It is sometimes said that Yugoslavia disintegrated because of its economic failures. Those who know a bit more talk about the failure of self-management. Still others say that social property was responsible for the failures. Some economists admit that economic development occurred but maintain that this was because of foreign aid. None of these explanations is correct. The causes are political. I have elaborated a complete political economy of socialism elsewhere, and I will not repeat it here. By way of introduction, let me point to a few crucial economic facts.’
Before World War II, Yugoslavia was extremely underdeveloped. However, because of rapid development, by 1968 Yugoslavia had surpassed the prewar level of production and consumption of the most advanced European countries. From 1953 to 1965, the annual rate of productivity growth was 4.7 percent, as compared with that of European capitalist economies (3.3 percent) and statist economies (3 percent). Productivity growth was probably the highest in the world during that period. At the same time the relative indices of the basic welfare of the population (life expectancy at birth, education, and health services) were much higher than those of capitalist countries, but also substantially higher than those of welfare states. In fact, around 1971 they were the highest in the world....
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