In this article, I examine foreign investment in the socialist enterprise in the former Yugoslavia based on the case study of Kolektor in the context of the liberalized communist social and economic order. Foreign investments were allowed in the form of joint ventures. I present these investments from the viewpoint of economic reforms, the concept of socialist enterprise, and the concept of economic development, which enabled foreign investments and shaped regulation and the structure of foreign investments in Yugoslavia. The history of the case of Kolektor began at a time when Slovenia still belonged to the former Yugoslavia, which was arguably a liberalized type of communist economic system. This was during the Cold War, when both Europe and the rest of the world were divided essentially along the lines of the communist east and the capitalist west. The Kolektor Company was established in 1963 as a state socialist enterprise for the manufacture of the rotary electrical switches known as commutators. From the outset, the company tried to establish international cooperation to acquire modern technology. In 1968, it reached an agreement with the West German Company Kautt & Bux, which at the time was the technological and market leader in the production of commutators. Kautt & Bux invested in Kolektor and became an owner of 49 percent of the company. The investment proved very profitable for both partners. The Slovenian side got access to modern technology and expertise, and the German side got additional production facilities, skilled workers, and low-cost production, which increased its competitiveness on international markets.

Keywords: Yugoslavia, Slovenia, communism, commutator economic reforms, socialist enterprise, joint ventures

Introduction

In this article, I examine foreign investments in Yugoslav companies during the communist period. Yugoslavia was among the first communist countries to allow foreign investments in the form of joint ventures in 1967. Later, it was followed by other communist countries. Yugoslavia attracted a larger volume of foreign investments than all other communist countries put together. It differed from the other Eastern Bloc countries because its economic and political system was decentralized, the state was better integrated into the global economy, its foreign economic relations were liberalized, and individual companies were responsible for their own success. This paved the way for foreign investments once they were allowed. The system of self-management was introduced with reforms in the early 1950s. It prospered thanks to a significant level of decentralized decision-making at the political and economic level. In the middle of the 1960s, it was decided that foreign investments in Yugoslav companies should be allowed, together with the integration into the international division of labor. The decision was strategic and pragmatic. In close cooperation with foreign partners, domestic companies would get access to modern technologies and management know-how, and they thus would be better able to penetrate Western markets. Also, foreign investments were cheaper than the importation of foreign capital through state borrowing. After that, the idea of attempting to attract foreign investment persisted in the Yugoslav territory until the dissolution of the state in 1991. Over the course of a period of twenty years, regulations would keep changing, becoming increasingly favorable to foreign investment, depending on the political circumstances.

The article is divided into six shorter sections. The first section summarizes the economic reforms and development periods during the existence of communist Yugoslavia. The second section analyses the distinctive characteristics of Yugoslav companies, which must be taken into consideration if one seeks to understand the positions of foreign investors. The third section traces the institutionalization of foreign investments. The fourth focuses on the regulation of foreign investments with emphasis on the essential aspects of regulation and changes over time. The fifth section examines the scope of foreign investments in view of the sectoral structure, regional distribution, and origins of foreign investors. A detailed case study of foreign investment follows in the sixth section, specifically the Western German Kautt & Bux company’s joint venture with Kolektor from Slovenia. The case study illustrates the pattern of investment in a Yugoslav company and of cohabitation between a foreign partner and a self-management company. This company’s experiences, however, were not typical of the practice of foreign investment into Yugoslav companies. Its long-term success makes it an exception, as most of the joint ventures were of a comparatively short duration and were of limited expansion and innovation. Kolektor, rather, offers a good example of what the Yugoslav authorities envisioned and hoped for when they decided to allow foreign investors to partner with domestic enterprises.

Economic Models

Economic development in Yugoslavia can be divided into four periods, each of which saw the emergence of a distinctive economic model. The first one lasted from 1947 to 1951. This period saw the rise of a centrally planned economy. In other words, it was the period in which administrative planning was implemented according to the Soviet example. The top priority was to develop heavy industry even if it meant neglecting other sectors, including sectors which had a direct impact on people’s living standards. In the second period, central administrative planning was abolished (1952–1965). The plan became a mere orientation concerning how the economy was supposed to develop. Furthermore, it became polycentric, as the individual republics attained the right to specify the priorities when it came to their economic development. In the context of the goals specified in such a manner, the companies would supposedly pursue their interests. Partial competition among companies was enabled. Companies were allowed to establish horizontal connections, i.e., communicate among themselves according to their business interests. Thus, hierarchic communication with the ministries in the framework of the centrally planned company activities was abolished. With reforms, decision-making was divided between the political and economic level. Companies became responsible for their own success, and their leaderships could make business decisions autonomously. The new economic model emphasized the development of the consumer goods industry and intensive rather than extensive development, i.e., productivity growth, business efficiency, and the liberalization of international trade. The third period (1965–1975) was called the period of “market socialism.” It saw the use of so-called indicative planning. Companies set their own business objectives in line with the national economic development plan. The focus of economic policy was on boosting consumer spending and income growth. The strengthening of the secondary and tertiary sectors, the integration of Yugoslavia into the international economic space, and the international division of labor were also emphasized. The intention was to strengthen the functioning of the market and the productivity and efficiency of the economy, to increase the level of general education, and to enhance the role of business research and development, either independently of or in connection with the academic sphere. The fourth and last period (1976–1991) was characterized by the consolidation of “workers’ self-management.” A turning point came when the society and the economy were reorganized according to the principles of the so-called “contractual economy,” which was supposed to strengthen the influence of workers (through self-management) in the management of economic entities. From the strategic point of view, the country changed its model and focused on the promotion of basic industries, energy, and raw materials. Attention was also paid to export growth, the reduction of the deficit in the balance of payments, efficient energy use, higher productivity, and closing the regional and economic gaps. The general decentralization of decision-making altered the nature of social planning. The planned goals became a synthesis of the planning by different actors, including companies, associations, and public authorities. Due to measures which were taken to further decentralization, which in turn diminished the power of the state authorities (especially the federal ones), the role of the renamed Communist Party became very important. With its cells in all of the social and economic units, the Communist Party, the League of Communists of Yugoslavia (LCY), became an informal integrating element of a fragmented society and economy.1

Yugoslav Companies

Foreign investments were also determined by the structure and concept of socialist enterprises in Yugoslavia, where there was a system of ownership that was unique in the Socialist Bloc. With the abandonment of the centrally planned economy and the introduction of “workers’ self-management,” the concept of state ownership and hierarchical management of socialist enterprises was abolished as well. In the context of the reforms, companies were becoming responsible for their own success. They were able to establish connections and engage in cooperative business endeavors according to their own interests and the demands of their activities. The transfer of responsibilities to companies took place in the context of the general decentralization of the state. At the same time, the transfer to lower units also meant a change in the ownership concept. The concept of state ownership was replaced by that of “social ownership.” According to this concept, the company was the property of society, i.e., of the entire population. Meanwhile, the workers were intended to run the company. The concept of social property was linked to the concept of “workers’ self-management.” This meant that company employees had the right to manage the company, determine its activities, production volumes, sales prices, marketing strategies, investments, and the use of profits.2

In Yugoslavia, a company could be set up by a municipality, a republic, the federation, another company, a bank, or even a group of citizens. New companies could also be created by merging or splitting up existing enterprises. The founder was obliged to provide the necessary capital. Companies were autonomous in determining their business policies. The power in the company hinged on the working community. With their employment in the company, all workers acquired the right to comanage the company. The working community would elect the highest management body in the company: the “workers’ council.” The workers’ council decided on all business strategies and implementation orientations. It also appointed the company’s management, board of directors, and the director. Board members were accountable to the workers’ council. The director was appointed by the workers’ council. The decision was formally based on the council’s public call for candidates, but the local party leadership initially made the choice. The period of tenure was four years, and there were no limitations on the number of terms. The director managed and administered the company on behalf of and by the authority of the workers’ council. In his work, he had to pursue the interests of the “working community,” to which he was ultimately accountable. The director had the right and obligation to participate in the workers’ council meetings, but he or she was not supposed to play a decisive role. The question of the realistic distribution of power, responsibility, and authority in Yugoslav companies was crucial for foreign investment decisions. Individual directors would successfully lead companies through the strength of their personalities and persuasive abilities. However, the real power of the workers’ councils also had to be taken into account.3

