Business history goes East: An introduction

Abstract

This article introduces the special issue ‘Socialist Entrepreneurs? Business Histories of the GDR and Yugoslavia’. It starts with a review of the growing literature on the history of business organisation in the Global East, or the Second World in the Cold War. It then argues that mainstream business history struggles to incorporate the findings of this emerging body of work, relying as it does on the traditional view of the Soviet-style firm as primarily a production function. We show that a more nuanced view, exploring a greater variety of experiences in the USSR and beyond it, has now developed, through the use of fresh archival evidence and the combination of business history with other historical and disciplinary approaches. Focusing on the GDR and Yugoslavia, the seven contributions in this special issue showcase new directions in the field and demonstrate how we gain innovative perspectives by taking business history ‘eastwards’.

Keywords:

• Socialism
• communism
• capitalism
• Yugoslavia
• East Germany
• Varieties of Capitalism
• Varieties of Socialism
• State Capitalism
• Globalization
• China
• Soviet Union
• Eastern Europe

Introduction

Following the October Revolution in 1917, the nature and extent of the challenge posed to the capitalist system by the Soviet Union and various Soviet-style polities across the globe gradually became the subject of intense study and debate. The growth of the field of Soviet Studies in the years after the Second World War, which included many historians, pitched establishment critics of the Soviet system against scholars with broadly socialist sympathies (Engerman, 2011). Even taking into account the difficulty of access to primary materials during the Cold War, however, the sub-discipline of business history was comparatively slow to venture ‘eastward’. Explaining why that was so is difficult. According to some critics (Scranton & Fridenson, 2013), the founders of the sub-discipline, from the 1950s to the 1970s, tended to take the US as the norm and as normative, which might have made an ‘eastward’ direction in research difficult. Critically, the most influential and extensive oeuvre of one of the sub-discipline’s founding figures, Alfred Chandler (1918–2007), concentrated on the era of American big business (Chandler, 1962, 1977, 1993). It focused on the firm, was based on extensive empirical data, mostly from archives, as well as cross-country comparisons in the US and Western Europe, and explored themes such as technology, management, organisation and operation. The Chandlerian method was widely seen in its time as methodologically rigorous and open to discussion with other disciplines like economics and business management. Given the transnational spread of Fordism (Link, 2020), it would have been logical for the firm in Soviet-style economies to come under the scrutiny of Western scholars, and some, like the economist David Granick, extensively studied the Soviet and East European system of industrial management (Granick, 1954, 1960, 1975). Ironically, though, it was only after the end of the Cold War, when the West’s great protagonist had been defeated, that business history began to more systematically engage with the Cold War’s Second World.

This special issue showcases an emerging literature exploring and incorporating the business history of Soviet-style societies. It aims to demonstrate that going ‘eastward’ can contribute to current debates around the themes, boundaries and methods in the field of business history as a whole. While it is important to acknowledge that we are not starting from a tabula rasa, it is equally important to acknowledge that the field has become more lively and contested than in the past. Indeed, the contributors to the special issue would probably not share a common approach to defining or doing business history. How far there is an emerging business history literature on Soviet-style societies may itself be quite debateable. Valentina Fava and Volodymyr Kulikov, for instance, take issue with Martin Kragh when he claims that Russian (and, even more, Soviet) business history is a field ‘in its infancy’ (Kragh, 2013, p. 386) and instead offer a definition of it as ‘a disciplinary hybrid’ (Fava & Kulikov, 2022, p. 326). We find the latter characterisation to be a more accurate reflection of the variety of approaches, preoccupations and methods open to, and being employed in, the exploration of the business histories of Soviet-style or Soviet-derived systems in the decades following the end of the Cold War. According to many leading figures in the field, in fact, the Chandlerian period in business history came to an end in the 1990s, as researchers not just questioned particular findings in Chandler’s works, but turned to small as well as big business, and explored business in a greater geographic variety, with increased interdisciplinary openness, and in relation to a wider areas of themes across politics, society and culture (Friedman, 2010).

Even though business history has opened up to going ‘eastward’, however, it is also the case that the field still grapples with how to include Soviet-style polities and firms, a problem that we modestly hope our special issue can help the field overcome. Few textbooks or handbooks on business history at the moment entertain Soviet-style systems as a topic worth exploring. A rare exception is the inclusion of Kragh’s (2016) chapter ‘Enterprise in the Soviet and Soviet-Type-Economies’ in The Routledge Companion to Business History (Wilson et al., 2016). Despite its inclusion in the volume, though, the firm in Soviet-style polities is even here mainly discussed in light of how it stood in contrast with the firm in Western economic systems, which are taken as the norm. Kragh argues that, on account of their subordinated position in the totalitarian command-and-control system,

enterprises do not possess any of the features we associate with normal corporate governance in market economies. Firms do not engage in strategic planning, spending decisions or marketing, nor do they fully control related activities such as logistics or personnel capabilities. (Kragh, 2016, p. 177)

