A Brief History of Privatization in Croatia

A month or so ago, Anton posted a piece which detailed the economic history of Yugoslavia (you can find that here). This is the second half to the same paper, which I collaborated with him. This portion focuses on Croatia's post-independence transition to capitalism and explores the efforts of privatization undertaken by the its government after the collapse of Yugoslavia. This is a topic which fascinates me, so I may potentially post more research in the future.

I. Post-Independence Recovery and Privatization

After Croatia declared independence in 1991, it would have to begin to deal with the burgeoning economic troubles at hand. The war which broke out as a result of Croatia declaring independence took its toll on the economy, which was in dire straits when Franjo Tuđman was elected president. Tuđman’s presidency would serve as the herald for economic views which now play a large role in the modern Croatian government; privatization and globalization. However, the maladministration of privatization would join a long list of causes of economic problems including damage to infrastructure caused by the war, the refugee population, and disturbance of macroeconomic relationships. Croatia had to overcome two major Yugoslavian legacies in order to properly de-nationalize the country’s economy. Self-management and social ownership were the foundations of Yugoslavian socialism [Franičević 6]. Although dismantling the socialist state was not a popular opinion in the late 1980s, early legislation arose, outlining privatization measures with the goal of benefitting Croatian workers. These initial premises of privatization legitimized the institution in terms of popular opinion. As far as the workers were concerned, “they were the real ‘owners’ of the firm[s]… the obtaining of widespread support for privatization among the working class was regarded as an essential element in its successful implementation” [Franičević 7]. What most Croatians failed to realize, however, was that President Tuđman’s Croatian Democratic Union was the single-party entity which made the system possible. In order to begin to renovate the economy, the Law on the Transformation of Socially Owned Enterprises was enacted. There were two stages to this approach; the first was the transformation of social ownership into private or state ownership, the second was the complete privatization of said state ownership [Franičević 9].

Several of the procedures of the first stage proved to be relatively successful, by the end of 1996 the public debt had been reduced by over 1.8 billion Deutsche Marks [Franičević 12]. However, major difficulties arose with the privatization process, which drew criticism since the process was nontransparent, power was concentrated in a single ruling party, nepotism was prevalent, and blatant corruption plagued the system. The privatization model was constructed in anticipation of foreign capital. This would have been the ultimate goal of the two-phase process; initially, previously nationalized industry would be sold to the private sector and the state, and if all had gone as planned, international corporations would buy into Croatia’s industries. Unfortunately, the corruption of Tuđman’s government made Croatia’s economy extremely volatile, and not one which foreign investors would so readily invest in. Nevertheless, privatization continued throughout the 1990’s until Tuđman’s death in 1999. Its institution wreaked havoc on the Croatian economy, and it was a testament to the dangerous power of uncontrolled state capitalism. Croatian privatization contrasted similar processes in other European nations at the time. A majority of Croatia’s capital was due to the hotel industry, however, throughout the 1990’s, the tourism industry shrunk as a result of violence in the early part of the decade, and economic decline in the latter half. Another difference was due to Tuđman’s strict nationalist control. Because of Croatia’s strong nationalist sentiments, they began to distance themselves from the Balkan states and became ambitious in wanting to be seen as a “Western State”. Tuđman was able to take advantage of this cultural Westernization and apply it to the economic policies of his administration. Whereas privatization by definition should result in less state control, Tuđman’s presidency virtually resulted in quite the opposite. He relied on the state, rather than the private sector of the economy, in order to globalize the country’s economy; however, it was an exercise in futility due to corruption, scandals, and the buying out of Croatia’s capital and industries.

II. Growth in the New Millennium

In spite of the tragedy and controversy that surrounded Tuđman and the Croatian Democratic Union’s privatization scheme, the economy began to take a turn for the better in 2000. With the Croatian Democratic Union defeated in the 2000 elections, structural reforms under Prime Minister Ivica Račan were finally possible. For the three years he was in power, he continued privatization by opening up the economy to the West, which helped to restart Croatia’s GDP growth. Račan also began programs to improve infrastructure, which was essential in assisting the rejuvenation of tourism. After nearly being destroyed in the 1990’s, the industry has steadily increased since 2000, with the inflow of capital further funding infrastructure. Inflation remained stable as well, with the Croatian Kuna maintaining stability with the Euro. Overall, the expansion of the economy was due to said infrastructure programs, Westernization of the markets and tourism, as well as the growth of smaller private corporations. In the nine years from 1999 to 2008, GDP increased by around 4.25% per year.

