A Nonaligned Business World: The Global Socialist Enterprise between Self-Management and Transnational Capitalism

Abstract

This article explores the role of Yugoslav self-managed corporations in the global economy, with a particular attention to the late socialist period (1976–1991). Guided by a vision of a long-term integration of the Yugoslav economy into the international division of labor on the basis of equality and mutual interest, by the late 1970s the country’s foreign trade and hard currency revenue was boosted by a number of globally oriented corporate entities, some of which survived the demise of socialism and the dissolution of the country. These enterprises had a leading role as the country’s principal exporters and as the fulcrum of a web of economic contacts and exchanges between the Global South, Western Europe, and the Soviet Bloc. The article seeks to fill a historiographic gap by focusing on two major Yugoslav enterprises (Energoinvest and Pelagonija) that were based in the less-developed federal republics—Bosnia-Herzegovina and Macedonia. The article also investigates the transnational flow of ideas around the so-called “public enterprise,” its embeddedness in an interdependent global economy, and its visions for equitable development. Finally, the article explores these enterprises as enablers of social mobility and welfare, as well as spaces where issues of efficiency, planning, self-reliance, and self-management were negotiated.

An advertisement for Metalna, one of the largest Yugoslav companies from Maribor, Slovenia, appeared in a 1982 issue of the international journal Public Enterprise: the company was presented as an exporter to 50 countries all over the world and as presently “working on equipment for the hydroelectric power station at Hadith in Iraq and Assuan II in Egypt; […] building wharf cranes for Nigeria and Bangladesh and presses for the Soviet Union; the total value of the work in progress [being] over 100 million US dollars” (Public Enterprise 1982, 101). ¹ Embeddedness in the global economy was one of the major parameters by which success was measured in Yugoslavia’s socialist corporate world. This article charts the role and presence of Yugoslav self-managed enterprises in the global economy, from the late 1970s until Yugoslavia’s dissolution in the early 1990s.

In the literature on Yugoslavia’s economic development, it is often remarked that the country was characterized by marked development disparities between the richer northern republics, such as Slovenia and Croatia, and the less developed areas in the South, such as Kosovo and Macedonia. Similarly, scholarly research has routinely pointed out that Slovenia constituted the economic powerhouse of socialist Yugoslavia and was the most developed region; indeed, there has been a tendency to focus on Slovenia, Croatia, and Serbia in scholarly research. ² This article, by contrast, focuses on the Yugoslav semi-periphery (Bosnia and Macedonia) and sheds light on a largely under-researched aspect of Yugoslav and international Cold War labor history. ³ By focusing on two major Yugoslav companies and exporters—Bosnian Energoinvest and Macedonian Pelagonija—this article investigates the transnational flow of ideas around development, the public-social enterprise, and issues of efficiency, planning, self-reliance, and self-management; at the same time, it explores the creation of a global identity among the Yugoslav workforce.

Engineering and construction were part of a gradual domestic process of expertise building and technological development in Yugoslavia, which later adapted both to changes in the global economy and in the United Nations’ agendas on development and industrialization. From the 1950s, one of the fundamental questions for Yugoslav policy makers was whether socialist enterprises could achieve the same quality of products and efficiency as capitalist ones and hence be able to compete internationally. In their view, the Yugoslav economic model of market socialism, debated throughout the 1950s and introduced in the early 1960s, was the first to provide a positive answer to this long-standing question in the debate about socialism and its viability as an economic system. ⁴ Furthermore, Yugoslav construction and engineering expertise was present in the Global South (e.g., Ethiopia and Syria) since the 1950s and rapidly grew with the establishment of economic cooperation through the Non-Aligned Movement (NAM) and joint ventures in the region. The positive reputation that the country enjoyed in these sectors, in combination with the growing web of NAM political alliances, drove Yugoslavia’s pursuit of new avenues for technological development and economic cooperation in the Global South.

An imperative of becoming and remaining competitive at the international level while preserving the specific features of self-management survived up until the dissolution of Yugoslavia. In compliance with the developmentalist paradigms that defined debates within the Group of 77 Developing countries (G77) and the UN Conference on Trade and Development (UNCTAD), Yugoslav development strategies were underpinned by a vision of a long-term integration of the Yugoslav economy in the international division of labor on the basis of equality and mutual interest.

By the late 1970s, the country’s foreign trade and hard currency revenue was boosted by a number of large, globally oriented corporate entities, many of which survived the demise of socialism and the dissolution of the country. Moreover, they reached their peak in export earnings at the end of the 1980s, as the country faced mounting economic and political problems. These enterprises’ leading role as the country’s principal exporters and as the fulcrum of a web of economic contacts and exchanges between the Global South, Western Europe, and the Soviet Bloc was at its highest in the 1980s. ⁵ In that sense, the article interrogates the conventional teleological narrative of the inevitable economic decline and the nonviability of market socialism and workers’ self-management.

