[ Economy of Destruction, Mladjan Dinkic, Belgrade, VIN, 1995 ]

The end of 1993. brought to an end an extremely unpleasant, very complicated and problematic episode in many senses in the economic and social development of Yugoslavia. Almost spectacular reduction of production and employment had taken place, the country had been stricken with equally far-reaching re-distribution of income and wealth, and everything finished with devastating hyperinflation which, according to the most important attributes, occupies the second place on the long list of hyperinflation episodes registered in the world so far. Behind the huge economic evil which overtook almost every segment of society and the whole social community, there stands a defective and reversed economic policy, the ethical and political aspects of which are equally malign as their scholarly and professional ones. The main component of this policy is outrageous abuse of the monetary system - its unscrupulous use for financial maintenance of an expensive and hazardous policy - and many other abuses have been added to this destructive orientation. That peculiar, ambiguous, and in many respects mysterious period, has remained mostly unclarified; strange turnabouts in the financial and wider economic turbulence remained without real, academically founded answers. Exactly from this fact, although not solely from it, the great importance of the latest Dinkic's book Economy of Destruction is derived.

The unquestionable topicality of Dinkic's book is one of the most conspicuous dimensions of its proved value. The book refers to the huge Yugoslav hyperinflation and the demonic machinery of financial manipulations which violently disseminated it, finally bringing about the spectacular collapse of the monetary system. Nothing bigger and nothing more tragic happened on the economic scene of the latest Yugoslavia, and it would be very hard to find a similar evil in the preceding two. Moreover - if we abstract Vojvodina, which shared the destiny of accelerated inflation of the Astro-Hungarian empire immediately before its tragic breakdown - we can say that such an economic catastrophe has never before befallen Yugoslav countries in all their entire documented history.

So, Dinkic took upon himself to analyze an extremely big event and he paid attention to its truly challenging strata: the most important group of causes which belong to the domain of economic policy and moves and attitudes, demonstrating in a very visible way the almost blood-thirsty ruthlessness and exploitative tendency of the state towards its own people. By selection of the theme, the author has demonstrated a remarkable sense for all relevant facts, but at the same time legitimized himself as an investigator who is not indifferent to the tragedy of his own people. The combination of clearly understanding the importance of a theme and having a sense for the misery of the community in which the author lives and works is very rare and that's why it's very precious.

Evil as the result of hyperinflation is huge and manifold. Production and employment had drastically dropped, together with all really expressed economic aggregates, salaries and other income dropped to the level which must be noted in some domestic book of anti-records, supply was disrupted in its very foundations, shops were devastated by ghostly emptiness of shelves, and a lot of people literally came to the edge of survival. We shall never know the exact number of victims of inflation, but there is no doubt that it can't be ignored. Some of them disappeared simply because of hunger and exhaustion, while others died because of the trivial shortage of medicines or the impossibility of buying them, for their price was enormously high in relation to the income. Also, some of them, in the hell of despair and hopelessness, committed suicide, and we can find soul-stirring testimonies about this horrible situation in Dinkic's book. The biggest strikes against the biological substance of the community are probably the indirect ones. Most of the people didn't die during the period of hyperinflation, but there is no doubt that inflation shortened their lives; hyperinflation has eaten away a large number of man-years. What can we say about the small number of marriages, decreasing birth-rate, etc. Without future, people turn towards naked survival and abstinence from any important and big decision concerning the future. The malevolent combination of decreasing birth-rate and rapid increase of children's mortality and mortality in general is the real blow against the biological being of the people - a blow which besides the evident short-term effects, also has tragic long-term ones. Also, this blow is so much incised into people's consciences that it has entered into literature, movies, caricatures, etc. Mladjan Dinkic's book is dedicated to the destructive hyperinflation which caused all these effects, and that's why it is the object of interest not only for economists, but for everyone who is interested in any of these important aspects of social life in the country, independently of their profession.