Croatia’s growth in GDP in the 2000’s was an excellent sign of improvement for the country’s economy; however it failed to match the growth in Yugoslavia in the 50’s, 60’s, and early 70’s. Although Croatia remains one of the wealthiest of the former Yugoslav republics, the damage caused by the economic collapse of the 1990’s and subsequent economic policies have left impacts on Croatia on both micro and macroeconomic levels. The unemployment rate in 2011 was 17.9%, with a comparable 18% of Croatians living below the poverty line as of 2009. Even during the dusk of Socialist Yugoslavia, the unemployment rate was lower, at 15%. Although life expectancy and literacy rate have risen to 76 and over 99% respectively, provinces like Krajina are particularly devastated by unemployment. In addition, Croatia’s domestic economy is in need of repair, as it relies far too much on imports and its export sector is minimal.

During a meeting with the U.S. Ambassador to Croatia in February of 2010, Minister of Economy Duro Popijac summarized the major issues which the nation faces. First is the privatization of shipyards. During Yugoslav socialism, shipbuilding was one of the largest economic sectors, and the Croatian government is currently having difficulty selling the shipyards. Until they are bought, the government must continue to pay to keep them open, which is something the European Union does not permit. Croatia’s candidacy for the EU affects its economy in a big way, as it is doing almost all that it can to meet the Union’s requirements. Minister Popijac highlighted a three-part economic bailout fund, which would include a subsidized loan scheme, government guarantee fund, and the creation of a private equity fund. A majority of Croatia’s microeconomic problems stem from the ineffectualness of government intervention in the private sector, as well as ongoing corruption. All of these, in turn create macroeconomic issues, as they make Croatia an increasingly unstable investment opportunity.

III. The Current Dilemma & What the Future Holds

The transformation from Yugoslav socialism to modern Croatian capitalism has stretched over half a century. There were a myriad of changes from one extreme to another; the hasty implementation of privatization is perhaps to blame for Croatia’s current economic troubles. This increased Croatia’s interdependence with other European nations after the Yugoslav Civil Wars, rather than fostering its own industrial-based economy. Furthermore, additional privatization has essentially become the only way out of Croatia’s economic dilemma in their eyes, despite it being what caused the economy to become so unstable. The ultimate root of Croatia’s economic problems, however, is cultural. The current policies are not working, yet there is hardly any opposition. Croatia yearns to further westernize themselves and their economy, to the point where their extreme nationalism is beginning to hinder progress and harm them. The nation is taken by the allure of pure capitalism, further fueled by their desire to join the EU, and there is no tolerance or consideration for any other economic viewpoints. Although Croatia’s economy appears to be relatively growing, successful measures need to be taken to address their high foreign debt, weak industrial export sector, crumbling bureaucracy, and large reliance on tourism. Until those issues are addressed in a more open minded way, Croatia will never be free of its economic dependency on stronger powers.

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-Ballinger, Pamela. "Selling Croatia or Selling Out Croatia?" Bowdoin College, 24 Oct. 2003. Web.

-Franičević, Vojmir. "Privatization in Croatia: Legacies and Context". Eastern European Economics, Vol. 37, No. 2 (Mar.-Apr., 1999), pp 5-54

-Government of the Republic of Croatia - Information on Croatian Economy 

http://www.vlada.hr/en/about_croatia/information/croatian_economy 

What is Work?

Work is difficult to define. In the modern mindset, it has become synonymous with economic productivity -- a primary cornerstone to progressing society: a kind of necessary evil.

Fundamentally, however, work does not implicitly have a negative connotation it. Contrary to its function in today's modern context, work is not objectively a burden nor a pleasure; It simply is. Work is indeed a necessity, that much is true, but must work be pursued and viewed as solely a negative aspect of one's lifestyle and be downgraded to the point of dissatisfaction, hatred, and dissuasion? Yugoslav Marxist-humanist Mihailo Marković, in his philosophical work titled "From Affluence to Praxis" addresses this dilemma eloquently:

"Work is a neutral concept. It refers to an activity which is a necessary condition of human survival and development in any type of society" [65].