The article maintains that a Yugoslav socialist “corporate value system” (Jež 1989), which embodied an outward-looking, export-oriented, globally imagined business culture, was internalized by the Yugoslav workforce and shared across the enterprise. The dynamic international engagement was reflected in the workplace, as companies successfully created and legitimized a consensus toward a shared goal of market expansion and profit making among the workforce. Indeed, corporate culture was shaped by the quantity and nature of international links, nonaligned values and practices stemming, for example, from the policies on collective self-reliance and South-South cooperation. Thus, the article seeks to show how nonalignment was brought home and its ideas diffused even among workers who did not travel but who benefitted both financially and otherwise from their globally oriented enterprise. The article also reflects on the global and domestic shifts that occurred in the late 1980s, with a growing consensus favoring privatization and challenging the legitimacy of self-management and social ownership.

In the literature on Yugoslav economic development, Bosnia-Herzegovina and Macedonia are often defined as middle- to low-developed areas, with economies traditionally based on the mining, heavy industrial, and extraction sectors (Woodward 1995; Cohen 1995). Because of their overall lower economic output in comparison to, say, Croatia and Slovenia, it is often overlooked that some of the enterprises that were based in the less developed regions—such as Bosnia and Macedonia—were among the most successful Yugoslav companies and among its largest exporters (Ekonomska Politika 1990). ⁶ By 1988, Energoinvest was the third-largest company in Yugoslavia in terms of both overall revenue and number of employees, following behind the Zastava car plant and other Bosnian giants (Unis and the Zenica steel plant) (Ekonomska Politika 1987). Its yearly export was over $440 million (USD), accounting for four percent of Yugoslavia’s annual export (Energoinvest 1988b). Although smaller, the Macedonian construction company Pelagonija ended up as one of the eight Yugoslav companies featured in the world’s top 200 contractors in the 1989 Engineering News Record ranking (Vojinović 1990). Bosnia and Macedonia’s biggest trade partners were developing countries and nonaligned partners in North Africa and the Middle East, as well as some of the socialist states of the Eastern Bloc: they were engaged in the design, production, and construction of large civil and military engineering projects in Iraq, Libya, Algeria, Czechoslovakia, and the USSR. ⁷

The Yugoslav Enterprise Beyond Yugoslavia: International Division of Labor and Equitable Development

One of the imperatives for the postwar Yugoslav elite was the modernization and industrialization of the country but also the fundamental restructuring of its prewar economic model that defined its foreign trade and positioning internationally as a producer and exporter of raw materials (grains, livestock, wood, and iron ore). This was underpinned by an exigency to catch up with the West and engage both economically and politically as an equal partner, on equal terms, avoiding relationships of dependency that marked the interwar period (Gross 2016). Hence, pragmatic economic multialignment predated official nonalignment foreign policy. As early as 1954, the Secretary-General of the Yugoslav Chamber of Foreign Trade observed that “the endeavours to extend economic ties with the largest possible number of countries are in the spirit of the policy being pursued by the new Yugoslavia” (Barbalić 1954). The following decade, Yugoslavia internationalized the demand for more equitable international economic relations as one of the founding members of the G77 and the UNCTAD in 1964. Developing countries were to be afforded equal opportunities for industrial development—“trade not aid,” as the slogan went—and a chance to reorganize the existing international division of labor, where structurally unjust terms of trade determined the role of the postcolonial South as a producer of primary commodities and the wealthy North of manufactured goods. Yugoslavia was able to gain much sympathy among its nonaligned partners precisely because of its principled view that the developing countries “must conquer a new place in the present pattern of international division of labour” (“Yugoslavia and the United Nations Conference on Trade and Development [UNCTAD]” 1964).

From the mid-1960s onward, the argument about a better involvement in the international division of labor was used to legitimize the liberalization and marketization of the Yugoslav economy. As a resolution of the Party’s 1969 Congress noted, “the development of socialist commodity production implies […] the need for wider involvement in the international division of labour” (Deveti kongres Saveza komunista Jugoslavije 1969). The refashioned political program also foresaw the creation of large, economically sound organizations of associated labor and their widest possible integration as “the path of accelerated growth.” It was at this time that industrial integration (i.e., the creation of large, complex enterprises) took off. Eventually, it was this decision that enabled a lot of Yugoslav companies to become competitive at the international market. As David Dyker argued, industrial integration was seen as a vital part of the 1965 economic reform package that sought to deepen Yugoslavia’s involvement in the international division of labor as well as to “breed national champions which could lead the Yugoslav assault on world markets” (Dyker 1990, 71).

