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not eliminate inflation, but masks it; price disparities increase and when it comes to price revisions they have an explosive character. We had such explosions in 1964 and 1965. and again now.

It is momentarily fashionable to propose so-called »self-manage-ment and social agreements« as instruments for control over distribu-tion of personal incomes. Social agreement, of course, has its sense. But for such progosals as are now given, it should be stated openly that they are completely mistaken. First of all, decisions cannot be imposed from outside on self-managed subjects, even under the mask of an agreement. And then, such decisions - unless they are based on direct administrative force - simply will not be carried out. The problem is not that personal incomes are unequal nor that they rise too fast within a commune or within an industry. The problem is that the conditions of economic activity are uneąual and that personal incomes are uneąual between Industries. For the same work in different in-dustries personal incomes differ up to 100%. Research shows that this inequality is systematically increasing. It leads to massive exploitation of the work collectives of some industries by the work collectives of other industries. If in respect of the distribution of income it is neces-sary to come to some social agreement - and undoubtedly it is - then that can be only on the level of the entire country. It is well known than this is precisely the function of a social plan.

Realization of distribution accordings to the results of work, or its correlative, the eąualization of the conditions of economic activity, were studied in the Institute of Economic Studies. This is an excep-tionally complex problem and therefore cannot be elaborated on here. Until now economic policy bodies have shown no interest at all in research on the operation of inflationary mechanisms in our country. Because of that there were no funds for such research, and our know-ledge about these phenomena is fragmentary and represents the by-product of other research (or business cycles, monetary policy and such). I will therefore limit myself here to only one element whose significance has been determined rather definitely, that is the control of distribution by fiscal measures.

In a memorandum to the Federal Executive Council at the begin-ning of 1967 and then again in a study at the beginning of 1968 (Su-marna analiza primednih kretanja i prijedlozi za ekonomsku politiku), the Institute of Economic Studies proposed progressive taxation of the surplus in personal income funds. That idea began slowly to be ac-cepted, and in Serbia and Slovenia the first drafts of republic laws were prepared, and the elaboration of that idea was also worked on in the Federal Economic Chamber. However, the very fact that republic laws were prepared shows how much the problem was incorrectly conceived. The problem was still morę mistakenly understood by cri-tics who snapped at those drafts, and the entire action was halted. (Until now critics were recruited exclusively from circles outside the economy.) The text which follows is a contribution toward clarifying the problem.

558

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