The indispensable nature of "work" is crucial to the praxis of Marxism. The elimination of the "free rider" issue is a paramount dilemma, and has to be properly discussed before goods are allocated accordingly. Specifically speaking, this requires a clear correlation between work done and goods received to be able to function fairly; however, the proper criteria and definition of work must be defined for such concepts to be handled.

The initial question that must be answered is -- what is work, and how is it different from labor? Marković makes a stark distinction:

"In labor the worker uses only those abilities and skills which he can sell, which are needed in the process of commodity production... [Work] is the permanent exchange of matter with nature" [63].

"[Work] is the self-realization and satisfaction of human needs... [labor] might be maximization of income, or increase of power" [66].

Perhaps most importantly, work is a natural concept. It is not, by nature, exploitative nor negative. Only in the current mechanisms of the market, is "work" (better said as labor) defined by its productive forces -- by its potential to produce more capital and profit. Realistically speaking, virtually all action that progresses the social being is work once this chained view of labor is broken. Leisure, which is seen as an valueless in economic terms, is indeed a form of work. It is used as an outlet to break from the routine of labor that is a commonplace in today's age of modernity; an attempt to free oneself from the objectification of what he does. 

The largest obstacle to the realization of pure work, the fullest self-realization and satisfaction of human needs, is the alienating nature of today's labor. Marković defines it quite well:

"Alienated labor is the activity in the process of which man fails to be what he is, that is, fails to actualize his potential capacities and to satisfy his basic needs. Marx distinguished the following four dimensions of this type of alienation: (a) One loses control over produced commodities. The blind forces of market enslave man isnterad of being ruled by him. (b) In his struggle for more property and power man becomes estranged from his fellow man. Exploitation, envy, mistrust, competition, and conflict cominuate relationships among individuals. (c) Instead of employing his capacities in creative, stimulating work, man becomes an appendage of the machine, a iving tool, a mere object. (d) As no opportunity has been offered to him to fulfill his potential abilities, to develop and satisfy various higher-level needs, his whole life remains poor, one-sided, animal-like, his existence remains far below the real possibilities of his being" [63]. 

Although poetic in its definition, it is fundamentally true. Is it not human to become more inclined to work, if one feels involved in the final product? Is one not more inclined to work if he feels it is necessary for the community, which he has clearly learned, through praxis, that it likewise benefits him as well? The struggle, then, is to liberate work from being a status of wealth and power. Rather, it should be seen as a necessity for human conditioning and improvement. "Work" is not simply a commodity to be used and exhausted, to be stripped of creative spirit; it is has definite aesthetic qualities. If one realizes the beauty in work, the individual is more inclined to work to reach the means that was once outside its productive sphere. Work would develop beyond being a collection of one-sided mundane tasks for indefinite periods of time; it would serve as a necessary form of expression of one's abilities and talents.
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Labor's Struggle for Supremacy by Eugene V Debs.
The Right to be Lazy by Paul Lafargue

A Brief Economic History of Yugoslavia

I. Nationalization and Re-industrialization

The victory of the Yugoslav Partisan army in World War II created many challenges for the newly-liberated Balkan region. After being occupied by the Ustaše from 1941-1945, the destruction was severe – “the human and material losses were the greatest in Europe after the USSR and Poland” [Simon, Jr. 5]. The former Kingdom of Yugoslavia was left virtually in ruins, being usurped of its raw materials and resources and stripped of its transport infrastructure, mining, and manufacturing industries.

Being granted the victory of World War II, the Partisans formed their own government, based on the ideology of Pan-Slavism and a Marxian socialist philosophy. The Socialist Federal Republic of Yugoslavia was established on the 29th of November, 1945 and quickly allied itself with the Soviet Union. It soon began to implement programs to rebuild its broken post-war state. Power became strongly centralized, based on the Soviet model of state socialism, and was firmly kept in place by Marshal Josip Broz Tito’s Communist Party. Six regions were then created, of relatively equal political power, in the newly drafted Constitution of 1946: Croatia, Montenegro, Serbia, Slovenia, Bosnia & Herzegovina, and Macedonia. Soon after, sweeping restructuring began to take root; property was transferred from its former private owners to the communist-run state, financial capital was expropriated from formerly being privatized, and the means of production was converted to public ownership. Specifically speaking, large financial institutions, such as the banks, were nationalized first to control the money supply and the flow of financial capital. After that was achieved, large industries were then overtaken by state control to promote industrialization in the war-crippled socialist republic. Then finally the smaller transport, commercial, and agricultural industries followed suit; they were also nationalized to increase production [Simon, Jr. 5].