Following this principle from the mid-1960s onward, these companies embraced the challenge of global expansion. An empirical research study on top-management efficiency and managerial motivation in highly efficient self-managed enterprises in Yugoslavia found that there was a consensus and list of shared development priorities that included the following: a strong market orientation; export orientation; quality of products; development based on its own financial resources (self-reliant development); development of and investment in the local community; and technology and human resources (Kavčič 1989, 335). Indeed, up until the disintegration of the federation, the most successful Yugoslav companies embodied the particular ethos of strong market and export orientation, coupled with a commitment to a labor-managed economy. However, after 1961, it was Yugoslavia’s leading position within the NAM that became instrumental to these companies’ global outreach. In the 1960s and 1970s, Yugoslavia became the center of a web of economic contacts and exchanges between the Global South, Western Europe, and the Soviet Bloc. ⁸

Already in 1962, Energoinvest’s internal journal reported numerous large sales of industrial machinery and equipment to the USSR, Ethiopia, Sudan, Pakistan, and Greece. The company’s bulletin remarked with great enthusiasm that export on the foreign market was an imperative for Energoinvest’s success (Energoinvest 1962). Energoinvest rapidly grew to be among the largest Yugoslav exporters, with business partners and networks in more than 32 countries. After opening its first branch abroad in Cairo in 1961, the company consolidated its global presence throughout the 1960s and 1970s, establishing joint ventures in Mexico (EnergoMex), Libya (ELPCO), and Pakistan (EnergoPak). In 1987, despite the economic crisis, it had revenue of $425 million (USD) from its exports (Energoinvest 1988a). Managers were aware of the opportunities that Yugoslavia’s geopolitical position as a founding member of the NAM provided. For example, the general manager of Energokomerc—the commercial branch of Energoinvest—Hakija Turajlić was often interviewed by the company’s journal and frequently remarked that the foreign economic relations with other companies and states were “fundamental for the company’s export and stability” (Energoinvest 1987a). ⁹ This was not only acknowledged by the company’s managers and employees but more broadly by general directors of other large Yugoslav companies. Milorad Savićević, former general manager of the Zastava car factory, as well as Ante Marković, former prime minister and manager of the Croatian electrical, transport, and energy giant Rade Končar, underlined the importance of Yugoslavia’s international geopolitical positioning for Energoinvest: as a nonaligned country geographically close to the Middle East, Yugoslavia provided its corporate giants with the possibility of establishing their presence across the globe (Filipović 2002, 138).

Although tourism was always singled out and perceived as the main source of foreign currency revenue, it was in fact the construction industry that competed successfully against the predominantly Adriatic-based sector that began to flourish only after Yugoslavia abolished visa restrictions for foreign visitors in 1967 (Zdravković 1981, 17). Throughout the postwar period, especially until the 1980s, the construction sector was regarded as central to contemporary development debates and development strategy. A number of UN agencies and bodies, such as the International Labour Organization (ILO), the United Nations Industrial Development Organization (UNIDO), and the United Nations Economic Commission for Europe (UNECE), engaged—both in terms of research and policy recommendation—with different aspects of construction, including employment, technology development, industrialization, and that sector’s relationship to economic growth (Wells 1984). UNIDO documents noted that “construction as an industry should be given adequate consideration in planning economic strategy” (UNIDO 1969, 2). Hence, Yugoslavia’s robust investment in the construction sector, both domestically and abroad, should be viewed as part of a particular postwar development paradigm shaped within the UN system. The UNECE was especially active in research and policy in the construction field in the 1960s and 1970s, a period that coincided with the leadership of the UNECE by Yugoslav and Slovene economist Janez Stanovnik as executive secretary between 1968 and 1982. In contemporary publications on the topic, Yugoslavia was routinely compared and classed with other developing countries: a 1986 publication, for instance, cited Yugoslavia, Mexico, and Ecuador as states where construction output had quadrupled in a period of 20 years (Wells 1984, 33).

Over time, the imperative of foreign presence of Yugoslav companies was increasingly couched in the language of an international division of labor. For instance, by the time it celebrated its 25th anniversary, Energoinvest could boast in an article in The Financial Times of the company’s ability to “fit successfully into the international division of labour” (The Financial Times 1976). Moreover, a 1973 issue of the company bulletin of the Macedonian construction giant Pelagonija stressed the fact that since 1966 the company had been involved in the international division of labor through investment construction projects in Africa, Western Europe, and the socialist Bloc (Pelagonija 1973a). While these companies were mostly dealing with partners from the nonaligned world and the state socialist East, efforts were made to maintain business contacts and partnerships in the West as well. Pelagonija, for example, became involved in the construction of the Olympic village in Munich. On the other hand, when Yugoslavia started talks with Sweden about the potential establishment of joint ventures in developing countries, Energoinvest was one of the large developers involved. However, it was also thanks to investment contracts with oil-rich nonaligned partners such as Iraq, Libya, Kuwait, and the United Arab Republic (UAR) that Pelagonija, with foreign contracts worth $305 million (USD), was ranked 70th in the world’s 250 top contractors by the Engineering News Record in 1989 and 90th in 1990 (Pelagonija 1989, 2).

