all level." (Denitch 1976, p.133) -34 norms, where it works in conjunction with the Union. As Milenkovitch (1971, p.115) points out the powers of the chamber are not defined - they may "exert a stronger influence than official statements would suggest, Zaninovich, however, concludes that "both the Trade Unions and the economic associations tended to have their top-level bodies dominated by Party members, which in effect created an interlocking directorate between the Party and non-Party organizations. The result was to provide the degree of coordination neces- sary to counter any ill-effects that might stem from econanic decentralization. (Zaninovich 1968, p.81) what appears as coordination in one person's book may take the form of control in another. It is very hard to differentiate Zaninovich's statement from those routinely broadcast by various other democratic regimes in the Communist bloc. The desire to avoid the "ill-effects of decentralization" can take a number of forms - some of them 1/ are incompatible with autonomy and participation at their most anaemi A final word from Wachtel, whose facility with the tezm "influence" impresses me more and more. "In practice, the economic chambers fulfil this legal mandate in a variety of ways.' They have some formal power in price adminis- tration and they try to influence overall enterprise policy. They transmit national economic policy to the local enterprises and attempt via persuasion, to obtain conformity with .at3nal policy." (Wachtel 1973, p.85) Anyone 1/ Participation by workers is encouraged in the Soviet Union as well. "The Party elite," writes Porket, "is an ardent advocate of mass participation and every citizen has both a right and a duty to participate in the daily business of society.... In practice, the Party elite strictly regulates participation in management as it does participation generally. It re- quires active participation but permits only participation and organization controlled from above and rejects spontaneous and uncontrolled partici- pation. (Porket 1977, p.127) It is claimed that Yugoslav enterprises are more autonomous than the ones in the Soviet Union, what I am trying to show is that this difference if it truly exists is not preserved when impressions are translated into the English language. - 35 - who has spent ten years sampling the literature on the S.viet Union develops a dread for the word persuasion. I cannot complement 'Wachtel on his choice of vocabulary or on his skill in laying bare the dynamics of power and influence in Yugoslavia. The Yugoslav banking system has attracted attention ever since reforms in 1961 and 1963 removed the regulations that had made banks into 1/ mere conduits of the Federal government. Later, during the same decade their power became so considerable that people began to talk of financial imperialism with the Belgrade banks as the main culprits. As I understand it, a bank is set up either by a group of enterprises or by a combination of communal and business interests and the founders continue to exercise control over bank policies. Given their associations, banks are inclined to support the interests of particular groups within the economy (i.e. the founders) and under the influence of regional sentiments, they have not shoun too much initiative in doing business across republican boundaries. If I have correctly grasped the ground rules, then I am unable to penetrate the reality underlying thenumerous references to the power exercised by the banks. Listen to Granick. The heavy dependence of the enterprises on bank credit "has led to claims that they undermine the self-management of industrial enterprises by dictating business policy, mastAminding appoint- ments of managerial staff and draining away profits ... through interest and 1/ Prior to 1961, the federal organs with the greatest direct influence on the enterprise were the banks especially with regard to investment. (Milenkovitch 1971, P.113) On the loosening of controls, see Vuskovic (1963), as well as the work by Pejovich (1973) and more recently Goldamith (197), there is a chapter in Horvat (1976)- part of a chapter in Singleton (1976) a book by Dimitrijevic and Macesich (1973) and brief discus3ions in a number of other places. I do not need to, fo.r mr Dur- poses, and I have not tried to summarize this literature. 2/ Only one-third of fixed investment is financed through the firms' own resources. (Granick 1975, p.404) -36- bank charges." (Granick 1975, p.Lh) Further, the power of the banks has increased their attractiveness for communal and governmental, as means of bringing additional regulatory pressure on the enterprises. Federal inter- vention takes a number of forus. (a) There is the subsidization of some kinds of new investment - the money being drawn from the various funds. (b) The 'influencing' (Granick 1975, p.346) of short and long-term lending. Since the National Bank has only a few tools at its disposal, (credit ceilings, the freezing of certain types of deposits) moral suasion is the favoured technique and in Yugoslavia, says Goldsmith (1975, p.82), it is "a much more powerful instrument than in market economies". Once again, we are confronted with a range of implicit rules and veiled power relationships which lie concealed just under the bland facade of self-management, Yugoslav style. To me, it seems that all roads lead back to the League of Communists which in a single Party state is still the main fount of power and the organi- zation directly involved in formulating long-run policy, coordinating economic and social activities and ensuring national unity. VI hen the decision was taken to adopt the ideology of self-management, it became necessary to reconcile the existence of the Party with the tenets of the new ideology - particularly the abhorrence of certain bureaucratic tenden- cies and the monopolization of political power by a single organization. In November, 1952 the Party 'transformed' itself into the League of Communists -37- and symbollically, at least, severed its connections with the administrative machinery of the state. It also adopted a progran stressing general guidance as against active control and intervention: or in the words only writers of manifestos have the courage to use, "It will be less an instrument of force and more. and more an instrument of social self-government, based on the consciousness of the common material interests of the working people and the concrete needs of their producing organizations." (Quoted in Singleton 1976, p.135) The change in the ideological climate notwithstanding the League strongly "influenced" (again that word!) the selection of candidates for a whole range of offices and in all the key sectors of the economy, Communist members provided the leadership within the uorkers councils. (Singleton 1976, p. 136 and p.147) The League no longer required absolute obedience from its members but this was the only evidence of softening. It is very likely that the 'influence' of the league over routine enterprise decisions declined through the sixties and this is borne out by the results of number of sur7eys (see for instance, Kolaja 1965, Wachtel 1973, p.80) But the rising pitch of the economic and political debate in the late sixties and early seventies which culminated in the crisis of 1971-2 (when Croatia came to the verge of seceeding) led to a reversal in the thinking of the leadership and a toughening of the directives issued to the members of the LCY. 1/ Wachtel (1973, p.81) gives details about the Party's membership during the halcyon 40s. Its current state is discussed by Singleton (1976, p. 301). - 38 - In August 1971, Tito gave a speech where he affirmed that "the Party is the main cohesive force in our country, what alternative force could hold it together. After the 1972 disturbances and the purges that followed it, Tito came out even more strongly, for a revival of the Leagues' vigour, a removal of deviationists and a return to the principles of demo- cratic centralism - a slogan covering two-thirds of the political spectrum. He urged that a more effective cadre policy was desirable so that responsible public positions were in the hands of true communists. "The LCY, as the vanguard of the working classes must become the watchdog guarding the self- management system against its enemies." (Singleton 1976, pp.273-4) The trouble with such watchdogs is that they usually intimidate the very people 2/ they are protecting. The current thinking seems .to be that for both internal reasons and external' political realities (Economist 1977, 28th July) self-management should not be allowed to get out of hand. Social institutions have not yet reached the level of maturity which would allow them to bring about the 1/ Referred to in Singleton (1976, p.294). 