The notion of workers’ self-management was not merely a matter of abstract conceptual thinking or disingenuous rhetoric. It had to be taken seriously in case of every intention of foreign investment, and the investments had to be negotiated with the company itself or with its management. On the other hand, Yugoslav companies were obliged to secure the consent of the authorities and political bodies. Another important issue also arises in connection with the roles of political bodies: that of political intervention in companies. Foreign investors needed to consider this possibility as well. As the reforms weakened the influence of the central authorities in companies, the influence of the party authorities within the given republic and district survived. The LCY had cells in every social organization, including companies. The political line would thus control the company and supervise the decision-making mechanisms and company management. As party members, the directors had a twofold responsibility. On the one hand, they were accountable to the employees, i.e., to the “workers’ council,” but they were also accountable (as noted above) to the local party leadership.4 In practice, this meant that there were formal and informal levels of decision-making which were sometimes complementary and sometimes conflicting. Meanwhile, the LCY had a monopoly on personnel policy. Decentralization also implied a transfer of social power. Corporate self-responsibility also meant that the social power of company managements grew in strength. The control exerted through the local Communist Party authorities at the company and municipal level was intended precisely to regulate this power. This was necessary to ensure that companies would pursue the overall social objectives rather than just their own aims. However, in this manner, the companies’ “self-management” and self-responsibility for their own economic success was systemically denied. Company leaderships would struggle to balance their political and economic performances, with the former often taking precedence. This dilemma was identified at the time by domestic critics, who also questioned the concept of market socialism.5

The Decision to Accept and Encourage Foreign Investment

Yugoslavia was the first socialist country to allow foreign investment in its economy. Hungary, Poland, Romania, and Bulgaria followed later.6 Due to the nature of the system, the investments could only take the form of joint ventures. The 1960s were an important period in the economic history of Yugoslavia (and Slovenia). They bore witness to a significant attempt to change the economic and social landscape. Economic reforms were implemented to make the economy more efficient, increase business incomes, and make the economy more competitive in foreign markets. Naturally, everything was done within the framework of the communist ideology, which meant that change was desirable, but only to the point where it did not threaten the existing fundamental postulates of the communist political, social, and economic order. Thus, in the process of phasing out the centrally planned model, the state started to shift some of the responsibility for economic success to businesses and local communities. It only allowed the market to function, but only within limits set by the state, and it refused to give up the mechanisms with which it controlled the economy. The state also promoted the integration of companies into the international environment. In principle, it supported integration into the international trade flows and the international division of labor. The internal and external trade regimes were gradually liberalized, and some measures were even taken to attract foreign capital.7

Foreign investment was one of the major development issues in this process. At the time, after the country’s accession to the General Agreement on Trade and Tariffs (GATT), following the adoption of the Great Economic Reform (1965), the Yugoslav authorities wanted to integrate the country into the international division of labor. The 1965 reform was one of the most comprehensive and profound of the Yugoslav economic reforms. After these reforms were adopted, the concept of market socialism was consolidated. At the time, it was clear that integration into the international division of labor also meant opening up the country to foreign investment. For a short time, a view prevailed according to which it was socially cheaper to allow foreign capital to enter domestic companies than to build economic development solely on foreign loans.8 However, the price of capital was not the only factor. The expectation was that domestic companies would thereby gain swifter access to modern technologies and, by leaning on foreign partners, enter foreign markets.9 It was also expected that the “workers’ self-management” would become stronger, the general economy and individual enterprises would become more efficient and profitable, and the pace of industrialization would accelerate. Furthermore, the balance of payments was also supposed to improve, as foreign investment would boost exports of higher-value products and help the country address its capital shortage. The issue of unemployment was pressing. The decision was adopted in a context of very high levels of recognized unemployment and increasing economic emigration to Western European countries. It was hoped that foreign investments would allow the country to create jobs more quickly.10

Regulation of Foreign Investments

Foreign investment was regulated by specific legislation which was adopted in various stages. At the initial stage, acts which paved the way for joint ventures were adopted. In the subsequent stages, more detailed regulation of the relationships followed. The process started in 1967, when an act was adopted to tax the profits of foreign companies that invested in Yugoslav companies. A second act limited the foreign investor’s share. The domestic company had to hold the majority in the joint venture (at least 51 percent). Foreign investment was not allowed in banking, the insurance industry, domestic transport, trade, and public utility services. The domestic and foreign partner had to conclude a joint venture agreement, define the purpose of the agreement, and determine the mutual relations in terms of capital, management, cooperation, operations in domestic and foreign markets, and, of course, the division of profits.11 The domestic company had to obtain the informal consent of the republic’s authorities even to enter the initial negotiations. After the conclusion of the agreement, it had to be sent for approval and entry in a special register of such companies at the Federal Ministry of Economy in Belgrade. The foreign partner was guaranteed certain rights under the law: the right to retain ownership of its capital contribution and to sell it, the right to a proportionate share of the profits, the right to comanage the company, and the right to access all documentation. It was also very important that the foreign partner had the right to repatriate the majority of its share of the profits. In summary, foreign investors were allowed to manage the company and participate in it based on ownership (investment). Rights went hand in hand with duties. Thus, the foreign partner had to reinvest at least one fifth (20 percent) of the profits in the domestic company or invest them in a Yugoslav bank at the usual interest rate. The foreign partner also had to pay the required taxes: a profit tax of 35 percent, which was supposed to be a more favorable tax rate than in Western European countries, where most of the potential interest in investing in Yugoslav companies was expected to be found.12

The 1970s were a decade of contradictions. In 1971, although the requirement to reinvest part of profits was abolished, the foreign investor could repatriate only one-third of the income earned by exports after having paid the relevant taxes. The individual republics were allowed to set their own tax rates on foreign investments. In 1973, long-term investments and the joint and several liability of Yugoslav companies in joint ventures with foreign investors were regulated in more discouraging detail. In June 1976, conditions for foreign investments were tightened. Only foreign investment aimed at exports for foreign markets would be approved. Contracts needed to be more precise. The volume of exports and the currencies had to be specified for foreign investors to receive their profits. The rights of joint management bodies were also limited in the sense that they were not allowed to interfere with the “self-managing” structure of companies. The responsibility to determine business policy was transferred to work councils. This limited the foreign investor’s right to manage the company. These repeated changes limited growth in foreign investment.