Throughout the 1970s, Energoinvest similarly expanded in markets within its geopolitical proximity, most notably Northern Africa and the Middle East. In Libya, Egypt, Algeria, and Iraq, the company built large infrastructure projects, such as power plants, for which it received payments in oil. At the same time, in collaboration with the Croatia-based oil production and refining industry INA (Industrija Nafte), and with financial participation by the World Bank, Kuwait, and Libya, it participated in the project for the construction of the Adria Pipeline JUNAF (Jugoslovenski naftovod), which was supposed to enable the supply of Arab oil to Czechoslovakia, Hungary, and Yugoslavia via a new terminal in the Adriatic Sea. Moreover, like other major industrial conglomerates in the country, Energoinvest was at the forefront of Yugoslavia’s economic and political expansion into the nonaligned world and the Soviet Bloc. Together with other large construction and engineering companies (e.g., Belgrade-based Energoprojekt) it paved the way for Yugoslavia to exercise its soft power in much of the developing world—from Indonesia, to Algeria, and to Zaire. Moreover, due to new bilateral trade agreements Yugoslavia signed with Algeria and Panama, Energoinvest obtained contracts to build oil refineries in the two countries. In the case of Panama, Yugoslav officials described this agreement as “a step toward economic liberation” and away from dependency on American oil monopolies for Panama’s energy needs (US Embassy Belgrade, 1975).

Although professionals involved in the Yugoslav investment construction sector often complained that there was no legal framework regulating investment construction abroad, in 1983 a law regulating business and technical cooperation with foreign partners was finally approved (Tešić 1986, 13). This regulation incorporated the same vocabulary and normative framework about a “more equitable involvement of the Yugoslav economy in the international division of labour” and “cooperation with other countries, especially the developing ones” (Tešić 1986, 13). The profitable Yugoslav self-managed enterprise measured its success in relation to its web of transnational engagements. The globally oriented self-managed enterprises, thus, formed a vital part of Yugoslavia’s strategy of what its elites understood as a struggle for the democratization of international economic relations and the rethinking of the old international division of labor, where Yugoslavia and its nonaligned partners used to play the role of primary commodity and raw materials producers. The imperative to open up the economy and engage the self-managed enterprise in the global flow of finance, services, and capital stemmed from a pragmatic but also from a deeply ideological commitment: to compete with, or even overtake, the West and engage with the developed world as an equal partner, eschewing asymmetric relationships of inferiority and dependence.

Theorizing and Materializing the “Public Enterprise”: Reconciling Market Socialism and Self-Management

In 1972, Fortune Magazine published a long piece on Energoinvest titled “A Socialist Enterprise that Acts like a Fierce Capitalist Competitor.” The piece praised, among other things, the entrepreneurial skills of Energoinvest’s management. Indeed, the global outlook of these companies and their success both at home and abroad were significantly influenced by the character, experience, and business ethic of their top managers. The empirical research study on top-management efficiency and managerial motivation quoted above also pinpointed another crucial element in the global outreach of the Yugoslav enterprise: it classed top managers in three groups, the first one being what they termed “the founding fathers” (Kavčič 1989, 336). Energoinvest’s founder, Bosnian-Jewish engineer and entrepreneur Emerik Blum, sought from the start to expand beyond the federation’s borders. He belonged to the Yugoslav war generation, the elite core of which had spent some of their formative years in different parts of interwar Europe. Blum, born in 1911, was educated in Prague and Vienna and spent several years during the Second World War in concentration camps before he joined the Partisan resistance. Blum’s motto was, “We cannot live of Yugoslavia! The market here is too small. It can serve as a training terrain, but we will play the real game abroad” (Filipović 2002, 120). In his last interview for the company’s journal, Blum stressed that ever since the foundation of Energoinvest in 1954, it was able to remain competitive or economically viable because it looked beyond the small Yugoslav market (Energoinvest 1981). Thus, since the mid-1960s, Energoinvest worked toward a business and development strategy that would guarantee its technological advancement and competitiveness both on the global and domestic markets. Factories and research centers were developed in Bosnia and throughout Yugoslavia that were geared toward production for foreign markets.

Scholarly analysis, so far, has tended to focus on the Yugoslav-specific features of its economic system, somewhat essentializing and provincializing the doctrine of socialist self-management. By shifting our attention to the global role of the Yugoslav self-managed enterprise and its embeddedness in the transnationalized, postwar economy, we also seek to deprovincialize the Yugoslav economic experiment and embed the Yugoslav story in the complex dynamics of a transnational flow and exchange of ideas around development, management, trade, and interdependence. One prominent, but often overlooked aspect of this was the institutionalization of a growing interest, research, and policy making at the international level around the “public enterprise” and Yugoslavia’s crucial role in it. By looking more closely at these debates, we can also trace the decline of self-management and the shift in thinking around the public enterprise that occurred after 1988. The International Centre for Public Enterprises in Developing Countries (ICPE) grew out of a United Nations seminar on the management of public enterprises held in the Yugoslav-Montenegrin coastal town of Herceg Novi in October 1969. ICPE was established in Ljubljana in 1974 as a Yugoslav institution for cooperation between developing countries receiving assistance from the ILO and the UNIDO. The purpose of ICPE was to carry out research and training on all aspects of the operation and development of public enterprises and the role played by the public sector in national economies. At the same time, ICPE’s goals were fully aligned with the principles outlined in the 1974 UN “Declaration and Programme of Action for the Establishment of a New International Economic Order” (Declaration on the Establishment of a New International Economic Order 1974).