2/ There are again some signs that the Yugoslavs may have brought back the political repression which was supposedly abandoned once Rankovic had been dislodged in 1966. (Silberman 1977, Shawcross 1977) - 39 - state of affairs desired by the leadership. Hence the LCY must stiffen the peoples resolve, guide, direct, plan.- I have already referred to the fact that the state influences enterprises through the Banks and its own agencies. Members of the LCY workers councils, socio-economic communities of interest also help to promote the line favoured by the Leadership as does the Trade Union. A final avenue through which the influence is exerted is the management which 2/ as we know, is the most important determinant of enterprise policy.- I have already indicated that the Directors of firms are exposed to 1/ Singleton refers to a facet of the 1974 Constitution which needs to be highlighted. "For the first time since the war both the LCY and the a:my had their roles in the legislature machinery written into the fundamental law of the state. At the top level, the president of the LCY is exofficio a member of t5e federal presidency, and the situation is repeated in the republican and provincial presidencies .... LGY members have a strong voice in the election of delegates to the socio- political chambers.... The anny's role in Yugoslav society has been greatly enhanced ... and changes the status of the LC have iidereased the number of army officers in the governing bodies of the Party." (Singleton 1976, p.277) This may be simply a precautionary step to keep the enemies of the self-managed society at bay, but it would be interesting to know who the foes are, and the sort of society they want. I should add that since the reforms of 1974, the League has grown even more concerned about the moral-political-credentials of indi- viduals enjoying significant decision-making power, 2/ See also Wachtel (1973, p.70) where he gives details of self-management in the Rade Koncar enterprise. -40- pressure from the commune as they face reelection every four years. But other parties are also interested in the director. I quote Granick. "Political forces outside the enterprise have a decisive impact on the reelection: the president of the local commune council and the head of the commune Party organization are said... to have the last word. Zupanov writes that the importance of political backing at the commune level became increasingly important for general directors in 1972 and 1973 and without this, they could be forced to resign." (Granick 1975, p.364) The pressure which government and Party can bring to bear upon him, makes the directors position a highly political one - and his relative isolation makes him vulnerable. However, the Director himself is not generally an unresponsive, a political, individual. He is part of the Commune's political elite 'and as such is likely not only to have internalised at least some of the social considerations of this group but also feel under a moral compulsion to accept its heirarchy of values". (Granick 1975, p.364) I am sure that Yugoslav workers, managers and Party leaders have a very concrete idea of the implicit rules and institutionalised modes of behaviour defining the realm of the permissible. I an also prepared to believe that there is some content to the notion of autonomy which the Yugoslavs have distilled over the years and from which they derive much satisfaction. Since I have spent very little time in 1/ 7eljko Ris, rather disingentously claims that political organizations do not "fundamentally influence" business polic'r. All they do is 7influence the personnel structure of the directorial and self-management organs." (Rus, 1975) Obviously, Rus has to see Stormtroopezrith machine guns on the factory premises before he begins to feel that something is amiss. the country, almost my entire appleciation of the term has been derived from the writings of those for whom self-managment is a living reality. I have also glanced through a few of the documents where the formal rules of the system are codified. I imagine that the scholars whose work I have followed, as closely as I could,think that they have understood the manner in which enterprise comrittees function and their relations with all the other entities - social, economic and political. They may even have a clear idea of the limits of discretionary authority enjoyed by,say,the workers council or the BOAL. I have been unable to share their insight. I see the self-management bodies of the work organization ringed around by influences nobody has had the patience or the knowledge to define or capture. When a word is used too often, the life drains out of it as blood from a punctured artery. So it is with "influence". I think it would be an absolute waste of time to continue poring -over the Basic Law of Associated'Labour'(oi other documents) carrying out attitudinal surveysof limited scope, and trying to find the magic formula which will explain how the Yugoslavs invest or distribute enterprise earnings, when we know practically nothing about the implicit rules, conventions and socio-political undercurrents(lying at the heart of an institutional analysis),,which is necessary for an understanding of a complex social phenomena. In a review of a book by Caves and Uekusa, Bronfenbrenner remarked that it was about time that econcmists stopped trea- ting industrial organization in isolation but saw it within the overall social context. In the Yugoslav case, an attempt to separate the economic from the political and the social is simply ludicrous. -42 VII One senses an extremely comprehensive framework of underlying social understandings in Yugoslavia which prevent the self- 1/ management system from drifting into chaos: It is important to know how much arbitrariness lurks under the suspiciously vague guarantees of autonomy 2/ and the constant reference to influences:- In both the Soviet Union and in China, law has been the instrument of the State instead of being a protector of individual rights. As Sharlet reminds us, one feature of the 'jurispru- dence of terror' is its tendency "to posit loosely defined as against clearly defined rules. /These7vague or ambiguous legal norms /aenf7 the principle of predictability leaving a large area of discretionary space which in turn permitted arbitrariness." (Sharlet 1977, p.164) For instance, is there such an animal as "the right to influence"? If I am at the receiving end of' this influence, what is the nature of my right to resist being influenced. How often can I ignore various influences? Nhat are the consequences for me. of rejecting advice, of being self-centered or selfish? Who protect my rights 1/ Denitch tells us that all the institutions of Yugoslav society are dominated by a small revolutionary elite numbering no more than 1200 bound together by the wartime experience and a philosophy of economic management and social change (Denitch 1976, p.8). 