Workers' self-management and planning : the Yugoslavia case

World Bank Reprint Series: Number 161 Cyrus Ardalan Workers' Self-NManagement and Planning: The Yugoslav Case Reprinted with permission from TWlorld Development, vol. 8 (1980), pp. 623-38.  World Development, Vol. 8. pp. 623- 638 0305 .750X/80/0901 -0623$02.00/0 O Pergamon Prcss Ltd. 1980. Printed in Great Britain Workers' Self-Management and Planning: Tbe Yugoslav Case' CrYRSJS ARD)ALAN 77itu Jt'orld BTank, [t'uhsl,iVoi, 1).C(. Summary. I1lie new con;titution that ug-oc;1a%vin adopted in 1974 provides an elaborate blueprint for a w nrkers' wlf-inainaged economny. One feature of the constitutional changes is fiat, in addition to continuing to 'trengdien thle role of workers in decisi)n-making, they s;irenvlfien the :ifil%tc lfor macroeconlomiic c -ordinaLtion and, spccifically, the role of planning. To reconcile the seemingly conflicting objeclik's of decentralizing and co-ordinating decision- making, a novel Form of participative planning was introduced. Trhe new system of self- management plinn`ntg. alilhmouli hlaving elements of central planning anc, indicative planning, is radically different from both. This paper, atter briefly reviewing the evolution of planning in Yug,slavila analyses the rules, procedures and tlheoretical premises of the new system of plan- ning- codified in 1976. Planning in Yugoslavia lhas uindergone con- metho(ds for or-anizing, and managing the siderable changes in the three decades since the economy. B3y 1 975 tlhere had been five medium- Second World War. These changes reflect the term plans, encompassing three broad planning gradutial nordific:tion of the role of the miarket, ph1ih1)sophlies central phlannii ing (1(47 1952), they also reflect the evolution of thought re- planninlg by global balances (1 956 1961) and, garding the comnpatilbility of planning an(d the for want of a better title, 'indicaLive' planning market with the (o)jective of (developing a (1961- 1975). The ConIstitutional changes of workers' self-managed economic system. The 1974 introduced yet anot0her system of plan- debate has centred on how to achieve efficiencY ning: self-management planning. in economic management and 'imultaneously The institutional changes in Yugoslavia con- to establish an :l'tective workers' 'elf-managed stitute an evolutionary process, not a set of economy. But the need to reconcile the choice unrelateu responses. Morew. er, the evolutionary of the system iwith the po.)litical realities of process has beeo dlialectical: institutional Yugoslavia has been equally important. In(leed chlanges lhave inmipinigetd on the performanice of the plural]stic clharaeter of Yugoslav society has the economiy, which in turn prompted further been a principal factor in determining the type institutional changes. Each heralded important of planning that wouldtL be a. ceptable. This new clanges in the system of planning and the paper starts with a brief review of the evolution dLegree of 'economic plannedness',2 Table I of planning in Yugoslavia between 1947 and s`Umnniari/es these changes by using a taxonomic 1)975. It then describes the p1IM111illg r11oceuTlres approachi that clharacteriyes planninig by its introduced for the period from i1976 onward, essential features.3 Thc first planninzg system After setting fortlh thie contours of a theory of was clharracteri/ed by its dletail, comprelhensive- sell -miman:ge nieTtI )plan ning, the paper - chllldes ncss. low degree of pa rticipationi by age nts of with a formiulation andl ivswssment of the theor- plalnning in plan fe rnulation andl strong com- etical undlerpinniings of the new sykstem. mitrTiment to plan inlplenmen tation. As the system * Ihe vievs expressed herw are those of thet imtlhor anid 1. I'lAiNNING, 1'47 1'7 should not be aitribmted to the World 13ank. I lhave h1e-neited from many lielpfLl continents and discussions witlh mly colleagues. In particuilar, I would like to Ying upd:avia adopted new conslif ll"1ions in thlank Marli. n Sehirenk, B3asl Kavalskv, Francis ('olaco, 1)46, 1953, 1963 andI 19)74;eachiforeshadowed Vinod l)ubey and B3ruce Ross-larson for their time the introdil i ot hn of a llew constellation of and encomraeencnt. 623  624 WORLD DFVEYLOPNIFNT evolved between 1950 and 1974 plan detail andl abanclon central planning.? I'lie break with the coverage were gradually reducedl, as was the Communist Informa(tion Bureau (Corninform) conlin1ittlrLiiL to plan implementation. These in 1948, however, illitiated a search "or a new changes reflecLed the growing market orien- system of econonlic minangemnerrt tihat would tation of the economy, the growing decentra- entirely disregard the Soviet niodlel of planniuig lization of decision-niaking and the increasing and be uniqluely Yugoslav.8 worker control in the mnanagement of their own affairs. The 1965 reforms brought about a sharp shift in this direction, Planning could (b) Global balan ce Planning.u 1'956 -196 1 not be readily reconciled with the thrust of the new econiomie order. It consc11.cLU ly becam-ne After.having Hiscarded cenitral planning andl essentially in d icaltive, playing only a liitiiedl before the adoptioni of a new system in 1 956, role in the allocationl of resources. The Ntriking the economy was managed on an ad loc basis feature of self-nianagement planning is that, through a system of annual plans.9 The main despite being comprehensive andl detailed with objective dluring this period was to finislh proj- a strong commitnment to impiencntation, it ects already starite( (during the last plan )period1. is conceived on the basis of nmarket relations During this creadtix' nlase of redCefining political and fornmulated with wide participation by all premises, a return to the original tenets of economic ag.'. Ls in the country.4 It represents Marxism led to the conceptruli/ation of two an attempt to reconicile plainning with the mar- guii(ding princioles for the evolution of the ket and with the principles of workers' self- system: 'self-rb.-ageunent' by the prodUcers management. It strives for a de:ailed ex an2te co- and 'socialist coniniodity production'. The ordlination over the medium germ, based on a 1950 law on the managemeint of goverln1mlent grass-root consensus, with a legal and maoral enterprises and economlic associations bly co01mmitilIment to plan imnplemeintation. The new workers' collectives intro(ucedl the principle of planning model is not only new for Yugoslavia; self-nmmangenicnit to the system. It was the first it has no apparent parallels in other couintries. step in providing workers with participation ill the ianage merit of their work units. In prac- tice, however, %voilkers' coouncilk ieniained for some time subordinate to managers, wlho as a (a) Centralplula/imiii 1947 1952 rule were appointed by andL rosponNible to the state. Thle principle of sociali'I commodity Yugoslavia's first system in planning was an production was first prop.1g.ated by Kidric extreme form of central planning based closely as a model of dLeCe1traliied mnarket socialism. on the Soviet model. The law on planning was It provided the ideological rationale for em- passed in 1946, and the first 5-yr plan period bracing the market mechanism. By 1953 the started in 1947. All decisions were to eniallalte new prinCilples hiad firmly Liken root. The from the Federal Planning Comni.ssion witlh 1953 constitimtioin, in con trast with the 194f little discretioni or feedback from production conistitoLtion . stated that social ownership of thie units.5 In Kidric's words, enterprises: rne.mns of produ.lctioni and the sclf-government of working people were to constitute the basis had virtually nolthing to plan, everytlinlg heinm of Yugoslavia's social andi political systemir. planned from above. The enterprise collaborated it Yugoslavia adtted a new sstem of plan- is true in the claboration of operational plans that Yugoslavia Te a new tem of plan- these plans depenided directly on the basic plan iring in 1956, The 1951 law on the planned which were ldictated from above and in great detail, u rrangeeilnt of the ecotnomy foreshadowed its by the state apparatufs, that is to say by the bureau- a(loptioni. tUlnder that law the IFederail Ilaninini,g crats.6 Commnmission became e the :ederal Planning Bu- reau . and 'state plant niig' hecaJIII r Mocidl planll TheA planning systern included provisions for 10- ning' with increased consultation and partici- day plans and directly controlled prod net on of pation, Central pluirning was to be the plainni,n sonim 1 3,C00 comiinoi(liies. The basic ohiectives of basic pio}lOl(itiors : notialY the rate of ac- of tlhe phi. were to overcome the general CeItila 3tion, the dist rihim lion of investriemn economie and technical backwardness of the resources tlirou^ghI the feder.il General Invest- economy; the growth of consumption was ment Fund andl the share of collective conI- accortded a low priority. 