II. Deterioration of Yugoslav-Soviet Relations

 Although the initial recovery program enacted under Tito’s leadership was derived from Stalin’s 5-year plan model, significant splits shortly began to ferment between the Soviet leadership and the Yugoslav communists. Economic blockades were being placed on the young socialist state because of their alliance with the Soviet Union, and Tito’s independent stance on issues angered Stalin and his associates. Moreover, Yugoslav theoreticians began to formulate their own strains of Marxist thought and began to criticize the internal political and economic structure of the Soviet Union. Consequently this led to Yugoslavia’s expulsion from the Cominform during the final months of the 1940s. It was at this point Yugoslaviabegan to economically develop differently than its socialist counterparts –creating a unique form of decentralized market socialism based on workers’ self-management [Simon, Jr. 6]. Frankly, the idea behind it was simple; the withering of bureaucratic state would only occur if innovative mass-participatory structures were created. Egalitarianism and populism became more of a principle rather than a political tool, contrary to the Soviet Union. Decentralized socialization of industry quickly followed Yugoslavia’s alienation from the Soviet Union. Led by the efforts of thinkers by the likes of Edvard Kardelj and Milovan Đilas, the original state-control of industry began to be broken down into localities and councils were created for respective industries. The profits were distributed amongst the workers in each individual firm, and some functions of state control were relinquished and allocation became more relied on the basic mechanisms of the market to ensure self-management and proper distribution [Frei, 45]

III. An Economic Revolution

Strictly speaking, this economic transformation can be described as taking place in three major stages: Firstly, in the 1950s, workers’ collectives were created but were restricted by the state’s regulation of capital construction. This was actually a remnant of the Soviet model of socialism. Secondly, the 1960s and 1970s were a radical shift from the aforementioned control that was present in the previous decade; rather than allow the state to control capital allocation and production, socialized markets began allocating it themselves with a self-managing structure using the labor involved. Thirdly and finally, liberalization reform followed until the ultimate collapse during the 1980s and late 1970s mainly caused by inflation and debt [Simon, Jr. 7].

The decentralized Yugoslav model mainly employed during the 60s and early 70s was localized, but complex and interconnected. Authorities in certain districts were authorized to oversee consumption and production services, to ensure each commune (the basic local government units) were working in each others interests. Moreover, each autonomous region in Yugoslaviawas different; each had different legislative procedures for planning. However, it did still remain a federalist system of governance – most of executive power was exerted in creating land uses, the geographic location of large industries, traffic networking, and grandiose public service projects that required cooperation with different regions [Simmie, 272]. Most of power was derived from the legislative regions, but the localities were actually given little statutory powers. Rather, they were consulted and functioned as “pressure groups” to ensure local interests within the regions are met such as in the areas of housing, settlement, education, national defense, and the likewise [Simmie, 274]. It was a demonstration of a collective economy at work, absent of a real large-scale “free market,” where different elements of production were decided by long-term plans, medium-term plans, and annual action plans – while also being guided by the mechanisms of the supply and demand curves in a regular market, except profits were socialized as was production It was a product of the masterwork of political scientist Edvard Kardelj [Simmie, 276].

The economic growth seen during the period of decentralization was upward and dynamic. Comparatively speaking, Yugoslavia experienced the greatest per capita GDP growth out of all the Eastern Bloc economies. It also embraced a tight-controlled policy on imports from developed capitalist countries after the restoration of Soviet-Yugoslav relations in 1954-1955; foreign trade with socialist countries increased from 1.8% to about 28% in the decade following the return of good relations, while the share from Western capitalist nations dropped from 80.9% to 57.7% mostly due to the policies enacted by the Committee on Foreign Trade which was given extra power in 1956 to protect infant self-managing industries in developing Yugoslavia. Equally important, Yugoslaviaenjoyed a balance of trade with the socialist nations during this period –amounting to $176 million of exports and $169 million of imports in 1962. Manufactured goods, machinery, and equipment were traded with the Eastern Bloc nations, while trade with developed capitalist countries consisted mainly of raw materials, food, and tobacco [Frei, 45, 46]. Banking was also heavily regulated, but broken down locally. In 1961, it consisted of eight large sub-national banks and over 380 communal banks, all overseen by the National Bank of Yugoslavia, the main credit institution of the country and giver-of-loans. The sub-national bank, granted on a regional basis, served as intermediaries between the National bank and the communal banks. The idea behind this was to encourage development by focusing giving loans to regions in need of aid, and they used communal banking institutions to do so [Frei, 48, 49].