2/ Michael Waller voices a similar concern in his review of Rusinow's book on the Yugoslav Experiment (Waller 1977). 3/ Buchann writes, "without some definition of boundaries or limits on the set of rights to do things and/or to exclude or prevent others fron doing things, an individual as such could hardly be said to exist. With such defined limits, however, and regardless of their resources of derivation, an individual is clearly an entity distinct from his fellows equipped with this set of rights, informed about them, and similarly, informed about the rights held by others, the person is in a position to initiate agree- ments with other persons, to negotiate trades, or in more general te-ms, to behave as a free man in a society of men." (Buchanan 1975, p.10) Nobody expects rights to be defined with a mathematical precision, but even with the Basic Law on Associated Labour by oneside , one does not know the limits of independence enjoyed by the self-managed enterprise. -43- to ignore influences, I find =anaceptable?- Take moral suasion - a term constantly used in connection with Banks. How far can a Yugoslav Bank resist the urgings of the National Bank? Suppose the answer is - very little, then, a second question follows; what is the extent of the pressure it can pass along the line to the enterprise? And when does this pressure encounter the steel of rights? We, then, move one step back. What institutions secure these rights and serve as the ultimate shield against "excessive" pressure and "too much" moral suasion? There is another source of unhappiness. A A recent article by Rigby states the following . "The Party sees to it that some scores of thousands of responsible and other sensitive pasts are res- tricted to its members that substantial membership levels are maintained in all influential occupations and that every work group has its leavening ef commu- nists. Intra-Party indoctrination and information programs, discipline and accountability procedures are employed to orient members both cadres and rank and file, and through them their non-Party colleagues, towards overall party goals and current priority tasks as defined by the leadership, rather than the special values and interests of the group concerned." (RLgby 1977 p.54) Party bodies "guide and check" the functioning of other entities using their "political judgement". (Rigby pd5) The Party is a "society-wide organization" which "seeks to mono- polize the socialization and moral guidance of its members", and permeates all other groups with "party members whose special indoctrinaticn, information and accountability sensitize them to the general thrust and changing priorities of the system." (Rigby 1977, pp.56-7) 1/ Experience in capitalist countries suggests that to counter the power and influence of one heirarchy an equally powerful offsetting heirarchy is needed. The self-managing firm in lugoslavia is exposed to the several organizations without any institutional or organizational evidence to indicate that it can stand up to pressure from these quarters. (Dahl and Lindblom 1976, p.259) -44- Rigby is describing the functions of the Communist Party in the Soviet Union, during the time of Stalin but his account could rather easily fit the Yugoslav situation. The LCY continues to claim poli- tical and cultural monopoly, reviews the moral-political qualities of individuals in positions of importance and has shown a marked distaste for heterodox ideas (Shawcross 1977). It is prepared to accept a measure of decentralization but only on its own terms. If the locus of decision- making power is to shift from the Federal Executive to the Republics so as to defuse nationalistic tensions, then the leadership within the Republics must remain with the members of the League (Denitch 1976, p. 131). The question which comes to mind is "If the Yugoslav system really is fish, then why is it repeatedly mistaken for a fowl." If mutual accomodation and com- petition between autonomous units is not the reality, .then why the coyness 2/ about a more-coercive means of coordination.- I have no answer. There is no dearth of economic analysis, but no one has bothered to probe the peculiar symbiosis between "influence" and autonomy. People babble endlessly about the joys of self-management rights, freedom, autonomy of decision-making, restoration of human dignity and so forth. At the same time, we discover that specialist managers are very much in control of policy-making and they, in turn, have to satisfy the LCY. Yugoslavia may 1/ A recent article by Vidojevic (1977) on the LCY is strewn with statements not very different from the above. For instance, he writes, "Within the /woekin7class itself it is indispensible to adjust steers and transform liffering interests, to increase the awareness of the community of interests and this function is discharged by the /CT7. This is one of the chief historical reasons for its existenceIt (Vdojevic 1977, p.61) This has a famiiar ring to it. 2/ There is concern for statist tendencies that have never exorcised. But writers like StoJanovic (1975) and Makovic (1975) for instance, never get beyond expressing their concern and talking hopefully how things ought to be. have found a device for temporarily arresting the spiral of alienation but until we learn something further about the implicit rules and arrangements by which the system functions, there is no way of knowing 1/ whether self-management as practiced in the country- , is close to democratic control in the liberal sense of the word for a meaningless autonomy within a political milieu of informal authoritarianism.2/ 3/ 1/ Ichak Adizes wonders if there are decreasing returns from placing more and more decision-making authority upon the shoulders of the general membership of an enterprise: A tendency which might well place limits on the scope of industrial democracy in Yugoslavia or for that matter any other country. (Adizes 1971) 2/ Denitch maintains that "the task of permitting the self-managing cells of society co assume increasing responsibility requires precisely that element of permissiveness and self-denial of control that the old leadership did not need to have." (Denitch 1976, p.9) As he has himself shown the old leadership is still very much in the saddle and since it is intolerant of permissiveness and self-denial, one could infer from the above statement that the self managing units will be- come autonomous when a new leadership takes over, but so far the ruling elite has resisted the spirit of the new ideology although ithas - gone through the motions constructing new institutions. 3/ There is no doubting the LCY's desire to be the "key factor in the social changes taking place in Yugoslavia". (Denitch 1976, p.83) Since 1974 the League's determination has grown further and I have indicated at several places that the attitudes of the Party elite appear to be at odds with the notion of enterprise autonomy integral to the ideology of self-management. But I would like to add that the some- what more militant views of the Party leadership need not seriously interfere with a trend towards greater autonomy because the instrument of control - the LCY - is beginning to suffer the consequences of middle age. Levin (1974, Ch. 11) writing,on the Soviet Union has des- cribed the declining effectiveness of the Party machine because of apathy, indifference and conflicting interests in the lower levels of the heirarchy. A similar situation appears to be developing in Yugoslavia, which may eventually sap the vitality of the LCY. This point has been made by Singleton (1976) and it is underscored by Denitch. "A Party of the classic Stalinist type when it took power, /the LCY7 has evolved voluntarily and consciously into the first among equals in a society with increased institutional pluralism.... Perhaps most critical has been the gradual withdrawal or atrophying of the func- tioning Party units in the working institutions of the Society and economy." (Denitch 1976, p.97) -46- VIII Once upon a time, the Invisible Hand was all that an economy needed, but we, who can see further than Adam Smith and the Neanderthalers of the last century, know that one Hand is not enough. About ten years ago, Hirschman found the Hidden Hand and offered it a home. A close cousin of the Smithian creation it never rose to prominence and nowadays is rarely to be found even in footnotes: the last resting place of a dying*Hand. Far more robust and successful is the Visible Hand, which is another name for the 'government or more accurately, those agencies of the government involved in planning and administering the economy.' Horvat ( 1972) is on good terms with yet another one of these friendly dreatures, whom he calls the "indirect hand". It is the result of "introducing the state only parially into the economy as an organ of economic policy", (Horvat 1972 ) In spite of their numbers, the Hands can still use some assistance in. the form of riagreement consultation and arbitration... a non-market means of coordination...