The legislative changes of April 1978 were again more favorable to foreign investment, as special protections were granted to foreign investors. This time, the legislature put foreign investors on an equal footing with domestic companies in terms of the right to manage. The rights of the company’s joint management board were laid out in detail. In addition, foreign investment in banking was allowed, which was to be regulated by a special act. Foreign investment in the insurance industry, trade, and public utility services remained prohibited. A provision that allowed foreign investors to repatriate half of their export profits was important for them. The next step was taken in 1984, when ownership restrictions were lifted. Foreign investors could now also become majority owners. The last change dates to 1988, when a new foreign investment act completely freed up foreign investment. Prohibitions in the military industry, rail and air transport, telecommunications, the insurance industry, and media remained in place. The act put foreign investors on an equal footing with domestic companies in terms of tax reliefs and government incentives. The foreign investor acquired all management rights and the right to transfer all profits, and collective agreements would be concluded with the employees.13

Foreign Investments in Yugoslavia

The Yugoslav joint ventures policy attracted the attention of the international business, academic, and political public. The number of articles and expert analyses on the subject was considerable. This had an impact on the flow of capital into Yugoslavia. Yugoslavia succeeded in attracting investments from the most technologically and economically advanced countries. The data from 1980, compiled by the OECD, indicate that the volume of foreign investment was gradually increasing.14 Among the industrial sectors, metalworking, the chemical industry, and transport equipment manufacturing attracted the most investment. Despite the constantly changing regulatory measures concerning joint ventures, the political-ideological prejudices in the country, and the actual constraints of the political and economic system, the volume of foreign investment should be deemed only a limited success, since its total value remained a small share of capital in all sectors except metal production (see Table 1). The interest from foreign private Western companies was still considerable, especially those that had already established cooperation with Yugoslav companies. The Western companies’ motives for investing in Yugoslav companies varied and, above all, included the low price of labor and the tax advantages, which allowed for the acquisition of the Yugoslav market, sales through Yugoslav companies to other communist countries, and competitive exports to Western markets due to the low price of labor. As a rule, investments would be proposed by Yugoslav companies.15 The main motivation of foreign companies was, therefore, further growth, profitability, and export opportunities to third markets. Foreign companies that strived to understand the Yugoslav ideological-political reality were successful at investing. A survey of a sample of Western companies in Yugoslavia showed that investments in Yugoslav companies met their expectations. Foreign companies would follow several investment goals. The relatively lower return on investment was compensated for by the increase in exports to other communist countries and the conquest of the Yugoslav market.16

While foreign investors were evenly distributed, most came from countries that were also Yugoslavia’s largest foreign trade partners. The main players were companies from the contemporaneous European Economic Community. Unsurprisingly, Germany and Italy were in the first place (see Table 2). They were followed closely by companies from the United States of America, though only in terms of the number of contracts concluded. However, the United States was the top investor by far in terms of capital invested due to their heavy investment in the oil refining industry.

 

Table 2. Origin of foreign investors in Yugoslav enterprises, 1968–1980

Countries of origin	Number of contracts	Foreign capital invested (millions of dinars)	Share of total foreign capital
USA	30	3,368.0	32.8 %
UK	12	1,777.8	17.3 %
Switzerland	19	1,637.1	16.0 %
West Germany	52	1,123.0	11.0 %
Italy	31	937.6	9.1 %
France	11	290.0	2.8 %
Austria	7	254.1	2.5 %
Sweden	6	223.3	2.2 %
Luxembourg	4	126.0	1.2 %
Belgium	6	124.4	1.2 %
Netherlands	3	75.6	0.7 %
Others	17	402.2	3.2 %

 

Source: Artisien and Buckley, “Joint Ventures in Yugoslavia,” 115.

While foreign investments in Yugoslav companies were territorially dispersed throughout the country, they were also regionally concentrated. The idea of the Yugoslav economic development planning that foreign investment would contribute to the more rapid development of the underdeveloped republics was not realized. Most joint ventures were secured by companies from the developed regions of Slovenia, Croatia, and Serbia (see Table 3). As the legislation allowed it, a kind of “competition” emerged to attract joint ventures. The underdeveloped republics offered lower tax rates to attract a higher share of foreign investments. Montenegro, Vojvodina, and Kosovo set a tax rate of 10 percent. The Kosovo authorities offered an even more reduced rate of only 5 percent for investments in Kosovo’s underdeveloped municipalities. Serbia and Macedonia set tax rates of 15 percent and 14 percent, respectively. In Serbia, any foreign investor could benefit from a half tax rate if they invested in economically less developed areas. Slovenia and Bosnia and Herzegovina set their tax rates at 20 percent. Croatia taxed foreign investors more, at 35 percent. However, it also recognized reduced rates, for example, in the case of investments in tourism activities, the rate was only 5 percent for the first five years and 20 percent thereafter.17 However, through tax policy alone, the underdeveloped republics could not make up for the advantages of the developed republics, which offered a better educated and experienced workforce, better infrastructure, more efficient companies, and better integration into the international economic space.

 

Table 3. Regional distribution of foreign investments in Yugoslavia 1968–1980

Location	Number of joint ventures	In millions of dinars	Share
Serbia proper	41	2,589	30.9 %
Croatia	34	2,585	30.9 %
Bosnia-Hercegovina	29	1,186	14.2 %
Slovenia	43	1,026	12.4 %
Vojvodina	9	470	5.6 %
Macedonia	6	184	2.2 %
Kosovo	3	180	2.2 %
Montenegro	2	134	1.6 %

 

Source: Prinčič, “Tuja naložbe,” 116.

In the individual republics, special bodies were established to attract foreign investments. In Slovenia, these bodies were a part of the Chamber of Commerce and the state administration. The Chamber of Commerce established a Foreign Capital Investment Commission to provide legal and economic information to domestic and foreign companies and to assist them in making foreign investments. The same role was performed by the Work Group on Foreign Investments of the Ministry of Economic Cooperation with Foreign Countries of the Socialist Republic of Slovenia.18 At the international level, a special organization called the International Investment Corporation for Yugoslavia (IICY) was established to provide support for interested foreign companies. The project idea was developed in the Yugoslav banking circles to facilitate and purposely promote foreign investments in Yugoslav companies. In November 1968, a group of Yugoslav bankers, in cooperation with the International Finance Corporation of the World Bank Group (IFC), initiated consultations about the new institution. The response among Western bankers was sufficient for a decision to set up an institution aimed at providing assistance for private enterprises regarding their cooperation with Yugoslav companies. It would help them find business partners and raise the necessary capital in the form of loans or venture capital. The primary objective was to bring modern production techniques and management know-how to Yugoslavia. The IICY became operational in December 1969. It was based in London, Europe’s largest financial center, but registered in Luxembourg for tax reasons. The founding capital in the amount of 12 million US dollars was contributed by 12 Yugoslav and 39 foreign banks, with the assistance of the International Finance Corporation. The founding banks described the new institution as a “pioneering type of investment company, through which private business will invest in joint industrial, agricultural and tourism and other services ventures in Yugoslavia.” The largest shareholders included Yugoslav banks and banks from Austria, Germany, Switzerland, France, Italy, and the Netherlands, i.e., from the countries with which Yugoslavia had already developed economic cooperation. However, financial institutions from the USA, UK, Sweden, Japan, and Kuwait were among the shareholders as well. In the early years, the IICY played an important role in attracting foreign capital to Yugoslavia. By 1973, it had participated in 22 percent of the total investments and provided capital support for these investments. It also invested in its own name, partly in the form of loans and partly in the form of risk capital. Its representatives ensured that investments were balanced regionally and by sector. As the Yugoslav banks and their international activities expanded, the IICY’s importance gradually diminished, as had been expected would happen when it was founded.19

 

 

“We Worked in Socialism, but We Need to Act and Think as if We Were in Capitalism.”20 The Case of the Joint Venture between Kolektor and Kaut & Bux

The Kolektor Company was established in 1963 as a state socialist enterprise for the production of commutators. From the outset, they tried to establish international cooperation in order to acquire modern technology. In 1968, when for the first time the joint ventures were allowed, Kolektor made an agreement with the West German Company Kautt & Bux, which at the time was the technological and market leader in the production of commutators. Kautt & Bux invested in Kolektor and became the owner of 49 percent of the company. The investment proved very profitable, as both partners benefited. The Slovene side got access to modern technology and expertise, and the German side got additional production facilities, skilled workers, and low-cost production, which increased its competitiveness on international markets. The German side also got the exclusive right to handle marketing. Kolektor was only allowed to sell products under its own brand in the communist part of Europe. The investments in development and technology were always very high, and both partners were obliged to make them. As a foreign partner, Kautt & Bux had to invest at least 20 percent of its profit in order to be allowed to export the rest of its profits. Both partners also made a commitment to decide jointly on reinvesting the profits and on additional investment above the legally set limit of 20 percent. Kautt & Bux regularly reinvested the generated profits. The repatriation of profits represented a mere 2 percent of the profit per year.