IV. The Collapse of Yugoslavia

Despite strong economic growth and potential – experiencing an annual GDP growth of 6.1%, a life expectancy of 72 years, and literacy rate of 91% according to 1991 World Bank Statistics from 1960 to 1980 – the experimental Yugoslav system soon imploded on itself due to a variety of factors. Perhaps more importantly, the Oil Crisis of the 1970s had the greatest impact on Yugoslavia and was a precursor to the catastrophe that would unfold after Tito’s death in 1980, ultimately leading to the breakup of the federation in a bloody civil war. The recession in the developed nations in the West severely hurt Yugoslavia, and hindered the economic growth it was experiencing for 30 years. Massive shortages followed in electricity, fuel, and other necessities and unemployment reached 1 million by 1980 due to the energy crisis and the increasing economic embargos imposed by Western powers. Soon, structural economic issues came to light and richer regions became frustrated from over-subsidizing the poorer regions of southern Yugoslavia, called “economic black holes” [Asch, 26]. Production severely dropped, and conditions only worsened as the decade went on; GDP dropped -5.3% from 1980 to 1989, the regions of Kosovo and Montenegro being hit the hardest. Real earnings dropped 25% from 1975 to 1980, further crushing the poorest regions. In an effort to curb the domestic crisis, Yugoslavia began to take loans from the IMF to boost infrastructure development and bring back production levels to their pre-crisis levels. Soon, its debt skyrocketed –Yugoslavia incurred $19.9 billion in foreign debt by 1981 [Massey, Taylor, 159]. As a request for incurring so much IMF debt, the IMF demanded market liberalization and many regions began to implement economic shock therapy: cutting subsidies, privatizing, and quickly opening trade to allow foreign capital, which only worsened Yugoslavia’s economic crisis. Inflation rates soared and Yugoslavia entered a period of hyperinflation, unable to cope with the currency crisis because of its complex banking system – it soon began printing large amounts of Yugoslav dinar banknotes, creating a new note of 2,000,000 Yugoslav dinars in 1989.

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 - Simon, Jr., György. An Economic History of Socialist Yugoslavia. Rochester: Social Science Research Network, 2012. 1-129.
 - Simmie, James. The Town Planning Review , Vol. 60, No. 3 (Jul., 1989), pp. 271-286
 - Frei, L. The American Review of Soviet and Eastern European Foreign Trade , Vol. 1, No. 5 (Sep. - Oct., 1965), pp. 44-62
 - Beth J. Asch, Courtland Reichmann, Rand Corporation. Emigration and Its Effects on the Sending Country. Rand Corporation, 1994. (pg. 26)
 - Douglas S. Massey, J. Edward Taylor. International Migration: Prospects and Policies in a Global Market. Oxford University Press, 2004. (pg. 159)

Download "An Economic History of Socialist Yugoslavia" here!

Anomie and Revolution

Sometimes in the heat of revolutionary change, unspeakable atrocities are committed. Individuals look back in horror at what was inflicted and are unable to comprehend how citizens could go into such a collective state of irrationality. This societal dilemma is called an issue of anomie, which is described as a state of normlessness; where there is a rejection of self-regulatory values and any distinction between right and wrong, for the moment, become obsolete. 

David Émile Durkheim, one of the fathers of modern sociology, coined the term 'anomie' in 1897 in his book 'Suicide' and describes it as a "a rule that is a lack of a rule." A society can become anomic for a variety of reasons, but it is always preceded by a dissatisfaction with the current set of affairs. In essence, the people's will to change the old order overcomes their rational instincts and makes them primitive peoples; regressing them from their modern consciousness. It is this phenomenon that is perhaps an obstacle to major revolutionary change, if done too hastily; since people loose their moral senses, their ability to recognize an emerging despotism all the more diminishes. This can have devastating consequences to the society after the initial short-lived euphoria of change.