Such an approach to the Soviet-style firm as defined by what it is not, or as simply a unit of production, seems very much to be an echo of past approaches. Indeed, it would be unsurprising to find that debates surrounding what is normal and normative still have identifiable roots in the Chandlerian era of business history, given that the side championing business won the Cold War. It is notable, for instance, that, two prominent neo-Chandlerians, Franco Amatori and Andrea Colli, still rely heavily on texts largely published before the collapse of the Soviet bloc in the chapter on the Soviet Union in their authoritative Business History: Complexities and Comparisons (Amatori & Colli, 2013). Despite the broadening of the original Chandlerian framework to deal with new preoccupations, like globalisation, entrepreneurship or the relationship between enterprise, society and culture, Amatori and Colli continue to frame the Soviet experience largely in contrast with Western experiences. They argue that the defining feature of the Soviet firm was that it was different from the Western firm because its freedom to function was severely delineated by the diktat of the plan; it was fundamentally just a unit of production. Citing Andrei Yudanov, a Russian economist who wrote the key relevant chapter in Chandler et al.’s (1997) Big Business and the Wealth of Nations, Amatori and Colli go on to explain that the Soviet command-and-control system scuppered the emergence of a business community, in which firms developed diverse, competitive strategies that normally provide ‘solidity to the economic fabric of Western nations’ (Amatori & Colli, 2013, p. 166).

An expanding, hybrid field

Following the brief triumphalism of the unipolar moment, however, it is also entirely to be expected that there would be more space for challenges to narratives which take the West as normative. Central to the departure from the (neo-)Chandlerian approach in much of the scholarship was the abandonment of the idea that firms in the USSR and Soviet-style societies were merely production units. As Fava (2016) explains, viewing what she calls ‘socialist enterprises’ as more than just subordinate production units shifts the focus from high management to a variety of other actors and factors, political and social, within and outside the enterprise. While partial and contested (Marks, 2020), the greater accessibility to Soviet-era archives in much of the region since the 1990s certainly made this easier for historians to make such a turn (Fitzpatrick, 2015). Fava and Kulikov (2022, pp. 334–337) actually argue that there is a developing literature discussing the overall and changing economic decision-making complex including the firm under Stalin (Yudanov, 1997), under Khrushchev (Kibita, 2013; Markevich & Zhuravskaya, 2011) and after (Feygin, 2017). They likewise posit that there is increasing interest and research in how relations between Soviet enterprises and Western counterparts were formative of Soviet practices (Millward, 2013), as were transfers of various knowledges and models from the West (Grachev & Rakitsky, 2013; Kravets & Sandıkçı, 2013; Shpotov, 2013), and also how informal practices and freedoms enjoyed by Soviet enterprises affected the post-Soviet transformation (Freris, 2018). Resting on new archival materials from many countries, Fava’s own extensive work on the car industry has demonstrated the significant extent of West-East transfers, adaptations and transformations of technologies, knowledges and management practices, often in response to local pressures and circumstances across Eastern Europe during the Cold War (Fava, 2008a, 2008b, 2013, 2019; Fava & Gatejel, 2017).

A further spur to this growing business history scholarship came from the increasing attention drawn by the seemingly inexorable rise of the People’s Republic of China in the twenty-first century. In a review essay on business history in China, Adam Frost (2022a) points out that a major innovation in our understanding of Chinese enterprise is precisely that Soviet forms were not simply transplanted top-down by all-powerful elites. Rather, many historical legacies going back to the nineteenth century could be seen as important to the transformation of business under the Chinese Communist Party after its seizure of power in 1949 (Bian, 2005; Giersch, 2020). Furthermore, improvisation rather than ideological fervour on the part of the party elites and negotiation with the extant private sector characterised decision-making and institution-building in the 1950s (Cliver, 2015, 2021; Finnane, 2011; Li, 2006; Thai, 2018). The period from the Great Leap Forward in 1958 to the initiation of Deng Xiao Ping’s market reform era from 1978, however, remains largely understudied from the perspective of business history. Frost (2022a, pp. 34–35) suggests that two major exceptions include Philip Scranton (whose work is discussed below in greater depth) and the wider debate caused by Karl Gerth’s (2020) work on consumerism in China in this period, especially the debate that contained in a special issue of the PRC History Review. In the latter, much of the discussion revolves around how similar the Chinese experience was to that in Eastern Europe, and how far consumerism can be conflated with capitalism or be seen as (in)compatible with communism. Finally, like with the scholarship on the USSR, the persistence of informal practices across eras retains an important place for business historians (Feng, 2013; Frost, 2022b; He, 2010).

