Uneasy Symbiosis of a Market Economy and Democratic Centralism: Emergence and Disappearance of Market Socialism and Yugoslavia

The Yugoslav economic system served as the only example of a socialist market economy, even though the system evolved through many reforms. The motives for the reforms and, what I call, counter-reforms, differed. These systemic changes also differ from similar attempts in other socialist countries of Eastern Europe. In Yugoslavia, the changes brought by reforms were greater, their scope was not limited by external powers, and they were not related to changes in political leadership. The reforms, however, remained ‘half-hearted efforts to implement policies promoting free market exchange of goods and services’ (Katz, 1987). They, in particular, failed to delimit political power from economic power; counter-reforms were enacted when the market became too destructive to political monopoly of the Party and to the principle of democratic centralism.