The main threat to cooperation with foreign partners was the system of management of Slovenian and Yugoslav enterprises. It was based on the ideology of socialist self-management, according to which all decisions on business processes were to be entrusted to the “workers council.” In Kolektor, they had to deal with this obligation on a daily basis. The company tried to be flexible. On the one hand, they insisted on contractual provisions, but on the other, they strove for balance with the Yugoslav provisions on self-management. Fortunately, Kautt & Bux was equally pragmatic. Two parallel “mind” structures were thus pragmatically established in Kolektor. They differed completely in their origin, backgrounds, and purposes. The “communist” and “capitalist” structures and methods of management intertwined in the company’s operations. The latter structure eventually prevailed. Jožica Velikajne, a long-standing associate of the company, described the split personality of the company: “Half of the time, we lived in socialism and the other half in capitalism.” But a pragmatic solution was found which was respected by both sides and which enabled long-lasting cooperation. With the entering of German investors, Kolektor began to undergo a process of deep economic, social, and cultural changes. Kolektor was partly excluded from the local environment. Kolektor’s management structure was different. It was led by two codirectors, one from Germany and one from Slovenia. Decisions could be made only with the agreement of both sides. Kolektor as a company was faced with an urgent need to adapt to western, namely German business standards and habits, well also dealing with the characteristics of the local communist environment.

Kautt & Bux assured itself control over management of the company and thus protected its interests, but this indirectly brought it into a “systemically built-in” conflict with the self-management system. This is why it was also ready to give certain concessions to the Slovene factory. In one of the provisions, Kolektor received an assurance that Kautt & Bux would guarantee each year a minimum volume of sales of Kolektor commutators on foreign markets. This was a great achievement for the factory, as it made a much-desired expansion possible. They could thus use the revenues from exports to finance the modernization and expansion of production capacities and the import of special tools and indispensable semi-finished parts. Both partners also made a commitment to decide jointly on reinvesting the profits and on additional investment above the legally set limit of 20 percent.

In line with the existing legislation, the contract laid down that the company would be managed by a joint management committee with a full mandate to run the company. Yet the self-management organization of the company had to remain intact. But once again, Kautt & Bux got a concession here. At its request, a provision was added to the contract according to which “the supreme self-management body,” i.e., the “workers’ council,” had to respect all contractual provisions and all decisions taken by the joint management committee. In this manner, the German partner assured itself in advance of the protection of its interests.

Another part of the process of establishing cooperation between the two companies and entering into a joint venture was a financial check-up of the company, which took place in November 1968. The German partner was interested in the structure and method of Yugoslav bookkeeping and accounting, including its everyday practices and categories. It wanted to check the credibility of the financial statements of the Kolektor company. It sent to Kolektor a group of three accounting and tax experts. Their report confirmed the credibility of the financial statements. They even concluded that the bookkeeping and accounting at Kolektor was very good and precise in every detail. The auditors, however, noted certain terminological differences stemming from the Yugoslav system and accounting standards. They recommended standardizing the terms or specifying clearer definitions of individual terms so that their meanings would not be lost in translation. They were extremely satisfied with the financial control exerted by the authorized state services, in particular the audit service of the central bank. They even found a good feature in the management structure of Yugoslav enterprises. They believed that the controlling authority of workers’ councils was a good solution, as such internal control largely prevented the possibility of personal profiteering. They eventually reminded the accounting service of the obligation to send quarterly financial statements to Stuttgart. Thus, the accounting service was subject to additional control. But it was very important that the representatives of Kautt & Bux trusted the accounting service and did not question the credibility of its reports.

Kolektor was one of the first cases of an investment by a Western European partner in a self-managed socialist company in Slovenia and even in Yugoslavia. There were, understandably, many ideological suspicions and idle fears, which were also reflected within the company. Any close connection with a foreign partner was met with great mistrust and concealed opposition, as is evident from the minutes of the meetings of the workers’ council. At its session of July 9, 1968, the council had on the agenda the approval of the contract with Kautt & Bux. After the director read the contract and provided an extensive interpretation of individual provisions, all the hidden fears, distrust, objections, and reservations came to the surface. He was also assisted by the president of the municipality, whose presence at the meeting gave the agreement wider political support and the backing of the local political environment. It was the president who stressed several times that the contract was not the type of contract which allowed the exploitation of workers, and thus he rejected in advance the suspicions that could be felt from the tone of the speakers. The fear stemmed largely from the difference in the levels of wages in Germany and Slovenia and the reservations regarding the real prices of supplied raw materials and semi-finished goods. In modern terms, this meant that some of them saw in the envisioned partnership the danger of the effect of transfer pricing which Kautt & Bux could turn to its advantage in terms of its profit levels. The other reservations concerned technology. Some members were quite impatient and objected to the gradual nature of the transfer of production. According to the plans at the time, they were first to produce commutators which required only minor adjustments to production and only later to switch to the production of more demanding types. After a lengthy discussion, they nevertheless reached a decision that Kolektor should sign the contract.

According to the contract, the Kolektor would invest all its available assets, and the foreign partner would invest cash, machinery, tools, the necessary know-how, experience, and goodwill. The investment ratio between the partners was at the upper limit what was allowed: Kautt & Bux could only obtain a 49 percent equity stake. Although the German partners wanted a majority stake, they had to accept this as the only possible option. But they insisted on a provision stating that, were Yugoslavia to adopt new legislation concerning foreign investment, Kolektor would agree to each of the two parties holding a 50 percent stake. The foreign partner also required additional assurances of the safety of its investment. They therefore negotiated the right to cosign any contract. Each contract had to be cosigned by a representative of Kautt & Bux’s management. The term “codirector” was used in the contract. When responding to the ideological accusations regarding this delicate issue of a “codirector,” Kolektor successfully explained to the authorities that the term itself was merely a “terminological concession.” They explicitly assured that it would not have any consequences for the management of the company, as all other management structures typical of a socially self-managed company would remain in place. These explanations notwithstanding, this provision constituted a significant change in the structures and methods of company management and business.

Both partners were pragmatic enough that the cooperative undertaking proved very successful. In the period beginning with the conclusion of the contract and ending in the early 1980s, production and exports grew at an average annual rate of 12 percent. By the mid-1970s, the volume of production surged around eightfold, and around half of all commutators produced were sold to foreign markets through Kautt & Bux. The share of production for the foreign partner was slowly rising, and Kautt & Bux constantly exceeded the purchase value of commutators set out in the contract. Kolektor became a supplier to numerous European companies, including Philips, Bosch, AEG, Siemens, Vorwerk, and Perles. Moreover, thanks to the new technology, the door to the Yugoslav market was also opened wide. Kolektor had an 85 percent market share of the domestic market.

Kolektor increased its production, technology, and market share rapidly. It also constantly invested in research and development, and it enjoyed successes with a few patents which enabled it to lower production costs substantially. Kolektor also improved the educational qualifications of its employees. At the end of 1980, Kolektor has already surpassed Kautt & Bux by volume of production and overall operation, market share, and profitability. Kolektor went from being a recipient of knowledge to an innovator, a company which generated its own knowledge and started to base its further growth on this knowledge.

Then, in 1988, the first agreement, which had been signed 20 years earlier, came to an end. After initial disagreement, a new contract was finally signed which was very similar to the first agreement from 1968. But there was one important difference. Kolektor would be allowed to sell in markets where its German partner did not have its own company for the production or sale of commutators or its own sales agents. Thus, a small window opened for Kolektor for independent marketing with its own brand.