One prevalent detailed precursor to 'collective anomie' is distorted idealism. The German Romantic author, Jean Paul, called this relationship of the mind and earth Weltschmerz - the grim understanding that the demands of the mind cannot be met in the physical world and that one's weaknesses are a direct result of his relationship with the cruelty of what he witnesses and experiences. There are seemingly two dark paths that can follow; either the individual enters a state of escapist mentality and seclusion or develops an anomic response that renders him incapable of self-regulating his values. The former is much less socially destructive, since it is individualistic, and is much more prevalent; it is known as Hikikimori in psychological studies and oftentimes is caused by post-industrialism and its implications. It is especially present in modern day Japan, given the origin of the word itself; affecting about 3.6 million.

The anomic response to Weltschmerz holds a much greater societal cost. Although individual anomie is dubbed "sociopathic," collective anomie is much more radical; it is the destruction of norms and values - and seemingly, for that time being, the destruction of morality. This deregulation of morals is often seen in war and violent struggles. It was present in the Yugoslav Wars, where Serbian soldiers in newly declared states of Croatia and the Bosnia would massacre citizens of non-Serbian ethnicity - for little reason other than ethic cleansing. 

A complex dilemma arises when you examine their actions; where did their moral consciousness go, and how could these seemingly 'civilized' peoples engage in such irrational violence? 

Oftentimes, when individuals are given authority they feel inclined to maximize their power; the Serbian military was in a position of dominance, and they felt they needed to fully exert their power, no matter the ethical implications, for their 'nationalistic common good." They had no limits; they were in a state of anomie. And moreover, war usually causes irrationality in the soldiers themselves, affecting their decision-making and their state of mind. It drives soldiers to do inexplicable acts - some so heinous they're difficult to comprehend. In Bosnia during the Yugoslav War, rape was used as 'an instrument of terror' by the Serbian-Bosnians. The victims were usually Bosniaks (Bosnian Muslims) of the region. It illustrated a total suspension of ethics and is difficult even to describe in words. Young Bosnian girls were sold and passed around in predominately Serbian infantry lines for rape, torture, and sometimes death - the majority of this happening the region of Foča in Bosnia & Herzegovina. There were specific camps designated for rape and torture, driven by religious and ethnic hatred. Young females were systematically brought to the camps, raped & tortured, and traded to other soldiers for money or just general 'enjoyment.' In the submitted 'Seventh Report on War Crimes in the Former Yugoslavia: Part II" the atrocities are described in grim detail:

"Day and night, soldiers came to the house taking two to three women at a time. They were four to five guards at all times, all local Foča Serbs. The woman knew the rapes would begin when 'Mars na Drinu' was played over the loudspeaker of the main mosque.." 

"..While 'Mars na Drinu' was playing, the women were ordered to strip and soldiers entered the homes taking the ones they wanted. The age of women taken ranged from 12 to 60. Frequently the soldiers would seek out mother and daughter combinations. Many of the women were severely beaten during the rapes."

The song 'Mars na Drinu' was a Serbian-Chetnik patriot song that was banned under Tito in socialist Yugoslavia. To illustrate the ethnic dimension even further, the report goes in more personal detail of the rapes:

"While the witness was being raped, her rapist told her, 'You should have already left this town. We'll make you have Serbian babies who will be Christians.' Two soldiers raped her at that time; [And then] five soldiers raped the 18-year-old girl in full view of the witness."

You can read the this particular war crimes report in full here. Also, an interview of Seada Vranic, the author of 'Breaking the Wall of Silence,' can be found here. She is a renowned journalist who has covered the mass rape that occurred during the Bosnian War. 

Now, the frightening question still remains; what caused these individuals to lose their sense of humanity? What desensitized them to the point of violence and rape? The collapse of their moral environment, their racially-idealist attempt to realize their nationalist goals, and the elimination of social values all contributed to their irrationality. They became submissive to 'herd mentality' that was formed on 'rules that lack rules' - there was no moral direction. It is this, I fear, that any form of disorganized violence could bring. This form of irrational collectivism is dangerous, and if any revolutionary change is brought it must be properly handled to prevent such a tragedy, in the true Aristotelian sense of the word, from happening. 

The Paradox(es) of Yugoslav Communism & Sovietism

"Absolute power corrupts absolutely!" it is commonly said. This idiom has proved to be true on countless occasions, and the Communist experiments of Eastern Europe are no exception.