Quite what could be said to have been specifically socialist about enterprises in the USSR, Eastern Europe or China, though, remains elusive. Perhaps one way of approaching this problem would be to avoid system-building as a whole and purposively remain elusive. Such is the method chosen by a well-established historian of American business, and a critic of the Chandlerian method from an earlier era, Philip Scranton. In what constitutes a spin-off from his earlier work on jet-propulsion, Scranton’s research into business history in Eastern Europe (first discussed in a special issue of Enterprise and Society, 2018; see also 2022) and China (2019) began with work on historical documents translated into English by the US Joint Publications Research Service (1957–1995). Rather than approaching the documents with the intention of system-building, akin to the Chandlerian method, Scranton begins with simple, open-ended questions (eg ‘How did communist enterprises work?’), only to make broader comparisons later. In both his work on Eastern Europe and China, Scranton finds broad similarities or resonances in terms of the challenges managers faced (vulnerability to being sacked, responding to arbitrary rules, finding their formal training did not prepare them for the real tasks of management) and the tasks they performed (producing cheaply, providing services, remunerating employees, responding to unpredictable situations). This was ‘despite communist and capitalist enterprises being responsible to polar [opposite] masters: the Market versus the Plan; the Board versus the Party; the shareholders versus the state’ (Scranton, 2018a, p. 571). The comparisons Scranton draws suggest management went beyond simply implementing production decisions from above, and his comparisons are not reduced to those between firms in the West and the USSR. Instead, they represent a more de-centred view of business history, where comparisons can be made between peripheries, Eastern Europe and China, and not solely with reference to the more advanced capitalist states. Challenging teleological explanations of business development success as tied simply to Chinese adaptation of market reform, Scranton in fact argues that Chinese openness to experimentation with new methods of production and new technologies allowed for greater business capacity to match resources and needs than in Eastern Europe during the Cold War era and even before the advent of market reform (Scranton, 2019, p. 5).

A contrasting approach, but similarly empirically rich, has its grounding in global history, and challenges dominant notions that globalisation started in the 1970s with the rise of what is often termed neoliberalism. Containing more voices belatedly sympathetic to the Cold War’s Second World, a literature has emerged in recent years which writes the Global East (Müller, 2020) into the business history picture. Spearheaded by historians such as Mark and Betts (2022), recent titles like Socialism Goes Global: The Soviet Union and Eastern Europe in the Age of Decolonisation, Alternative Globalizations: Eastern Europe and the Postcolonial World (Mark et al., 2020), and 1989: A Global History of Eastern Europe (Mark et al., 2019) demonstrate that there were in actual fact different, competing projects of globalisation from the 1950s onwards. Rather than emphasising Euro-Atlantic visions of globalisation that later became dominant under their so-called neoliberal variant, these new histories aim to challenge conventional chronologies, re-discover alternative visions of globalisation often constituted by (self-defined) anti-imperialist internationalisms challenging deeper, structural inequalities in international affairs, and uncover more diverse agents involved in conceptualising and implementing different routes to development.

What does business history gain from this global turn and its attention to the Global East in particular? Where could the relatively micro study of business organisation and the macro study of global processes intersect? At the macro level, many of the new studies contend that the (geo-) economic and (geo-) political context in a wider sense shaped economic ideas, institutions, industries, and even individual firm strategies in the Global East. In Markets in the Name of Socialism: The Left-Wing Origins of Neoliberalism, for example, Johanna Bockman (2011) shows that the innovative ideas of various East European economists inadvertently contributed to the development of neoliberal ideas. Oscar Sanchez-Sibony’s (2014) The Political Economy of the Soviet Cold War from Stalin to Khrushchev has been similarly influential in establishing the extent to which Soviet trade policies were shaped by the global economy. More recently, Alessandro Iandolo’s (2022) Arrested Development: The Soviet Union in Ghana, Guinea, and Mali, 1955–1968 explores the ways in which the Soviet Union’s developmental agency in West Africa played a major part in the emergence and shaping of the import substitution industrialisation road to development, including at the level of economic enterprises. Moving onto the micro-level, much of the new global history scholarship emphasises the recovery of the agency of alternative actors in the Global East and South, including businesses, in the co-constitution of globalisation and its active contestation (Calori & Spaskovska, 2021). A concrete example is Irina Yányshev-Nésterova’s (2020) investigation into the shaping of the Soviet fishing fleet Sovrybflot, its global reach, and consequently its role in forging ‘Red Globalisation and Soviet efforts to construct global development by becoming a donor to developing states, importing food and raw materials, gaining access to, and exploiting fishing resources, exporting industrial plants, and providing low-rate credit’ (Yányshev-Nésterova, 2020, p. 2). Meanwhile, Spaskovska and Calori (2021) show how deeply embedded some Yugoslav industrial giants were in global economic networks, West, East and South.