The 1990s were the challenging years for Kolektor and Kautt & Bux. The transition period in Slovenia and the business troubles faced by Kautt & Bux created a new context. During the post-1989 transition, it was finally possible to transform the Kautt & Bux share in Kolektor into a pure capital investment. Kautt & Bux achieved a majority share, 51 percent, with the lease of the production line to Kolektor. It was stipulated that Kautt & Bux’s majority share should be reduced after Kolektor had paid off the production line. Kolektor did that in two years, so the share of Kautt & Bux decreased to 50.01 percent. Kautt & Bux at that time still held the exclusive sales and marketing rights for Kolektor’s products on Western markets. Kautt & Bux regularly used its majority share in Kolektor as collateral in different credit transactions. In the new contract, there was a provision which later became crucial. Kautt & Bux agreed that for any kind of decision, a three-quarters majority of shareholders was required. This was a concession given to Kolektor in order to protect the interests of the Slovenian side.

In the beginning of 1990s, Kautt & Bux was overburdened with debts, lagging behind Kolektor technologically, and losing its competitiveness, and its market share was in decline. In fact, its business performance was completely dependent on the profitability of Kolektor. Kautt & Bux was at the verge of insolvency. Due to the marketing rights which Kautt & Bux held, which meant that it had direct contacts with customers, Kolektor had an interest in helping Kautt & Bux ease its solvency problems. However, in 1994, the efforts to keep Kautt & Bux afloat proved futile. In fear for its future, Kolektor cancelled the agreement with Kautt & Bux, since Kautt & Bux was not in position to ensure the selling channels anymore. Within the customer’s network, Kolektor was already recognized as reliable, innovative, and excellent producer of commutators. Although Kolektor faced initial troubles, it successfully managed to establish direct ties with its customers and build partnerships with them.

Simultaneously with the decline of Kautt & Bux, another process was going on, specifically, the privatization of Kolektor, or to be more precise, the privatization of Kolektor’s 49.99 percent share, which was in state/social ownership. By the time of Kautt & Bux’s bankruptcy, privatization based on the concept of broad employee co-ownership had started. After a very complicated procedure, two newly stablished companies (FI and FMR), owned by 800 employees with a deciding role in management, privatized the Slovenian part of Kolektor.

After Kautt & Bux declared bankruptcy, there was an offer to the Slovenian side to take over the Kautt & Bux share in Kolektor. At the time, however, the Slovenian side simply did not have enough founds for such a takeover. Finally, Kautt & Bux was taken over by Kirkwood Industries, an American commutator manufacturer, in February 1994. In addition to Kautt & Bux’s total assets, Kirkwood also took over slightly more than a 50 percent share in Kolektor. Kirkwood entered the takeover procedure of Kautt & Bux, and Kolektor unprepared. Kirkwood’s management expected to gain total control of the company. However, they were soon faced with reality. They found out about the contractual provision concerning the need for the assent of a three-quarters majority of shareholders for the adoption and enforcement of decisions. The bankruptcy administrator in Germany had obviously withheld this important information from Kirkwood.

In the 1990s, when Kirkwood acquired a share in Kolektor, Kolektor became even stronger and more independent. By using modern technology, it substantially increased its production capacity. The volume of production surged by 47 percent in the second half of the 1990s, from 66 million to 107 million commutators. In the same period, the volume of sales was up by 40 percent. The company started to establish commercial branches and production facilities in different countries (Germany, USA, Brazil, Mexico, South Korea, China, and Bosnia). In the end, Kolektor even bought Kautt & Bux.

From the perspective of the day-to-day realities, the story was not so smooth. The Kirkwood era at Kolektor was marked by huge misunderstandings concerning the future of both companies, since they were also competitors on the most important markets. The Kautt & Bux and Kolektor management were on close and friendly terms. They trusted each other and were partners. In Kolektor’s relations with Kirkwood, there was no sign of that spirit. From the outset, Kirkwood tried to subordinate Kolektor and degrade it into being a plain production plant, without any other function. This was completely unacceptable for the Slovenian side. Kirkwood attempted to acquire additional shares in Kolektor, but it failed, and it also underestimated the mutual loyalty in the local environment. After this failure, Kirkwood lost interest in Kolektor and in the European market. They offered Kolektor’s owner the option to buy out Kirkwood’s share. Slovenian owners agreed. They finished the procedure in 2002. At the same time, Kolektor also purchased the German company Kautt & Bux from Kirkwood and thus completely dominated the European market.21

Conclusion

Yugoslavia was the first communist country to allow foreign investments in the form of joint ventures as early as the second half of the 1960s. The decision was made as part of the broad reform efforts of 1965. This was a period when the reformist wing of the LCY was dominant. The decision to allow foreign investments was part of the effort to modernize technology and management in the Yugoslav economy. The aim was to further Yugoslav integration into the global economy and the international division of labor and also to enable its competitive entry into the Western markets. Allegedly, the advantages for foreign enterprises of investing in Yugoslavia were the relatively lower investment costs due to cheaper labor and favorable tax rates, satisfactory infrastructure, proximity to the Western markets, a relatively extensive domestic market, and the possibility of exports to third markets, especially the Eastern Bloc countries. This was a pragmatic approach to making the domestic economy more efficient. However, the representatives of the reformist wing, even before they were removed from their positions at the beginning of the 1970s, had to take into account the political realities and the prevailing ideological orthodoxy. Therefore, the regulation of foreign investment was a compromise between pragmatism and the ideological constraints of the communist regime. For foreign investors, the security of their investments, shares and management of joint ventures, and repatriation of profits were vital considerations. There were no ideological prejudices regarding the security of investments. This interest was recognized by the authorities, but there were greater concerns about the co-management of companies and the repatriation of profits. As of the mid-1970s, ideological restraints were tentatively weakening, and the regulation of foreign investments was gradually removing the constraints imposed by the self-management political and economic system. In the late 1980s, Yugoslavia fully liberalized foreign investment. However, at that time, the country’s profound economic and political crisis drastically undermined the efforts to encourage foreign investments in the Yugoslav economy through liberalized regulation.

By 1980, Yugoslavia had managed to attract 200 joint ventures, which meant an average of around 15 foreign investments per year. These investments were rarely extensive, which attests to the caution of foreign investors when it came to joint ventures. 200 foreign investments were not much considering the size of the national economy, but they were a lot for a country with a communist system and regulatory restrictions. Research has shown that foreign investors had no problems with the Yugoslav self-managed corporate structure as long as the local or republic party leadership did not interfere. Investors received half of the management rights, even if they had a smaller share of the capital. Thus, both sides needed to seek consensus to make business decisions. A sort of an informal pattern emerged where the Yugoslav side had more say in setting the employee wages, determining the pricing policy on the domestic market, and focusing on integration into the local environment and relations with the local supplier network. Meanwhile, the foreign partner had a decisive say regarding the technology, the product range, the organization and quality of production, marketing, and sales on the Western markets. Together, they made decisions on recruitment, employee training, and marketing on the domestic market and in other communist countries. The experiences of foreign companies were mostly positive. The self-management of the Yugoslav companies was also not an obstacle. The qualities of the leading operational personnel of both partners were more crucial. The concerns of many investors regarding subordination to the workers’ council as the supreme governing body of Yugoslav companies were unfounded. As a survey among foreign investors revealed, the workers’ councils in joint ventures were more of an advisory body, while the decisions were made by the joint management board.22

The volume of foreign investments shows that the expectations of the Communist Party’s reform wing were justified and that foreign investment could be an important driving force for swifter economic development and the state’s integration into the international economic space.23 However, the restrictions put in place by the communist regime were severe. The ideological-political, social, and economic dilemmas related to foreign investments are evident from the case study presented here. The example of the Kolektor company shows that pragmatism was also needed by foreign investors and domestic companies in their daily business practices. The case of Kolektor also shows that foreign investment in a self-managed enterprise could be very successful when long-term objectives were given emphasis and there was minimal political interference, as was often the case in Slovenia.

As we have already pointed out, Kolektor was not a typical example, but the question remains as to how much of its long-term success was made possible by the investments made by its West German partner. The success of a company cannot simply be attributed to one or two factors. The answer lies in several arguments and their mutual interaction in a historical time and space. Each company is a specific, unique story. It takes place in a specific social context in combination with several favorable circumstances.

