WHAT WAS TITO'S SEPARATE WAY?

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After the break with the Soviet Bloc there was a need to find an ideological basis for the unique Yugoslav position as a Communist nation outside the Soviet community.[21]The Yugoslavs contended that the SU had deviated from ‘true Marxism-Leninism’ as a result of an independent
Communist bureaucracy created by Stalin which transformed the dictatorship of the proletariat into a dictatorship over the proletariat.[22]

The essence of the new doctrine was that the state must ‘wither away’. The key to this development was decentralisation of the government, of the economy, and, later, of the CPY.[23]

The essence of the decentralisation in the economy was the introduction of self-management system. First real step towards self- management was the Basic Law on the Management of State Economic
Enterprises and Higher Economic Associations by the Work Collectives which came into force in June 1950. In fact, this law remained purely declaratory, until the initial operational provisions were passed in 1952-
1953. Then followed an endless zigzag of constitutional, legislative, and other changes and reversals.[24] In April 1951 the Federal Planning
Commission was abolished. At the end of 1951 a new Law on the Planned
Management of the National economy took force. The Soviet system of planning was abandoned. In its place the Yugoslavs introduced annual (and later medium-term) ‘Social Plans’, which at the enterprise level were no longer directive and compulsory, but indicative.[25]

In 1951-1952 there were several efforts to free prices, and several devaluations of dinar.[26]

The economical reforms were followed by the crucial turn in agricultural policy in early 1953, when the movement toward collectivisation was reversed and the peasants were permitted to leave the collective farms. Ever since that turn the Yugoslav agriculture has been predominantly based on individual farming.[27]

The law of May 1949 on People’s Committees had given greater political and economical powers to the district, as opposed to republican or federal, levels of government. An administrative reorganisation of local government units was designed to strengthen them through enlargement. The existing 7,104 local people’s committees were replaced by 3,834 communes grouped in 327 counties, plus 24 cities without county affiliations.[28]

Administrative decentralisation was carried further. Many of the
Federal Ministries responsible for the direct management of the economy were abolished. In general, the number of ministries was reduced to 19 from
34.[29]

The role of the CPY was also reformed. The 6th Congress of the CPY met in November 1952. The redefinition of the CPY was symbolised by a change of name. The CPY became the LCY, the League of Communists of
Yugoslavia. The Resolution and the Statute adopted by the Congress redefined the role of the Party. The ‘basic duty and role of Communists’ was ‘political and ideological work in educating the masses.’ The LCY ‘is not and cannot be the direct operative manager and commander in economic,
State, or social life.’[30]

The conclusions of the Law on People’s Committees and the 6th
Congress of the LCY were formally embodied in the new Constitutional Law in
January 1953. Article 3 pronounced the People’s Committees of municipalities and districts to be ‘the basic organs of state authority’ and limited the powers of federal and republican governments to the rights
(admittedly still considerable) specified by the Federal and Republican
Constitutions.[31]So, the devolution of economic power to the enterprises was matched by a devolution of political power to the communes.[32]

But as the reforms begun, the economic situation was becoming more and more complicated. After the beginning of the economic blockade,
Yugoslavia found itself in dangerous economic situation. Tito felt bound to turn to the West for economic aid. In late summer 1949 Yugoslavia had applied to the World Bank and the US Export-Import Bank for credits of $250 million. The first formal request by the Yugoslav government for American foodstuffs was made in October 1950.

On 18 November 1950 President Truman recommended the Congress a large- scale scheme of aid to Yugoslavia, and on 29 November, an American-Yugoslav
Aid Agreement was concluded. By the end of January 1951, the sum of
American aid had reached $17 million, with a further $35 million promised, and a further (2 million from the British.[33]In summer 1952 the US administration made a further $30 million credit available, and by the end of the year Yugoslav foreign trade had again reached its total level of
1948, with the main Western powers taking the place of the Soviet Bloc.[34]

The other result of American aid was the beginning of a pro-Western
Yugoslav foreign policy.[35] On 14 November 1950, the US-Yugoslav agreement on the re-equipment of the Yugoslav Army was signed.[36]

The American aid led to the boom of the Yugoslav economy which had been achieved in party by means of a high rate of investment expenditure.[37]But by the end of 1961 the boom had turned into recession.
The growth rate for industrial production, which had been 15% in 1960, declined to only 7% in 1961 and an annual rate of 4% in the first half of
1962.[38]

In January 1961 a number of economical reforms were introduced. Banks were made more independent, dinar was devalued. But this mini-reform was unsuccessful.[39]Yugoslav economy needed greater reforms. Yugoslavia already was living beyond its means. In 1964 and the first half of 1965 the country was incurring a balance-of-payments deficit at a rate of more than
$200 million annually.[40]

All these problems led to the introduction of the Economic Reform in
1965, which had two principle aims: to make Yugoslav goods competitive in international markets, and to modernise the economy by eliminating uneconomic investment and production and by compelling enterprises to respond to the forces of supply and demand.[41]The Reform had five major components:

1. Lower taxes;

2. the role of the state in investment allocations was henceforward to be limited;

3. very large adjustments in product prices designed to bring relative domestic prices designed to bring relative domestic prices closer to world parities;

4. the dinar was devalued from 750 to 1,250 to the dollar; customs duties, export subsidies and the range of quantative restrictions were reduced; and Yugoslavia become a full member of GATT;

5. private peasants were given the right to buy farm machinery, and the opportunity to obtain bank credits for this purpose.[42]

But the immediate economic results of the Reform were minor. In the first years of the Reform Yugoslavia was facing rapid inflation, a serious recession and growing unemployment.[43]The major effects of the Reform were in the sphere of banking and trade. The foreign trade was expanded.[44]

The economic problems led to a rise of nationalism in Croatia and
Slovenia. The most productive enterprises were located in Croatia and
Slovenia, and it was in the interests of Croats and Slovenes to have a less centralised country. In Croatia agitation for more autonomy went to the length of demands for sovereign independence (but in Yugoslav confederation) and a separate seat in the UN.[45]Tito’s response to the
‘national excesses’ was to force the resignation and replacement of the highest-level Croatian leaders in December 1971. During 1972, the LCY leadership structure throughout the country underwent a major reshuffling.[46]

In general, the 1970s were marked by the two major developments - the reconciliation with the SU, and the introduction of the ‘delegate’ system by the Constitution of 1974.

Brezhnev’s visit to Belgrade in August 1971 symbolised the end of the period of acute suspicion. Tito returned Brezhnev’s visit in June 1972, and negotiations were duly begun in September for the huge new Soviet credit
($1,300 million) for the construction of new industries.[47] In October
1973, during a visit to Yugoslavia, Soviet Prime Minister Aleksei Kosygin and Yugoslav Prime Minister Djemal Bijedic agree to non-interference in internal affairs, industrial co-operation, and better understanding.[48]

The major development in the domestic politics was the promulgation of the new Constitution in 21 February 1974. There were three principal aims of this Constitution: