the participatory economy
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Venecks participatory economy: failure or success?
Along the 20th century, numerous numbers of economic
systems have been introduced. Most famously capitalism (Wilson L,
2008), beside other systems like communism, fasiaims and
socialism. Actually Yugoslavia is the only country which experienced
nearly all economic systems in addition to what so called the labour
market economy (howord, 2001) which will give us an opportunity
to make a contrast between veneks participatory economy applied
in Yugoslavia and the rest of the economic systems. The main idea
of the participatory economy is based on emphasizing on the
labours role in the economy. Workers were not considered as a
factor of production, but actually the owners of factors of production
throughout enterprises and corporations they worked in (Kennet
2004). This essay will express the participatory economy or in other
words, labour market economy in terms of definition, objectives,
and principles and mostly important the evaluation of the degree of
success of the system. The essay will also express the performance
of the participatory economy in reigns of venek and Tito who are the
founders of the system (kalmi 2003).
Veneck provided an economic system which is very
exceptional. It was as previously stated a combination between
socialism and capitalism. It took the participation of people in
managing the economy as workers and through firms from
capitalism (self-management 462). On the other hand, the idea of
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equality between workers was socially based. What was very unique
about venecks participatory economy is the period it showed up in.
After the Vietnam war and the during the cold war period between
capitalism and communism, people started looking for an
intermediate system and venecks system was the strongest
nominee (kalmi 2003) . It was then adopted by Tito in Yugoslavia
who was one of the strongest supporters.
Generally speaking this type of managing the wealth of the
economy has proved to be not so successful for many reasons which
will be expressed throughout the essay. One of the evidence is that
it didnt last for long; it started officially in the 1950s (Library of
Congress Country Studies 1990) and ended by the end of the
Yugoslavian state in 2003. Some attribute the failure of the labour-
market economic system to the way venek himself represented it
(kalmi 2003). He was accused of being too eager to represent his
idea and he refused any adjustment in the economic system. In
other terms, not flexible. Another opinion expressed was calling for
separating between the theory of venek and the way it was applied
in the Yugoslavian economy. They actually attribute the failure to
the way Yugoslavia adopted or applied the system. They actually
applied it in only three institutions out of five main economic
institutions. Besides, venek was very unrealistic expressing the
predicted results. (Kennet 2004).this opinion seems much more
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realistic and accurate as the performance of the economy does not
depend on the degree it sticks to its economic ideology as much as
it depends on the way of management of those in charge. One of
the opinions regarding the failure of the participatory system is that
venick went so theoretical rather than practical (kalmi 2003). He
actually focused too much on the operation of the firms under the
workers management and failed to provide an overview of the
operation of the economy in all its microeconomic and
macroeconomic aspect. This opinion is not very accurate as no
economist or research can provide such vision on the performance
of the economy and no one can provide such ideal figure. Others
assumed that one of the major deficiencies in the participatory
economy adopted by venick is that it lacked the link between firms
(self-management 463). Firms might have been operating
successfully, but the absence of link can be a huge deficiency in the
economy.
The participatory system has many objectives, but actually all
these objectives can be summarized in two main issues; eliminating
unemployment and focusing on the personal income rather than the
total GDP. There arent really frequent statistics about the economy
indicators in this period, but there are other important indicators
(kalmi 2003). These objectives were great proof of the failure of the
system as venek was very optimistic and he had to realise that this
was not applicable. Maximizing the output of the enterprises werent
the first concern, but the higher income of labour was (Kennet
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2004). This can lead to less enthusiastic workers with very low
output because they lack the incentive to produce.
It is very clear that the veneks economic model didnt
achieve the expressed objectives, but there are still benefits to be
mentioned. The most important advantage is the relative
satisfaction of a very wide class in the society who are the workers.
Another important advantage is minimizing the friction between the
government and workers as they have the most powerful situation
in the economy (Kennet 2004). Decreasing the gap between the rich
and the poor was also an effective advantage although some
consider as a curse.
After the end of the cold war by the defeat of communism and
outstanding the capitalism, the world rejected any other system
rather than capitalism including the participatory economy. The
Yugoslavian economy went weaker and weaker. Inflation rate
reached 42% in 2000 and the GDP per capita was $2,300 only, the
purchasing power was also very low (World Fact Book
2001).Yugoslavia finally ended with its disintegration into Slovenia,
Croatia, Bosnia-Herzegovina, Macedonia, Montenegro and Serbia
and Serbia also lost control over Kosovo (Western Intervention and
the Disintegration of Yugoslavia 1999).
Concluding, veneks participatory was an economic system
that raised many contra versions among economist. Most consider
as a failure for debatable reasons. Some attribute the failure to the
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ideology itself while others attribute it to the way veneck and Tito
applied it in Yugoslavia. There are still advantages that were
accompanied by the participatory system, but many consider that
disadvantages were much higher. At the end, this will not stop
economist from continuous searching for a better economic system
provides the best allocation of resources.
References:
1) Horvat,B.(2001) Self-Management and the Fall of Yugoslavia
retrieved 2nd November from www.geonewsletter.org
2) Kennet D. (2004) A new view of comparative economics
united states: Thomson.
3) Kalmi, P. (2003) The Study of Co-operatives in Modern
Economics: A Methodological Essay retrieved 2nd November
from web.uvic.ca/bcics/pdf/mapconf/Kalmi.pdf.
4) Kornail (1971) Self-management, chapter 20.
5) Western Intervention and the Disintegration of Yugoslavia,
retrieved 2nd November from www.davidchandler.org
6) Wilson, L .(2008) FREEDOM AND CAPITALISM, retrieved 2nd
November from www.drlwilson.com
7) Yugoslavia economy (2001), CIA world fact book, retrieved
at 2nd November from www.geographic.org.
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