In clarifying this unprecedented civilizational fall, Dinkic naturally turned to effects. In the search for effects, his attention was turned towards decisions, orientations, behaviours and actions of our political leaders. He turned towards political determinations of economic life, especially those with effects which will cause headaches for future generations. In that sense, in our economic scholarship, he gives a significant contribution to the interruption of an absurd practice, as well as to the undoing of a damaging manner. Namely, this practice and manner is that economists must be confined to their profession, and "leave politics to politicians". Thereby economists deprive themselves of the possibility to understand the most important things in economic life. In a society fettered by authoritarian structures, all important events and changes, especially in economy, are politically determined. Who really wants to define the causes of events has to reach for political determinants. Everyone who does the opposite deprives himself of the possibility to understand and clarify the most important things. Dinkic is not afraid to show the political generators of our economic catastrophe. Without that it would remain unexplained. Behind the economic collapse stands the flood of newly created money, both in legal and illegal channels. And behind these floods there are naked and brutal political decisions. No other way would lead to clarifying the tragic events which reached their unbearable climax at the beginning of 1994. The result of this brave return to political causes of economic events, on the trace of great economists from the last two centuries (Smith, Mill, Marx...), is an elegant and effective synthesis of determining factors from the two most important spheres of life: politics and economy.

The book throws a clear light on the compounded complex of various damages caused by inflation which could have been easily avoided by a different policy. In the complexity of these damages we can discern a few truly big ones. In the first place, hyperinflation has its own extremely unfavourable and insufficiently noticed micro-economic aspect. It so much deforms and blurs market signals that the market itself becomes unable to perform its functions. The economy is left without common, but vitally needed mechanisms for allocation of resources. Economic subjects are left without motivation and lose interest for functioning of production, trade, and all other activities. Economic life is almost stopped. The economy falls far beyond the limit of its productive possibilities, resources are deactivated, and the national product falls under the level which is objectively achievable. Lost, but objectively achievable national product reaches astonishing proportions. The damage consists in the production which society is unnecessarily deprived of and which wouldn't have been lost with a more responsible policy. There is also the fast melting of capital, especially of the working assets, which accompanies every high inflation. The inflation, further, destroys patterns of rational economic behaviour: instead of being oriented towards productive actions and contributions, economic subjects are oriented to redistributive profits -financial speculations and other similar transactions which don't result in creation of new, but re-distribution of existing funds, profiting at the expense of other subjects in the system, in an unpleasant zero sum game. The consequences of this destruction of good business practice and productively oriented economic attitudes do not disappear with the cutting down of hyperinflation, but last even into the far future. What could be said about the loss of credibility, which represents invisible but no less valuable and important capital accumulated throughout, not years, but decades? That credibility does not return with the breaking of hyperinflation, and market economy without credibility is literally incapable of accumulation and financing of investments, and consequently of modernization and growth. Besides, hyperinflation has caused far-reaching re-distributions of income and wealth: whole social structures are economically destroyed, and huge wealth is in the hands of the small group of people who were clever and unscrupulous enough, and who also had the rare privilege to lean on the government in their ethically and legally problematic manoeuvres.

Paradoxically, the government itself, which is the source of economic and political abuse and enormous damages - which, with rare exceptions, affect the whole society - finally entered the list of losers. When the money has been so ruthlessly destroyed, the threat of disconnecting all vital social functions appeared. And the government was responsible for that. The salaries of military officers were reduced to 15 D-marks per month, infrastructural systems couldn't afford petrol, spare parts, etc... The whole society was facing a collapse, and that was the moment when the totally devastated currency had to be replaced with an entirely new one. The program of monetary reconstruction was literally extorted; its true architects were solely economic necessity - poverty which almost gave no possibility of choice - and the politicians who had to accept the necessity of life. This is the context in which we can point out another contribution of Dinkic's book: in simple words, but with strong arguments, entirely convincingly, he has demystified the so-called - now evidently ruined - Avramovic's program. With regard to the cruel necessity which extorted it, and the fundamental importance of the political will which preceded it, it could more justly be named after the politician who, at the decisive moment, had the power to give it the go-ahead. It remains to be seen how the embarrassment caused by the "breakdown" (D. Avramovic) of the program will be divided among the participants who fervently praised it, and eagerly tried to appropriate its illusory and, as it turned out, short-lived, effects.

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