- different from the administrative orders of the State." (Horvat 1972 ) I might also mention that this is a neighbourhood, shunned by the Hands, and the one,,hich to me,offers the most in terms of intellectual booty. People have wondered, occasionally, if it is wise for economists to limit their investigatibn to those areas of in which the suzerainity of the Hands is unchallenged. But very few have been able to cast-off the spell and the reasons for such weakness are not difficult to find. Research favours pre- cise and definite results - the more loose ends there are, the more people worry because these results cannot be used blindly. A further act of thinking, judgement and gathering information is called for. Research, which can assume some kind of 'limiting' device, such as a Hand, is favoured because it imposes situational constraints on the object of research and thereby -47- creates, what Latsis has called "a single exit decision". It restricts the choice of the decision-maker to just one possibility. Or to put it differently, it leaves the decision-maker no choice at all: his actions are entirely predictable. Latsis explains admirably the heuristic of the single exit approach and the researchers task. "Look at the situational constraints and the preferences of the actor in question. Look at the institutional technological or structural obstacles, given his goal. Given that the actor correctly perceives all these, they will uniquely determine his course of action. Then using the rationality principle as the trivial animating law you will be led to an explanatory argument which suggests why the actor in question did x rather than not x". (Latsis 1976, p.21) I think that there is some advantage to listening a little longer to Latsis as he explains why the single exit approach is so popular. "(i) We do not have to commit ourselves to any particular . psychological or social-psychological theory, because what we use is so weak that it is consistent with widely divergent views /on the above fields7; (ii) one can claim autonomy for on6s discipline- a description of the situation in the terms used by ones particular discipline is all that is needed to ex- plain the phenomenon in question; (iii) situational descriptions appear to be, and often are, more easily empirically checkable, than psychological hypotheses about the agent: (iv) the single exit approach often makes the application of powerful mathematical techniques easier." (Latsis 1976, p.22) The most useful feature of the model perfectly competitive system is that it allows us to think of enterpreneurs, who are ostensibly there to take decisions, without having to consider the possibility of their misbehaving. Perfect cometition is marvellous architectonically and totally ridiculous conceptually because it contains no uncertainty and thus, has no room for choice: it has decision-makers but no decision procedures, since the single course of action is unambiguously defined. (Latsis 1976, p.25, Loaaby 1976, Ch. 1 and p.136) The fina responds passively to speci- fAed market situation (Georgescu-Roegen, 1967), going in a robot-like fashion frm given assmpptions to the desired consequences. (Machlup 1967) In fact, micro-economics has become a device for effortlessly manufacturing results through the use of strong 'situational' assumptions. The very first attempt at doing rigourous economic work on Yugoslavia fell unthinkingly into the 'single exit' trap. I have in mind the article by Ward. Others rushed in to extricate Ward, but continued using the very same methods which had created all the confusion in the first place. Damar (1966), Vanek (1970, 1977), even Horvat (1975) were prepared to play the game even though the position and perspective of the latter, at least,,. made it quite unnecessary for him to go through the ritual obesiance towards neoclassicism. It is because of this obsessive search for testable hypotheses, produced by authorised neoclassical techniques that the analysis of the Yugoslav economy has made very little headway (Horvat 1971). There are innu- merable descriptions of the econmic structure, at hand, masses of aggregate data entombed in the annual Bank Reports, elegant little exercises in single exit micro-econcmics, a succession of sample surveys, characterised by a deadly sameness; and total silence on the dynamics of power, influence, managerial discretion, the actual freedom enjoyed by the individual deep inside his BOAL. Perhaps, my puzzlement stems from my inability to lift the semantical veil separating the Yugoslav.world from my own. It could be that the ontic chasm between the worlds is so wide that there can be no traffic in words such as influence and autonomy and freedom: I must stay locked within my language game, the Yugoslavs in their own. I do not wish to exclude this possibility, but my suspicion is that economists have dallied so long with the Hands because the discipline lacks the theories that would allow us to came forth with interesting conclusions in the areas of choice and decision-making, where we are required to take account of uncertainty, subtle shifts in social influence and a complex, fluid distribution of power. Shubik believes that ultimately ganes theory will have the answers,but so far, he has won few adherents from among the social scientists - the journal of games theory is still virtually unintelligible. Similarly, the literature on bargainning has not so far put out any green shoots. If we do encounter a detezminate theory, it is only when the decision-maker has ban tied hand and foot by assumptions, leaving him no choice but to obey the function prescribing the concession rates. (Coddington 1968, p.79) So far we have been able to define negotiation- without being able to use it to reach a coherent understanding of how committees work. One reason for the failura is that power cannot be accaodated. It is recognized, t7pologised and then politely ignored, with the result that bargainning scenarios have their Hamlet but the Prince of Denmark is absent from the gathering. The ability to impose ones will, to influence decisions, to win, rests on power. But this makes its tautologous nature apparent. The 1/ Zartnan defines it as a process of combining divergent viewpoints to reach a cammon agreement. (Zartman 1971, p.202) -50-, ability to win determines who has the power. Cross explains, "the profusion o0 conflicting definitions is due to a failure to distinguish clearly enough between a bargaining out come and a bargaining process.... A defini- tion of power, however, cannot contribute anything to an analysis if it is sim- ply taken to be synonymous with or descriptive of the outcome." (Cross 