'lle uISefulness of suni1ption. These basic proportions were then central planning, given YLugosl-via's low level used by the Federal Planning B3urealu to fore- of development, may not have spent itself cast sectorail growvth rates. Such 'fulndamenltal' completely when it was decided in 1950 to planning was the responiibhihily of the state;  taJIlc I L-")i olin 01 Pla,InIngI III P")SI oar I ugWatli aQ taoi.. tG i,iii approach entral lilaninine (dohal blamttes plannine, Indicative planninp Self-managemnten planniny 1947 195 2 1956 1961 1965 1974 1975 onward (hr plan l1erdiiiit~ pl an Short-trotn 'lediunin-terni Mediuiii-termi Mediumn-term c vo,Ile .1 plan I utire ecoInoniv Mac roi-conornic jagtregalc's Mtacroeconomic arets I nitre economy -ln ier ,,own i n,cl tomplele (omptete Low highi P'lan -i rx7co ,IO 1w 0 i . ii I imaterial, Complete Nvnii N'onc' fliLh tor raw materials and I e-l it- detail int plan \ en iipecilicAll sectors Aggre-gative hfighly aegryeyative Seiinte,redioiate odse:,t I oistruti.l,i the plait1 > I ster.t or 1,rtistipoin I, enterprise- I osLow I ow Iltigli I \icnt -it participatin by -nte,rpriscs in thle co,nStruction jil the investlitnt plan I ow I o)w lo Ilgl kind ,i part,iciation enterprise-. Provision ,tIi iviji in Provision ol intormation None Autlior,tly to initiate proposals PULn inmplenienutaiinZ lmplenivitnatnii miitpulviir Ibrs-oio-political Compulsory lor socio-political1 Compulsory tur sucio-political Compulsor% bor seoipolitical ,;olttiunittiies and crnterprises coiminunities and enterprises commtinities ominnunitie, aiid .ntcrfprisvs t Men liiiinienlati n D)irectisus Dlirectives %1lanipuaiiiin Social conpac:ts and selt- iiana.-Cmtent ag,rcements, or. it abr-tated. 'oial and ennicpenaltiesZ Numiber and dctal it i ie-,r piAraitietr% I I eli Iligli Io IbC Ientite- plani adjustme-.nt m~:ciiiii togStrong Wkeak W eaik %miir,e Adapted tri-m Ilerhert S. levine. (On conparing planned couni,mies', in Ale\anrtler I ckstein led Ciw iiparison oI Lionowuc Sist,ins lllerkeley rt.nmsersiiy vi C aifiirnma Press. 197 11. pp 1 37 1601 \.-te I nless ,itienxisc indtcattd. plannine is taiti by siicio-politisal ciinmuniiies. Ilhat is. by governmental bodies Such planning integrates thec planning- b\ enterprises to yaisinu dere tee. Os e'.i  6'6 W()R LD) DEVELO PM L Ni' enterprises were to have plans based on these abanloning of the General Investment Fund basic proportions and on market signals.ll To between 1963 an(d 1965. It partly rellectedl an facilitate the use of the market, steps were economic dlecision to encoujrage a more rational taken to create a uniified price structure and distribution of investment. But it may have also adopt a more rea1listic exchiange rate. The been a reflection of the increasing difliftilty of introduction of the ntw planning system co- achieving a consensus on the regional an(i incidied withi incre ' (} emphasis on the growvth sectoral dist ribUtioll of illesltale Ifund3 andl on of consumptioni. ' toslavia's economic per- national objectives in general.'3 Ftirtherimore formance uindler the plan for I 957 1961 was the system of investnient pl,rnniing was tliltictuilt sICCesfuLll in relation to the objective.; set: all to reconcile with gLrowiin a err ;is on workers' ol)bjctives were :IcliieC vd in 4 yr. setf-managenment and the use of the i:irket . (e) 7'Traisitiotn, 1961 1965 (d) 'Indieati ,'dunn in, 1965 1975 Thie success of the secondL S-yr plan ')rought Thle 1 9(5 refrm0Is gave considerably greater with it a drive for furthler changes in the systemii substance to vorkers' self-managemient by of econonmic inanageri-rnt. TIhe notion of self- reduicing the control exercisedl by state organs mnanagement, initially very general, had slowly on enterprise dIeCisioll-ilrakinig. Planning in been filtering from the realm of vision into Yugoslavia beeamiie esientially indicative, P'lans practice. *Trhe scope of central decision-making were to provide forecasts, est:iblisil a hasis for ha(d gradually declialed-, the auItonomyl) Of rational decision-irraking by enterprises anti set ertcirises had increased. In resource mohiliz- forth the objcivetivs to be pursued byh govem- ation and allocationi the formier continlue(l to ment througl non-adriniNt ra ive instrumenits. donminate; in day-to-day operations the latter Ihe social phaius prieparred hy the federal and gradually gainieed ground. By 1960 the practical rePUblican plan1ing instituItes were in(licative questions about the respective roles of enter- in the sense thalt thley didi niot imlpose legal or prises and the state, of the market an(d the plan, mandatory obligations on enterprise s and banks liadl inLlCasillgly become focal issuIes. In 161T in tile social sector. Thle only comoipuilsory three reform measuires were introduced to aspect of social plans was that, wien accepted, inerease consideraLbly the role (of the market.'2 they becanie directives for sociu-political Yu-iosl;,iiai opened its economy to worldi mar- comniunities, the Yugoslav ternm for politicali kets, 7eoroani/ed its financial systemn and units. With the exceptioIl of the Federal Fundl relaxetd controls for the determninatiun :f for the less dleveloped regions, investlclnt wages. The preparation of reforim mIeasURe decision-making Wvas passed on to the nirarkaeL nevertheless was instifficienit. their imnplenlirei- thironugl the estatulislhnent of sel f-managed all- tation, too hasty. plurpose banks. 14 The ensuing conditions increasingly necessi- Tihe basic premlise of the indliLative sy'stemll of tated ml hoc policy ine;asures. first to raise the .-nangeruen t was thiat enterprises, by rn:mximini/ing level of economnic activity, then to control their incomie, would further the general interest. intlation. Althouigh annuial plainig ConltilnueL Two elemienits were required to make that the medliuim-termi plan for I 90 1 16i5 liad to system operate efficiently: a stable macro- be abandonedi in 1963. I'lhe economIlic diliicult- economic environment for in(liviutial prd(tLTIurs: ies of the perioni insltigated a national diebate andl appropriate miarket signals. This new sYs- over whether the sollitiomi lay in ftnrthier liberal- teml of econonmic m:inage menrit lidl lot live uil) ization or in a returin to greater central control. to Yugoslav e\pmect.lonus: the econm.cic per- Plarallel to these diNcussiLins. antd to tile attempt l'onicaice was dkisappointinglt; emerging social to arrive at a viable eisensisus. a new consti- and politiCal developments tIh e:m tIcued tIle tILtiLon was pronitilga ted in 1963. A 7-yr plan legitimacy olf re' rs' sel f-muarr;g milen t alle for 1064 1970 was prepared as well, but it socialismi. After 1965 tile ecLon1 1y cx1li1)ited had to be abandolled when major econoinric considerable cyclical hlela vi (U , with ucLnodii)(liL reformis furthier liberahliieCd tiIe systelIl in 1965. balance-of-paymiients difficulties, stop-go poli- Thus, between 1961 and 1965, there was rio cies arid growing irillationar) pressure. In ctiectiCf 11ed,liriu-terni plan. The changes to tle addition, stiutriL mal imbalances appeared. Al- sy-stemi, their reperciussions on the econoruy' and th0ou.gh it iS dliffiel lt to sp)eul.te about causes, the resulting needl for short-term management an important factor seelnis to have been the preclude(l any attempt at iiieditimil-term plan- conibination or an iniperfect markct witn ning. 'I'le key innovation of the period was the instruminents of economiic policy that were  WORK FItS' SELI -MNlANAG, :Nll'N'I' NTANf) PLANNING 627 inadequate to lacili tate the smioothl manage- that are binding for all (lecision-mi}akers. Al- nient of the econ)my, AII economly at the level thougli the 1976 1980 plan was formulated of Yugos1'ivia's development still required sonme only in part on the basis of thle rules and pro- form of long-term mancroeconomnic strategy. cedures outlinedl in satIh seqLtIellt paragraphs, the Itndicative planning andi the use of the mlarket 1981 1985 plan is explected to follow this could have provided for such a strategy, if the formulation closely. instruments of economic Pt,licN at the disposal 'ITle 1 976 law on planning o1.n iIine.N the basic of the state were sufficiently strong andl precise. principles of the new systel.16 Although the Yet one of the prinicipal effects of the growtlh law provides a deelailed catalogue of the pro- of self-managemient was the %%eaklening of the cedures at various levels of planning, it (toes not conventionial inistruttieitis of ecOnomrtic policy indicate any hierarchly in planning.'7 Thle basic avail:l'Ic to the sta tf. Consequently, this characteristics of self-managemnent plannilg can considerable redtuctio.i in the sco)pe of available he summninarized as follows: ins5trumeitnts impSosedi .1 dlemma on'll thle econ- iiistriY ientoos iniposed a ulleiiitls to tleal I tzcon (i) Planning must involve all planning agents that nay; oobfewtinestis, all organizations that are affecteC by the de- mlany obectives. cisions to be madie. (ii) 'lanniing is to be im ineoal1y carried out by all plannling agents at all levels. Mlicroeconomic 2. ('CON(ETTS ANI) PROCHL)IJRFS OI: planning within and among enterprises is referred SI' LF-MANAG( FIFlNT PLANNING to as sclt'-iin.aein eat plarning. Macroeconomic planning witlhin and among governmental biodies is A numliher of' constitutional amendmients referred to as social planning. PIlnning is thus con- were ptassed in 19v7 1 ,eadige venltulally to a duicted at the level of the basic or-anizations of new czonstitution in 1}74. The news coaIst itat i;on associatedj labour (B() .\ Il, tihe smallest leatllv dlc ii1t m economic unit producing a miiarketable hias hiad far-reaching ef'fects biy changing nearly o a:i otne pt ~vrmna oisa ,}11tlilt1i: It COt)tliu tllUe tol a} overmnlental l0odies at all legisla lion azit'eciing the economic systenm. Or the feeral level. particutlar in poit aice has been the introd uction i) I Fhere is an obligatory exchaIITIge of inl;Oriniiii of' a ntew systlm of' planning. A numiber of by all economic units on thieir plans and ecurrent nmotives vmnderlie tlhis. Oine factor lhas been the econlomlic situation based On1 a pre(determiinled list perceived rneed to strengtlhen macroecononoic of indicators., jn,iangemneitt of the e-onomvy. A secondl was a (iv) ('o-ordination otf individual plans is leg.pal! revival of confidence in the need for planning, required for all sectors designated as priority see- whiclh gradually enmerged in the 1 '70s, Indeed tors anid cncouraged fl;r those designated as non- the view now is generally held that effective priorit% sectors. Thlei chambers of the economy act as a forunm for securing agreements on the adoption planninig must coimiplenmenit self-imianagement of plsn;I and their implelne nailIion.I9 Trade unions if Yutwosla% a is to avoidt econonic clhaos. Ilie participate in tIIe planning of incomI1e distribution. IIIanIIer in whiclh new instranien ts of econiomic (v) Ihle co-ordinatetd plans are eodified into legally policy, introdluced to strengtlhen miacroecononmic binding agreemients. 