In 1957 Milovan Đilas, a prominent Yugoslav dissident and Communist thinker, published his magnum opus "The New Class: An Analysis of the Communist System." In it, he exposed the material privilege the nomenklatura had in Soviet society and the paradox of what has become the 20th century Marxian interpretation of "dictatorship of the proletariat.'

Milovan Đilas believed that Eastern Communism was perpetually in a state of false transition; it was centralizing state power and rendering the revolution(s) fruitless. He was correct in his analysis, and he only validated the well-established idiom of power [quoted above] that was espoused by John Dalberg-Acton in the mid 1800s. The vanguards of 20th century Communist systems did little to nothing in bringing their respective society to classlessness. Rather, they created a new class of wealth and power that were perhaps more oppressive than the system they initially overthrew. This is the true paradox of the 20th century Marxist experiment.

But here lies the conundrum of Marxist thought; how is the transition to egalitarianism achieved, and is the irony of establishing dictatorship necessary in reaching the Communist ideal?

Milovan Đilas would argue that true egalitarianism would not be achieved through an Orwellian vanguard, and I tend to side with his sentiments. Eliminating democracy and ousting dissenters creates an environment based on fear and passivity. Karl Marx, in his criticism of capitalism, noted the systemic alienation of the proletariat from production. He hypothesized that the capitalist means of production separated the worker from the output of his labour and made him surrender his self-autonomy and destiny to maximize the surplus value of the bourgeois; In essence, ripping apart individuals [workers] from their right to be directors of their own actions. The Marxist experiments of the 20th century did very little to fix this and include the workers (i.e reincorporate them into the means of production), rather it perhaps even furthered their alienation, another ironic paradox, through obedience and mass-surveillance, making them puppets of the domineering state.

But what is the missing link to eliminating this unnatural alienating aspect in production? Simply, you must let people be free, rather then servile to the state (state socialism) or corporatist demands (capitalism). In revolutionary Catalonia this was tried and something radical was done to put production into the hands of the workers. Money was abolished, being replaced with a voucher system, and industry functioned on direct democracy. Goods were allocated effectively, and needs were met. Most importantly, some from of horizontal power was reached and there was solidarity in the workplace; it was a beautiful creation and lasted until its demise by the onslaught of fascism in the aftermath of the Spanish Civil War. While it existed it was a true living example of a tried attempt in eliminating alienation, as Marx described, and real progress toward classlessness.

The only similar attempt made by the self-described Communist states was in Yugoslavia, where Tito attempted to institute independent socialism which was one of the reasons for their split with the Soviet Union [known as the Informbiro period]. Milovan Đilas was very much involved, advocating workers' self management in state run industries. However after Đilas' imprisonment, the main architect of the workers' experiment was Edvard Kardelj who favored decentralized workers communes rather then state-controlled industries. Sadly, the project failed to get the traction it needed. Although Yugoslavia was distinctively better than its Communist counterparts in Eastern Europe and Asia, it still failed to give the workers the sufficient power over production they so deserved - however they should be applauded for attempting it, albeit insufficiently.

Thomas Jefferson, a champion of the Enlightenment, eloquently wrote:

 "...every government degenerates when trusted to the rulers of the people alone. The people themselves are its only safe depositories."

This is the issue of 20th century vanguardism that we cannot overlook. The creation of a "New Class" is an major issue in leftist thought and we must be weary in calling for its future reestablishment. An examination of 20th century failures would be wise in formulating the basis for Post-Marxist thought, and we must always remember that freedom should never be compromised; because someday we might find little of it left. Slavoj Zizek in his essay "A Permanent Economic Emergency" published in the New Left Review writes,

 "What was wrong with 20th-century Communism was not its resort to violence per se—the seizure of state power, the Civil War to maintain it—but the larger mode of functioning, which made this kind of resort to violence inevitable and legitimized.." 

He goes on to say that when a state believes that it is the "instrument of historical necessity" it has no limitation on the terror it can inflict in achieving its ends. This is the danger, and I stand by localized, decentralized power as a probable solution; and if not that, a less oppressive vanguard of weaker stature that derives its true might from the regional workers' communes rather then from itself. This, I feel, is fair and truly progressive in the Marxian sense.
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Zizek's 'A Permanent Economic Emergency'
Tito on Self-Management