1969, p..17) There is a need to separate process frm outcome - not to think of power as a thing or a concept, but as an area of enquiry. I feel that one way out of this impasse would be to look towards the rules which control and modulate relationships. Games Theory has never again achieved the euphoria of the two person, zero sum days. Unique or even detenmiA.te solutions are difficult if not impossible to come by in many - perso, pasitivt sum, situations. The discipline appears to be slowly strangling under the weight of mathematical apparatus and huge costly simulation models. Meanwhile, theories of bargaining and negotiati6ns limp along, struggling to formalize a human process that by - its very nature is impervious to fo=mulaic treatment. Ix Let me try and pull all these strings together. We all derive aesthetic satisfaction from microeconomic techniques. We maximize a function and out pops a marginal condition, which has all the generality of calculus and algebraic notation behind it. A little more fiddling and we can extract sign conditions. All this without stepping out into the street and rubbing shoulders with the plebs. The thought of abandoning these techniques and the aestheticism which goes with them fills us with revulsion and just a little fear. When something can be leveled to the ground by assumption, - 51. - there seems to be no point in going through the agony of house to house fighting. If optimal solutions can be made to flow from the tip of a pencil, who would want to waste time snaring the rules by which people act; especially when these rules are often difficult to articulate, and even when captured in print evade precise interpretation. Single exit solutions are the playthings of a world where there is complete certainty or one in which all but one option can be excluded by assu:qption or admnistrative fiat. They have no place in our scheme. The purpose of research as I have hinted in the first part of this paper is not to distill convenient asswptions which will take us to unique and optimal 1/ results by the shortest route , but to find the range of possibilities permitted by existing institutions. These institutions emerged in a world of uncertainty and they suggest ways of responding to particular contingencies. The rules provide boundary conditions, but inside the doughnut there is a bole. 1/ On the question of optimal decision-making the ranks of dissenters continue to swell. Here are Simon's reasons. "For most problems that Man encountersin the real world, no procedure that he can carry out with hic information processing equipment will enable him to discover the optimal solution, even when the notion of 'optimum' is well defined. There is no logical reason why this need be so; it is simply a rather obvious empirical fact about the world we live in - a fact about the relation between the enormous complexity of that world and the modest information-processing capabilities with which Man is endowed. One reason why computers have been so important to Man is that they enlarge a little bit the realm within which his computational powers can match the complexity of the problems. But as the example of the travelling-salesman problem shows, even with the help of the computer, Man soon finds himself outside the area of computable substantive rationality. The problem space associated with the game of chess is very much smaller than the space associated with the game of life. Yet substantive rationality has so far proved unachievable, both for Man and computer., even in chess. Chess books are full of norms for rational play, but except for catalogues of opening moves, these are procedural rules: how to detect the signifi- cant features of a position, what computations to make on these features, how to select plausible moves for dynamic search, and so on." (Simon 1976, pp.135-6) - 52 - The size of the hole fixes the limits of the individual's discretionary power. In some countries, administrative regulations greatly decrease the range of choice, but even totalitarian regimes cannot muster the organizational resources which would be needed to extinguish choice. There are other countries which profess an ideological aversion to extra- ordinary organizational intervention; but nevertheless are strongly wedded to social goals. Hence, there is no inclination to allow institutions to exist and mutate as they would in a Hayekian spontaneous order, but to coordinate activities so as to achieve certain desired ends, while keeping administrative intervention to a minimum. There ranain a thin line separating coordination from arbitrary control. This is approximately the situation in Yugoslavia as I see it. I therefore, feel that it is pointless to proceed with as-if modelling, which assumes that the institutional structure generates 2/ a menu of choice comparable to a competitive capitalist economy. I cannot find any vestiges of the individualistic ethic, which infuses the more liberal minded spokesman for capitalism, or the thorough going autonomy of. economic unita,,which is still a not entirely farfetched starting point, for an analysis of free market systems. X Leijcnhufvud (1967, 1968) in his exegesis and interpretation of Keynes' writings, claims that a Keynesian disequilibrium is due to a failure of autonomous economic entities to coordinate their activities. When the 1/ Dahl and Lindblom (1976, p.264) havc argued that excessive efforts to coordinate, by bringing into existence a heirarchy of coordinating bodies, particularly in the executive branch, might diminish the independence of socio-economic units. 2/ Djilas fell into disfavour because (among other reasons) he wanted the country's politics to move in the direction of polycentrism, with the emergence of another.partly to act as a counterweight to the LCY. The Croat leaders, who were purged in 1972, felt that the Party should allow factions to exist legally and openly with the leaders of these factions rontesting each others views in public (Econanist 1972, Feb. 19). - 53 - Walrasian auctioneer is around, he costlessly aggregates and distributes information on demand and supply and thereby keeps all market activities instep. If this helmsman is dropped, for the sake of realism, the problem of divergent expectations creeps in. Producers and consumers, alike, fall prey to uncertainty: They do not know how others will respond to their actions.in the absence of forces that will coordinate all activities in accordance with some grand design. Everyone is not bound to a single set explicit rules as in the simple model of an -organization, but is guided by his own appreciation of institutional parameters, past experience and his conjectures of what others will do. (Loasby, 1976, p.189) The autonomy of the free market economy is qualitatively different from the self-managed one. The difference, I think lies not in the diffuse- ness of rules - a feature which prevents finely tuned schemes of coordination. Precision is not a distinctive characteristic of Yugoslav institutions either - the official documents are opaque to all but the - initiated. It is to be found in the parallel diffuseness in ihe expecta- tions and understandings that are coextensive to the rules and which serve to sharpen individual options in particular contingencies and thereby reduce the unpredictability of behaviour. As Heymann points out, it is the diffi- culty of "predicting consequences in an interactive context /which7may lead one or more of the participants needed for a jointly beneficial cooperative scheme to fail to see the pay-off from joining or to choose an alternative plan of action with negative pay-offs for himself as well as for others.'