1I'lese are social comrpacts, alIM!dtanI1ecmeat, lhaVe been reconciled with1 proimi- which codif% agreements on Lencral policy and ises ol ss orkers' sel'-mange is of pi:rliicl,r pi iorities, and sell-management agreements, wvhich interest. The \ugoslavs hlave triedl to! iiotr1ltt stiptulate not onih agreements betwcen enterprises conterl thlrough workers self-matenaged instru- on specific oblig,ations and undertakings. but also mentr bledon widersp l cap.d ofstr, t'en:l]tiCs for failure to fulfill obligatioins.0 lvi) All affected parties must be consulted anid irkers, rather titan iapinosinig control thirouigh thleir agreemenlt secured bef(ore the conclusion olf state titter cLation. l'h1e syste m of setl-nage- a se1-llnan3ldtmeni agreement or social compact. meiat planting as it standis is a vividk oxamrple ot (vii) Ihe basic plan is the HitLtum-teriir plan. this. 'Ihlere is, in addition, a long-term plan to review l'lme new systerm o1 Iliimitiimig foreseen in the long-termn 0 iCIies and structural chlangte. I974 aami jut ion and codified in the 1(7() law lviii) The tlplaimminP process is a contillnlul one, witlI on pi ml ilii i, is r: d icalIN dillIt tcill fro al its annual assesstments of the P rot' mess and revisionl ol rs.iS nlike tle previous system tlhe plains ot respective economliic uinits. Ihle cycle preces fo.lir thet next niedium-tern plan, 1981 1985. based oin plans prelpa red by thle meiblbIiamil andi started in 1979. federal !I.lanning institutes, the new system re- quiiires the complete anld activkc participation of 'I'lie plaitlning process starts with the passage all doeL,iim-niakers. And whereas the previous of a law on the prellaration of the plan. This system was largely in(licative it was mand(atory document outlines the work prrogranitnie for the only for soeio-politicil cuimuitnt anities self- 1pre para tion of the plan, including not only the managemtie, it pltnninm involves legal mibligaitions timetable of event., and tfle plan period, but  628 \OR LI) DEIVELOW.lI NTr also a list of maximlum ind(licators that rnust be The process of co-ordination leads to the prepared anid a coimmiioni nietliod( to which all coniclusion of two tlJpc of legallv binding units engaged in the planning process must ad- iostrLunntcii. Social c.mllpaicts regulate tbroad here. economic issues and policies andl providle thc Plannigl thien commences simultaneously at ranimework for niore precise oper:ition.lly all levels. fhe plans of the socio-political corn- orientated ohligat[ions codified in 'lf-l.ia nag- munities, or 'social plans' initially pi ovide menet agreements.23 These self-lidnaerelllellt 'tramnework' plans outlininig their pureep tioim of igreeineii k regiLii te: all relationis within and hiow the ;qcononiy shlould evolve at a t'dirly between economilic ulnits suchil as imiedlimllil- and agerogate miacroecononmie level,21 Conversely, long-terni deliveries. trinslter prices, eritemia enlterlprises i(dentify their own ob ietives andt for distributioll ol income and the use of capabilities. I'he process of co-ordination is investible resotirees. Sc! -manag int agree- tlluis an exercise in e nsLUring Consistency be- nments are oundatfor% for the piiiritv sector. tweeni the individlual goals and objectiv.es of If the parties fail to reaclh igr einen I by thile enterprises antl more maeroeconomic national specifiedl date, governmenltal bodies canii in- consideratioiis. TIhle process is often called trodluce te nipor.iry measures until agreemenit coutiter planning' andl is viewed not necessarily is reacle(l24 as a process of resolving conitlicts but as a pro- I'he actual plains adiopted at the republican cess 'v%lierelv the same basic units, consisting of an(d tiltiniately at the Federal level are based on workers antd their reprcrenitatives, are forcedi to the social comiipacts andL self-management agree- view their development obiectives at differing ments rmached by the various economic units.25 levels ot aiggregatioln. By tdoing so, the various In this sense the planning system can he viewedl work ori!.inii, ti oii are obligedl to consider as pl:n ning fromii below. Il reality., hwe'W er, tile broaler olbectives and to .ippleciate the trade- systenii is best viewedl as a non-hiierarcliical sys- off.s involveLl andl t[le need to assume respon- tern, because tle initial stages of plannnini are sibility flor deCisions takeen. One of the miiain condtucted at all levels simulltan1e1ously. features of the new systeni is the large imanlda- tory exclhange of' comparable and( consistentl% complliled iniorniit ion between enterprises 3. ('ONTOURS 01 A TIlllHCORY OF SUL IF- (based on [lie mininmuLm11 list of inTdicators MANA( N I %lI NT PLANNING dliscuissedl earlier). Trlis will helpl to increase greatly the transparency of the economy andL The concept of selt-nii.nagenient planning mnake possible the application, of objective propagated in Yugoslaiavii providies a new systemn criteria in dlecision-makiilg. of planning both inl namle dad subsils ance. It To iacilitate this process of 'collnter plan - provides a genuine .atempt to d.e%elop a new ning', whiich would become synrnnugeable svstc in that woLuldl avoid tlle i tfalls of central if all economic units hadl to be simultaneously plan ining and circumllvent some of the ackntowl- involvedl, large 'economic c'iiiplexes' of enter- edged slihortcoriiings of the nmarket ni1eChansinl prises are createtd on the lbasis ot their vertical ill t[le co-or0diln:iiOll anLdl synchronization of and horizontal lin-iages (iiijnput Inltl[ut link- econoniic activity, particula rl) witlh respect to .ue,). Attemiipts are tlien made to co-ordinate intertemiporal resource allocation in a devel- ou ppl> and demiand '.. dlliin and between comri- opling coint ry.26 plexes. I'Linning is thus redluce(d Li a systei i ThIe Illkl erlying mnechanism of' sclf-manag - of 'nt'el. irk p1:111n1ning' condutietdc t A di ftrent I ment plia iing nevertheless bvars Co'ln,id erdlble leovels b) delega te, of' the parties involved. ` reselliblallne bluhrred more by dtLllt Ci L. '.s. in Ihle principal veliicles tor co-ordination are tellilillolohgy thani in ,lie pt nal iiat i i to thle A.iailnbei of t[le ecollorily to wlhiclh all 1 th eoretical cOnlelph deeklvoped ini tlle iieo- ente(r1riNke belong. literplrises are encouriagekl classical liti[iatoire, conecpt, s aboutt the coi- to mnake pi opo,.aIs on the basis of the vi,i liNi it diti o is il cessa r\ for (lie efficient (pe CIAt1j of Of P1i iCLc. fi Ine.aSe of' d is,.lorCLnllellt tlie p:r ieh thle . 0lllLun t, citi i eI c qo iii' ri iuii od f con cc rue are encouraged to su bmit their resource allocationis, as it relates to.l all' 'c,i li indlivildual P1 IL'LCt prolpousals for irbliiriimini. 'Ihle over (illt and ull(ndele conditions ol unce it a iintv. chalimber caninot legally block any investmenit A brief review of that literatire provides a proposa'l. II the cniterprise cannot acill,11c th use lii as \%elI as a better uiintcistandingp of its prToiect froIII its ownI res,i)Lllne li however,t lite theoretical miplicalloni.ii- clhinhier's evaluationi of the project can be Start with an abstract vision of the world.28 ipmtilln,t in dLetermiinling t[ie enterprise's access The restri tive assiiiiip ti'is of' this :il'strluet to L.' \ It d iiall fundS. vision will be relaxe(d in dtue coutrse, blut t ley  \VoR~KlRlS' SI LI-M-,ANAG;I- MlNi' .\NI) Pt *\NNING 629 are essenitial to hligh 'itlit the biasic f eatures ot forepoing t-el.ti it ins. TI'im co-ordination of plans thle in odde: in dImalg mi plannitnig cor-respondLs to (ii Iliere IS peCrlCtec o L pct11it iOll in both outptiut 'negotiations' in (lie f'orwardi markets. Social and I actor markets. comp;icpt.is ant.l selt-maiiiingenoinnt ,tgieemnc jiisO Giil I hiere aire nok e\ternal efl'ects. indivisibilities, dteliveries and criteria lor transfer prices are monopolistic tenidencies, increasing retuirns to) scale tiIil i t thle leglp ohli ipaIti i us that exist inl a or inc.oiie dkir iibut io problerm. fr IrwaI id market.33 ['hel tediotuS PiMi ces Of (iii I(lie timie lhurizon runis at thie end( of the ter- ShIiiikIIiiOiii multltileVel :1.1iloini., Wlit h lorilon- iiinal ~ ear oit the pilaii. tal and vertical co-ordlinaztioni, is in essenice an (i)teei oe.ie nteciioilI at temnipt to dieterminiie an implicit vector oh econormic at!ents (dccii ii-iit.kero operating. in theL iiiaketeqoIi b ii ui ini prices andI deliveries to all producers (vi there is coiiipl)ete participation I)N aIlt and conisumiers. ['lie type oft pr i'LeLtires existinig 00wacns i el iiiiae Ic planning, cani biest be cxii Ilic. only uicertainix is in,irket miinertainrx terniie d 'qul asi -forward markets'. L ike tforward arisinu tro ini inadequate hi Iritulm on about tilic miarkets, thev imipo-se legall% binding coin miit- behlaviour ot' othier economic a.c iit'. oitlier events mieni ts. tIinilike lorward ni,i rke is, decisoion-making can be prTedicted ss ithi certaint, is