This is Richard Wolff from Democracy at Work responding to another Ask Prof Wolf question
from our Patreon community. This question comes from Anthony Sarich and he wants
to hear what we have to say about the experiment in worker co-op type organization in Yugoslavia,
from the end of World War 2 and for several decades during the regime of Marshall Tito. I’m
glad to talk about it. It is one of the important experiments of the 20th century in worker co-ops.
It has some important differences from what we are talking about today,
but it also is a very important story with important lessons for us to learn from,
as indeed all of the 20th century's experiments were. Those efforts to go beyond Capitalism
whether in the Soviet Union or the People's Republic of China, Cuba, Vietnam and so on.
These experiments in Yugoslavia also play their role.
As Anthony Sarich rightly understands, what they called their experiment in Yugoslavia was worker’s
self-management and we pushed something somewhat different, workers self-directed enterprises. The
difference there is the keywords management and directors. To understand the difference
we can look at how Capitalist corporations work. At the very top of the Capitalist corporation
are 10,15, sometimes 20 people who sit on something called the board of directors.
The people on that board are selected by the major shareholders in an election every year where you
get one vote for each share you own. Since the vast majority of Americans own no shares in
these companies they have no votes. Typically the bulk of the shares, a determinant amount,
is in the hands of a handful of people, so they vote their shares,
and they determine who's on the board of directors and the board of directors is the real authority
in most large corporations. They decide what the company is going to produce and what technology
it's going to use and where production is going to be located and what's done with the profits
that everybody's labor helps to generate. Okay, management is something quite different.
One of the things the board of directors does is hire managers and tell them what to do,
so the pecking order here is very clear. Directors and major shareholders, that's the top,
they own the business and they run it. They hire managers who in turn hire the workers.
Self-management which has been something Capitalism has played with, tried occasionally,
experimented with, involves workers being told, “we’re not going to hire a manager
to overlook you, to manage you, we’re going to let you do some or all of the management yourself.”
It gives workers more power absolutely. It's an interesting experiment, but it is not the same
as having the workers in the dominant position of directing the enterprise, hiring managers,
if they want to or not, but really being the folks in charge. Wow, our argument about worker co-ops
has to do with what we call worker’s self-directed enterprises. The idea being that the workers
are their own board of directors. They don't have any other directors. They may or may not
be self-managing but the key here is the higher level, the dominant level, the real control.
So, what you had in Yugoslavia was a step in that direction. Giving workers their own management is
no minor matter. No disrespect is involved here in noting the difference between that
and going the next big step which is the workers, not merely managers, but the directors
of the corporation. So that's an important lesson we learned, that there is a kind of halfway
point. If you like a midway point, it isn't quite Capitalism with directors over managers over the
mass of employees. It is something else. Workers are doing self-management
but there's still the question of who’s the director and often in Yugoslavia, and elsewhere,
the directors were people outside of the workers who self-managed. State officials of one kind or
another, party officials and so on. Then there's a second lesson from the Yugoslav experience, very
important, on the one hand you had the workers managing the enterprises, sometimes pushing even
further in Yugoslavia in the direction of becoming directors, which in some cases they probably were,
but on the other hand you had a government, and something had to be worked out between
the power of the government and the Communist party that ran that government on the one hand
and these worker self-managing enterprises on the other, and that government had its own agenda.
If you recall the history, Tito was independent of the Soviet Union and its Eastern European allies.
[Yugoslavia] carved out an in-between place. It wasn't part of Western Capitalism, it wasn't
quite part of Soviet Socialism, it was a neutral intermediary. Yes, with a Communist party, yes,
with a Socialist system, but still independent. They therefore had a hard road to hoe to stay
independent of Stalin on the one hand and of Western Capitalism on the other. So
that government had its own agenda, which wasn't always the same or consistent with
what the worker self managers, especially those who became almost directors, what they wanted,
and there were tensions between them and this was a whole new experience.
Most of Eastern Europe, starting with the Soviet Union, had government enterprises. The government
owned, operated all of the basic industrial enterprises. It may have hired managers,
but there was no question that the workers were not the directors of these enterprises;
state officials were. It was state officials who replaced the private board of directors,
not the workers who replaced the private board of directors,
and so in Yugoslavia there was a lot of tension, a lot of conflict who made the final decision— the
party and the government on the one hand, or the workers in their self-management
operations on the other? We have to learn that that kind of a tension exists if you
have a worker co-op based economy. It would exist if workers were their own directors.
If we had worker’s self-directed enterprises as the normal enterprise structure in a new economy,
and then there would be tension between them and the government, and that would have to be
worked out, presumably in a way that respects a certain role for the government but also respects
the self-determination of worker’s self-directed enterprises. You know, Capitalism too has had a
long and difficult struggle, which is not over, between the power of the private corporation and
the government. These days for example the power of big corporations in the media Google, Alphabet,
Apple, Facebook on the one hand and government controls on the other. That's being fought out
in Europe, in The United States, so there's always this kind of tension so long as these institutions
coexist. The state over here and the self-directed enterprises over there and that will continue.
I hope this clarifies the relationship, the learning, the experiments that link what
was tried in Yugoslavia as a way to get beyond Capitalism, and what we've been talking about
as worker self-directed enterprises as the next phase of economic systems beyond Capitalism. Thank
you again to our Patreon community, among other things, for providing these important questions
and I thank you as always for your support.