How Serbia was systematically destroyed – by privatization: an interview with Marija Obradović

Note from the editors: The following interview with Marija Obradović was conducted by Vladimir Sudar for the Serbian publication, Sputnik. It is published here in translation with generous permission.

If remaining state-owned strategic resources are sold, it will bring about enormous economic damage. Although the oligarchs that sell them will make great material gains, the situation of the working class will get even worse, says Dr. Marija Obradović, author of a new book Hronika tranzicionog groblja (Chronicle of the Transitional Graveyard).

Privatisation cannot be fair. There is no empirical evidence that any privatisation ever has been fair. Privatisation is a speculative activity, and it always comes at the expense of the company that is being privatised, especially the employees. According to Marija Obradović, researcher at the Institute of New History in Serbia, “it is one of the most advanced forms of plundering the working class.”

In her new book, Hronika tranzicionog groblja, Dr. Obradović analyses privatisation in Serbia from 1989 to 2012, and empirically proves that its goal has been to change the ownership structure of society, and not to improve economic efficiency, either with regards to individual firms or the economic system as a whole.

Serbia, China, Cambodia

“That is perfectly evident in the case of Serbia,” she insists. “By way of privatisation, 98% of the industrial potential of Serbia has been destroyed.  Over a million people worked in industry, and the level of GDP today is significantly smaller than what it had been in the beginning, in 1989. In this regard, industrial production today is at the level of 1970.”

Furthermore, Obradović says that ever since Serbia began implementing the privatisation of socially-owned property it has not been capable of reaching the level of GDP it had in 1989. The way that growth is going right now, it is probable that it will never reach that level, or will reach it “in the distant future.”

“In the whole of Eastern Europe and the USSR, privatisation has brought about a significant erosion of the socio-economic standing of the working class. Today, the cost of labour in Serbia is lower than in China or Cambodia. At the outset of the privatisation, Serbia had an average salary of 1500 Deutsch Marks (around €700), and today about 350,000 people earn a minimum wage of 140 dinar per hour (around €1).”

Obradović emphasises that all the empirical and economic indicators demonstrate that the objective of this privatization has not been to achieve economic growth, but rather served political interests, by which she means the change in the ownership structure of society, or as the Czech Marxist philosopher, Karel Kosik, would say- it was a counterrevolutionary blow.

Counter-Revolutionaries – Hitler, Thatcher

“It is interesting that neither Yugoslavia nor the USSR had negative rates of social growth before privatization, and that in the years that followed both faced negative rates, which supports the thesis that it comes as a counterrevolutionary measure,” Obradović says.

And history demonstrates that privatisation had been used as a counter-revolutionary measure before. One of the first privatisation campaigns in Europe was undertaken in 1933 by Hitler’s fascist government and its goal was to privatise the property which had been nationalised during the Weimar Republic. Throughout the Weimar Republic the level of nationalisation was quite high, as in the USSR, and many Western European theoreticians have thought that finance capital supported the National Socialist Party in order to destroy “nationalisation.”

When it comes to the economic well being brought about by privatisation, in Great Britain in the time of the government of Margaret Thatcher, following the privatisation of the railways, they neither became more efficient, nor better, nor cheaper. And in Italy, in the 1990s, when Alitalia was privatised it only caused a massive loss of jobs, and ticket prices rose.

Children of Communism

Privatisation in the countries of the former Yugoslavia did not bring any economic prosperity. With the exception of Slovenia, no republic has achieved its national income levels from 1989. Slovenia achieved that level in 2008 when the world economic crisis began, and that is also when its national income and industrial production again started to fall.

“In contrast to those countries which experienced rapid privatisation, in Slovenia that process was very controlled and very long. On the one hand, privatisation damaged Slovenia’s economy the least. But we have to say that still during that privatisation some important Slovenian firms disappeared, such as Elan. Some managed to survive, like Gorenje and there are also such firms in Serbia, like Metalec or Niš Ekspres. But,” Obradović emphasizes, “these are firms where the working class was organised and managed to take them over through employee shareholding.”

In response to the question as to whether the objective of the transition has been to bring the former socialist countries into a semi-colonial position, she says that this thesis was quite widespread in the 1990s in Great Britain. A certain Professor of Economics from the University of London explored how the changes in Eastern Europe and the fall of the USSR was a way to return the Eastern European countries to a position of European peripheries. He emphasized the role of the “foreign factor.”

“However,” Obradović notes, “the research I did somewhat problematizes that thesis. I think the key to understanding what went on in the USSR, Eastern Europe and Yugoslavia, lies in the internal counter-revolutionary forces. A great number of the people in Serbia in the early 1990s, who opened their own private firms or participated in the privatisation of the socially-owned companies were part of the communist nomenklatura, or were their children. That is apparent from the research conducted in the 1990s. A public opinion survey from 1989 demonstrated that 66% of the members of the communist nomenklatura were for privatisation or economic changes, while 58% of the working class in Yugoslavia supported federal Yugoslavia and socialist self-management. So, the thesis that the counter-revolution was undertaken by the communists is only partly true.”

God, Homeland, the Nation

Dr Obradović thinks that the privatisation would not have been possible without the civil wars of the 1990s. Without nationalist or religious propaganda, she suggests, this type of privatisation would not have been possible since it was ideology and war which caused a disorganisation and disorientation of the working class.

“It is clear that a large part of the working class supported nationalist politics because it was accompanied by the false thesis that each nation in Yugoslavia is economically damaged. A false image was being portrayed that the creation of nation-states and privatisation reforms would bring a better material situation. I think that now the majority of those belonging to the working class have become aware of how they were deceived,” she says.

The wars contributed to the creation of the unregulated system, which would implement the privatisation that was carried out all over the territory of Yugoslavia during the time of conflict. “In the book,” Obradović tells me, “I bring in a document from 1999 from a meeting of the governing Socialist Party of Serbia where, in the midst of the bombardments in April, they reach the conclusion to speed up the privatisation. Their reasoning is: ‘We may lose government, so let’s grab what we can!’”

There will be more Agrokor

Firms such as Agrokor, in Croatia, cannot survive because privatisation never and nowhere has brought increased economic efficiency. All firms created during the privatisation have no economic future, Obradović insists.

“The example of Agrokor is the most visible, but we have a great number of companies in Serbia and Croatia which have completely disappeared during the course of the privatisation, and which had been very successful as social companies. Those companies which came about through the merger of certain parts of different companies with social capital, like Agrokor, demonstrate that the speculative way of organising production cannot be profitable or efficient, and cannot survive in the long run. I think that cases such as Agrokor will become more and more frequent, both in Slovenia and particularly in Serbia. Unfortunately.”

When it comes to the possible sales of strategic resources such as Telekom or of agricultural land, Odradović states that privatisation of large systems has not been efficient anywhere in the world. She reminds us that the privatisation of the public companies in Serbia was announced in the law from 2014 and, if it comes to that, it will bring enormous economic damage. Although the oligarchs that sell them will make great material gains, the situation of the working class will get even worse,

Marija Obradović is a researcher at the Institute for New History in Serbia. Her latest book, Hronika tranzicionog groblja is out through the Serbian publisher, Filip Višnjić.

Vladimir Sudar is a writer at Sputnik.

Translated by Adela Gjorgjioska.