The major projects implemented by ICPE reflected some of the core Yugoslav foreign and domestic policy values: technology transfer and innovation, the role of women in the development of public enterprises, financial management, information systems and monitoring, and worker participation in management. ICPE’s quarterly journal Public Enterprise offered an international platform for discussions and the sharing of experience and know-how on how to reconcile economic efficiency and development with public, self-managed enterprises. Public enterprises were indeed seen as a core segment of the self-reliant development agenda, where their evolution and success were intertwined with their global orientation. Through ICPE and through its bilateral ties with countries in the nonaligned camp, Yugoslavia stood at the forefront of an international debate on the doctrine of workers’ self-management (Zaccaria 2018; Bockman 2019). An international conference on workers’ self-management and workers’ council across the globe demonstrated that there was interest in discussing aspects of the system at the international level. This was partly linked with ideas of a successful company perceived as such if it satisfied two conditions: being global and self-managed. Yet, by the late 1970s, the vocabulary of self-management was supplemented and updated with concepts and notions that two decades earlier would have been considered alien. The public enterprise—whether self-managed or not—was above all to be managed efficiently. This was in line even with World Bank policy guidelines at the time. Its 1983 “World Development Report” underlined that “the key factor determining the efficiency of an enterprise is not whether it is publicly or privately owned, but how it is managed” (World Bank, 1983).

It was in the name of efficiency, and with the goal of expanding globally, that Energoinvest’s managers resolved to consulting the US consultancy firm McKinsey to advise them on the company’s restructuring. This further facilitated its global expansion and forged a new understanding of what constituted success: a combination of workers’ management and Western style reorganization, especially at the level of production. The company’s global orientation benefitted from the internal reorganization proposed by McKinsey’s consultants. In fact, as Energoinvest pursued expansion on the global market in the 1960s, it became apparent to its founder Emerik Blum that a structural and managerial reorganization was needed. Blum, thus, turned to the US, at the time the leader in the development of new business and management strategies. In 1968, Energoinvest’s management appointed Drago Baum as aide and representative in the USA. Baum was an economic expert who had contributed to popularize Keynesian economics by translating Samuelson’s Economics into Serbo-Croatian (Oslobodjenje, 2016, 15). Following his suggestion, Blum as General Director decided to engage McKinsey in a large project aimed at the overhaul of the company’s internal structure. Energoinvest’s managers wanted to introduce business models that would allow them to be as competitive as other Western corporations (Filipović 2002, 142). At the meeting of the general workers’ council in Sarajevo in 1968, Blum sought to convince his fellow managers and employees that engaging the costly McKinsey would be beneficial for the future of Energoinvest. As he stated,

social relationships in Yugoslavia may be different from those in other countries, but our enterprises must be organised like those in other developed societies. This is a matter of expertise. Since we do not have it, let us be frank, we must buy it, just as we buy licenses to make products patented elsewhere. What is more, we must buy the best. That we can do only in the U.S. Even though it will cost a lot of money, we must take the step if we are to expand our prosperity. Our motto must be the liquidation of amateurism.

(Burck 1972, 130)

This excerpt reveals a rationale that was quite widespread among the company’s management: pragmatism was the best way to guarantee success and long-term prosperity for their company. Energoinvest’s main point of contact at McKinsey was Croatian-born, newly appointed partner, and MIT graduate Charles Shaw. As he recalled,

at that point in 1969, Energoinvest representatives showed up in New York and they were looking for a consultant. [. . .] So, then, the managing director of McKinsey called me in and said: “Well, this inquiry came in and you speak the language,” and, so, I was sent to Sarajevo to negotiate the first study.

(Shaw 2016)

Shaw and his team went on to spend a few years in Sarajevo collaborating with Energoinvest on its large restructuring project. Over the years, Shaw grew closer to General Director Blum, whose entrepreneurial principles and business drive he deeply respected. As he noted, Blum “had a feeling that [Energoinvest] was not working adequately, and, certainly, if you wanted to compete internationally, you had to be organised well enough to do that” (Shaw 2016).

McKinsey’s proposal for increasing Energoinvest’s competitiveness on the global market was essentially one of decentralization of management functions: it divided the 41 daughter companies into six groups according to branch, outputs, and functions (e.g., research and development, powerlines, armatures), each with its own general manager. Part of this restructuring was aimed precisely at making Energoinvest more efficient and competitive. This, in turn, further strengthened the company’s understanding of quality and success as measured by the ability to engage on the global market. This decision initially created a stir amongst some party cadres in Belgrade, who reportedly accused Blum of “going capitalist” (Burck 1972, 132). Shaw recalled this backlash:

At the beginning there was a huge controversy [. . . .] Articles and newspapers were saying that Yugoslavia had its own technology [and did not] need foreign consultants. [. . .] But our basic argument was that [. . .] you can’t be modern only in the machines, you have to be modern in the management, if you want to be an international competitor. So, there was a lot of fuss, for the first six months to a year, and then it all died down. There was an article in Fortune Magazine, it was a very long article and it very well explained how the place worked and our role actually in there as well. So, yes, I think in some ways that article also helped. Because, it kind of brought the company to international prominence and that opposition died after a year, or so.

