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Saturday, July 2, 2022

The curse of (Slovenian) privatisation

By: Gašper Blažič

Although economics and finance are not areas that are particularly close to me, at least from a professional point of view, it is still good to understand the basics of state (macro)economy. Also, some concepts that otherwise come from the economic vocabulary. One of these – we call it “liquidation” – was used in the Soviet Union to destroy class enemies and was imported into our region through the students of the Felix Dzerzhinsky Academy in Moscow. And put it into practice.

Although the jubilee year 2021 is behind us and the historical themes from the time of independence are not in the forefront now, it is worth recalling some of the concepts that emerged at that time. In the spring of 1991, when preparations for independence were (more or less successful) – and we can admit that many things went wrong at the time due to disunity within Demos, which made the unfolding of independence more the result of God’s grace than our strength – Slovenia received a visit from two American economists. These were Jeffrey Sachs and David Lipton. Above all, the first of them was a striking personality, a “miracle boy” from Harvard, who was recognised by Dr Janez Drnovšek in the eighties, and, when he was elected to the presidency of the SFRY, he invited him to Belgrade and introduced him to the then Prime Minister of the common state Ante Marković. He quickly seized the concept of privatisation and began to use it, probably also because of his zeal to show the entire Western world that a united Yugoslavia can survive with a new economic market system. His plans were thwarted by Slobodan Milošević with his own vision of the new SFRY system, wherein the “vozhd” pragmatically allowed the “amputation” of Slovenia and parts of Croatia, of course without the territories where Serbs lived.

Social property without owner

However, after the Demos government came to power, Slovenia was also working on how to make the transition from Kardelj self-government to a normal market system. The previous system was based on the so-called social ownership of the means of production, which was a kind of absurdity – in fact, it was all owned by everyone and at the same time by no one. Legally, formally, it was property without an owner (!), as the owner was not even the state, which means that there was no legal entity that would have the position of owner and manage it. Therefore, no regulation determined who owned the assets and “capital”, as both were socially owned. So, there was no de facto owner. Let’s say you had an orchard in the village that was “socially owned”. If the orchard were to bear fruit theoretically, it would be very difficult to decide who could take the fruit from it. For example, whoever would appropriate a single apple would actually harm society, including himself. But, of course, I pointed out that an orchard would theoretically (!) yield a lot of edible fruit. In practice, this was almost never the case, as it was almost never known who was supposed to maintain that orchard at all… Unless there was an agreement in the village for volunteers to maintain social property. Well, we are back to theory…

To caricature a bit: all this social property mess is reminiscent of a refrigerator in some small work collective, where employees put their leftovers in it and very quickly forgot what was theirs. And since it was not known what belonged to whom in the refrigerator, clearly, no one touched anything. As a result, the food in it spoiled over time and the refrigerator quickly became a source of unpleasant odours and a disruption to the normal work process. Which means that the employees had to act (if the hired cleaner had not already done so) and throw everything (in the trash) out of the fridge first. And these are things that could still be useful: a tetra pack for a litter of milk that was still three-quarters full, for example – but milk that could have been used for coffee was curdled and useless. All this “social property”, which had been accumulating in the refrigerator for several weeks, became useless, as it had no defined owners (which also means responsibilities). And we can imagine what such an approach looked like in factories where collective irresponsibility was legitimised because of the system of cardinal self-government.

You should also recall Slavko Kmetič’s stories of how the rot of this system destroyed the standard of railway workers – and in fact there was no one who had the “balls” to act until the famous strike of machine personnel in December 1988, which “tickled” the president of the executive council, Dušan Šinigo to rant, as the management could not afford to have freight trains (some with perishable goods) stop all the way to Milan…

Privatisation as the first stage of transition

The privatisation process should therefore enable the least painful process of transformation from the Kardelj self-government into a normal market economy. Well, it should be remembered that privatisation was a double process: on the one hand, it was a denationalisation, i.e., the return of confiscated property (either in kind or in compensation) to the beneficiaries (or their heirs). On the other hand, it was about privatisation, that is, the establishment of ownership wherever there was chaos over ownership until then. Already the first exposure of these issues provoked conflicts, as in the independence government Sachs’s concept was opposed by the then Deputy Prime Minister Dr Jože Mencinger. And then he resigned together with the Minister of Finance Dr Marko Kranjc. However, both achieved that Sachs’ model of “shock therapy” was not accepted and the privatisation process continued to gain at least some Mencinger spirit…

As the split within the coalition would have been too dangerous just before Slovenia’s independence, the issue of privatisation was postponed to the autumn of 1991. But by then the spirit of the Demos schism had already escaped the bottle, and the first transitional scandals were coming to light. A parallel mechanism began to show its teeth, and its godparents (Niko Kavčič) strengthened their influence on a part of Demos, and the latter formally dissolved itself on the last day of 1991. Which, a few months later, also took away the independence government. The path to “privatisation” – a term taken from Russian, introduced to public discourse in the mid-1990s by the writer Drago Jančar in his essay “Egyptian Pots of Meat” – was thus open.