The presence of the foreign partner was no doubt a very important factor in Kolektor’s success. It put Kolektor in a specific position and prevented any foreign interference. As for internal relations, here the foreign investor had an important controlling function. Dependence on the foreign markets guaranteed by Kautt & Bux and the ensuing steady incomes were advantages that could not be ignored. The need to adhere to the Western economic standards through Kautt & Bux also had a positive impact on the performance standard of the employees and the leading managers. The foreign partner assured a high level of investment. First, the high investment stemmed from the entry of the foreign partner and the requirements of the Yugoslav legislation, but later, they became a necessity guaranteeing technological progress and growth in the market share. Both sides were aware of this. The level of investments in development (knowledge), technology, and production were constantly high. Kolektor’s success was founded on massive cost-competitive production in the constantly expanding electric motors market.

Another important element was the stability of management and teamwork. In the period between 1968 and 1994, there were only two Slovenian directors and one German director. This contributed to the necessary predictability of the management and its approach to the business. Long-term goals had priority over short-term goals. This was respected by the foreign partner. Kolektor was a company which from the outset had a clear strategic orientation and clearly defined, realistic, and measurable goals. The loyalty of employees to the company should also be mentioned. The level of employees’ identification with the company was high for a long time. The company tried to understand the employees and their families and help them meet their needs. This has been a constant feature of the company’s policy of social responsibility, regardless of which decade of Kolektor’s development we are looking at. Social responsibility was a key feature in the concept of Yugoslav enterprise, as other cases clearly show.24

Unlike most of the others joint ventures in Yugoslavia, the collaborative undertaking between Kolektor and Kautt & Bux was successful due to pragmatism of the partners, both the foreign and the domestic, and the pragmatism of local authorities, which was very important. Local party and administrative authorities respected the new reality at Kolektor, which was established after the entry of a foreign partner. Primarily, they were interested in economic performance, since Kolektor became an important employer and contributor to the development of the local community.

Bibliography

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Artisien, Patrick F. R., and Peter J. Buckley. “Joint Ventures in Yugoslavia: Opportunities and Constraints.” Journal of International Business Studies 16, no. 1 (1985): 111–35. doi: 10.1057/palgrave.jibs.8490445

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Conner, James. “Yugoslavia: Laws on Joint Ventures and the Transfer of Technology.” International Legal Materials 18, no. 1 (1979): 229–71.

Dyker, David, Yugoslavia – Socialism, Development and Debt. London: Routledge, 1990.

Flakierski, Henryk. The Economic System & Income Distribution in Yugoslavia. London: M.E. Sharpe Publisher, 1989.

Gnjatović, Dragana. Uloga inostranih sredstava u privrednom razvoju Jugoslavije [The role of foreign loans in economic development of Yugoslavia]. Belgrade: Ekonomski institut, 1985.

Investiranje stranog kapitala u jugoslovenska i talijanska poduzeća [Foreign investment in Yugoslavia and Italian enterprises]. Rijeka: Ekonomski fakultet Rijeka, 1970.

Lamers, E.A.A.M. Joint Ventures Between Yugoslav and Foreign Enterprises. Tilburg: Tilburg University Press, 1976.

Lazarević, Žarko. Kolektor: 50 years 1963–2013. Idrija: Kolektor, 2013.

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Patton, Donald, and Do Anh-Dung. “Joint Ventures in Yugoslavia.” Management International Review 18, no. 4 (1987): 51–63.

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Prinčič, Jože. “Tuje naložbe v slovenskem gospodarstvu v času druge Jugoslavije (1945–1991)” [Foreign investment in Slovene economy in Yugoslavia 1945–1991]. Prispevki za novejšo zgodovino 42, no. 1 (2002): 109–20.

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Ramnath, Narayanswamy. “Yugoslavia: Self-Management or Mismanagement?” Economic and Political Weekly 23, no. 40 (1988): 2052–54.

Sukijanović, Miodrag, and Djura Vujačić. Industrial Cooperation and Joint Investment Ventures Between Yugoslav and Foreign Firms. Belgrade: Jugoslovenski institut za ekonomska istraživanja, 1968.

Woodward, Susan. Socialist Unemployment – The Political Economy of Yugoslavia. New Jersey: Princeton University Press, 1995.

 

Table 1. Foreign investments by economic sector, 1968–1980

Sector	Number of contracts	Total investments (millions of dinars)	Share of capital
Food, Drinks, and Tobacco	17	2,577	5.5 %
Chemicals and Allied Industries	27	5,843	12.5 %
Industries in Which Metals Were Used	17	2,269	4.8 %
Production of Metals	12	22,218	47.8 %
Wood and Paper Industry	8	3,094	6.7 %
Transport Equipment	17	5,860	12.6 %
Electrical Engineering	14	1,395	2.9 %
Rubber Industry	8	2,178	4.7 %
Other Industries and Activities	44	1,137	2.5 %

 

Source: Artisien and Buckley, “Joint Ventures in Yugoslavia,” 116.

The study examines Soviet fashion houses as fashion corporations with an extensive structure and a certain autonomy which served as centers for the development and representation of Soviet fashion. These state institutions were created in the capitals and large cities of the Soviet republics. The Moscow All-Union Fashion House acted as a methodological center for fashion houses of all Soviet republics. The Ukrainian SSR was one of the important centers of fashion development in the Soviet Union, and it included six general orientation and five specialized fashion houses, as well as the Ukrainian Institute of Assortment of Light Industry Products and Clothing Culture. Based on a wide range of archival sources and interviews with fashion house workers, the article reveals the structure and operation of Ukrainian fashion houses in the period between 1940 and 1991 and also examine their cooperative endeavors with garment enterprises and research institutions. The technology of clothing production by designers, the processes of approval to which these technologies were subjected by art councils, and the organization of exhibitions in the USSR and abroad are also considered.

Keywords: Soviet fashion, fashion house, light industry, Soviet Union, Soviet Ukraine, fashion corporation, art council.

As the nineteenth-century Russian playwriter Anton Chekhov wrote in his comedy The Wood Demon, “In a human being everything should be beautiful: the face, the clothes, the soul, the thoughts.” Although Chekhov was not referring to the USSR and its fashion industry, his now famous saying served as a slogan for the so-called “new Soviet person.” The “new Soviet person,” a hard-working, selfless member of Soviet socialist society, was cast as the embodiment of the harmony of individual and societal interests. This person was supposed to express this harmony through his or her every act and accoutrement, including clothing, to which particular attention was devoted in the second half of the twentieth century.

Soviet fashion is a complex phenomenon which combines cultural, social, aesthetic, and ideological aspects. Clothing is arguably also one of the most important symbolic languages of a given society, and the production of clothing is a way to control the appearance and visual vocabulary of the population, as well as a way to interfere in everyday life through a regulated market for fashion products.

Today, Soviet fashion is being made the subject of study by representatives of various disciplines, including art criticism, culturology, philosophy, and sociology. Rather recently, it also began to be actively studied by historians. Among the studies on the history of Soviet Ukrainian fashion, it is worth noting the works of Ukrainian culturologists Zenovia Tkanko and Maria Kostel’na.1 In her book Fashion in Ukraine of the Twentieth Сentury, Tkanko points out the most distinctive features of the styles and trends that influenced the development of Ukrainian fashion.2 Kostel’na focuses in her research on the ethnic direction in the work of Ukrainian fashion houses designers who were active in the middle of the twentieth century or the beginning of the twenty-first century.3 She attempts to reconstruct the stages of development of Ukrainian fashion houses, focusing on the evolution of the ethno-paradigms of the Kyiv, Lviv, Odesa, Kharkiv, and Donetsk schools of fashion design.4 She also covers the creative path and the development of ethnic trends of Ukrainian designers such as Marta Tokar, Lidia Avdeeva, Hertz Mepen, and others. While both Tkanko and Kostel’na consider mainly the cultural aspects of the development of fashion trends, including the period of Soviet Ukraine, they also examine the distinctive elements of fashion development in Ukraine and Soviet light industry in general.