(Shaw 2016)

Božidar Matić, the general manager of Energoinvest between 1989 and 1994, similarly recalled the consultancy work by McKinsey as being relatively unproblematic from an ideological perspective. As he reflected,

Yugoslav companies were very independent and were not burdened by the state terror that exists today. They had to respect laws, self-management and so on, but in our decisions on production plans, and our own organisation, we were fully autonomous. The state never told us—“do this” or “do that.” So, I openly say that we copied the best practices from Western companies. They were more advanced than us. [For me] consulting McKinsey was a turning point, as I learnt a lot from this cooperation.

(Matić 2016)

Decentralization and restructuring were also at the core of the Yugoslav constitutional reforms in the mid-1970s. The concept of associated labor that came to embody the Yugoslav variant of market socialism was officialized by the constitutional amendments of 1974. They also introduced a new process of planning by agreement and association—the so-called social compacts (društveni dogovor) and the self-managing agreements (samoupravni sporazum). According to David Dyker, this approach “had perfectly good credentials, and a degree of respectability in the Western industrial world” (Dyker 1990, 5). So, in this sense, the Yugoslav take on industrial democracy in the form of associated labor could be viewed as a genuine attempt at reconciling the market and socialism. The constitutional reforms were preceded by lengthy public discussions within companies and factories across the country that aimed at introducing the new system and getting feedback from its employees. Around 5,000 workers at Pelagonija were directly involved in the public debate in 1973, which culminated in a draft “self-managing agreement” that reorganized the company by establishing 22 “basic organizations of associated labor” (Pelagonija 1973d). Similarly, Energoinvest was organized as an umbrella company that encompassed a variety of branches, from the traditional industrial sector (raw materials, mining, and foundries) to more technologically advanced companies (engineering, software development, and electronics). It had a workforce of 55,000 (with roughly 40,000 in Bosnia), of which over 10,000 were professionals and experts (Energoinvest 1988c).

Through its official journal and its member states, ICPE also sustained an interest at the international level about self-management as a vehicle for promoting popular participation in development. In addition to individual studies, Yugoslavia initiated a large international comparative project under the auspices of ICPE entitled “Workers’ Self-Management and Participation in Decision-Making as a Factor for Social Change and Economic Progress in Developing Countries,” launched at the 4th Summit Conference of Heads of State or Government of the Non-Aligned Movement in Algiers in 1973 (Kester 2007). Academic debates often portrayed workers’ management as the way forward to motivate workers, to reestablish links between workers, and increase productivity of labor, thus creating more successful enterprises. Indeed, the idea of the success and profitability of a company was measured up against its ability to be competitive on the global market against other large companies while maintaining internal self-management and redistribution. While Energoinvest’s managers were keen on learning new practices from McKinsey, they were also aware of the importance self-management still had in their company and in Yugoslavia more broadly. When commenting on his cooperation with McKinsey, Blum stated that “since the start it was very important not to allow them to convey a view [of development] which would be damaging for self-management” (Filipović 2002, 198). A former partisan and fervent communist himself, Blum was an advocate of self-management as “the most revolutionary change in the social relations amongst people” (Oslobodjenje 1970, 5). Thus, he set out to establish his company as a strong international competitor while at the same time stressing the need for this to be based on local industrial development and the social property paradigm. Jakob Finci, a manager and head of Energoinvest’s trade union, recalled a discussion between McKinsey’s representatives and Blum during a meeting of the workers’ council:

I remember McKinsey’s team saying: “We can make this organization perfectly according to Western standards, but we don’t know where to put your workers’ councils and all these institutions from the self-management system.” And Blum replied: “Please ensure the system’s organization is perfect, and then I will insert workers’ councils wherever possible or necessary.” So, quite honestly, I don’t think that this was something that was interfering or that was contrary to the modern management system.

(Finci 2016)

As these testimonies highlight the company’s rationale was geopolitically and ideologically nonaligned. The Yugoslav enterprises’ drive for global expansion and competitiveness with other industrial corporations led them to pursue ideas of efficiency and success beyond ideological alliances. Energoinvest’s partnering with an American marketing giant was motivated by the prospect of achieving a stable presence on the global market. At the same time, Yugoslav economic elites and industrial leaders made attempts to rethink worker’s participation and the socialization of the economy, remaining conscious of the fact that self-management provided important incentives for workers. Thus, until the late 1980s, combining Western models of management, pricing, and production with a domestic model of industrial democracy and workers’ self-management was seen as a viable and desirable long-term strategy.

The Global Socialist Enterprise at Home: Social Mobility, Welfare, and Geopolitical Pride

When Pelagonija was founded in 1952, it had one engineer, 11 technicians, and around 1,000 workers. In 1973, it employed 165 engineers and 6,500 workers (Pelagonija 1973b). In the mid-1970s, the majority of the blue-collar workforce was of rural origin, from the North-Eastern parts of the Socialist Republic of Macedonia, as well as the autonomous province of Kosovo. The profitable and successful Yugoslav self-managed enterprise provided both welfare and financial incentives to a variety of employees—from highly skilled professionals to semi- or unskilled workers. The living standard, or what was often referred to in official discourse as the social standard, was the cornerstone of enterprise policy and consumed a substantial part of their net income. Besides subsidized loans, meals, and housing, Pelagonija had its own health center, offered scholarships for high school and university students, provided purpose-built accommodation on its construction sites, and financed two-week spa and physiotherapy treatments for workers with injuries or work-related illnesses. Companies committed to providing a range of welfare benefits and guarantees for minimum standards in areas, such as housing and food, by signing various cross-enterprise, self-management agreements, as mentioned above (Pelagonija 1973c, 4).