achieved thiii ihl negotiations, andi legally N'ext consider thle behaviour of the pre- binding obmli-:t ions are undetak-en only after all viotislv stvli/edI economly. Undet suich circumii- parties have r-eachied a coinproi tn s. Thei qIitasi- stances, the problle ii of'i c t iu resourice forwardi miarkets seek in principle~ to eliiiinate allocation ti.e. over thec plan period) canl ble miarket uice r a in t anid reduice risk by pt.ii ing, redutcedl to) one of dtetermininiig the .111pro pri: t e limiitedi knoledCLge. Theli potentidl gaini in allo- vector of f'it tire p iicc"s. ca tive eff'icienlcy over a cottipetitivc maiirket sys- Failure to dectermiine the .tpproju ite vector temi is evidlent. (Capacities nieeded f'or ;t rod otral ol prices wvill genecrally resuilt in unfu'tll illedi reasonis cant be crea tedi in timie andt be a pioxm- expectations, adi Z1IIstek '1 pitd t LI in and con- n i.itet tailored to d emanmd , I hius elimii na i tie thie sumpijtioni pl~iins, andk Illt" re-entry of' econiomiic p,Iit fall kof boiltleniecks andIL e\(. eSS capacity. Of agenlts inito the market %wit different price CoUrse, thie gainis in ci limpa rsion withi a miarket vectors. Th'lere will bie economic loss at eachi ecoronomy or ai centralkl p1t mmed econiomiy are stg:there is nio guiarantee that there will be a potential. Theli degree to whiichi they are realisedI cotive,rgetce Itiwa jrds, equiilibriumti pa.rticulaurly in Will deeidCIL entirely uploni the efficienicy andi a mionetiZedl eeomIOiiy.- 'Ihle econlomiic waste rationiality withi whichl planning is orga ni/ed cauised by thec miarke't uincertainity associated andi carriedi out, B3y IIeCeTSsity a good deal of wvithi this mechanism can bie alleviatedI by estab- learniniig by dloinlg must be invested over a long lishing forward miarkets for all commiiodities. periodI before that 1) tCIetidi LiCanl be fully1 CX- Thti et iriicallv all agents could I hrroagli nlego- ploitedl tiationi I 'ig. i' establish an e,idl thirili ii vec- TFhCtetiLt i:illy, if f'orward mti:rkett, are to tor of presenit andi fuiture. prices. TIhle forwvard resrilt in an opiitimal initertemiporal alloca itions of matrkets serve to brinig togetheor thie StieCiali/ed resouirces, the participatioin of all economiic knowled.ge of producers (stitppl\ I and cotisoitiers agenits is necessary. In piractice this wouild be (demand), thiereby priovidling all agents withl a formidable undertaking. A "igiCdl shortcut 0%. erIcL t in II' III oa i 0n onl prices, their lu iture would he to adlopt a system of groupl represen- inicomies andL the level of conistutmptioni for every tationi, Tbe goioap representatives s% titldl then -mit ii lit i t 1 ecauise expectations are Fully gat ther toge tlier att di 1.1e rent levels andi present sa sfetstp ltieqals demand, and marginal the pairtici patoy dlecisions Of t heir constitUents, rates of' substitution equlItial mrginat rates of I'lhe negotiations and operatio n of' the f'orwardi it 1iiat ' n. quilibriumn can be altecrima- miarket wouldl then p rOcCed tively chi,trae let i/elI by two sets of relations: In Yugoslavia, ext erisive part icip:t Iitn is (ii I'mrwal-d marAels It' only foDrward markets etinsue tf' risoiaiithed ctaotirn Bof Asic rg n'ii- exist twithi no goverinnvrit or arirl r.i itti . ecomotimic ain fascae aor(1( XL) h ag.ents eriter into bindinig legal obl`tions lirtuitli obliga itimn to plani by all BOALs ensit tes thiat the forward immarket miectianiisnii the smallest units withi a miarketable ouLtout 0iii t0 ,rti'c)'/iflCt If onily a goivernmiient exists il ireLt.I y p:rtrIicipn Ic in Ii~ oi niiig anid decision- (Ni dl noi forward niark-etl it can. heiicaiieb deter- ma1,king. It uILs all units can reveal tI hir individ- niine tIme vector of prices, and post thiese.3' (This ual Preferenmces, andi all eol)mni(mdities mutst bear could be ealled the *iiidieat yVe plan'.32- eXpliCit (even itf aICCOtunItinlgi prices. At the saninc TheII pI-hi 'ii c plS Of pi -i naei t'tlZIp1animing time it is recomgriit/Cd. that phlatnnin g cannot be bear, of course, a clear reSeItilia ce to the efficiently ciint.liCLet. by 50,000 or miore indi-  (I 011 WORLD DEVFLOPNII N'[ vi(lduall units. (Colseqtluenl1iy tlhere is a need t.a in- an(d forecasting functioni of the microeconomic tegrate BOAL s into larger 1nits. The constitution unit. The plann iers n must lhave at thieir disposal presribes in tegration into ihonizont[ally or a foreCLsting (Brokiriigs-l ype) mtlodel indtl a Vei t;iC -Ils linked units. This provides large consistenicy (Leontiel' input oullpult) itmlodel to blocks within whieli plaunning can be inore cf- check the feasibility of the projections. TIhe ficin th11 conducted. Furthermore, selt-miianage- first step in the process is an exclhan1ge of back- mlelnt a11 1u11ning in Yulgoslaviai is based oni such a gotiiind information on the currelnt setlting, SyStemI the nevW cc ru1tinlioil has int roLlhced a incluCLdinlg the most likely rninge ot growth rates. Ste})-WiSe SyStemll Of delea211t's to represent the Bidding thien starts at a point well witiinil tie views of their constituenits and to be directly target protuoci-possili iv frontier.3' I This accountable to tlhem or every dlecision. has Lwo advantages: first. there is greater cer- Ihle Ytuoslav systemn of Ilan nix^ing is simllilar tainty at such a point l(it is close to the reali7ed to eade's niotion ot 'tnetwork planning'.34 present sit u:itio"Ii4 ); second, thiere is a strong I'o overcome the prd.LIic.dll dlciut ilL's ot tindLel- incentive for partners to exchalnltge information t;1aki1ng a co1Mprelhensive plan, the central and to i:se the level of' bidding bhec,ause all governmlenit starts witlh a ir nis. eork plan', on parties are likely to gain. the hasis of wvhiicli elterp rises and local auth- Bidding sLirts by ani exchuange of infor- orities make their ow(n plans. There follows miation USillg tlle 'inuiMlcd vocabiliry' agree(e an idi,[mcsuncrl process with feedback loops upon. The miiroecumnomnic uinit miay use an uintil a conisistent set of plans is available at all elaborate economiic demnand foreca,ting miiodiel. levels. I lie samiie proLedure can be applietl Plauinei1s need not kIIow the precise struicture of regicnrll. , As Mleatie notes, this is not eom- the nodel buMt only its general toruui andl behav- mlnonily ur dertakeen iour. Ierat ions ensture. Iachl new bid timuist be lIiglie r than the last, otlherwise the parly in tist It is Iiis f'eatutre o dlecentralized fornmal anid in- pass keepiiig to the previous bid. Any bid form Al indicative planninm! sets of alternative pass, kxps a the c re itll bid. All bid -l. nr all based uipont more trr less similar repreSentS a firn; contract. All bidding has to be alternative en.iro.nnentl a terminated by a predetermiinedL tdate. W'ietlher rmIomiient is conspicuous by iathS which t thiere Will be convergenct to an economic op tinti is not clear. 13tut this may not be so ITlie actuial procedI(ures [or co-ordinationi lhave serious because the product iion-possibilil fron- been left extrernely :io tie and appear on the sur- tier may in reality be viewed1 as a nest of fron- face to be formidable. ltoweven. an interesting tiers. The parallels betweeni the planininiEg pro- model of how the system of planining imight tiers, each corresponding to a particuilar level operate in practice can be seen in Alhin.3" 1'he of uncertainty rathier than a single I ronlier. 'lle prohlem for Albin is one of devising a specific parallels between the planning. procedurrs pro- comnurniUlication systemi between the mnicro- posed by Albin andl thlose iuinler the systenm of economiiie units, which plan for their own pur- setlf-managnmint planning, are evitient. Asalready poses, ;nd tlle planning i[untlrisies. wlhich have noted, planning stai is withi an agreement on the their oWnl nNialcOec0I0 onliL' targets, to acilleve a inforniiationi to be pcro%ided and is folIo'.'d by a consistent co-ordintledt plan as close as possible general exchange of data and an interactive pro- to the frontict of production possibilitie,. Albin cess to reach a co-ordlinated plan. finds his answer in the logic of partnershlip bid(ling in contract bridge. P.artners iP a game 4. SELFI-lMANV.\(F 'Ml F M rl\N1NNIN;: of contract biritdg seek the optlinmuini coot ract AN ASS FSSNI I N I' tor the combined partnership resources by ; Wi.inging inforima lion on card holdings and ('onsidered in thie light of the stylized their relatliVe strengthls. I ighI-lCvel contracts pay econoiimy oiiitiiiied earlier, self-mi,in.i.geiient hig]er preminin is but carry greater risk becanse plan tninip is logically .pulpidinp. nd lan ears great thie% are more thli'flfciit to fulfil.3?1 promise. First, selt- f'nu a ngen:eln Ip. niung pro- In the same way, Albin suiggests that micro- vides an ex atnte general qtlilibriiunu solutionll eLCololll0ie uniits and p1mi).1n11ing authorities ex- wvluich, in principle, avoids thle uincertaiin pro- chanue inf tormn.ition on production lpwsSlili ties gress of the uncontrolled market's trial-and- throui_gh a process of bidding andi in this way error a( inistilnci t toward a general equilibnbrium.1 move the econoiy closer to its production- This solution enalcles the elimiiination of market possibility frontier.38 To do so a list of bidding uncertainly associated Wi lIt the inadequate variables has to be agreed upnn, that is, a 1knowledge of econonmic agen Is abouit the plans 'language' must be devisedl. These will be vari- of other ag,ents. In this respect sell.