The works of the Russian historian Sergey Zhuravlev and the Finnish sociologist Jukka Gronow are significant for the study of the history of Soviet fashion.5 Zhuravlev and Gronow consider the history of fashion industry development in the USSR and analyze changes in the attitudes of the authorities and society towards fashion.6 Their works deal with various aspects of Soviet fashion, including the creation of the design system in Soviet Russia, discussions about fashion in the Soviet public discourse, individual tailoring and designing clothing based on the example of the State Department Store (GUM), and so on. Their detailed examination of the Tallinn House of Fashion Design, which is based on interviews and archival materials, is of particular value to the scholarship on the broader subject.7

Historians Larissa Zakharova and Natalia Lebina are also actively studying the fashion world of Soviet Russia, and Djurdja Bartlett and Judd Stitziel are studying socialist fashion as a phenomenon. Historian Larissa Zakharova has examined the trips taken by Soviet fashion designers to France and attempts to cooperate with the Parisian fashion house Christian Dior, and they have called attention to the significant French influence on fashion trends in the Soviet Union.8

Natalia Lebina’s works are dedicated primarily to the study of Soviet everyday life and the image of Soviet people, including aspects of their appearance, clothing, and behavior.9 In the monograph Man and woman: body, fashion, culture. The USSR – Thaw, in which Lebina scrutinizes the relationship between a man and a woman from various perspectives, she also examines fashion as well.10 Lebina alo considers the activity of the All-Union Fashion House and the Leningrad House of Fashion Design, which is particularly important for this study.

In Fashioning Socialism: Clothing, Politics, and Consumer Culture in East Germany, German researcher Judd Stitziel thoroughly examines the emergence and development of the socialist fashion industry and analyzes discussions about the aesthetics of clothing, drawing on the example of East Germany.11 Stitziel reveals the economic and political conditions under which the fashion industry in Germany operated.

FashionEast: The Spectre that Haunted Socialism by British researcher Djurdja Bartlett is dedicated to the phenomenon of socialist fashion. Bartlett considers the institutionalization of fashion and the formation of the “official socialist costume” as an ideological construct.12 She also touches on the roles of the Council for Mutual Economic Assistance (СМЕА), within the framework of which the USSR also cooperated with the socialist countries in the formation of socialist fashion, where corporate ethics and culture were also visible. In addition to considering clothing design in the USSR, Bartlett also devotes considerable attention to Eastern European countries such as Hungary, Czechoslovakia, Poland, the GDR, and Yugoslavia.

Thus, the research topic on which I focus in this inquiry is relevant and interdisciplinary and has broad potential for further research, though it has not yet gained the recognition it merits among professional historians. My inquiry is the first in the field to consider Ukrainian fashion houses as Soviet corporations responsible for representing fashion in Soviet Ukraine and abroad. Questions about fashion houses, the features of their internal structures, and the hierarchies within which they functioned remain poorly studied.

This paper is based on a wide range of sources, including archival documents, interviews, and periodicals. In particular, I have done considerable work in archives in Ukraine and Russia. The materials include documents from the Ministry of Light Industry, fashion houses, garment and shoe factories, tailor shops (atel’ye mod), department stores, and other institutions that were directly involved in the development and production of fashion goods. Especially valuable are the materials which were produced by the fashion houses, including documents on their organization and functioning, their trips abroad, exhibitions, and cooperative endeavors both within the republic and abroad.

However, after the collapse of the Soviet Union, most of the materials on Ukrainian fashion houses disappeared, and they are not found in the state archives. For the time being, only two archival funds have been identified, namely for the Kyiv and Lviv Houses of Fashion Design. But they are incomplete and do not cover the entire period under study. In contrast, the All-Union Fashion House fund is available in a more extensive format at the Russian State Archive of Economics. Since the All-Union Fashion House was a methodological center for all the Soviet republics, its materials also contain aspects pertaining to corporate cooperation with Ukrainian fashion houses. Additional sources include private archives of fashion houses workers, which contain sketches, photos, documents, etc.

Interview materials are an important part of this paper. Since the interviews were done with fashion houses workers, the features and specifics of work in the fashion houses were shared firsthand by the interviewees. This made it possible to consider the subject from different perspectives, including the perspective of a clothing maker (konstruktor odezhdy), a fashion designer (khudozhnik-modelyer), a fabric artist (khudozhnik po tkanyam), a clothing demonstrator (demonstrator odezhdy), a chief art director (glavnyy khudozhestvennyy rukovoditel), the director of a fashion house, and the head of the raw materials rationing department.

These historical records are valuable sources, since very few “witnesses” were still alive and available for questioning. However, it should also be taken into account that the interviews were done several decades after the fashion houses closed, so respondents may tend to forget or miss some facts. Moreover, the current political situation and public opinion affect how the past is remembered and evaluated today. In some cases, there was a feeling that the people who were being interviewed were still afraid of State Security Committee (KGB) surveillance. For example, respondents refused to speak on tape about the illegal activities of fashion houses or some real statistical information. Against this background, an attempt was made to reach as many fashion houses workers and members of their professions as possible in order to collate the data and determine their relevance.

Regarding periodicals, the emphasis was on Ukrainian magazines, in particular the socio-political journal Radianska zhinka (Soviet Woman) and the fashion magazine Krasa i moda (Beauty and Fashion). They were two of the most popular and widely distributed magazines in Soviet Ukraine. In these magazines, reports were published on the latest achievements of the light industry in Ukraine and the functioning of fashion houses, and they also contained writings on the image of a modern fashionable person and certain fashion dogmas. The materials of the socio-political magazine Rabotnitsa (Worker) and the fashion magazine Zhurnal mod (Fashion Magazine) were also used, since they were the most popular such publications in the Soviet Union and contain valuable information on the general Soviet context.

The Soviet Fashion Concept

From the second half of the twentieth century onwards, there were lively discussions in periodicals about the place of fashion in Soviet society, discussions which involved specialists from various fields.13 As a result of these discussions, fashion was recognized as one of the components of the ideological education of the “Soviet person.” The concept of “Soviet” fashion began to be broadcast in every possible way, but primarily through periodicals. Based on periodicals and special literature about fashion by Soviet fashion experts, the characteristic features of “Soviet” fashion were simplicity, modesty, convenience, relevance, sense of proportion, and good taste. Any slight deviation from the norm in clothing met with a negative assessment.

Emphasis was also placed on the availability of goods: “Dressing nicely does not mean wearing expensive things. Clothing should be inexpensive and elegant at the same time. After all, we create samples for workers.”14 The fabric also did not have to be expensive, even when it was used to make samples which were used in international exhibitions: “Use of cheap colorful fabrics is very important for sewing because it makes clothes accessible to the general public.”15

Fashion was supposed to reflect the success of Soviet industry. At the same time, the concept of Soviet taste was being formed in the official discourse. It was believed that “the cultivation of taste is one of the important forms of struggle for the formation of Soviet socialist culture, for the cultural growth of all Soviet people.”16 Taste was considered “inseparable from the general culture of a human,” and it was regarded as playing an important role in the regulation of consumer behavior and was therefore brought in line with Soviet values.17

