Social Ownership

In listening to some old lectures by Rothbard, I heard him bring up a concept called “social ownership” that was being pushed by communists in the former country of Yugoslavia as a way of managing the ownership of industry.

In Yugoslavia there was a communist general named Josip Broz, who commonly went by the name Marshal Tito (how can you not love a guy that walks around calling himself Marshal Tito?). Marshal Tito is not your average run of the mill commie hahaha. I actually somewhat like this guy.

From his biography:

From 1945 to 1953 Tito acted as prime minister and minister of defense in the government, whose most dramatic political action was the capture, trial, and execution of General Mihajlovic in 1946. Between 1945 and 1948 Tito led his country through an extreme form of dictatorship (rule by one all-powerful person) in order to mold Yugoslavia into a state modeled after the Soviet Union. [that last part about wanting to model Yugoslavia after the Soviet Union is not true] In January 1953, he was named first president of Yugoslavia and president of the Federal Executive Council. In 1963 he was named president for life.

By 1953 Tito had changed Yugoslavia’s relationship with the Soviet Union. He refused to approve Soviet leader Joseph Stalin’s (1879–1953) plans for integrating Yugoslavia into the East European Communist bloc (a group aligned for a common cause). He now started on his own policies, which involved relaxing of central control over many areas of national life, and putting it back into the control of the citizens. Although relations between the Soviet Union and Yugoslavia improved when Soviet leader Nikita Khrushchev (1894–1971) visited Belgrade after Stalin’s death in 1955, they never returned to what they were before 1948.

Marshal Tito is one of those guys that accomplished a tremendous amount of good for his country, which is why you’ve probably never heard his name before.

You see, Tito came to recognize that while the Marxists constantly called for the ownership of industry “by the people,” they never actually got around to making this happen. Tito believed that “ownership by the people” must obviously preclude the ownership of industry by the State. In Tito’s view, communist social ownership should consist of the factory workers owning a share of the company they worked for.

The communist followers of Tito were inherently anti-statist. They made a clear distinction between State ownership and social ownership. They saw that the two were not related to each other in the slightest.

When Tito gained political control over Yugoslavia in 1945, he began aggressively implementing his policies of social ownership. Those sectors of the economy in which the public assumed ownership of industry soon began to prosper. This lead to increased reforms and greater public control of industry.

The communists ran into some problems though. The workers wanted to be able to retain their ownership in a company as their own private property. This caused some tension between the old hard-line Marxists and the general public. The workers began calling for what amounted to a stock exchange so they could trade their shares of ownership with each other and pass them on to their children.

By 1952 the new system was in place. It had a price system between plants, and a profit and loss system in the plants. The banks were decentralized and consumer co-op banks (credit unions) took the lead role in lending. This lead to success after success as the economic problems the country was facing resolved themselves.

By 1967 a third phase of reforms were implemented that were much more free market. The price system became completely free, profit and loss tests for all firms were implemented, firms could go bankrupt, and State control of investment was reduced. By the end, the State took only 20% of industrial profit in taxes – less than the United States.

The Slovenians and Croatians became the most industrialized as they were the most accepting of the “social ownership” concept. The Serbs remained the most statist in their economic views so they tended to lag far behind the economic growth of the Slovenians and Croatians. By the end, the Slovenian or Croat communists sounded like Barry Goldwater or Ronald Regan. They were even saying things like, “The individual should not have to sacrafice himself for the social welfare.” They even wanted a gold standard and a freely convertible Dinar.

Rothbard’s lecture ends without him getting into the specifics of the civil war that led to Yugoslavia’s break up, but the reasons behind the conflict should be obvious.

Wiki states:

Croatia declared independence from socialist Yugoslavia in 1991. War broke out in 1991 with Yugoslav National Army open attacks on Croatia. At the end of 1991 there was full-scale war in Croatia. The war was between the Serbs, in what had been the Republic of Serbia in the former Yugoslavia, and Croats in the newly independent Croatia. The reasons for the war are quite complex. To greatly simplify, while Croatia and Slovenia wanted to separate from Yugoslavia, Serbs were largely unwilling to allow this to happen, probably largely for economic reasons.

Further:

At the 14th Extraordinary Congress of the League of Communists of Yugoslavia, on 20 January 1990, the delegations of the republics could not agree on the main issues in the Yugoslav federation. As a result, the Slovenian and Croatian delegates left the Congress. The Slovenian delegation, headed by Milan Kučan demanded democratic changes and a looser federation, while the Serbian delegation, headed by Miloševi?, opposed it. This is considered the beginning of the end of Yugoslavia.