The business history of the Global East has also gained from attention by historians of European integration. On both sides of the Iron Curtain, Western and Eastern European elites at various levels sought to create spaces for cooperation and trade beyond the control of the superpowers (Autio-Sarasmo & Miklóssy, 2011; Cain, 2013; Dobson, 2012; Stone, 1996). This percolated to the level of business. In the most relevant findings, Angela Romano and Federico Romero spearheaded several co-edited publications (Romano & Romero, 2014, 2021) that showcase work done in this direction and the creation of what Romano calls ‘Pan-Europe’ as a space for continental cooperation at multiple levels (Romano, 2021, pp. 31–49). In the first of these publications, particular note should go to the article of Pavel Szobi (2014), who explores contacts between East German, Czechoslovak and West European companies in the 1970s and 1980s. He argues that the resulting

economic co-operation was an important means of filling gaps in the supply of goods, as well as prolonging the life of the crumbling Communist regimes…[but that] the choice of relying on Western means – whether technology or credits – revealed the inadequacy of the socialist system to cope with modernisation and global competition. (Szobi, 2014, p. 264)

In a further contribution in the same special issue, Pál Germuska (2014) argues that Hungarian economic elites in the late 1970s began to look ‘westward’. Meanwhile, in the later publication, Benedetto Zaccaria shows that Slovene and Croatian business elites lobbied for closer Yugoslav relations with West Germany and Italy in the 1960s and 1970s (Zaccaria, 2021, p. 226), in a rare documented direct example of business elites trying to shape foreign policy in Eastern Europe. Such work shows, however, that there are major possibilities for studying the economic integration of Europe across the Iron Curtain before and after 1989 through the prism of business history.

Indeed, if we take the notion of the business history of the Global East as a hybrid seriously, we may find it fruitful to cursorily map here recent histories of the Global East in sub-fields adjacent to business history or with potential elective affinities with it to illustrate the potential for cross-fertilisation. Economic history and the history of development are obvious such fields, which have seen significant expansion in recent years (Berend, 2009; Berghoff & Balbeir, 2013; Gatrell, 2006; Kalinovsky, 2018; Lorenzini, 2019; Steiner, 2010; Varga, 2020). Traditionally, technology is a field of interest to business historians, and the histories of technology specifically related to the Global East have indeed been popular (Augustine, 2007, 2018; Miljković, 2021; Petrov, 2023; Stokes, 1997, 2000). Recently, historians have also fruitfully turned their attention to the role of money in the USSR and Eastern Europe (Ironside, 2021; Zatlin, 2009). Issues from industrial policy across Europe (Grabas & Nützenadel, 2014) to industrial relations specifically in the countries formerly ruled by the communists (Archer & Musić, 2020; Bartha, 2013; Bonfiglioli, 2019; Musić, 2021; Ost, 2018; Pittaway, 2012), from joint ventures between Western and Eastern companies (Ironside, 2023) to the advertising industry and marketing in former communist-run states (Papushina, 2020; Patterson, 2012), have much to contribute to the writing of business history. Such a list is far from systematic or exhaustive, but serves to illustrate the potential breadth of the literatures that business historians could make use of when travelling ‘eastward’.

Altogether, the sheer diversity of business history approaches outlined above, and possibilities for business history research to be undertaken, indicates a strong sense of the multiplicity of business experiences in the Global East. This may lead to the question of whether it is possible to speak not just of ‘Varieties of Capitalism’ but of ‘Varieties of Socialism’. Certainly, with the publication of David Soskice and Peter A. Hall’s Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (Hall & Soskice, 2001), the Varieties of Capitalism (VoC) paradigm rose to prominence in terms of explaining different transformational pathways in Russia and Central and Eastern Europe from the 1990s onwards, as well as to China since the market reforms of the late 1970s (King & Szelényi, 2005; Lane & Myant, 2007; Myant & Drahokoupil, 2010; Offe, 1996). Could we read backwards from that? An important question within that vast literature has been how far the legacies of the past affected the transformation processes of different states. There are, as we have intimated, different ways of viewing these societies and their legacies. At one end, it is possible to claim that some of them still have not yet even developed a capitalist economy (Williams et al., 2011), while on the other it has also been argued that they had never been socialist at all, but had always been a form of capitalism (Dale, 2011). Both history and theory clearly matter here, and how socialist enterprise is defined and how business history is done has implications for our understanding of the period since the end of the Cold War. Moreover, it has implications for the broader calls business history to develop an impact agenda outside academia on policy and practice (Wilson et al., 2022, pp. 84–93), which it can here do by discussing the importance of the legacies of the past to the successes and failures of the transformation process since 1989.

Nevertheless, let us go back to the possibility and utility to business history of developing an agenda that could help map the ‘Varieties of Socialism’. Business historians have indeed attempted to make use of the VoC literature, even while criticising its ahistorical model-building approach (Marx & Reitmayer, 2019). Any attempt at building models akin to the liberal market economy (LME) vs coordinated market economy (CME) paradigms for a ‘Variety of Socialisms’ approach could learn from these ventures. Although we do not make any such systematic attempt with this issue as a whole, it is obvious that comparing the businesses histories of a more statist country like the GDR and a more marketised country like Yugoslavia may generate empirical findings that could help develop such an approach. In fact, one of the two editors of the special issue makes an explicit call for a ‘Variety of Socialisms’ agenda in his own contribution (Saša Vejzagić, see below), while the other editor’s co-authored contribution does indeed undertake a systematic comparison of the GDR and Yugoslavia, but polemicises with both the notions of ‘varieties’ and ‘socialism’, preferring to define these states as capitalist and to emphasise differences within capitalism rather than between capitalisms (Gareth Dale and Vladimir Unkovski-Korica, see below).

