Albanian autarky and planning

Formation of the self-reliance line

Albania's autarkic planned economy rested from the start on shifting aid channels rather than pure self-sufficiency. Yugoslav credits funded much of the 1947–48 state budget, and after the 1948 break the USSR replaced Yugoslavia as the main source of aid; Albania joined Comecon in 1949 and launched its first five-year plan in 1951. After the 1961 break China stepped in, supplying about 90 percent of the parts, foodstuffs and other goods the USSR had promised. Chinese aid was reduced after 1972, when the strict autarky line was adopted, and the 1976 constitution entrenched the ban on capitalist loans and credits and on joint companies.

Isolation and response after 1978

In July 1978 China ended economic aid to Albania altogether. The break eliminated the source of half of Albania's imports, forcing the country to stimulate exports to earn hard currency. Just before the announced break, planners prescribed a rapid increase in production and export of Albania's four main hard-currency earners: oil, chromite, copper and electric power; exports between 1976 and 1980 rose 33 percent over the preceding five-year period. The regime also invested an estimated 2 percent of net material product in building thousands of prefabricated cement bunkers from 1977 to 1981.

To end dependence on food imports, Tirana forced each district to become self-sufficient in food production, made rural wages relatively more attractive, tightened travel restrictions to keep people on farms, reduced collective-farm members' personal plots and harassed peasants selling produce in cities. In late 1981 it collectivized private lowland livestock and all goats and sheep in the highlands, triggering a wholesale slaughter of herds and meat and dairy shortages in the cities. The leadership's own review later conceded the attempt to socialize agriculture completely had failed and that livestock collectivization had been a huge blunder.

Limits of the planned economy

Autarky proved unsuccessful. Productivity growth fell steadily during the Seventh Five-Year Plan (1981–85), and annual net material product growth for 1981–88 averaged only 1.7 percent, below population growth of more than 2 percent. Net material product decreased in 1984, 1985, 1987 and 1988, declining 1.4 percent from 1986 to 1990. Five years of drought (1983–88) set back agriculture and hydropower, while fixed wages and goods shortages produced repressed inflation and forced saving. Insolvent enterprises turned to the state for bailouts.

Hoxha semi-retired in 1983 and died in April 1985. Ramiz Alia, who became chairman of the Presidium of the People's Assembly in November 1982, gradually took over decision-making. In 1986 the party still fully backed central planning, and the Eighth Five-Year Plan (1986–90) targeted roughly 35 percent higher national income, 30 percent higher industrial output, 35 percent higher agricultural output and 44 percent higher exports. Because of the constitutional ban on foreign credits, Tirana by the late 1980s pursued "masked forms of development assistance" to circumvent it.

Reform and collapse, 1990–91

In September 1989 Alia insisted the party would never permit weakening common socialist property or a return to private property and capitalist exploitation, while signalling that guaranteed employment could lapse. The January 1990 Ninth Plenum programme made enterprises financially independent with long-term bank credits replacing subsidies, decentralized decisions, let workers elect and dismiss directors, based wages on plan fulfilment and profits, freed luxury-goods prices to supply and demand, and allowed agricultural cooperatives to sell food in towns at their own prices. Personal plots were raised to about 0.2 hectares and livestock returned to peasants. The reforms came too late: by mid-1991 only a quarter of Albania's production capacity was functioning and third-quarter industrial output was 60 percent below the same quarter of 1990. The foreign debt rose to about US$354 million from US$254 million at end-1990 and US$96 million at end-1989, and the government financed wages of idle workers (80 percent of normal) with unbacked money, fuelling inflation.

Distinctions

Autarky as ideology and strategy must be distinguished from autarky as outcome. The post-1978 self-reliance line did not mean autarky in trade. Because of limited hard-currency earnings and Eastern Europe's willingness to accept inferior Albanian goods and barter, imports from the Soviet bloc kept growing faster than from the West, and after 1985 Albania raised exports 13 percent about equally to the bloc and the developed West while its Western purchases declined about 15 percent. The 1976 constitutional ban on foreign credits pushed Tirana toward masked forms of development assistance, and it remained the only European nation outside the CSCE. Declared self-sufficiency coexisted with a pragmatic search for Western equipment, training and technology. The project was a form in which the state absorbed capital-organizing functions under conditions of external blockade, and its declared goals should be read separately from real import dependence.

Examples

The 1976 constitutional ban on capitalist loans and credits is the clearest case of entrenching self-reliance in law. Bunker construction in 1977–81 tied about 2 percent of net material product to a military purpose. The collectivization of private lowland livestock in late 1981 led to wholesale slaughter of herds and shortages of meat and dairy in the cities, an example of a policy ending in disaster. Repressed inflation and forced saving amid fixed wages and shortages, and insolvent enterprises seeking state bailouts, exposed the contradictions of the autarkic economy. After the 1990 reforms, some firms cut output targets to raise bonuses while others planned for losses in advance to avoid penalties.