? (pp.817-18) He continues, "an ability and willingness to sacrifice part of 1/ In a free market economy, an additional impediment in the way of coordination is the absence of a well defined system of rights and liabilities, which leads to the failure of markets, and what amounts to the same thing, a blocking of theflow of information. -54 ones freedom of decision in order to. assume a predictable role is essential to most schemes of coordination. Once a decision has been made to partici- pate in such a scheme, many subsequent decisions are dictated in whole or in part by the arrangement itself; and full individual decision-making would violate the terms of the arrangement." (Heymann 1973, p.810) The free market economy is richly supplied with institutions facilitating coordination, but it is my contention that these schemes are not the result of any master plan, they often conflict and they do not, in general, give rise to the stabilized predictions of what each party will do or refrain from doing. Further, there is very little by way of a joint effort to reach a preferred objective. The market economy does not march to the drumbeat of ultimate goals: it has a sense for the means, but only the haziest notion of ends. Hence, the realm of spontaneity for each actor is fairly wide. (Heymann T973, Hayek 1974, 1976) I want to avoid creating the impression that Yugoslavia iaat- the other extreme, having constructed a master plan for a coherent institu- tional system, which coordinates the activities of all economic a:nits. If there is a Visible Hand in the country, it is an exceedingly shy one. However, autonomy within self-managed socialism, lacks altogether the aura of spontaneityr it is constantly under the shadow of social obligation. The formal institutional arrangements in-Yugoslavia are such as to gladden the liberals heart. Here is a country which has deliberately moved away from authoritarian, communist, stereotypes by distributing decision- making power over the working population and putting together rules which ensure that individual has a say in the management of his life in the work- place and the hapenings within his community. The work organizations have - 55 - been given law making power and their rights are so defined that other organi- ations can only attempt to infl.uence their decisions, not force obedience through directives. At first sight, the system of comittees appears as a triumph for human rights but it also strikes one as the most cumbersome and 1/ 2/ 3/ costly procedure for making and coordinating decisiFs. Che has this vision of an idea born in a BOAL self-managing body slowly congealing into a suggestion, finding its way into the workers council being debated in terminably in that body, tossed about in the Collegium the executive board of thw Workers Council, screened by the LCY, the Trade Union, the Politikal Aktive, Republican Agencies, the socio-economic committees of inte mst and finally, in a sadly depleted state emerging as a decision. On paper, the process is appallingly long drawn out. Suggestions could cycle interminably within the. camnittees, with the hnan frailities of comittee members as the only safeguard. In every interview I had in Yugoslavia 1/ Self-management goes against the grain of the entire neo-classical theory of the fim. There, the firm is a decision unit. People combine and accept a specialization of function so as to enhance the efficiency of decision-making. By erecting the BOAL and in theory at least putting the power to make decisions in the hands of the Workers Council, self-management turns the clock back on scientific decision-making. If self-management, in spirit as well as in the letter, is to sweep the industrial sector, our attitudes towards expert advice and the advantages of specialization will have to be . reversed. (Loasby 1976, pp. 132-5) 2/ On this and the trends towards participatory management in European countries, see Walker (1977) and'Garson (1977). 1/ I should qualify my statement a trifle. After all our commitment to the Invisible Hand as the most efficient device for allocating resources is partly a matter of belief. `Tiicient decisions even in the market context are not costless, and a con- certed effort at developing and using optimal decision rules can render the overall system suboptimal. (Hurwicz 1972) Furthermore, as Posmer (1976, ch. 10),Daly and Brady (1977) and several others have pointed out the procedures employed in the U.S. to handle market distortions either through the courts or governmental regulatory agencies are equally cumbersome. My point regarding autonomy, however, still stands. - 56 - the same story was repeated. Enterprise members were obsessed with committee discusions and I had the spooky feeling of having stumbled across a nation of dedicated discussants and debaters, who grudged sleep; movies, food, so as to be able to spend more time on camittees. It was clear that all my fine theories of games, bargaining and negotiation, all of micro-economics would never allow me to decoct a theory explaining how the Yugoslavs took decisions and coordinated them within a finite interval of time. I toyed with fatigue and exhaustion theories of decision and then dismissed them as being too sophisticated. Yugoslavia is not the Soviet Union,but coordination is facilitated by hedging autonomy, draining it of spontaneity, through ideological compul- sions and a web of arrangements and implicit rules, which the Yugoslav workers understand very well,but which the outsider cannot perceive. All these rules and the nature of the autonomy they bestow are affected by the flow of power- and the asymmetry in power relationships, which is there, but obscured by . ideological effluvia, the deadly legalism of official documents and the political climate which discourages pluralism inimical to the Party's unity and threateni g what Wallace calls, its "goal culture". - 57 - Conclusion It is in the spirit of this entire essay that there are no 'detachable' conclusions to wich I can point with pride. I believe that a coherent theoretical structure and the universal laws that gd with it,are not to be found in the social disciplines, hence no detachable conclusions. However, it is possible to say a few more words about the theme of this paper. At the very center has been preoccupation with coordination and with control. I have not attempted a typology of either though I have alluded to the link between control and power; I have worried over the boundary between coordination and control the possibility of coexistence and the possibility of coordinating activities taking on overtones of coatrol. The only way in which this dynamic can be perceived is by appreciating the manner in -&ich the status-of entities affected by such activities is altered. The most suitable indicator of changes in status is the limits to discretion in making decisions. These limits are to be found in the rules by-which a system functions - and not just rules. A rule is a statement naming classes of persons, acts, things and circumstances (Letwin 1976). The concern -with classes endows it with flexibility, it is also the source of an ineradicable uncertainty. A rule may apply to a range of particulars, and in each situation, the rule must be interpreted, keeping in the forefront all the details germane to that situation. To interpret is to exercise discretion. It can take two fo=ns. In the weak sense discretion can mean simply the exercise of judgement in applying standards, that have been set by authority. (DworTn 1977, p.32) When there are no such standards, discretion exists in the strong sense. The latter "is not tantamount to license and does not exclude criticism. Almost any situation in which a person acts makes relevant certain standards of rationality, fairness and effectiveness" (Dwozin 1977, p.33). If there is to be weak and strong discretion, then this must be mirrored in a gradation of rules and Dworkin's scheme, rules that apply in an all or nothing manner, give way to principles. These are standards other than. rules which have a bearing on decisions (Dwozin pp. 22 & 26) and have the "dimension of weight or importance". That is, principles can be raked and the ranking determines their influence on decisions. Can discretion be widened still further by moving fran principles to conventions, where the vagueness is of a higher order to understandings at which point the limits to discretion are stretched thin? There is no point to following the taxonomies of legal philosophers all the way-back to the 1/ institutional boudaries of society. 