Business history goes East: towards the special issue

As a matter of fact, this special issue of Business History arises from the two editors’ initial discussions on the nature and extent of the idiosyncrasy of the Yugoslav business world. Given Yugoslavia’s early exit from the Soviet bloc in 1948, following the Tito-Stalin split, and the introduction soon after that of workers’ councils in Yugoslav industry (Unkovski-Korica, 2014), the Yugoslav industrial enterprise looked different to the image prevailing in the rest of the Soviet bloc. With the deepening of decentralisation and market reforms in the 1960s and then of the re-organisation of Yugoslav industry to create workers’ councils at lower and lower levels in the latter 1970s and 1980s, obvious questions arise, among them: the extent to which Yugoslav enterprise managements differed from their Western or Eastern counterparts; how far enterprise structures evolved in new directions; what role workers’ councils and workers themselves played in enterprise functioning in reality; in what ways enterprises related to the (local) state and (global) market; how much more or less dynamic they became in terms of acquiring and adapting technology from abroad or spurring technological innovation; how they were shaped through their interaction with the local unevenness in Yugoslavia (including the existence of the private sector in land and elsewhere) and global unevenness (including Yugoslavia’s non-aligned position in the Cold War, with economic links in the West, East and South); what different functions enterprises fulfilled, from making profits to providing welfare or shoring up defence compared with counterparts elsewhere; how they adapted to consumer demands and pressures; what kind of role they played in gendering social citizenship in Yugoslavia compared; and how Yugoslavia’s international economic and political position affected many of these questions.

We resolved to organise a workshop to explore a subset of these questions, and the use of comparison as an initial method to test the nature and extent of the idiosyncrasy of the Yugoslav business world struck us as poignant. To quote Jürgen Kocka, quite simply, ‘comparison helps to distance oneself a bit from the case one knows best…[and] can have a de-provincializing, a liberating, an eye opening effect…’ (Kocka, 2003, p. 41). We decided on the Democratic Republic of Germany (GDR) as a comparator. The choice of the comparison between Yugoslavia and the GDR was initially fortuitous. It arose from conversation the two editors of this special issue had while were both based at the University of Glasgow. Saša Vejzagić was a visiting doctoral fellow from the European University Institute exploring Yugoslav business organisation during the market reform era, and Vladimir Unkovski-Korica an early career lecturer in Central and East European Studies and author of The Economic Struggle for Power in Tito’s Yugoslavia: From World War II to Non-alignment (2016). While doing research related to his doctoral thesis in the library, Vejzagić found that Yugoslavia and the GDR drew a brief comparison in Raymond Bentley’s (1984) Technological Change in the German Democratic Republic. Vejzagić and Unkovski-Korica were intrigued by that comparison, and found an interested, supportive and sharp interlocutor in Professor Ray Stokes, Chair in Business History, Director of the Centre for Business History in Scotland at the University of Glasgow, and author of Constructing Socialism: Technology and Change in East Germany, 1945-1990 (Stokes, 2000). Combining our joint research agendas to ask how (dis)similar the business worlds of two very different states of the Global East were made for an intriguing set of possibilities.

As we tried to justify and develop the comparison, however, both the advantages and disadvantages associated with comparative history soon became obvious. Let us start with some of the advantages. Using the case-oriented comparative research could test how definite phenomena worked themselves out in several nations, how particular institutions developed diverging forms in different societies, and how certain macro-causal conjunctures produced significant historical outcomes (Skocpol & Somers, 1980). Certainly, asking questions like how far their shared socio-economic system was determinative of their business world and their broader fate, what common institutions they tried to build in differing contexts with diverging results, and how particular conjunctures in their short period of existence shaped the Yugoslav and East German trajectories all seemed to us fruitful. These two states also made sense as a comparative choice because they were arguably as well researched as any other potential comparator states in Eastern Europe, making it relatively easy to attempt a more systematic comparison in the first instance, which could be a classic methodological criticism of comparative approaches (Kocka, p. 41).

