Privatization in Yugoslavia - Only if Necessary

The shares would be issued according to the book value of the firm. This would be appropriate only if the book value and the actual value of the firm were to converge. One of the shortcomings of the federal law is that it provided inflationary share purchase. The advantage of this law is that it opened the door to privatization in the unfavourable conditions.

After the federal law, there were laws on privatization in Croatia and Serbia. These laws are also to be enacted in Macedonia and Slovenia. The practical handling of the Croatian law turned out to be the search for the quickest way to turn the quasi state ("social") property into state property. In the present circumstances in Croatia it is unlikely that anyone would seriously consider privatization.

Even the Serbian Law on the conditions and procedure of turning social property into other kinds of property represents a step backwards compared to the federal law. It in effect provides for the funds raised by selling state-owned firms to be handed over to the state or its development fund. Reflecting upon this Ljubomir Madzar (a well known economist from Belgrade) stated that "the society loses the income which is being created by the social capital and the right to administer it, while it gets nothing in return". It is totally unclear what the notion concerning volunteerism promoted by Act 1 of the Law actally means. When will the employed consent to losing nonfinancial profits owing to delays, sickleaves, indiligence, the 3 to 4 hours long working day etc. and even their jobs - so that the firm could be sold? In many respects this law looks as if its creator was governed by a motto "Privatization - if it is absolutely necessary, but in such a manner that everybody declines".

The suggestion of the Slovenian law on privatization, recently halted in the Assembly owing to the Trade Union's protest, is based on the Saks model. If it is applied, this law will enable the fastest process of privatization in all of the Eastern European countries. In the meantime, in Slovenia and some other parts of Yugoslavia privatization is proceeding spontaneously and if it continues in this fashion, we will soon be the new "champions of spontaneity". The spontaneous privatization, however, does not apply to the big industrial firms, the famous dinosaurs of socialist economies, which have traditionally been the toughest nut to crack. According to the "Slovenian model", part of the firm's property would be transferred to investment funds, and then through free share distribution to individuals; another part of the state firms property would be sold in the market, and the third part would go to the funds directly. The critics of the Slovenian model of privatization point out that it betrays the Saks's liberalism and that it in effect represents a process of transferring the state ownership to investment and pension funds, which would, as has traditionally been the case, be the pilgrims of the nationalization process in the economy.

The Macedonian privatization programme has not yet been completed. The privatization there has gone according to the federal law. It allegedly embraced around 60% of state-owned firms, but in most cases the property transfer was symbolic.

The privatization in Macedonia has from the beginning been characterized by the sale of monopolistic firms (e.g. central heating in Skopje). Overall we can conclude that the conditions surrounding privatization in Yugoslavia in 1991 were much worse than last year, although there are more laws to qualify it. The privatization has little chance of succeeding unless there is free trade, the presence of real exchange rate, the minimal price control and the internal market network. The chances for its success are impeded by the obvious aspirations of the national states to control thier economies. Postponing it would only aggravate the state intervention in the conditions of an ever-increasing poverty.