-maageumet ables that play a significant role in the obiective planning is sinilar to indicative lplan niiig andl  WORKER'S' SlELF;-MANA,(;I* 1 N'I' ANI) PLANNIN(G 631 central planning.41 But unlike indicative plan- no unit of accouint, and the pairad. that the ning, the plan involves legally binding obli- true value of knoWle0dge can be known only if gations; in this respect it is similar to central the purchaser already hlad the inhfrniatioin. planning. But, unlike central planning and like lUndLer a private cnter-prise systen, the free flow indicative planning, the plan is not imiiposed of inforination could cunsi.ticiably weaken the from above. Its formuiiilation is based on the foundation of in(lividual cinteil rihc, (animnal participation of all economic agents in the spirit') or create instability.5l Tlhe nattire of a economy and therefore avoids the pitfalls of ittLe commandl economiiy precludies the tore- having to determine the vector of prices tlhrouighi goinlg problem. Th'le state imposes its otUn 'ison, some mathematliecal model or through some andL the rest must obey. if the state lacks exogenously given set of objectives unrelated to sufficient information, it demands it. In a so)- consumer sovereignty. Mathematical models cialist self-ainangeentnt eciinoni% . however, the have been and remain ntotoriously inadleuaLIdte situation is different. Ilere is no Capitalitsti representations of the economy: thie neglect of class whose sole pUrpose is to bear risk. Prop- consumeresovereignty violates the basic premises erty is socially owned, and all ecoioii rent of welfare maximization and Pareto opti- should in principle belong to society, not to mality.42 Yet by e'liminating market uncer- any one group,' These escitmci.illh are the tainty it becomes possible to avoid duplication ground rules in Y'ugoslmvia:.53 'I[ls one signii'i- or lags in the provision of capacity, which cant advnt1agCe of such a sknliil is that it can would lead to waste or bottlenecks, This is provide for the dissemination ot information essentially what Scitovsky calls 'pecuiniary as a public good and potentially increase the external economies', whichl he considers to be efficiency of the system. particularly serious in the developing countries The new planning systeml alsol has positive undergoing major strLel tural transforina tions.43 aspects from a poflitic:il ViOWlh01iiin First, tlhe Dorfman et al. have shown that static technical pilanning systenm is now reconcled witlh thle efficiency is a necessary bhut not sufficient basic prenmises ol a w(orkers' sellin1allaged condition for reaching an efficient growth path economiy. ln particula r, the role oit '-ate organs with a given technology and consumption is considerably reduced. Ihley act pruipIllv as profile over time.44 For this to be achieved, arbiters of last resort andl as forums for pre- producers must be informed about current senting a macroeconoiie perspective of futiure prices and about the current rates of price development. Seconld. the new svteni offers an change or future prices. opportunity for all interests to be representetd Second, this attenmpt to attain a simultaneous and a forum for choosing dlitferenll 1ne.m11s of general-equilibriu in solution induces an exhaus- provitdirng the samne end or clhoosirig between tive exclhange of information between agents on diflerent ends. rhe legal obligatiion of parties to their preferences and production possibilities, reach agreemient places responihibility witlh thereby greatly increasing the transparency of those involved, and with the state, only and the economly. The legal obligation for an tin- for such time as direct agreemnent caJInnot be restricted exchange of informriatijin is emphasized reached. For ainother thing, :elff-iman.genient as a principal eleiiient in the new 5-yr plan in planning will ameliorate the problems Yugo- the Constitutioni (Article 69), the Law on slavia faces in co-ordiinatinig the development of Planning (Articie 22) anL in the draft manual regions. The Pluralistic character of Ytigoslav on self-manage mienit planniing (as a legally society has d1W.Nys compl0li (Cdted pl),mnning. whliCh hinding nmiiiinimini set of indicators that must he is based on a moinistic view of obliectives.54 Th 1e inale available by all economiic units).45 new system of planning provides an oppom Thle efficiency, of the miarkt mechlanism in tUtnit for tile relrNCsemi1WtHiOt of all interests aind handling and processing vast amounts of a forum for choosing Ironi anmong different inforniation have been extensively analysed.46 means and diffeienlt ends. This lhas been h'irtlier clarifietl by modem in- In conotrast with thLese pOttntialt 'irenl't li, fornmition tleor .47 The shortcomings of the the new system of planininig hlts some potential market mechlanism for the tr:ansiiiissiiin of wveaknesses. First, althozuglh the new plaiilumiii knowledge and information are also well systemii provides a fraimmework fotr dlecision- (loc:nmiented.48 Informiiation has the basic miiaking, it fails to specify the way in which featuires of a public good, indivisible and in decisions are actually reaclhed. In the ceummpeti- most cases inappropriable,49 thereby leading tive general-eqtiilibriuiiii atnodel, individual pro- to market failure and suboptimal resource ducers anld consulmers express tlhcir prreterenc' a1locationl50 As a result, we observe only a tlirotLghl the market place, the vector of prices limiteCd and imlperfect market for infornmation, being an outward reflectioni of all these prefem-  632 WORID) DI:FLO)P.I N'l' ences. Earlier it was arrgued that it is pwossible to the higlhest retrni;s to society. Thle clhanm,bers of view plaanning in Yuigoslavia as a mneclhanism for the economiiy woul(d act as a forumn lor sluchi siiimiilating forwardt narkets: the process of analysis, fltougi to bie e(i)ipaitilfle wilh tlle liarnionization acts as a market place vhiere pliikisop lical premiises of the niew sy,tein t(he stupply andi dLemand andi prouticer and consumller use of cost benefit analysis nevertheless poses preferences are reconcile,. one imiiportautan (question. It presa pposes the Tile process of lhairninoni/atli in cotlll he made cC;''ulation and In p)lica iL(in of; a consistent set to work as a market where individlril produticers of cmoln ry parameters, but the calculation ol' and consumiiiers co:m7pete for resources tlhrotughi these l;11;1iancL'WPs is 1mt value-free, palrtICl11,nrly a bidding procedture. A process sinilai r to tllis wllenl issues o)f inicomie d ist rihiLion enter in. was in fact adoptedl by the Yugosla.\s in the Thluts one prere(quiisite to the application ot mid-l 50)s, whienl etenrprises bidi for iruvestible cost benefit malysis wouiltl be enici .il aigree- resources by oft i-inIg highler interest rates.55 nients on thie valtue of' thiese juranie ei . TIhle systeni operated between 1954 and 1 950 Ihe planning exercise tor thle 1t I1080) andl was restrictedl to a limited number of see- plan appears to have beeni based on a .iricl v tors cuvering between 1) andl 35"; of invest- of a ii,nl ies mixing oldt and neNxs procedures. ments dluring the period. tUnder the system lof Bidding procedlures dLo not ,ippaer to liave been global balances planning during that period, the usedL or even seriouisly considered. lIo the ex- level an(i thie broad allocation of in%estible tent that cost lbenefit analMsis has been used, re,ouirceh were ce n irallI deternmine d and it (does not appear to have been based oin a specifie(d in l}he plani. Auctions were used as a consistenit and elaborate metio(l. B3y tile samie means otf alloatiing Ftunds witlliin sectors. lrie token, it seems unlikely that political coitn- auctions were iiin1dageCd by the banks under the pronise could be madie oiLi0letelt .nlltitlletie,lca atuthority of governmental bodies folloxwing an to the econiomiiic viability of pnr\itedIs. 11hw an nonL neriiLiC1nt in the official ga/c eIc on tile o)pen nes of the econlotmly the o'ten reiter rated LOndi(itions anl criteria for bidding.q6 role of ii:nrklt-ba;sctl prices, and the ini(ewt 'k That svstenui nevertiheless liadi importanit of cnterprises to miaximiiize their invcomies all shortcomings and proved dli lflf.ilcl t) 11nda1aLe provide a stlrnIgI intcentive towardL econonmic prices were distortedl antd cotnsquequcily did not rationalitv. retlect true scarcities: the numerous and often Thie secon(d LitticulCty relates to the a,diust- non-economic criteria in evaluating bidIs posedni ment meelanismii of the plan, SeIl-mianagenieii a difficult dilemani: project prepiraL)ii provedl planniing, as already noted, could 1elIp to to be inaddtC(I1K1te: and (lisconitinuity in auctions eliminate market uncertainity. But mnarket lidl not correrspo)nd to the needs of en terprises. inneertaiamty is a special case of' uncertailnty. Many of these ditflicul ties no longer apply , or There is another forml OfUrIncert am llt 'enliroll- at least not to the same extent as in the 1P1) 5. 