Transition into a Market Economy: The Road to Privatization in Yugoslavia
It is not worthwhile to criticize monetary policy (or "monetary-credit" policy, as it has been wrongly and characteristically called in Yugoslavia), interest rate policy, exchange-rate policy or macroeconomic policy in general, 1 because the basic problems of the Yugoslav economy lie in the most fundamental characteristics of this third economic system, the socalled market-planned economic system. A transition into a market economy cannot be achieved only or mainly through changes in the conduct of the economic policy. Putting too much emphasis on the conduct of the economic policy misses the point. By focusing on economic policy, unwillingly or with good intentions, grave mistakes could be made, and the conclusion could be quite wrong. Economic policy, from the standpoint of the market economy, had to be wrong, strong, or peculiar to enable business enterprises to keep producing goods in the market-planned economy. Only such an economic policy could somehow (the details of which shall be explained in this chapter) neutralize the peculiarities of the third economic system and make economic life look, at least on the surface, approximately normal.
An adequate path for the transition from the market-planned into the market economy cannot be found without precise knowledge of the essential features, functioning, and residual aspects of the market-planned economy. In the first three sections of this chapter, we shall present this necessary background information on the Yugoslav market-planned system. In the fourth section, a desirable transition will be explained, with particular emphasis on the introduction of the private ownership of busi