Growth or Reforms

Industrial production in Serbia continues to fall, in the last post-war period it declined another three point something percent. The Socialist Party of Serbia, the Serbian Radical Party and the Democratic Party of Serbia were the only ones to lament that fact. One has to understand the socialists and the radicals. Their hearts bleed while they watch and see all they had built for years collapse - a bad economic system which only spent capital and exclusively produced losses. If October 5 presents a discontinuity with the socialist-radical manner of ruling over the state, therefore over the economy as well, then all that they had left as a legacy to the new government should collapse as soon as possible.

But, why is the Democratic Party of Serbia shedding bitter tears over the fallen fate of such an industry? The decline of industrial production has become an obligatory chant of Vojislav Seselj's and Ivica Dacic's public appearances with which they wish to present crown evidence of the new government's incapability. Recently, Vojislav Kostunica, DSS's leader and president of Yugoslavia, has included in his public repertoire a refrain in which thesis vary on the incapability of the Serbian government to organize production (which should contribute to its growth) and on the unsuccessfulness of the reforms because industrial production hasn't risen. Elaborating on this thesis, Kostunica's fellow fighters from DSS have extracted a capital conclusion that Djindjic's cabinet should be changed. Both thesis on which, in this case, Kostunica's political ill humor lies, are in essence anti-economic and anti-reform. The first, that the government hasn't done a thing for the growth of industrial production, is peeking out of the old Russian model of communist economy in which it is important that the "workers in our state have cast one million tons of steel and have dug out five million tons of coal, while the kolkhozes have reaped three million tons of wheat". That's how Slobodan Milosevic and Mirko Marjanovic used to operate in the last couple of years. Serbia used to produce tractors, and combines, and cars, and wagons, and coal, and electrical energy, and wheat... only no one asked how much that costs. The government planned how much of what needed to be produced, the workers produced "something", and Mirko Marjanovic brought a sack full of money to them every first day of the month. When a line was drawn on October 5, it turned out that the costs were higher than the earnings - an empty state strongbox (budget) was found, which financed the "incentive" for production, at least 300 billion dinars of losses made in such an industry and halved and ruined economic capital assets.

And instead of seeing that annual balance sheet of Milosevic's rule as the greatest warning for the new government, DOS's leaders, in the first days following the October revolution, have taken up all the main "seats" in the companies (the famous crisis headquarters) and therefore actually continued where Mirko Marjanovic left off. That's why today the employees of the ruined companies, instead of chasing their managers, are running to the government of Serbia asking for their wages. There are not many of those today who want to hear prime minister Djindjic's albeit late cry that the government isn't Serbia's general manager and that it would neither organize production, nor hand out the wages. The employees believe that the easiest thing is to hang on to the state "skirt", and political populists believe that to play along with the "lowly passions" of the working class will bring them more ballots on some future elections. However, one needs to say publicly that populist economy has its price by which the finance minister (meaning, Bozidar Djelic) either has to loosen the purse strings or form some secret budget from which he will hand out credits and salaries to the companies. That also means that the governor of the National Bank of Yugoslavia (therefore, Mladjan Dinkic) should, for the needs of political populism, outside of plan, allow a few billion dinars to be printed which would be distributed to the ruined companies for a revival of production. The money, as usual, would be spent on producing low quality goods with fantastically high prices and on the employees' wages. That is why the real question for those who are toying with populism again today is whether they would invest their private funds into any Serbian industrial company so that a production growth could be statistically noted?

In the last (at least) ten years, the ruling political nomenclature has built into the Serbian industry a system virus whose bad characteristic is that it eats capital and instead of profits, produces losses. In that period, companies operated by spending money so that something could survive. What they did make was expensive, of poor quality, old fashioned and it couldn't compete on the market. For their invested labor, the employees received wages which were progressively smaller, only so that it would turn out in the end that this system destroyed all state capital invested into production, together with half of the property of the companies themselves.  

That's why after the October revolution economic reforms aren't a whim of a few domestic and foreign enthusiasts of Serbian descent newly arrived from abroad. The issue is the necessity of changes so that what little capital is left shouldn't dissipate as well. Those from the world who are prepared to help create a new Serbian industry with their capital are satisfied with the fact that the initial reforms have been implemented in a healthy manner and because they have given results very quickly. The largest part of the citizens, therefore, the employees as well, knew even before October 5 that changes would be difficult and painful because the virus which has comfortably settled into the Serbian industry has to be destroyed. And those economic reforms themselves should mean a severance with the old communist economic philosophy of producing millions of tons of "something". Economically developed countries are filling up their gross domestic product less and less with millions of tons of "something" and are earning more and more by "producing" high tech goods, by developing telecommunication, marketing, tourism...

Those who are forcing the Serbian government today to revive the growth of the existing industry are actually standing on an anti-reform course, due to at least two reasons. First, they are forcing the government to take up a job which doesn't belong to it and, second, they are in favor of preserving a ruined industry.