Today, a significant part of the public still lives in the illusion that the first Janša’s government (2004-2008) brought the first tycoons, i.e., those ascendants who gained strong capital influence and personal gain through various financial embezzlements. Hardly anyone remembers the fact that the first barons of privatisation were brought about by Marković’s (at that time too liberal) legislation at the time of the disintegration of the SFRY. In the Slovenian stories of privatisation, where the former managerial “old boys” became owners of “social” companies, which they had previously run, in suspicious circumstances, the most prominent are the friends of the last party leader Milan Kučan. For example, the late Jože Žagar, then the recognisable name Smelt. At a time of great losses in the market of the former common state (mainly due to the war) and due to too slow restructuring, many of the then industrial giants ended up in the dustbin of history, and with it, unemployment rose sharply. On the other hand, we had the so-called privatisation barons who, by various tricks, established by-pass companies and used the privilege of belonging to the so-called deep state or its parallel mechanism. With this, this split between the barons and the lawless paradise intensified throughout the 1990s.

But let’s see what Dr Janez Drnovšek (President of the Republic at the time of the interview), who was formally the strongest political figure as Prime Minister in the period 1992-2002 (excluding the six-month period of Bajuk’s government in 2000) had to say in 2006. He vehemently rejected the assessment of the wildness of privatisation. “Slovenia is the only country that has managed to maintain social cohesion during the transition. There are fewer rich people here than elsewhere. We were constantly accused of privatising too little and too slowly. Both domestic and foreign critics have pressured us to carry out this process more quickly. In fact, we have taken over a democratic and market system that has its own laws, and we are now getting to know them. Perhaps in this system we have trusted each other more, the other less unhappily, thinking that he will arrange everything as he should. Experience shows that this is not the case. The market system can benefit, but if you leave everything to it, it causes major anomalies, severe social tensions, environmental pollution. This is one of the experiences that the market system must be used, but profit as a driver can still be limited, so we must not allow it to decide everything in society,” he said.

Everyone should form their own opinion on how honest the now deceased Drnovšek was regarding the events in the first stage of the transition.

Privatisers as cancer metastases

Why do I even raise the issue of privatisation? Because this may be the starting point for what was recently openly discussed by Dr Nina Krajnik. Namely, she drew attention to the phenomenon of left-wing privatisation of social subsystems. In a slightly different way, she confirmed what we have been pointing out in Demokracija magazine for many years and which has been especially evident in the phenomenon of this year’s elections. As pointed out by Dr Krajnik, the ideology on which privatisers rely is only a means, because real privatisation interests are in the background. Protesters, civil society, subordinate media, and media workers are key to the success of privatisation and its bearers. According to her, these are only a link in the chain of maintaining “dead” Slovenia.

What Dr Nina Krajnik said is not something fundamentally new and revolutionary. However, she put into words what we have been guessing all along, and under the guise of Lacanian psychoanalysis, she unveiled another veil of the (retro) transition. But this may be just the beginning of the cleansing of Slovenian society in the “pre-hell”, but at the same time an important step in raising public awareness that active citizenship requires more than following some forced impulses, which are reflected in the underground construction of a kind of road protest, where useful idiots think of themselves as working for democracy, but in fact do the dirty work for the privatisers of social subsystems. The protest rumble of the last two and a half years – now, after the elections, this phenomenon has understandably disappeared – was the actual act of preventive war against those who showed the Slovenian public that the public goods can be distributed in other ways, to all citizens and not just in advance chosen guild. Since the difference between what the previous government built and what the current one will bring will sooner or later be revealed, it will be necessary to stifle this difference as much as possible with the imagination of “Janšism” as a scapegoat to which the public must pay attention to not notice this difference.

It is also (and above all) important for someone to psychologically diagnose the state of Slovenian society in a psychological sense. It is crucial for the patient to be diagnosed with the right disease so that he can receive appropriate therapy. If there is no diagnosis or it is wrong, the disease only gets worse. And there is no doubt that the privatisers of Slovenian society are in fact a kind of metastasis that depletes the state – but the essence of recovery is that the patient must decide for therapy. If there is no free choice for therapy, there will be no recovery.

Gašper Blažič is a journalist, editor of the board of the online Demokracija, and the Blagovest.si portal.

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