1nue t:nl Lune1Crtainty' wlichl can not be elimninated C mnseqit enifly, the potential ftor some bidding ttlrouglh gcacrter exhliange of inh)ornia tioii be- or ziuction system oiuglht to be nmore favourable. tween the a-eirts because it is external to lith In lraLctice, however, tle ;y steni would be sytemu.58 Tlhcoret ically, thle general-eLluilibrnriL dittllictt to operate. N-in-economnic criteria are mnodel can be exten(lded to handle suchl uncer- likely to continue to be inipoutaint and elusive tainty througl tile est[alblisIi ment of 'contin- to handle. Mlore iiiiportlant. the whole process gency'mlarkets witll ;euntingency comeimodlities (t auctioling raises thorny tqiuestions: sllould and(i prices. The basic i(dea is quite sinllple.59 .anet' ions be based oni po,int oflers orseined tile What is required is a imarket fo,r eacih conII- oftfers? Shoildl they use a discriiiinito-) price iodlity (i,nlnitiemal oni a certairl state of natutre rule tor clharge a uniitormi 'miarginal' rate otf with a slot price. witll in tciest rates for vach in terest?'' Mm0i voe the Operaion ol suclh a period condtlitional oi the state oi nature, and ivs ee tirns clearly cotunter to thIe lbl.SiC plhilo- witlh al tI-c ni .mi rig in.snln.Lc. %.sclele that sip1i iical p rerniiises of' the niew cOnIstiltioiOll. .ill )aws individ uals to hedlge aainsdht nt> staSte Ot' because it wmild inliply a Cimpil:nl market in nature. Given thlese precm miitiolns, it slim hbe whieli capitld is alliealted not by the gtneratuors possible, in principle, to comne up., tihrougd a of Nu rplus value but throutghi an inipersonal systeini of negotiatiorn, witlh a vector of equilib- niechianism alienating workers froim the friit rioiin prices for each state of nature, In othler of their work. wordls onz CldU.L concept ii ally dletermiiirne an A secondl alternative would he forenterprises optinmal plan ct)nsisting ot a set of optimal sub- to agree on the applicatiton of a nalytical tech- plans fur eacll state of natuire with all economic r;iques, sLulcl as cost beniefit analysis, to ensure agents being legailly boundi thlrouighi the forward that funds are allocated to pirlects promiiising contracts nmade in the contingency market. Inhe  WORKIRS' SI-NIANAGI NI1 NI ANI) Pl ANNIN( 063. Yuigoslav planinitig system recogniies thiis: plazii iniig as a nieanis of adiusting and rt pisinlg the various plans and projeckts underly ie thlemii, . . . vorkers must have at their disposal complete or, wlhere nccessary, ol abilo-all. uC0nitraL tAl and clear information on all elemcnts necessary a Uifiangemets. Agatin IIILICII 'A ill diefoiki' )II thle l'or decision-making itcludi)ng possible alternatives InRl I procedlures adioptedi to revise plans. It is timp p lar alternatives.60 o gnt that the iiecess,iry ad us triL' ifs be ex- pedtiti) usly inderL.ikei and based on .a con- Althouglh the pulan ecogni'ics the need for 'coni- sistent analy tical framework. tingenicy planoing', thie problemi is perple \ing An imiporfi nt Icasuitc wo*ulk be to lease a in reality. If, for simiplicify, we consi(der three portion of invest iiL1i unallocated a-s a reserve. possible utncertain e xogenuus variables such F"or e.xaiiple., Kornai sugpesfs that tip to 30) oft as weathier, exports andl technology and as- investm.ent sh1ould iLe main.l uLnCommllittedl."I I o sume that eachl can lhave three dlistinlCt valties some extent, an elemenit of fleximiliI0 has been stuchi as low, mediiumii andL high andL that the built iilto the planninig miieciihanismit by dIesi' plan period is 5 yr, the economity coild i.1ce na tiing certain activities as priorits activities, fo: abotut 14 million different p,atlis.61 Under whicih liarmilonlik.itionl and the ensuinlg coliti.lc- these circumistances the 14 million initerdeplern- tual ol;ligafionin nsiuf be concelukleti by a certain dent indlicative subplans would have to be (ieter- da te, and( othelr aictiviIies as nion-priority activi- mined through a process of negotiationis or ties, for which harmonization is encouraged but bidding 62 In practice, of course, the number of not irianda tory. This system. priol.: proxiding uncertain variables and their alternative ValUes somTe lexi-i it , can also lead to ainonaliies Iihe would he conidWer_ibly greater andi the number system of contractual obligations Would tileo- of subplans would thieoretically approa;ChI reticilly ensiire infiniite supply and dkemialn(d at infinity.63 the iila'f)ti ha te prices for the priority sectors What are the implicatio.ns ol this for sell- Consequiently, ;n cases of shortaiges tlie price management planning? Because otily a very mecihanisimi is nlIlifieL in its role as dan allicator liimiited number of dilterenit environmnital of resotirees betweetihe priori fy and non- paths can be considered, and because tthere is priority sectors. I1e brun,t of the .ikidmn4ilcntI no certainty that these will closely approx- WoIu, at least iltlth.,1lb, tzall on the 1n1 0iipm rity mate the future evolution of the environmen,. sectors. Sucih a process coliltd he dkruprise anid there will be conciderable risk that expectations lead to resource misallocation. I[le prriomify will not be fulfilled. Given the all-enibracing sectors may also be adversely affected by tIie nature of the plan and given that it imposes feedback effects of chanme', in the non-priority legally binding obligations on econotnic agents, sectors. Furthermore, slmirfagjles or, surplusts the new planning mechanism is likelJy to prove to woutlld restilt in a dItial -trucftire (ot prices thiose be d ifticult to operate. inder rapidiy chlanginlg fixedi tflroiugph1 eontracttial obliga Iiunsh antl those cireinistfances, the system of plaIinning woould left to vary freely with market condtitioris. Ihe become difficult to operate, and the adlierence adjuistrmient meclianism couldl be more etlleclve to contractual obligations could lead to niis- if the need for reserve funds were explicitly allocations of resources andi the need for a recognived an(i establlish1edL.65 Thle use of tihese complex svstem of fiscal transfers, If oblig' funds should be governetd by market forces. ations are nullified, there will be eithier a Although it is too early to review the aj11ust- retuirn to the invisible hand of the niarkct or ment process in YUgOSla'd%ia the .ipplica fion of a neetd for re(ontraicting. Given the time taken an appropriate nnecI1;1nismi1 cloarl% is Oft crucial to obtain all the contractuald obligations for the import:Lnec to the success of the plan. current plan (some 2 yr), it seenis unlikely that The thlrd prroIllemii arises because plamilinj, recontrad[ing could be easily done within the is based on a limlitedL time liori, on, whiil leads scope of a 5-yr plan. lMuch will delpen(d on how to an additiomil1 typet of Hnm,ikLet unceILTIL ruty sLsceptiible Yu`l1aSViaI is to environimliental that cannot be readily 11.hanIlfef. D)ccisio1s ma1(1e risk. The openness of the YLIgoslv economy to during the plan pe riod.] may be suibtect to e pee- foreign tratle and demionstrate( di ifficulties that tations of wliat is likely to Iaplieii after the Yugoslavial has in in the past faced in short- plan period, particularly in so far as cuininiodi- term economii' rnanagbnient of the ecolino1m ties are dIrable and l uveshment has a lon.g pay- certainly will pose prolleims. back period. Extending the time horizon helps The Yugoslavs stress that the 5-yr plan is to reduce such markel. uncertainty, but oinly at complemented by a systemi of continual plan- the cost of increasing environniental uncer- nirig based on annual assessments of the im- tainty. At some poinit the lbelnefits of extenldling pleinentation of the plan. They see continual the time horizon will be oftfset by the costs.  634 WORD1.1) DIVI:LOPNI NI' binding undertakings tluils are not imp)oseL. they penalties needs to he establislhedl to encouraLe merely are an outward reflection of consumer accuracy in the bidding process. This coultd be and prodtucer preferences. In addition, the difficult. I'he reason is thiat resporimbiliW. for during the current plan period. The YugoslLvs erryrs may be dillfuse antd may thus have to bie recognize this in formulating their long-term tia('Qd throutglh a comiiplex input ouitptut clhaini. plan:66 Asitde fronm this dlifficuilty the pay-off schedules for iniforimiationi exchianiges miiay be I i re rni f or It is necessalryt tor estab)lish oranic linkes, a fedback e parl icip. SO. In somie cases there may be effect and interconnections betveen lonig-term no incentive to transmit information. lhat development policy and mediumiii-ternm and annua could necessitate some coercion, which in turn plans could lose pa.:rticmiL.ir dillicuilties in zero-sum TIllis shouldli help alleviate this problem especially zones. Managed andl closely mnonitored ex- it fiuture long-term plans are formultlated on the clhanges of informiiation thus are crucial.68 basis of' xvidespread participaltion by all econ- In tlle Yugoslav planniig, systemi, as ias been omic units. observed, exchanges of iniformlation are manda- A fourth area that poses dilf'ictillies f'or the tory and closely manaagedt. .Sinilarly the pro- planning system, but one that again may not be vision for blldiLig conitracts, withi penalty as serious in the Yugoslav institutional frarne- clauses t'or non-tullimnent, potentially acts as a work is the assumption of perfect comnpetition deterrent against provision of nuisinf 'rii'lation. and( no external economies. If coiiipetition were In practice, lhowever, tmtuclh will depelnd onI the perfect throughout the system, belhaviour extent to whiclh firms will be held accouintabile woulti be solely determined by prices. Once for their mistakes andL, if financially insolvent, monopoly is introduced, it is necessairy to threatened witlh liqltidation a stick that hias specify the demand curve (and the monopolist not been that widely usedi in Yugzoslavia. 