In the discussion of an alternative economic order the terms “producers’ democracy” and “workers’ self-management” are inseparably bound up with the “Yugoslav experiment”. The “Third Way” of Yugoslav socialism acted as an important point of reference in the debates of the international left. When the Yugoslav communists turned their backs on Moscow in 1948 Yugoslavia became the classic case of a socialist country successfully breaking with “Stalinism”. The proclamation of “workers’ self-management” drew upon the ideas of a democratic left that went beyond the conservative social democracy of the West and the bureaucratised “state socialism” of the East.

The Yugoslav experiment aroused worldwide fascination. In Yugoslavia itself, however, the self-management system was always a subject of controversy. When they broke with Moscow, the Yugoslav communists had no pre-formulated alternatives to the Soviet system which they had initially tried to copy after the Second World War. One peculiar feature, however, was provided by the local “people’s councils”, revolutionary administrative bodies which had arisen during the war to support the partisan movements. In the new thinking of the Yugoslav party theoreticians they were to form the basis of a socialist model which was supposed to draw upon Marx‘s thoughts on the Paris Commune as a form of direct democracy, both in the political system and in the economy.

In the first phase of “workers’ self-management”, which started in the early 1950s, “workers’ councils” were set up in key large-scale enterprises. Their powers, however, were still restricted and subject to central planning mechanisms. The pioneering spirit of the early days led to major successes in modernisation, industrialisation and urbanisation. Despite the devastating destruction wrought by the war the infrastructure soon regained its pre-war level. Educational and health systems expanded as did housing construction and the setting up of industrial core areas. The country was, however, kept under relatively authoritarian party control. This extensive and centrally run growth model had exhausted itself by the end of the 1950s and could find no answers to the need for a diversification of production.

In this situation passionate debates raged both within and outside the League of Yugoslav Communists (LYC). Since the early 1960s a “liberal wing” had been emerging within the Party, led by a group of younger political activists of both sexes, who could and did count on Tito’s support. At the Eighth Party Congress in December 1964 the “liberals” pushed through an extensive reform programme which relied on the introduction of market mechanisms in order to achieve more efficiency and intensification of production. By “self-management” the “liberals” meant strengthening the powers of the enterprises. “Denationalisation” was the code for reducing the central state planning mechanisms to a few core areas. The term “socialist market economy” on the other hand, meant that enterprises with “workers’ self-management” were to deal with one another on more of a market footing. Furthermore, fiscal measures were to be taken to intensify the integration of the Yugoslav economy in the world market. The concepts of “federalisation” and “decentralisation” meant that the powers of the republics and municipalities were to be strengthened simultaneously. The Party was also to be federalised.

The reformist efforts of the “liberals” triggered acute conflicts. In the first phase the opposition came from a “conservative” wing under the long-standing interior minister and secret-service chief, Aleksandar Rankovic´, who rejected the strengthening of the republics and wanted to stick to the centralist model. Rankovic´, whose power base was in Serbia, was toppled in July 1966. In the subsequent period social and political crises made the situation more and more explosive. The main economic aims of the reform – speeding up growth and rationalising production – were not met. Instead social and regional inequalities sprang up. Wage differentials grew as much as unemployment. With the cuts in the redistribution of the national income between rich and poor regions, the already conspicuous inter-regional disparities grew more marked. The reform policy led to escalating conflicts over distribution between republican leaderships increasingly competing for resources, which in turn caused the “national question” – long since believed to be a dead issue – to rear its ugly head again. The high point of these debates was the “Croatian Spring” of 1970/71, in which the “liberal” Croatian Party leadership set a nationalist mass mobilisation in motion, in order to claim, among other things, the slogans of the tourist business for itself.

A counter model to both the reform programme of the “liberals” and the centralist “conservatives” was formulated by a left opposition current gathered around the “Praxis Group” and the Yugoslav “New Left”, which had also been increasingly airing its views since the early 1960s. The left opposition current opposed the market reform of the “liberals”, in which they saw the danger of a “restoration of capitalism”. As early as 1969 the leftist student activists warned in a 3,000-word “Manifesto” that the reform programmes could lead to regressive tendencies in society. Among other things they complained about growing “national intolerance”, “self-centred attitudes on the part of the constituent republics”, and “regional particularism”. These phenomena they interpreted as a result of the “joint operation of bureaucratism and petty-bourgeois neoliberalism”. The “one-sided insistence on market chaos, openly applying the principle of survival of the fittest and the ruin of the weaker” would lead to “petty bourgeois ideas, needs and aspirations making inroads into all fields and all social strata”.

The high point of the mobilisation of the “New Left” was the series of protests in June 1968, when what started as a university sit-in in Belgrade led to student demonstrations all over Yugoslavia. The main demand of the “Praxis Group” and the student “New Left” was a profound democratisation of society. The alternative reform model of the left opposition with its slogan of “integral self-management” aimed at abolishing party control and developing a direct producers’ democracy. Unlike the liberals, the New Left did not aim at a “socialist market economy” and increased “efficiency” but, in keeping with the “young Marx” and contemporary authors like Herbert Marcuse, at a change in the mode of working and the “overcoming of alienation”. The Praxis member Svetozar Stojanovic´ wrote in 1967: “Socialist self-management must be conceived of as an integrated social system”, that “embraces all sections of society” and administers society “as a whole”. Stojanovic´ demanded the “setting up of vertical associations of self-management groups, the sprouting of representative bodies from below, the subordination of all state organs and the whole life of society to the control of the representative bodies, and a thoroughgoing democratisation and adaptation of political organisations (especially communist ones) to such a system”(emphasis in original).

In the first half of the 1970s the conflicts between “liberals”, “conservatives” and the “New Left” were terminated by a wave of repression. In the subsequent period the system of workers’ self-management was incorporated into the Constitution of 1974 as a hybrid, which retained internal contradictions. As the sociologist Laslo Sekelj remarked, Yugoslavia showed a “paradoxical incorporation” of the Leninist concept of an “avant-garde and hierarchically organised party” in a theoretical “system of ‘direct democracy’ and ‘anti-elitist egalitarianism’”, which had been elaborated on the basis of Soviet communist thinking. Despite the nominal transfer of power to the work forces there could be no question of a producers’ democracy. As work study experts found, the political and economic elites who were linked to the Party controlled the decision-making processes, while the work forces remained powerless. Summing up, the Belgrade sociologist Nada Novakovic´ commented that in view of its social and political “atomisation”, the Yugoslav working class had always been a “class in itself” and never became a “class for itself”. For that reason it had been unable to develop a “class consciousness that went beyond its common interests”.

Despite this extremely critical – given the claims of workers’ self-management – balance sheet of the “Yugoslav experiment”, it must be said from today’s perspective that the experiences in socialist Yugoslavia were not all negative. Although no producers’ democracy was developed under the slogan of “workers’ self-management”, it was still a relatively open society. Above all, important social rights were successfully enforced in socialist Yugoslavia. The country and the society managed the leap from a peripheral agrarian country to a relatively modern industrial nation. These successes were largely destroyed in the wars of the 1990s. So it should not surprise us if current surveys reveal that 81 % of the population thinks that life under socialism was better than the life they have today. In today’s labour struggles against privatisation, workers of both sexes express themselves positively about self-management. In order to make the ambivalent historical experiences of the “Yugoslav experiment” helpful for the current debate, we need a critical and differentiated discussion. Unfortunately, however, empirical research is still in its infancy.