For the majority of those who went to work in the Middle East, Africa, or Europe, it was their first time to travel abroad. Yugoslav companies and workers were in a particularly privileged position because of the country’s nonaligned positioning, as companies could conduct business across the globe and their employees were able to travel and gain work experience across the Cold War divide. Moreover, the Yugoslav constitution guaranteed the “same socio-economic and self-management rights” for workers in self-managed enterprises that made use of resources invested by foreign persons (Tešić 1986, 147). By the mid-1970s, around 4,000 Pelagonija workers had participated in the company’s construction projects abroad, mainly in West Germany, Czechoslovakia, and Libya (Pelagonija 1973a, 5). Traveling by airplane, being paid in hard currency, and venturing to radically new, faraway lands were experiences that not only constituted parameters of social mobility but also were deeply transformative on a personal level. An 80-year-old interviewee who worked for Pelagonija in Libya in the late 1960s and 1970s, spoke with much affection about the country, praising its development and culture, as well as its leader Muammar Gaddafi, whose overthrow and execution he deemed unjust in light of Libya’s civil war and subsequent destruction. He particularly treasured a traditional Libyan hat he had bought in Tripoli and even had a formal photo taken of him wearing it (Acevski 2015). ¹⁰

When these companies’ outward gaze was reflected inward, it was usually popularized and shared by the companies’ journals. Energoinvest’s journal often described its international exploits in terms of competitiveness, research, and development. On its pages, visits of international delegations, partners, and diplomats were frequently reported. For instance, in 1970, the central branch in Sarajevo received delegations from Iran, Sudan, Kenya, India, Germany, Hungary, and the USSR (Energoinvest 1970). This contributed to a spread among the workforce of a sense of geopolitical centrality, as well as diplomatic and economic relevance. Details of production and development of factories and companies across the country were always accompanied by news of their international trade deals and contacts. For example, in 1988 when the former president of the Federal Executive Council Branko Mikulić went on a visit to Energoinvest’s Egyptian production facility EVAKO, he declared that the factory which employed Yugoslav technology in partnership with Egyptian producers was “the best and most concrete manifestation of the idea and concept of nonalignment” (Energoinvest 1987b). The celebration of Energoinvest’s internationalist and Yugoslav ethos is best captured in a tribute song the company commissioned, composed by famous Sarajevo singers Kemal Monteno and Alija Hafizović and distributed by Yugoton in 1982 (Monteno and Hafizović 1982). The lyrics highlighted the company’s successes on the world market:

We had a luminous vision; we saw the opportunity for a collective power

Our [workers’] councils discussed how by building factories, we have built people

All our nations and nationalities all knew that it would be better for them

Energoinvest, Energoinvest, your name is known all around the world

[…] Our bridges, with steel arms, have covered softly the whole globe

[…] Sarajevo, Yugoslavia, Europe, the whole world! Energoinvest!

The song concluded with an uplifting line, a reminder of Energoinvest’s global presence and its business trajectory. Here, too, the recurrent themes that defined an Energoinvest identity were present: international prestige, unity of different nationalities in labor, the collective effort in constructing factories and, as a consequence, the emergence of a sense of loyalty and collective belonging.

Aside from what was reported in the company’s journal, workers were able to experience the benefits of nonalignment and market engagement in the workplace daily. Energoinvest had a relatively high rate of a highly skilled workforce, especially engineers. For them, the company organized trainings both within Yugoslavia and abroad, aimed at educating cadres in line with the newest technological developments. Dževad—an engineer employed in the Sarajevo Armature foundry since 1980—recalled, “We had such a privilege to progress, to go to seminars, to get an education. They urged us to learn foreign languages, to go to technical training. For example, I’m an engineer, and I was nonstop at trainings” (Dževad 2016). Miro, a high-skilled worker in the factory and research center in Lukavica (now Eastern Sarajevo) added, “Not only did we have foreign experts here, but we had training of our experts abroad” (Klepić 2016). “Even blue-collar workers benefitted from stipends,” machine steelworker Osmo noted. This made him feel proud of working for a company that valued training and education to this extent (Osmo 2016).

It was in these factories that even blue-collar workers got a glimpse of the Yugoslav global project, one that was very much a tangible shaper of their working lives. Ismet recalled that when he worked for the company in Sudan in 1972, he met “people who knew about Tito and Energoinvest, and not about Yugoslavia” (Energoinvest 2001). When asked about his job, one of the first things Asim—a factory worker in a branch that was a highly specified producer of power transmission lines, selling the majority of its products to the Soviet Union and Cuba (Energoinvest 1987a)—remarked, “Energoinvest has always been a giant. It was known all over the world […]. We were absolutely proud… you know, you have the market, it means you have work… you have a secure wage… if you have the market requesting you to deliver some jobs for 3–5 years from now, it means that you’re secure… you must be proud, your job is secure, your existence is secure” (Asim 2016).

