Veneck’s participatory economy: failure or success?

Along the 20th century, numerous numbers of economic

systems have been introduced. Most famously capitalism (Wilson L,

2008), beside other systems like communism, fasiaims and

socialism. Actually Yugoslavia is the only country which experienced

nearly all economic systems in addition to what so called the labour

market economy (howord, 2001) which will give us an opportunity

to make a contrast between venek’s participatory economy applied

in Yugoslavia and the rest of the economic systems. The main idea

of the participatory economy is based on emphasizing on the

labours’ role in the economy. Workers were not considered as a

factor of production, but actually the owners of factors of production

throughout enterprises and corporations they worked in (Kennet

2004). This essay will express the participatory economy or in other

words, labour market economy in terms of definition, objectives,

and principles and mostly important the evaluation of the degree of

success of the system. The essay will also express the performance

of the participatory economy in reigns of venek and Tito who are the

founders of the system (kalmi 2003).

Veneck provided an economic system which is very

exceptional. It was as previously stated a combination between

socialism and capitalism. It took the participation of people in

managing the economy as workers and through firms from

capitalism (self-management 462). On the other hand, the idea of

equality between workers was socially based. What was very unique

about veneck’s participatory economy is the period it showed up in.

After the Vietnam war and the during the cold war period between

capitalism and communism, people started looking for an

intermediate system and veneck’s system was the strongest

nominee (kalmi 2003) . It was then adopted by Tito in Yugoslavia

who was one of the strongest supporters.

Generally speaking this type of managing the wealth of the

economy has proved to be not so successful for many reasons which

will be expressed throughout the essay. One of the evidence is that

it didn’t last for long; it started officially in the 1950’s (Library of

Congress Country Studies 1990) and ended by the end of the

Yugoslavian state in 2003. Some attribute the failure of the labour-

market economic system to the way venek himself represented it

(kalmi 2003). He was accused of being too eager to represent his

idea and he refused any adjustment in the economic system. In

other terms, not flexible. Another opinion expressed was calling for

separating between the theory of venek and the way it was applied

in the Yugoslavian economy. They actually attribute the failure to

the way Yugoslavia adopted or applied the system. They actually

applied it in only three institutions out of five main economic

institutions. Besides, venek was very unrealistic expressing the

predicted results. (Kennet 2004).this opinion seems much more

realistic and accurate as the performance of the economy does not

depend on the degree it sticks to its economic ideology as much as

it depends on the way of management of those in charge. One of

the opinions regarding the failure of the participatory system is that

venick went so theoretical rather than practical (kalmi 2003). He

actually focused too much on the operation of the firms under the

workers’ management and failed to provide an overview of the

operation of the economy in all its microeconomic and

macroeconomic aspect. This opinion is not very accurate as no

economist or research can provide such vision on the performance

of the economy and no one can provide such ideal figure. Others

assumed that one of the major deficiencies in the participatory

economy adopted by venick is that it lacked the link between firms

(self-management 463). Firms might have been operating

successfully, but the absence of link can be a huge deficiency in the

economy.

The participatory system has many objectives, but actually all

these objectives can be summarized in two main issues; eliminating

unemployment and focusing on the personal income rather than the

total GDP. There aren’t really frequent statistics about the economy

indicators in this period, but there are other important indicators

(kalmi 2003). These objectives were great proof of the failure of the

system as venek was very optimistic and he had to realise that this

was not applicable. Maximizing the output of the enterprises weren’t

the first concern, but the higher income of labour was (Kennet
2004). This can lead to less enthusiastic workers with very low

output because they lack the incentive to produce.

It is very clear that the venek’s economic model didn’t

achieve the expressed objectives, but there are still benefits to be

mentioned. The most important advantage is the relative

satisfaction of a very wide class in the society who are the workers.

Another important advantage is minimizing the friction between the

government and workers as they have the most powerful situation

in the economy (Kennet 2004). Decreasing the gap between the rich

and the poor was also an effective advantage although some

consider as a curse.

After the end of the cold war by the defeat of communism and

outstanding the capitalism, the world rejected any other system

rather than capitalism including the participatory economy. The

Yugoslavian economy went weaker and weaker. Inflation rate

reached 42% in 2000 and the GDP per capita was $2,300 only, the

purchasing power was also very low (World Fact Book

2001).Yugoslavia finally ended with its disintegration into Slovenia,

Croatia, Bosnia-Herzegovina, Macedonia, Montenegro and Serbia

and Serbia also lost control over Kosovo (Western Intervention and

the Disintegration of Yugoslavia 1999).

Concluding, venek’s participatory was an economic system

that raised many contra versions among economist. Most consider

as a failure for debatable reasons. Some attribute the failure to the

ideology itself while others attribute it to the way veneck and Tito

applied it in Yugoslavia. There are still advantages that were

accompanied by the participatory system, but many consider that

disadvantages were much higher. At the end, this will not stop

economist from continuous searching for a better economic system

provides the best allocation of resources.

References:

1) Horvat,B.(2001) “Self-Management and the Fall of Yugoslavia”

retrieved 2nd November from www.geonewsletter.org

2) Kennet D. (2004) “A new view of comparative economics”

united states: Thomson.

3) Kalmi, P. (2003) “The Study of Co-operatives in Modern

Economics: A Methodological Essay” retrieved 2nd November

from web.uvic.ca/bcics/pdf/mapconf/Kalmi.pdf.

4) Kornail (1971) Self-management, chapter 20.

5) “Western Intervention and the Disintegration of Yugoslavia”,

retrieved 2nd November from www.davidchandler.org

6) Wilson, L .(2008) “FREEDOM AND CAPITALISM”, retrieved 2nd

November from www.drlwilson.com

7) “Yugoslavia economy” (2001), CIA world fact book, retrieved

at 2nd November from www.geographic.org.