1hat is of greater interest is to look in the other direction. The point at which rules give way to orders, directives, commands and injunctions, whose purpose is the achievement of particular . objectives rather than regulative in a general sense. By specifying the parti- culars, the above category dissolves the ambiguity of a rule with regard to a given situation. But the very concreteness of a directive, also at one stroke, eliminates the discretionary element fran decision-making. 1/ Eeklaar has remarked These examples could be multipled but should be sufficient "that the gradations in the generality and weight of normative propositions are so fine that no real denarcation line can be drawn bet- ween those which should properly be called 'rules' and those which should be called ?principles'. Lawyers tend .to describe as principles those propositions which are cauched in tems of comparatively wide generality with a correspondingly weak directive, though these are also sonetimes referred to as 'general rules'. But general propositions, too, might precede a strong directive. These could be described either as principles or as rules". Eckelaar (1974, p.33) On the principles and conventions of common law, see Simpson (1974). - 59 - Practical workaday economic considerations aside, one last question remains. Why is discretion or the lack of it so important, especially when I as an econaeist can say nothing very convincing about the benefits of greater discretion for economic efficiency? Ultimately, it is a matter of values. What one chooses to study is something which is a source of concern. Here, the concern is for individual freedom. It matters, if we have a little less freedom and the loss takes on the dimensions of a great human tragedy when it is due to shortaightedness on the part of the few and a lack of vigilance on the part of the many. It is of interest to know what the Yugoslavs have been able to achieve by way of self-management. It is pertaps only right that I let Hayek have the last word. "The value of freedom rests on the opportunities it provides for unforeseen and unpredictable action; we will rarely know what we lose through a parti- cular restriction, any coercion, other than the enforcement of general rules, will aim at the achievement of some foreseeable particular result but what is prevented by it will usually not be known.... And so when we decide each issue solely on what appear to be its individual merits, we always overestimate the advantages of central direction. Our choice will regularly appear to be one between a certain known and tangible gain and th mere pro- bability of the prevention of some unknown beneficial action by unknown persons. If the choice between freedom znd coercion is thus treated as a matter of expediency, freedom is bound to be sacrificed in almost every instance." (Hayek 1974, pp. 56-7) - 60 - Annex I Chronology- of Economic Reforms in Yugoslavia Economic system of the initial postwar periods established in 1947 - essentially a copy of the Soviet system with a heavy emphasis on bureau- cratic centralization. Yugoslavia expelled fran the communist bloc by the Cominform Resolution of June 28, 1948. Decision to collectivize agriculture taken in January 1949. (Horvat 1976,p.8) Passing of Law on Management of Economic Enterprises by Working Collectives on June 27, 1950. However, workers management was actually introduced in 1952 following tkie adoption of a new law on planning. (Wachtel 1975,P.63) First steps towards economic decentralization taken in January 1951. (Milenkovitch 1971, p.68) Law on the Formation and Determination of Consumer Goods lifted price controls from non-rationed commodities. This was extended to industries under the supervision of local governments in March of that year. By September, the prices of most other consumer goods were also freed. The rationing of consumer goods was terminated during the first part of 1952 and in the same year the general directorates and the price control agencies were abolished. (Marschak 1968) In 1952, enterprises also given more freedom in determining the allocation of their earnings between investment and the inc=e of workers. - 61 - A marked increase in *the share of workers incar,ies was the reason behind a progressive tax on bonuses to wages from enterprise funds which was introduced in 1953. (Hilenkovitch, p.105) The rates were prohibitive b'yond a very low percentage of actual wages. The policy towards the distribution of enterprise earnings hardened further in 1954 ith the introduction of legal limits, set by the local governent, on the share of not profits which could be distributed to bonuses. (Milenkovitch, p.105) Price ceiliags were imposed on a number of scarce materials and semi-fabricates in response to inflationary pressures. (Milenkovitch, p.108) Interest charges were levied on capital goods in 195h; enterprises were permitted to sell capital goods to one another and in an effort to guide the choice of investnteat projects by protitability criteria a system -of investment fund auctions was set up. (Neuberger 1959) All this occurred in 1954. (Marschak 1968) Workers councils in the enterprises were permitted to fix labour norms which determined the income received by workers. It was hoped that this, would improve labour productivity. This policy was instituted in 1955. (Milenkovitch, p.106) In 1956, measures were taken to increase the share of income retained by the enterprise for bonuses or investment. The communal determination of local tax rates and bonuses was ended and the portion of funds paid out in bonuses was established by federal regulation. The basis selected was - 62 - the ratio of the distributed profits to total wages in the previous plus a small increase. (Milenkovitch, p.106) Incentives were strengthened still further in 1957 when costs were redefined to exclude personal incomes. Personal income now came entirely from the after tax residua3 earnings of the entemprise. Gross profits were subject to tax. Frod net profits a maximum of 50% could be distri- buted to workers. (Milenkovitch, p.106) The legal scope of the workers council authority over the enterprise director was enlarged in 1956 and in 1957. (Marschak 1968) In 1958, there was a removal of restrictions on the distribution of net profits to workers but a progressive tax or personal earnings as a share of total net profits was introduced so as to exercise a measure of res-. traint. (Milenkovitch, p.106) Compulsory minimuh wages for same categories of workers were abolished. (Marachak 1968) Enterprises were given some freedom in moving resources between the fixed capital and working capital funds in 1957 and the restrictions were relaxed further in 1960. The momentum of Liberalization increased in 1961 with the following reforms (a) The dinar was devalued, multiple rates were introduced, same quota limitations were removed and Yugoslav prices were brought more in line with world prices. -63- (b) The percentage of earnings retained by the enterprise was enlarged further. Progressive taxes on incomes were displaced by flat rate taxes so as enhance incentives. (c) The first steps were taken to make banks into independent profit making organizations rather than being channels through which government funds were disbursed. (Milenkovitch, p.123) (d) The enterprise was given