Moreover, nationalist parties attained power in other republics. Among them, the Croatian Franjo Tuđman’s Croatian Democratic Union was the most prominent. On December 22, 1990, the Parliament of Croatia adopted the new Constitution, taking away some of the rights of the Serbs granted by the previous Socialist constitution. This created grounds for nationalist action among the indigenous Serbs of Croatia. Closely following the adoption of the new constitution, Slovenia and Croatia began the process towards independence, which led to a short armed conflict in Slovenia, and all-out war in Croatia in areas with substantial Serb populations.

You see, statist socialists always come to depend on the economic success of freedom in order to support their statist programs. Socialist nations always have an incentive to violently attack the productive members of their society if those productive members attempt to leave the tax system.

There are tremendous parallels between the Yugoslavian civil war and our own Civil War. The causes of both are nearly identical. The South wanted to withdraw from the Union because the North had nullified the fugitive slave act. By nullifying the fugitive slave act, the North had removed the only remaining economic incentive for the South to remain in the union.

The southerners were putting up with high levels of federal taxation and tariffs, without any return on those tax dollars, simply because they needed the North’s cooperation in keeping slavery in place. Without the cooperation of the North in returning fugitive slaves, the South had no remaining economic incentive to remain in the union.

The South viewed themselves as nothing more than tax slaves to the North. The money that was collected in federal taxes was almost exclusively spent in the Northern states. Since the South didn’t want to be tax slaves to the North, they withdrew from the Union.

In so doing, the South did not want to invade and conquer the North, they simply wanted to be left alone. The Northern states had made it quite clear to the South that if they attempted to leave the union, they would be attacked. This is what caused the South to fire the first shots, since the South was dead set on leaving the union, they figured they might as well position themselves in an as advantageous a position as possible before the North could muster an invading Army.

If the North had simply let the South walk away, there would have been no Civil War in America. However, the North could not stand for this loss of Southern tax revenue, which is why they violently attacked and invaded the South.

Lincoln made it clear why aggressed against the South in his letter to Horace Greeley:

My paramount object in this struggle is to save the Union, and is not either to save or to destroy slavery. If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that. What I do about slavery, and the colored race, I do because I believe it helps to save the Union; and what I forbear, I forbear because I do not believe it would help to save the Union. I shall do less whenever I shall believe what I am doing hurts the cause, and I shall do more whenever I shall believe doing more will help the cause. I shall try to correct errors when shown to be errors; and I shall adopt new views so fast as they shall appear to be true views.

Lincoln was an ardent racist, as is evidenced in numerous speeches and writings. He even proposed sending all the blacks back to Africa at one point. The US Civil War was strictly about maintaining the flow of tax revenue from the South into Northern coffers. This cause parallels almost exactly with why the Serbian military attacked Croatia after it declared its independence.

History repeats itself, only in Yugoslavia, the South won.

Yugoslavia commentary starts at time 1:07:30

  • Scott Gaff

    it seems to me all the attacks waged against Rothbard is a failure to understand him. Praxeology is about not only analyzing a man’s actions to arrive at a wanted satisfaction, or alleviation of uneasiness, but also THE SATISFACTION ITSELF. And they choose to call it an interpretation of history, when it’s a gathering of various sources to make connections empiricism is incapable by definition of seeing. I don’t need a quote by Teddy Judah or J.P. Morgan to see something fishy in the National Banking Act and the Transcontinental Railroad. When you can’t falsify anything Rothbard says, default to “well, that’s only his interpretation.” Mises gave us the textbook for Austrian Economics (and he spent over 100 pages just explaining Praxeology), and Rothbard merely put AE into historical perspective. His work is nothing more than a companion to Mises.

    If the left actually bothered to read Human Action instead of outright dismissing it they would soon realize every one of their strawman attacks against Austrian Economics have already been answered by Mises. Even popular arguments raised at the time that are no longer bumper sticker idioms have been answered.

    I have actually been going on Policy Mic, and my biggest complaint is the extremist positivism so clouded in ideology that the “pundits” fail to see their own hypocrisy; and telling us “Austrians” how we fail to understand how value is subjective is ridiculous. Praxeology INVENTED subjective-value; only it goes much further than the left could ever grasp with their failed ideology. And then they dismiss the youth as though there’s never been a young liberal who converted to libertarianism late in life, as though its even an argument to begin with. Every argument by a liberal is a matter of convenience.

    Sorry to go on and on, but all this BS is really frustrating.