Indeed, as Ramanadham argued in his study The Yugoslav Enterprise, the autonomy the enterprise exercised in decisions on personal incomes was “one of the important aspects of enterprise performance in Yugoslavia” (Public Enterprise 1982, 76). The above-cited Fortune Magazine article also praised the company’s successful production strategies, as well as its capacity to keep workers relatively satisfied by paying them comparatively high wages. In addition, the system of social ownership, and the affective meaning associated with it, is also what contributed to the formation of a strong company identity (Calori and Jurkat 2017).

A sense of pride tied with the global contacts and economic relations that the company developed emerged time and again in interviews conducted with current and former employees of these companies. These companies’ global entanglements symbolized the success of Yugoslavia as a key participant in the world economy and lent credibility to the nonaligned project. Interviewees who were part of Energoinvest, from managers to blue-collar workers, proudly remarked that their company was a socialist giant. They referred to the same two details that they considered illustrative of their company’s (lost) grandeur: the number of its employees (55,000) and its connections across the globe. This is also the narrative adopted in contemporary reports on the company’s unfinished and contested privatization (Čavčić 2017).

Moreover, in workers’ accounts, their country—Yugoslavia—and their company almost overlap: they both constitute a source of pride in terms of geopolitical relevance. As a 1973 Pelagonija company bulletin pointed out, an employee working abroad was not only representing himself and his work organization, but above all he was there as a citizen of Yugoslavia, “a country that enjoys high international repute” and whose nationals benefit from free mobility and visa-free travel (Pelagonija, 1973e). It was, thus, often taken for granted that both the companies and their workers acted as unofficial ambassadors of Yugoslavia and fulfilled a specific diplomatic function in enhancing the profile and reputation of both their company and country. Not only was their company an ambassador of Yugoslavia across the world, but it fully embodied its values and principles. Moreover, employees felt internationally engaged even without leaving their factories in Bosnia or Macedonia, as they were involved in production for the foreign market and were often reminded of this at workers’ council meetings or in the company’s bulletins, which reported at length about their ongoing or future international operations. In this context, policy makers and workers shared an idea of the world where their country and they could engage with countries and partners from across the Cold War divide as equal partners. This stands in stark contrast with a current acute sense of geopolitical marginalization and peripheralization present in personal testimonies with these companies’ former employees.

Conclusion

The globally oriented, self-managed enterprise formed a vital part of Yugoslavia’s development strategies both at home and abroad. Shifting the focus away from the realm of exclusively domestic debates around workers’ participation provides a fresh perspective on Yugoslav self-management by deprovincializing the Yugoslav economic experiment and embedding these histories in the complex dynamics of a transnational flow of ideas around development, management, trade, and interdependence. A central, yet overlooked, aspect of this was the institutionalization of growing interest, research, and policy making at the international level around the public enterprise and Yugoslavia’s crucial role in it.

The article focused on two Yugoslav industrial giants from the lesser developed regions of Bosnia-Herzegovina and Macedonia. The country’s leading position within NAM from the mid-1950s became instrumental to these companies’ global outreach. Beyond the domestic debates on the socialization of the economy and workers’ control of the means of production, the self-managed public enterprise was embedded in what its elites envisioned as a long-term project of the restructuring of the global economy, the democratization of international economic relations, and a definite overhaul of the old international division of labor. From the mid-1960s onward, however, the argument about a better involvement in the international division of labor was used to legitimate the liberalization and marketization of the Yugoslav economy. Following this principle, Yugoslav companies embraced the challenge of global expansion. This was further facilitated by additional reforms and the introduction of the concept of associated labor. The economic success of the leading Yugoslav companies was thus measured against their presence and competitiveness on the global market, with a commitment to internal self-management and redistribution. Questions of efficiency and good management practices, as well as notions of corporate culture, were not alien; on the contrary, advice on restructuring from management consulting giants such as McKinsey was welcomed and implemented, insofar as it would not challenge workers’ participation.

The language of interdependence and a new international division of labor was perpetuated by the enterprises themselves and disseminated via factory bulletins and at self-management meetings. Essentially, an imperative to catch up with the developed North and prove the viability of the Yugoslav model of industrial democracy underpinned the growth and expansion of these companies. Above all, the unique geopolitical positioning of Yugoslavia, and the role it played within international debates on global trade and development with the UN system, provided credibility to the theoretical base these enterprises were rooted in; furthermore, this increased their visibility and appeal as desirable business partners or investors across the Cold War and North-South divide.

At home, workers’ identities were shaped by their companies’ global outlook. Those who had a chance to work abroad—be it in Africa, the Middle East, Western Europe, or Eastern Europe—assumed the role of unofficial ambassadors, internalizing a sense of geopolitical dignity that stemmed from Yugoslavia’s positioning in the global Cold War.