more freedom in using its foreign exchange earnings. (Marschak 1968) The communAl banks took over the task of distributing short-term credit from the National Bank in 1961. Two years later, the investment funds of the federation, republic and commune were transferred to the capital funds of three specia1ized investment banks. (Milenkovitch, p.170) This was accompanied by an increase in the depreciation allowances of enter- prises. (The.enlargement of the bankst role is discussed by Vuckovic (1963).) At a meeting of the League of Communists in December 1964, it was decided to embark on a policy of decentralization and the constitutional principle of a separation between political and economic spheres. (Milenkovitch, p.175) First steps taken in 1965. (Horvat 1976, p.21) Aleksandr Rankovic, the leading opponent of liberalization,purged in July 1966. Reforms gathered steam. Overhaul of pricing system that had become encrusted with controls - many price controls were dropped and this facilitated a withdrawal of a host of direct and indirect subsidies. -64- (Milenkovitch, pp. 175-6) Other changes included (a) abolition of taxes on enterprise income. (b) setting up a network of investment banks. (c) a further accretion in the authority of workers councils and a decline in the political control exercised on them. A legal basis for this development was provided by the Basic Law of Enterprises (1965) and the Laws on Employment Relationships (1966). (Wachtel 1975, p.69) (d) retail sales covered by a uniform sales tax. (e) all limitations on the use of depreciation funds by the enterprise ±thdz-awn. (M) unification of foreign exchange rates applicable,to different sectors of the economy. (Granick 1975, p. 392) Economic units were set up within enterprises during 1967 so as to increase substantive participation by workers on self-management bodies. Their creation brought into existence a many-layered system of sel'- management at the entv;prise level. (Wachtel 1975, p.95) Reforms were instituted in 1967 to provide self-management institutions with greater depth. This involved the establishment of 'economic units' in large enterprises, creating in effect several layer of self-management bodies in large enterprises. Each unit has its own self-management organs including a Workers Council and a management board. (achtel 1975, p.95) - 65 - During the sixties, the attempt to distribute investible resou mees more evenly across the regions, in order to assist the backward areas such as Macedonia, Kosovo and Hersogovina, led to increasing tensions between the republics. (Lang 1975, Bicanic 1973, Ch. 9 for policy towards under- developed areas) Tensions reached a peak in 1971 when Croatia threatened to secede from the confederation. To bring the situation under control, the Constitution was amended in 1971 . The changes transferred more power to the enterprises at the expense of the republican and federal governments. 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Weber, Max, "Economy and Society", Vol. 3, New York, 1968. Wiles, P. J. D., "Comparing Economic Institutions", Halsted Press John Wiley 1977. Wang, Stanley, "The 'F-Twist' and the Methodology of Paul'Sambelsoi" American Economic Review, Vol. 63, June 1973. Wrong, Dennis H., Skeptical Sociology, Columbia Univ. Press, 1976. Zaninovich, George M., The Developrmental of Socialist Yugoslavia, Johns Hopkins Univ. Press, 196d. Zartman, I. 'illiam, The Politics of Trade Negotiations Between Africa and the European Economic Commurnity, Princeton Univ. Piress. Zupanov, J., and Tannenbaum, A., "The Distribution of Control in Some Yugoslav Industrial Organizations as Perceived by Memrbers", in Tannenbaum ed., Control in Organizations, McGraw Hi1,1958. DOMESTIC FINAICE STUDIES # 1. Resource Mobilization Through Public Savings: a Case Study of Turkey's Plan Strategy. April 1973. D.C. Rao. # 2. Decentralization in Yugoslavia: 1947-1972: Implication for 2onetary and Fiscal Institutions and Policies. May 1973. Shankar Acharya. # 3. Cross-country Data on Government Expenditures Classified by Functions. December 1973. Kazuko Artus. # 4. Interest Rate and Credit Allocation Issues in Turkey. December 1973. D.C. Rao. O 5. Tax Revenue Forecasting. May 1974. Kazuko Artus. 6 6. The Definition of Income in Studies of Budget Incidence and Income Distribution. July 1974. Jacob Meerman. P 7. Index-linking of Financial Contracts: a Survey bf the Staterof-the-arts. September 1974. Kul Bhatia. # 8. Government Finance and Resource Mobilization in Pakistan. April 1975. Woo Sik Kee. # 9. An Examination of Changes in the Retail Price and Taxation of Petroleum Products (July 1973-July 1974). September 1975. K. Saito. # 10. Fiscal Decentralization and Economic Development. November 1975. Woo Sik Kee. # 11. Guidelines for Incomes Policy in Developing Courtries. January 1976. V.V. Blhatt. # 12. Centre-states Financial Relations in the Context of Planned Development. - - January 1976. V.V. Bhatt. # 13. Review of Tax Incentives in Selected Asian Countries. January 1976. Woo Sik Kee. 0 14. Development Banking: Structure and Functions. January 1976. V.V. Bhatt. # 15. Economic Development: An Analytic - Historical Approach. February 1976. V.V. Bhatt. # 16. Subsidies of Major Malaysian Public Utilities. February 1976. J. Meerman. 0 17. A Simple Model of Budget Incidence. .February 1976. J. Meerman. # 18. The Definition of Public Overhead Expenditures and the Distribution by Household. February 1976. J. leerman. # 19. Consolidated Accounts of Non-financial Public Sector of Jamaica. March 1976. K. Artu #21. Aspect of Rural Savings and Investment, June 1976. M. Alamgir. #22. On Development Problem and Strategy. June 1976. V. V. Bhatt. #23. Resource Mobilisation in Developing Countries: Financial Institution's and Policies. September 1976. V. V. Bhatt. 424. The OPEC Countries and the 'Absorpti6n of Oil Revenues: An Essay'. October 1976. SBery. .- . . DOMESTIC FINANCE STUDIES 125. Public Sector Enterprises in India: A Descriptive Survey. October 1976. S. Bery. #26. Revenue Policy for Thailand: Incone, Sales and Property Tax. October 1976. W. S. Kee. #27. An Estimation of the Household Sector Savings of Sri Lanka. August 1976. K. Saito. 28. The Unorganized Financial Sector in Korea, 1945-75. November 1976. Y. C. Park. '29. Cbntractual Savings and the Mobilisation of Resources. November 1976. P. Shome. #30. Tax Evasion and Avoidance: A Crucial but Neglected Aspect of Taxation. December 1976. J. N. Sharma. #31. Aspect of Savings Behavior in Rural India. December 1976. Surjit Bhalla. #32. The Incidence of the Corporation Income Tax: A Fixed Endowment, Specific Factor Model. January 1977. P. Shome. 033. On Monetary Data and Analysis. February 1977. V. V. Bhatt. "34.1 A Program of Research on Finance and Development. March 1977. R. S. Eckaus. #35. The Determinants of Savings Behavior: A Survey of the Evidence. March 1977, K. Saito. #36. Some Project Issues in Indexation of Financial Contracts. April 1977. Shahid Yusuf. #37. Meeting Basic Needs in Malaysia: A Summary of Findings. April 1977. Jacob Meerman. #38. The Impact of Contractual Savings on Resource Mobilisation and Allocation: The. .Experience of Malaysia. April 1977. K. Saito and P. Shome. 139. The Commercial Banking Industry in Brazil 1964-1974. May 1977. Shahid Yusuf. 40. Enterprise Control in the Soviet Union and China: The Futility of Lessons. June 1977. Shahid Yusuf. #41. Bank Behavior and the Control of Credit Flows: Lessons from the Sri Lanka Experience. June 1977. J.K.S. Ghandi. `42. The Distribution of Public Expenditure for Education and Agriculture in Malaysia Methodological Issues and a New Approach. October 1977. Jacob Meerman. #43. Division of Public and Private Finance: Research Program and ':s Rational. October 1977. V. V. Bhatt. '44. Understanding Self-Management in Yugoslavia. November 1977. Shahid Yusuf.