61 must accept the specification), Once oligopoly is introduiced, there are elements of game theory or collusion. In blotlh cases the problein 5. ('CONCIAIMIN( ; RI\t. ' R;K S of attaining an optimumiiii becomles e\lreniely treaclherous. In Yugoslavia the complete transparency of In the precedlinig sectiotns. self-inin;ngemnent the economy induced by the continual and planning as a Inlecliainisii for the co-ordination comprehensive exchanges of information duiring of econonmic activity was comllpared witlh the plan fornmulation, greatly restricts the ability mechanism for resource allocation in the theo- of enterprises to reap monopolistic returns. rct ical gemieral-equilibrium iniodel as applILd to This is given legal support through the prin- intertemporal decisioni-miiaking under con1ditions ciples of solidarity and reciprocity in the of uncertainty. I'he ianalylsis has shown that the conistitution, which call for the equal sharing new system of planning and the recent insti- of pure economic rent or adversity and the tutional clhanges provide a setting similar to exclusion of windfall and nmonopoly profits. that envisaJgedL in the theoretical models: ni- To accomodate external effects, particularly tably, conmplete participation and expression of those associated with com-inmodities having the revealed preferences, forNward contractinig, and character of public goods, Yugoslavia hlas comprehensive exchanges of information to introduced commuLinities of interest. These com- facilitate decision-making. The process of nmunities basically are forums for consumers simultaneous alrnionization and the ensuing and producers to get togetlher and determine contractual zirrangemnents simulate the oper- the exact supply of various services to be ation of forward markets for commodities with provided and the cost of providing them.67 future prices and forwaard deliveries. Altlhough Such an arrangenment provides a forunm for the planning systemn does not explicitly internalizing, and thus consitieralbly reducing prescribe the developnien t of' contingency the imrportance of, external effects. markets, the need is r-CoLgliI.Cd for enterprises Finally, much of the success of the planning to consider alteinatives and for contracting mechanism will hinge on the establishment of based on alternative conitinigencies. The partici- proceduires ensuring the transmission of correct pation by all ecoiionoic units ensures that plans and unbiased information. fEnterprises may reflect the revealed preferences of all units and have an incentive to provide unduly optimistic are acceptable to tlhemn. This outcome gives projections and therebiy ensure their adequate much support to the Yuguslav contention that com11manlLd over resources. Consequently an plan fulfilment is promloted by the participative appropriate structujre of (lisincentives and character of the planninig system. T'he legally  WORKIE'RS' SELIU-MANA(;I [N.Tl.r AND PT. ANNING; 635 One way to help alleviate the problem is to issues will be the adoptiong of rules and pro- have a prospective plan on the basis of wlhich cedures for co-ordinating individual plans and decision-makers can make rational decisions choosing among alternatives. Thllese rules andl preparation of a prospective plan facilitates procedures are crucial if adequate stress is to be decision-making during the plan period because placedi on the use of eccoioliiic criteria in a long-terin view is essential if economic units decisior-n-making. Participants can he mad.ltle are to enter into contractL1ul obligations that aware of the costs andS benefits of their de- must in part reflect their perception of the cisions, as well as the trade-offis inivolvedI in economy in the post-plan period. At the same inlltoLlucing non-economic considerations. In time, annual reissessmients of the progress ad(lition, 1ne;suITC- to falCilitate adl,jnstClt tn of made toward the Objectives of the plan help the plan to clhanging conditions will be necess- focus attention on the need for recontracting. ary if waste is to be avoide(d lnealsLures that should tnat need arise, and for iiitrodlicilig increase the flexibility olferel by t11w plan to specific macroeconomic measures. decision-makers. C'onsequen tI , there is likelv The success of the new syste]n of planning to be a period of learning-b~ -doing before the hinges on the ability of the YLlgo0lavs to deal true potentials of the new system of pilanningl witlh several issues that the planning mechanism can he realized and fully assessed. raises. One of the most important of these NO rl .s 1. This paper was prepared in conjunction with a 8. The drotiglit and failure Orf the colleetivization World Bank ('ountry Economic Report: Martiq of agriculture may have also Con! rihb eud to thle Schrenk, Cyrus Ardalan and Nawal 1.1 Tatawy, Yugo- decisioni. lIut on strriLtl) ec(nomic grounds the plan slavia: S/elf Janagemnit Socialism aned the ('allo'ects cannot be judyed to lhave been a f'ailure or a success. of'Developinent (Baltimore; John Hlopkins UTniversit% See Milenkovitdli (1971),0op. cit.. pp. 2 77. Press, 1979). lortions of the paper have been incor- porated into that book. The views and initerpretations 9., 'A conl\ of dillere!t annual political and in this paper are solely those of the author anid do not economic instruments lor the current regulation (of nece',saril) reflect those of the Wk'orldI Bank and its a free, but imperfect market'. See Ekonomnist, 195, affiliated organizations. quoted in MIilenkovitch (1971). op. cit., p. 122. 2. See Herbert S. Levine, 'On comnparing planned 10, rhle Costirision of the Socialist Fl'ederal Re- economies', in Alexander Fckstein ted.). (OWnpariTon! puiblic O4'1,oSh7laia, 1953. Article 40. o0 ECotnomtiC Systemns (Berkeley: Uni%er.itI of Calif- ornia Press, 1971). pp. 137 160. 11. During this period the Y'ugoslavs experimented with auciionN for investable resources with enterprises 3. See Levine (1971), op. cit. bidding for funds on the basis of a given set of criteria including interest payments. See Egon Netihereer. 'lThe 4. For a somewhat different view, see Deborah Yugoslav investment auctions', Quarterly Journal of \lilenkovitcht. 'The case of ' ugoslavia', Amiierican t Econoonies, Vol. 73, No. 1 (February 1959), pp. Ecoinormie Review, Vol. 67, No. 1 0 chruary 1977), 88 115. pp. 55- 60. 12, A contributing factor may have been the clhronic 5. Article 15 of the 1946 constitution sets the scene: trade deficit in the balance of payiments througholt 'In order to protect tl!e e5scnti.al inierests of the people, the late 1951)s and financed lthroltwh bilateral aid. increase national welfare and nmake proper use of all economic potentials. the state directs econonliC life 13. See, lor exampile, \ ilen0vitelh (1971), o)p. cit. anLd development ilirouigh] a general economic plani, relying on the state and co-operative sector and 14. lsul'lislhed in 1965, the lederal I und for thle exercising general control over the private sector in Acceleraited D)evelopment of' the I ess Developed the economy.' Republics and the Autonomous Plr(ivince of Kosovoi collects approx. 2'' of the pross material product ol 6. See Fred Singleton, Tr,ncmieth-(C'enmy Yu'go- all repuiblics and provinces and dkitri IhU1C tllese slavia (New York: ('olumb,h3 University l'ress, 1976f, resources on hiighly concessioniary termns to the less p. 112. developed regions. 7. See Deborah Mfileniko%itclh, Plan anud Market in 15. Lawv on the L9derli-ing Premises off'the System ) ugoslar Economic Thlougght (New liaven, Conn.: of Social Plannitng alnd the Social Plall Of )'1,9gSlaM ij Yale University Press, 1971); and Singleton, op. (Belgrade: Federal Assembly, 1976). See also l'ilioimiir cit. Vlaskalic, 'Practice breaks ground for self-management  636 WORLDI) DEVlLOI'MI N V planrillit', in Socialist Ihought and Practice, Vol. 6 ''liese couldl have been developed indepiendently or (JuIne 1975). pp. 28 37. WithtOLut any slpctific thcoretical foundation. 16. Selrenk et al. (I1979), op. cit. 28. See, for emainiple., Meade (1970), op. cit. 17. Ihis correspondls to a dictumiii phrased by John S. 29. This is the thrust of the (lower Leijonhuvird Mill. h'e A tnlmritV which is most conversant With interpretation o1 Keynes. General Tlheory. priinciples ShIOUld be suprenme over princiepl. wlhile that which is most compoetenit in details slhould have 30c [here is a sm..all provisioitf the economy is to the dtetails left to it.' Jolin Stuart 1 ill. RepresentativreCoilVrtic to an eluilibrium, namiely all comn odities (;orermnlent, pI . 183 cited1 by N ulier (1959). oP. mtust he substittles. C(iipleenatlrity in producrdtion and c. constptttl tion creawvs difficulties that call for more 18. 'Ihe I ederal 'lanning Institute has ptublished a comiiplex searclh procedures. hlitndhbiok of self-maniu'rncilnt planniniiL in which a list ol po-Ol 'kc indicators ,ccoirdlin e t) thle tvpe of econ- 31. Through actings K s a type of W'alrasian autionLaire, t1iiik unilit involved are summarized. See I itilm. Blelogrlic See also Janos tornai and I. 11. I ipl ak,iTwo Ievel t't al.. lanlldbooh * i'lPo7111ic IAeolog,iical Plremises p6lanning', pp.'o e/r, Vol. 339. No. 1 (Jan uary Welho,b 1,0h, Regulations I ltel:rade lederal Insti- 1965), PP. 141 169. tute (or Social Pla,nningp. 1976). 32. See Mleade (19701), op. cit. 19. Ali enterprises are miembers of thle chambers of economy. I ach republie has its own chamiiber, incluttd- 33. Article ofr the l aw on Planning, for exam)ple, ing the fedlet: I i nI. Tlhe chambers act as a forunm whlere calls lor the 'elimination of randiom behaviour of the t,nterprihes- can formulate common views on matt rs of iliarket', a plhrase tretquently used in innumiierable economiiic policv atid as a body varryi'llt out tile either documiients incluiding references to excessive dialogue withi the adeilliitrat ioin. Chambers are short-term price lied uations caused by 'group owner- organized on sectoral and ftunctional -roundk. shiip' beliaviour ol individual enteiprises. 20. 