Yet we also had to contend with the inherent problems of potential traps of ahistorical approach and methodological nationalism in making comparisons, as well as questions related to the selection of the elements or parts of the totalities we were comparing (Kocka, pp. 41–22). In our mind, the differences between the two countries made for an intriguing contrast. Of the Eastern European states, the GDR was among the more statist; concentrated largely on the Comecon market at the high end of technological production; and dependent on the USSR for political support, given it was largely a product of Soviet occupation. By contrast, Yugoslavia was outside of the bloc, an outlier in terms of market reform; largely agrarian; linked to the EEC and Comecon as well as major Third World production chains and markets; and among the least dependent on the USSR for domestic legitimacy, given it was largely a product of a domestic revolution. These very differences obviously echoed some of the preoccupations of the VoC literature, like the CME (GDR?) vs LME (Yugoslavia?) divide, which could either set the agenda for a ‘Variety of Socialisms’ research paradigm, or at least for an interesting debate around such paradigm-building even when we disagreed with it and a challenge to offer a better alternative. Intriguingly, and in the spirit of much of global history, the comparison could moreover be said to de-centre the study of the global Cold War, by comparing not core states in the system, but, rather, two states removed from the core and entangled in particular geopolitical contexts in competition with the core. If we were to be provocative, we could be said to be comparing states in some important ways developmentally akin to the Global North (the GDR) and the Global South (Yugoslavia), a departure from more common core-core or East-West comparisons.

Nevertheless, some of the classic problems, particularly linked to identifying common approaches and cases to study, emerged. This became evident as the three of us, Stokes, Unkovski-Korica and Vejzagić, organised a workshop entitled ‘The Second World Does Business? Enterprise in the GDR and Yugoslavia’, at the University of Glasgow in late 2018. Following the keynote by Ray Stokes, there were eleven participants from all career stages presenting on five panels, interrogating the following problems: 1. The state as entrepreneur in ‘state socialist’ societies?; 2. Business organisation transformed?; 3. Technology transfer and adaptation?; 4. Business from below: what about the workers?; and 5. Transition/transformation compared. A round table of leading business historians fed into the discussion at the end. The sheer variety of perspectives on the questions at hand and the extreme unevenness in terms of the sources available revealed that any attempts at systematic comparison or paradigm building would not be possible in the short term. Still, there was also a general feeling that the field was more vibrant than any of us had anticipated and that bringing to light some of its major strands would strengthen the case both for more attention to business history in relation to histories of the Global East and for bringing the experiences of the Global East into mainstream business history.

Our contribution: showcasing different approaches

The resulting special issue brings together seven articles that draw on the workshop discussions. The first four articles by Vejzagić, Pieter Troch, Dolores Augustine and Ezster Bartha analyse the emergence of new management structures, elites, practices, priorities and cultures from a variety of complementary and contrasting viewpoints in Yugoslavia and the GDR. At the forefront of a new generation of historians looking into Yugoslav business history, Vejzagić reconstructs the pathway undertaken by Zagreb’s Industrogradnja on its path to becoming a construction and engineering giant in the 1960s and 1970s. His focus is on the continuous and unresolved system clash between socialist and market principles as seen through the history of the growth of the company. While this is a familiar theme, Vejzagić’s contribution is at the cutting edge of the scholarship in terms of mapping out the interaction between, on the one hand, the rise and fall of the market reform agenda and the accompanying institutional transformation of the socio-economic and political system, and, on the other hand, the evolution of a self-managed company. Relying on the company newspaper and oral history interviews, Vejzagić shows the company’s management negotiating federal, republic and local governments, the powerful investment banking system that operated autonomously from political structures, and internal industrial relations as refracted through workers’ self-management structures with the workers’ councils at their core. His contribution therefore speaks directly to the emerging theme of linking business history to business power (Rollings, 2021). It also

speaks of a fairly autonomous and authentic company modernisation, technological experimentation, and a strategically planned market expansion (and flexibility) in a business environment established within one of the twentieth century European socialist projects… enterprises and their managements in Yugoslavia went through an original experience, one that ultimately supports the idea of a variety of socialist projects. (pp. 16–17)

By contrast, Troch engages with similar themes and processes, especially the tension between state and market, but also power. Nevertheless, he does so, not from the standpoint of big business, but of a small company in a peripheral setting of Yugoslavia. He explores the history of an unsuccessful wood processing plant, Kosmet Šper, which emerged largely as a local government attempt at creating employment in an underdeveloped area, but on the eve of the market reform period and the federal move towards intensive growth and international trade in the 1960s. Despite several internal re-organisations and an ever more professional top management, the company struggled to perform on the market, largely because its original purpose clashed with its new function. It was not efficient enough to convince market-oriented actors like commercial banks to fund it long-term, and it was not big enough to gain subsidies from federal, redistributive bodies. Its all-South Slav top management had to rationalise a multinational, but majority Albanian, workforce. Moreover, it found itself permanently stuck between the need to increase wages to attract skilled workers from the countryside on the one hand and the need to raise sufficient income to cover these wage rises. Troch concludes that the management was faced with the difficult task of responding to the intersecting problems of function, ethnicity, and origin, a task in which it ultimately failed.

