Systemic Changes and Unemployment Growth in Yugoslavia, 1965–1984

Abstract

The Yugoslavs are infected by what calls the disease of “historical optimism.” Shocks, emanating from the international economy over the last decade or so, were seen as a developmental problem or, at worst, a transitory difficulty. This argument seems to follow these lines: Contemporary capitalism, of course, is doomed to collapse sooner or later; contemporary etatism is also in a state of crisis and will evolve toward Yugoslav self-management socialism. The socialism of self-management, however, could not itself be in crisis, because, if it is in crisis, what is left?In fact the word crisis was not used to describe the state of the Yugoslav economy until September 1982 when it was discovered that foreign debt could not be serviced and required rescheduling. By then the Yugoslav foreign debt was $20 billion, the unemployment rate stood at 10 percent to 16 percent (depending how you measure it), and inflation was at 40 percent. Only then did the policymakers realize that these problems were a consequence of prolonged economic mismanagement, excessive borrowing abroad, arbitrary decision making, and an autarchic economic policy in general.