'Si'-iee.inaccneem agreements and social compacts 34. See Meade (1 971), op. cit., pp. 46 50. determline the commnion interests and el'it ci i%T and set out tile mTituall relations, 6iclii . obligations, anid 35. See Meade (19711), op. cit., p. 51). responnihilitiies for realizing these interests anld Objec- iivs.' Article 18, 1 tis on Planning. See also (Caslav 36. See IPeter S. Albini, 'Llincertainty, information Strallinjiic, Self'-iniani .ietnwnt agreements an(d social excliange and the theory of indicitive planning', comipacts', Socialist T'houi.t at(hI P'ractice, Vol. 16, E'conoic Joutrtnal, Vol. 81, No. 321 M%larcli 1971), No. 6 (June 1976). Pp. 24 27. pp. 61 90, 21. In drawving up the social plan. especially at the federal level, considerable attention is also paid to 37- Albin (197 1 ), op. cit., p. 74. the growth experience and pattern (I' otlher countries. In this respect, the Yugoslavs draw on whiat Kornai 38. Albe tfrontier ilt nee lnOt be plrecisely defined. has called the 'international nmain strealm' its a planining In t lbi the fnlitier represenlts the plsctnin tutinorities' tool. See Jatnos Kornai, Ruish ['ersus hlaroniie (;rovitl target grtwth rate. Itis may be a useful starting point (Anisterdani; Noarth l Iolland, 19?72), ip. 1.S 23. but clearly mav have to be revised as more infor- nmation is exchlanged between all parties. 22. See, fov examp)le, Jaliies Mleadie, rhle} Il'leori, o*j 22li. See. Plelr example, James IadeThese lTnieory 0 39. For example, if planiners hope to achieve a 6', sity Press, 1971)). n growtth rate, tlhey shlould start at, say, 2%;. 23. 'I or tlheir l'.Lrtici1.eits and siginatories, they are 41). According to Albin, errors are likely to be hetero- law's and event ninteimlt itii more in terms ot' their social skedm:stic, that is, they inicrease tfiz futirthier away from substance.' \'Ia..kali' (1975), op cit. thle ;axis you move. 24. Article 61) of the l.awv on P>lanning. 41. See Meade (19701), op. cit. 25. 'I'[us the plans tor OicLo-1iol{it il; COtntiIILIlliticS 42. 'Tihe market system is based on 'ulterior' siginlas. bring abotit the unite of the systems of' planning and i.e. warnings that tlhings need to be clhanged; self- decision-miakin i evard lnu incotmie and poesibil itiies to nmi nagetinent planning complenments Itesse witlh 'an- realize their commonl interest.' Article 93, Law on terior' signals reducingt waste. Kornai (1972), op. cit., I'lanning. p. 15. 26. See. for example, Iibor Sci.iee.sky. 'T'wvo concepts of external economlics', Journial of PIoliticoal Economy, 43 Secitcivsky (1954), op.cit Vol. 62, No. 2 .pril 1954), pp. 143 -15 1. 44. Robert Dorfman, Paul Samuelson and Robert 27. Ihis is not to say that the basic concepts of self- Solow, Iitnear Pr(ogfrainniehg and iseonornic Analysis rnana'etnient planning are derived fronm these sources. (New York: McGraw-1ill, 1958), pp. 265 345.  WORKERS' SELF-MANAG E1 ENT AND PLANNING 637 45. See Social Plan of Yugoslaria 1976 80 (Belgrade: Article 18 of the constitution milakes it very c\ plicit lederal Committee of Informatioln), p. 125, paragraph that any 'windlall' or mlonopoly profits are Ic he 13, 'In vieW Of the dispersCeL nature of initiative and appropriated directly by society and should not decision-making and the large number of policy-makers accrue to 1nterprises, let alone be distributed as and executives, thc efficiency of self-management personal income. he ilong-ternm plan also notes planning depends to a decisive extent on the timely, 'consistent implemenitationi of the principle of incomlie effective, full and rational provision of information distributioni according to work perfornmed and the primarily in basic organizations of associated labor, results of labor, wlhieli slhould eliminate the sources or and in otlher places and at all levels where decisions are income earning wlliclh are not based on labor.' 1 ederal made and adjusted.' Also, the long-term iplan stresses, Assembly, 'D)raft outline of a common policy for long- 'Mluruil exclhange of information slhould create eon- term dleveloppment in Yugoslavia (until 1985)', op. ditions for jointly avoiding irratiotnal decisions.' Fed- cit., 1). 80. See also Mlileiikovitclh (1977), op. cit. eral Assembly, 'Draft outline of a commonn policy for long-term development in Yugoslavia (until 1985)', 54, See, for example, lony vKillick, 'Ihle po.ilhilities Yugoslav Survey, Vol. 16, No. 4 (November 1975), of development planning', ()xjbrd h'conomfic Papers, p. 87. Vol. 28, No. 2 (July 1976). pp. 161 -184. 46. I'his has been particularly the case with members 55. See Neuberger (1959), op. cit. of the Vienna sclhool such as Flayek and Von Mlises. See, for example, l[riedrich A. Hayek, 'Tlle use of 56, See Neuberger (1959), op,. cit knowledge in society', A mericant Economic Review, Vol. 35 (September 1945), pp. 519-530. More 57. Thle problem with poinit offers is thlat enirerpriw., recently Pelikan has introduced the notion that do not know (unless you use discriminatory pricinve) doing different things and attempting to convey the interest he will have to pay and depending on the deferring preferences, limits the efficienlcy of a central- interest his choice of the project design or commodity ized system. This type of problem presumably would mix may have been dillerent. Schedule offers (i.e. a also apply to a large model of market socialismii. Pavel set of bids based on alternative expected interest rates) Pelikan, 'Language is a limiting factor for centraliz- are preferable but cumbersome to operate, similar ation', A.Imerican Economic Review, Vol. 59, No. 4, problems exist with discriminatory pricing arrange- Part 2 (September 1969), pp. 625 ,631. mejits. See Neuberger (1959), op. cit_ p. 112. 47. See, for example, Robert D)orfman, The Price 58. See Meade (1970), op. cit.; and Roy 13adner, S,ystemn (Englewvood Cliffs, N.J.: Prentice-Hall, 1964). 'Comnipetitive equilibrium under wucerrniiin ', Flon- omtietrica, Vol. 36, No. 1 (January 1968), pp. 31 58. 48. See, for e.xanlple. Kenneth Arrow, l conomic welfare and the allocation of resources for invention'; 59. For an elaboration and formal prootf see Meade and Kenneth B3oulding, 'rhe economics of knowledge (1970), op. cit.; or Radner (1968), op. cit. and the knowledge of economics', Aterican Econ- omnicReview, Vol. 56, No. 2 (May 1966), pp. 1--13. 60. Social Plan of Yugoslavia, 1976 S(1 (Belgrade: Federal ConiriiIt ee of' fiforniatior). p. 125. 49. Patents are an exception. 61, X Y x Z 50. See, for example, Francis M. Bator, 'Anatomy of wlhere: market failure', Quarterly, Journal of Economics, Vol. X numnber of environmentally uncertain 72, No. 3 (August 1958), pp. 351--379. See also variables; Arrow, op. cit., where ArroNv concludes his article )' number of different values .X can take; with: 'There is a strong case of centralized decision- 3X1 = plan period (yr). making under these circumstances.' 33x 14,348,907, 51. If, for example, the state prov;-,d information on 62. The individual would have to determine his the expected state of the market based on existing subjective probability assessment for these 14,352,087 plans, and found a shortage of beer, for ixample, different patlhs, each expressed as a ratio adtling to individual enterprises may all unilaterally increase unity in total. their produCtion plans and create the typical cobweb situation. If, on the other hland, all agee on a planned 63. A special type of environritental uncertainty is expansion, wvlat is left of the capitalist's role as a linked to deiiiograp1liC tuirniover. Changes in the com- bearer of risk? position of the p)artici)allIs in the planning exercise through birth, death or retircnienit Ch1ang,s the initial 52. See Oscar Lange, On thet, Tlteory, of Socialism set of indifference curves and prodluction possibilities. (Minneapol-is: UTniversit) of Minnesota Press, 1938), This changes the initial premises on which the plan is formulated thus frustrating plan fulfilment. 53. Fnterprises are encouraged to be as efficient as possible and be rewarded for this, however, the 64. Kornai (1972), op. cit., pp. 137--140. principle of 'reciprocity and solidarity' tends to preclude the accrual of pure economic rent to workers. 65. 'Quick adaptation of the system can be made  638 WORLD DEVELO PM NT'N possible only by liquidating the tension due to short- 66. Federal Assembly (1975), op. cit., p. 20. ages, wVith major reserves (witlhin that, with mobile real capital suited to thie quick implemlentation of invest- 67. FIoratlieoreticalanalysisoftlhisseeMarkoKranjec, ments with the excess suipply of iniestment goods).' 'A self-managed fiscal system and the allocation func- Kornai (1972), op. cit., p. 140. 'The existence of the tion of fiscal policy', Journial of PuZblic Ecotnomaics, unicommitted liquid investment reserve mobile real Vol. 5. capital is at least as important as physical condition of the effective functioning of the market and its playing 68. Flor a useful discussion see Albin (1971), op. cit., a pasticular role in complementingT an(d adjusting thie pp. 82 88. pianis as the legal and instittutionial conditions auth- orizing entcrprise autonomy.' Kornai (1972), op. cit., 69. Schrenk et al. (1979), op. cit., Chap. 8. p. 144.  THE WORLD BANK Headquarters: 1818 H Street, N.W. U Washington, D.C. 20433, U.S.A. European Office: 66, avenue d'Iefia 75116 Paris, France Tokyo Office: Kokusai Building, 1-1 Marunouchi 3-chome Chiyoda-ku, Tokyo 100, Japan The full range of World Bank publications, both free and for sale, is described in the World Bank Catalog of Publicatiotis, and of the continuing research program of the World Bank, in World Bank Research Programn: Ab- stracts of Current Studies. The most recent edition of each is available with- out charge from: PUBLICATIONS UNIT THE WORLD BANK 1818 H STREET, N.W. WASH I NGTON, D.C. 20433 U.S.A.