If the contrasting fates of these two different companies in Yugoslavia suggest the need to understand the diversity of businesses in order to gain a fuller appreciation of the role of business in the country’s history, the next two articles in the special issue concentrate on the same East German company, Carl Zeiss Jena, but from divergent perspectives. Researching management culture in electronics and microelectronics R&D, Augustine traces changes from the 1950s to the 1980s. She argues that, for a complex set of reasons ranging from ideology to geopolitical pressures, the GDR cracked down on the professional ethos and relatively risk-friendly managerial style of top managers whose careers started in the Weimar or Nazi eras in the years leading up to Erich Honecker’s coming to power. Their over-reliance on using the Stasi to literally copy Western technologies actually retarded innovation, roll-out of new technologies and the ability to raise foreign currency. By contrast, Bartha focuses more on industrial relations, and argues that the state-led ‘scientific-technical revolution’ and market-like reform of the 1960s failed amid struggles between management and workers. She demonstrates that the memory of the working class uprising of June 1953 and labour resistance to attempts at implementing Taylorism through the New Economic System (NES) after 1963 frustrated management. If this was symbolic of the power of the workers’ moral economy, to which Honecker appealed, the socialist consumerism implemented in the 1970s slowly and unwittingly unravelled labour solidarity. That, ultimately, led to the collapse of the regime, as access to Western money and goods created cleavages in East German society.

Both of these articles rely heavily on factory archives, and explore the history of the Zeiss in a similar period, but the former’s gaze on high management culture and the latter’s on industrial relations lead the two authors to rather distinct and possibly conflicting conclusions about the reasons for the failure of the GDR. An intriguing contrast, worth more future research, between the findings of both these two articles on the GDR and the preceding two on Yugoslavia, relates to the apparent weakening of top management over time in the former, but not necessarily so in the latter, at least not in the case of Industrogradnja. This may speak to the theme of the two tales of the power of business and management in the two systems.

The following two articles by Max Trekker and Anna Calori, while very different in approach, both have in common their challenge to long-held assumptions in the scholarship, while also sharing a common preoccupation in the form of the transformation period in the 1990s. Trekker points out that while the GDR is often seen as the most reform-resistant of the Soviet bloc states, it was also the country that maintained its largest private sector until the early 1980s, usually smaller manager-owned companies supplying the larger state sector. Ironically, too, the GDR attempted to harness private entrepreneurs to reform and save the system in the late 1980s. Using archives and memoirs, Trekker shows that the reform wing of the SED leadership in 1990 still hoped to save the system by charting a middle road between what they called capitalism and Stalinism. The reform leadership sought to re-privatise the Mittelstand that had been nationalised during the Honnecker era in the early 1970s as part of an effort to create what they termed a social market economy. Yet their plans were vague, possibly deliberately so. They clearly did not wish to privatise the public sector as a whole. Furthermore, they were friendlier with the Hungarian than the Polish leadership, which was attempting shock therapy, and later referenced Yugoslav self-management and Israeli Kibbutzim as their inspiration. Nevertheless, Trekker finds no proof of any foreign inspiration in the documents of the time. In the event, too, the Mittelstand were the only economic survival of the reformed SED in power, but one that proved a failure quickly following the shock therapy imposed with reunification of the two Germanies.

If that is the story of a potential middle road not travelled, or of a failed transformation to a social market economy combining strong public and private sectors, Calori looks at transformation in Bosnia and Herzegovina through the prism of the rise and fall of Energoinvest, a Yugoslav-era engineering and power plants construction giant. Resting on archives and oral history interviews, she finds that ‘[f]rom the perspective of a small country in Europe’s semi-periphery, the advantages of Bosnia’s “in-betweenness” amongst Europe, the middle East, Africa and the rest of the Non-Aligned world, was lost on the post-communist country’s path to economic transition (p. 11) The country’s integration with the West after the end of the Bosnian War (1992–1995) ironically led not to the rising competitiveness of companies like Energoinvest, but their restructuring and privatisation as small and peripheral companies in a poorer setting. Horizons narrowed from the preceding era’s globalist visions of development among the company managers and experts. What this story tells us, explains Calori, is that we need to reassess the world that disappeared in the amnesia of the era of Euro-Atlantic globalisation to re-open the horizons closed in the meantime, to help us imagine new understandings of development and globalisation. Further research cutting across business history, history of globalisation and histories of the Global East would therefore foster more dialogue and discussion of the past, present and future.

The final article in the special issue, co-written by Gareth Dale and Vladimir Unkovski-Korica, is in fact a comparative analysis of the business histories of the GDR and Yugoslavia conceptualised as countries implementing a form of state capitalism, rather than socialism, and is crafted as a contribution to comparative capitalism studies. Dale and Unkovski-Korica embark on an ambitious critique of the VoC literature, turning instead to the concept of variegation. The literature on variegated capitalism emphasises interconnectedness and hierarchies in the world economy which are most often left out of the VoC literature. Nevertheless, Dale and Unkovski-Korica argue that the literature on variegated capitalism increasingly tries to incorporate China in its approach, but without explaining how or when China turned capitalist. They therefore argue that the former communist world’s participation in the world economy needs theorising and inserting into histories of global capitalism. Placing the former communist world into a broader context of statist late industrialisers, Dale and Unkovski-Korica posit the communist states as a state capitalist model of catch-up industrialisation. This approach still needs to account for differences within global capitalism, including down to the granular level of business units. Bringing in the concept of uneven and combined development, Dale and Unkovski-Korica extend, in time and space, the use of the concept of variegation. They argue that the state-capitalist societies were integral parts of a variegated global capitalist system, as was the state-capitalist firm. They then insert the GDR and Yugoslavia into three phases of post-war global capitalist development, explaining differences in their evolution according to the interaction of their global position and domestic circumstances. They conclude by calling on business historians to re-write global business history in the twentieth and twenty-first centuries by engaging more systematically with the experience of all the co-called ‘communist’ societies.

