Yugoslavia: Capitalistic Comrade

When Yugoslavia decided to embark on its own road to socialism, it also decided to chuck doctrinaire economic rules and let its economy operate more or less according to the principles of free enterprise. Yugoslav businessmen, though still subject to more controls than in the West, are therefore unique in the Communist world in their respect for the profit motive, the laws of supply and demand and the necessity of competition. One of the most remarkable of the capitalistic comrades who are putting the dynamics of the free market to work under Communism is a former partisan fighter and devoted Communist named Velimir Marton. With a spirit and shrewdness that any businessman could envy, Marton took over a small meat-packing plant in the early 1950s, and has turned it into Yugoslavia’s largest food company.

Slavonic Bill Holden. Marton, 42, is managing director of Zagreb-based Sljeme Agricultural Industrial Corp., whose sales last year topped $37 million —a fourteenfold increase in eight years. Sljeme (pronounced Slay-me) now owns four farms stocked with 20,000 head of cattle, 100,000 pigs, 2,000,000 poultry, and ponds full of trout and carp. It employs 3,500 workers and has four large factories that produce everything from semiprepared “TV dinners” to pickled pigs’ feet for sale in its 60 food stores, eight restaurants and one hotel. And it makes its deliveries in its own fleet of 150 trucks, manufactures its own cans and labels.

Businessman Marton, who looks like a Slavonic William Holden, learned many of his economic lessons in seven trips to the U.S., and is fond of repeating such familiar free enterprise lines as “The customer is always right” and “We have to grow or die.” He particularly believes the latter, and has just embarked on an ambitious plan that aims at nothing less than converting Sljeme into, as he puts it, “a Yugoslav combination of Howard Johnson’s, Safeway and Swift, with a little Conrad Hilton thrown in.” Marton intends to spend $50 million by 1970 to build restaurants, motels, supermarkets and processing plants. Last week his program was well under way: four motels and restaurants along the Adriatic coast were nearly completed, and a big advertising campaign was under way in Europe to attract the summer tourists whom Marton counts on to fill them.

A Practical Limit. After filling a series of postwar industrial posts, Marton took over Sljeme in 1951 when he was 29. He got the job because of his credentials as a trusted Communist, had no formal business training. But he made Sljeme prosper because of his skill as a manager, his ability to outwit competitors and his readiness to adopt the modern techniques and philosophy of capitalism. This was possible because, though all major Yugoslav industry is owned by the state, the state itself does not run businesses. Workers’ councils that operate somewhat like boards of directors are elected by the workers, hire a managing director and hold him responsible for the firm’s profitability. Marton had to overcome his cautious board’s objection to his ambitious expansion program.

“There is no such thing as Communist business techniques and capitalist business techniques,” says Marton. “The only difference is who gets the profits.” Sljeme pays taxes to the government, but the council decides whether the company’s earnings should be paid out to the employees or reinvested. Sljeme’s net profit averages a respectable 4% of sales, and earnings are usually reinvested. Is there a practical limit to Sljeme’s growth? “Oh, yes,” says Marton quickly. “There is a limit. The sky.” It is clear that he has also learned a few lessons from Madison Avenue.