This special issue, taken as a whole, aims to help make the growing, hybrid literature on the business history of the Global East more relevant to, and a more integrated part of, business history as a whole. The diverse findings of the articles published here strongly challenge traditional views of the socialist firm as simply a unit of production. Furthermore, this special issue represents only the second special issue in the field to explore the business history of the Second World project during the Cold War. While the first, published in Enterprise and Society, centred on an article ‘Managing Communist Enterprises: Poland, Hungry and Czechoslovakia, 1945-1970’ by Philip Scranton (2018b), this special issue expands the geographical, thematic and temporal boundaries dealt with in the pioneering attempt. This current, second special issue breaks new ground by making comparisons between, and spurring the investigation of, business operation in two very different states, East Germany and Yugoslavia, respectively a Central European and a Balkan country. It therefore allows for a more refined understanding of the operation of the Second World project in regions with different levels of development and different degrees of integration with core countries of the global system, as well as different historical legacies and sources of legitimacy for the respective regimes. As such, the special issue is a stepping stone to including a greater variety of experiences of the Second World project both inside and outside its initial Eurasian location. In thematic terms, it goes beyond management practices to include wider economic, social, cultural and political factors in the operation of companies. It dissects business operation in both very unique complex, multinational settings and in terms of global entanglements and hierarchies of power. It poses questions surrounding both business power and power relations within business. It interrogates roads taken and not taken. In terms of pushing temporal boundaries, the articles contained within this special issue stretch the boundaries both backwards before the advent of communist party regimes in the wider Central and East European region and the Balkans, and forwards, to the transformation period of the 1990s and beyond. Overall, too, the articles in this special issue, while written by specialists of all career stages versed in both the languages and archives of the region, suggest not just that the writing of business history can travel ‘eastward’, but also that, in doing so, it will not leave the field of business history as a whole unchanged.

Acknowledgements

This special issue ‘Socialist Entrepreneurs? Business Histories of the GDR and Yugoslavia’ would have been impossible without the financial support of the Business History editors, the Centre for Business History in Scotland, and the Central and East European Studies (CEES) Research Incentivisation Fund, for a workshop held at the University of Glasgow in 2018 and entitled ‘The Second World Does Business? Enterprise in the GDR and Yugoslavia’. Big thank you to all the participants, and particularly to Jeffrey Fear, Nataliya Kibita and Angela Romano for their comments at the final round table. We express our sincere gratitude to Sara Bernard, Valentina Fava, Phil Scranton and Ray Stokes for useful comments on this introduction. Ray Stokes was a pillar of support in the early days of the project and it would have been impossible without him. Neil Rollings kept us afloat at a critical time while acting as Ray’s successor in the editorial team of the journal. Rebecca Kay was a supportive mentor in CEES. Last, but not least, our appreciation goes to our diligent managing editors, Andrea Colli and Susanna Fellmann, without whom this special issue would not have seen the light of day.

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No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Vladimir Unkovski-Korica

Vladimir Unkovski-Korica Senior Lecturer in Legacies of Communism, Central and East European Studies, School of Social and Political Sciences, University of Glasgow. His first book The Economic Struggle for Power in Tito’s Yugoslavia: From World War II to Non-Alignment was published by I.B. Tauris in 2016. He has published articles on a variety of topics in Cold War History, Europe-Asia Studies, International History Review, and Revue d’études comparatives Est-Ouest (RECEO).

Saša Vejzagić

Saša Vejzagić earned a BA (2008) and MA degree (2011) in History from the Juraj Dobrila University of Pula, an MA degree in Central European History from the Central European University in Budapest (2013) and a PhD in History and Civilization from the European University Institute in Florence (2021) with the dissertation `The Rise of a Business Class - Managerial Elites in Yugoslavia, 1963-1978’. He is interested in economic, business, political, labour and social history of the 20th century with a focus on Yugoslav socialism. He is an associate of the Centre for Cultural and Historical Research of Socialism in Pula within the project `Microstructures of Yugoslav Socialism: Croatia 1970-1990’. He was also part of the research team working on the second phase of the project `Cartography of Resistance - Zagreb: 1941-1945’, published in 2022. At the moment he is without affiliation, working as an independent researcher.