The question of how to learn good taste was discussed in the pages of newspapers and magazines: “Taste is what we need today. Excess is bad.”18 Periodicals received letters asking for help in understanding what “tastefully dressed” meant.19 Sometimes, Soviet fashion designers or art historians personally answered these questions in the pages of magazines. In particular, the fashion designer of Kyiv Fashion House Natalia Kalashnikova advised readers to improve their knowledge of culture, visit museums and galleries, and read fiction to cultivate their tastes. “While visiting museums,” she advised, “one should pay attention to the color scheme of paintings and their composition, and one should look closely at the plastic expressiveness of sculptures. Clothing also ‘sculpts’ a person’s figure. It is necessary to read more fiction and to be interested in all branches of the arts, especially applied art. This will nurture an artistic sense, and then you can accurately identify everything that is marked by good taste, whether it is a painting, a sculpture, or a dress.”20

Many publications with characteristic headlines were devoted to the cultivation of taste and the art of dressing in the 1960s–1980s. I am thinking of titles such as “Taste and Fashion,” “Needs, Tastes, Fashion,” etc.21 Importance was attached not only to clothing, but also to manners, behavior, correct posture, and the ability to maintain a conversation. In one of the responses printed in the socio-political journal Radianska zhinka (Soviet Woman) to a reader’s letter, the author contended that “Tastefully selected clothes and shoes may look ridiculous if a person does not maintain his posture.”22

Advice on how to look beautiful was also given to men: “Dear men, look for it, try it out. The concept of ‘fashion,’ although feminine, applies equally to you.”23 Referring to the “commandment” to men from the famous French couturier Pierre Cardin, one of the publications emphasized that “a tie which is too bright and expressive and immediately catches the eye is a man’s sin number one.”24 The same was true of bright socks. Tips about fashion trends in men’s clothing often were made by professional Soviet men’s fashion designers.25

Considerable attention was also devoted to children’s clothes, because it was believed that one had to make an effort to begin cultivating good taste when a child was still in the cradle: “Have you noticed how a child reaches for a bright toy, a colorful scarf? Specialists, artists, and educators believe that this is the first manifestation of the aesthetic perception of the world. What about children’s clothes? They play perhaps the most important role in the complex process of crystallization of good taste.”26 The fact that Ukrainian SSR had a separate fashion house, the Dnipropetrovsk House of Fashion Design, which specialized only in children’s clothing, offers clear testimony to the importance given to the concept of fashion in children’s garb.

One of the most important features of Soviet fashion was the appeal to folk traditions: “Although new equipment and new materials suggest and sometimes dictate new forms of clothing, we should not forget about the importance of nationality. The history of the traditional national costume has left us brilliant examples of the organic unity of the texture of the fabric and ornaments, decorations, a rich synthesis of delicate taste and culture of color. If you follow these patterns, study them thoroughly, our suit in modern processing will be safe from inconsistency, deliberateness, disharmony.”27

Soviet fashion designers collaborated with folk artists, studied national art, visited specialized museums and galleries, were inspired by natural materials, and created their collections on the basis of these influences. Folk clothing was based on the use of ancient ornaments, embroidery, lace, and sewing.28 The originality and uniqueness of the clothing was seen in the appeals of folk motifs and the ways in which they were combined with newer fashion trends.

Another trend involved the use of motifs from narratives concerning the heroic past of the country, which included the sewing of women’s coats with materials from military overcoats, hats in the form of helmets, budyonovka created according to the sketches of artist Victor Vasnetsov, etc.29 It should be noted that the folk theme was relevant throughout the entire period under study. In the pages of women’s magazines, in addition to a large number of publications concerning national traditions in clothing, quite often there were samples of folk clothing or national ornaments.30

The periodicals also systematically covered competitions for the best drawings of fabrics, clothing samples, knitwear, and hats using Ukrainian folk motifs. For example, in 1965, 72 enterprises in the textile industry and six republic fashion houses participated in such competitions. This shows a fairly high interest and involvement in similar events.31

Another feature of Soviet fashion was the creation of clothing ensembles. The ensemble signified a combination of things which were in harmony with one another in color, shape, and decoration. The ensemble was complemented with shoes, a hat, a bag, a scarf, and gloves. It was important to arrange the outfit according to the purpose (were they to be worn in the theater, during a visit to an exhibition, for a casual walk, etc.). The correct creation of an ensemble of clothes was also covered in the section of fashion tips for readers. Taisiya Rovna, a fashion consultant in the Kyiv Fashion House, offered the following suggestions in response to her own rhetorical question: “What makes up the ensemble? A coat and a dress, a coat and a suit, a coat and a blouse with a sundress or skirt, a suit and a blouse, a suit and a vest and a blouse, a jacket and a dress, a half-coat and trousers with a blouse, trousers, a blouse and a vest should be in harmony.”32 The development of the ensemble depended not only on the tailoring of the clothes, but also on the proposals made by textile artists, shoemakers, fur masters, and headdress masters.

Soviet Fashion Corporations

In the Soviet Union, a network of state institutions was created which was aimed at development of the fashion industry and its promotion and engaged in clothing production and the formation of the Soviet fashion concept (this network included fashion houses and research and oversight organizations).

Fashion houses were gradually created in all the Soviet republics with a methodological center in Moscow. They were divided into general orientation (houses of fashion design) and specialized (houses which focused on shoes, knitwear, leather goods, workwear, etc.). The first fashion house was opened in Moscow in 1934. With the outbreak of World War II, it was closed, only resuming its activity in 1944. The gradual restoration of clothing and shoe factories throughout the Soviet Union also began in the postwar period. In 1949, the Moscow Fashion House was reorganized into the All-Union Fashion House, and it gradually became a kind of fashion institute with a large number of services and divisions which dealt with the main theoretical, practical, and methodological aspects of fashion.33

In the period between 1944 and 1948, fashion houses were established in Kyiv, Leningrad, Minsk, and Riga. These institutions were merged into a single system, headed by the All-Union Fashion House in Moscow. At the beginning of 1949, twelve republican and regional fashion houses had been organized.34 By the second half of the 1950s, there were 16 of them. In 1977, there were 38 fashion houses in the Soviet Union, 18 of which were in the RSFSR and seven of which were in the Ukrainian SSR.35 There was by one house of fashion design in each of the other Soviet republics.36 Thus, given the total number of fashion houses in Soviet Russia and Ukraine, it can be argued that these two republics were the centers of fashion development and promotion in the USSR. It is also worth considering that these republics had large territories and extensive light industry in general.

In addition to large designing institutions such as fashion houses, there were research organizations that were also entrusted with the responsibilities of providing scientific and methodological guidance and coordinating the work of other fashion designing structures. These organizations included the All-Union Research Institute of the Garment Industry, the Special Art and Design Bureau, and the All-Union Institute for the Assortment of Light Industry Products and Clothing Culture.

The All-Union Research Institute of the Garment Industry was the main scientific institution in the Soviet Union. It dealt with virtually all issues concerning scientific and technological support for light industry. In particular, its functions included the improvement of technologies for design and tailoring, analysis of materials for manufacture, the study of the performance properties of clothing, rationing, making clothing production more efficient.37

The Special Art and Design Bureau (SHKB) was established in 1962. Its main tasks included the development of projects for mechanical engineering products and goods for cultural and household purposes, the generalization and promotion of best practices in the field of artistic design of industrial products, the preparation of proposals for phasing out products which were obsolete and unsatisfactory in terms of artistic design, and staging for the production of new types of goods which met modern expectations.38

It was this organization that developed a method which made it possible to create various samples, such as items of clothing, according to one basic form and a single constructive basis. According to the Bureau management, the constant renewal of collections through the use of new or different fabrics, décors, and the imaginative redesign of samples without the introduction of any fundamentally new cuts would allow the industry to rebuild easily and provide a wide variety of garments in stores.39 Articles in periodicals were often dedicated to the study of the experiences of the Bureau’s clothing department.40

The All-Union Institute for the Assortment of Light Industry Products and Clothing Culture (VIALegprom) was launched in the second half of the 1960s. The Institute studied the range of goods produced by light industry enterprises. It selected the best samples and made recommendations for their introduction, monitored the timely introduction of a new range of fabrics and light industry products into mass production, and promoted the development of fashion in clothes and the artistic design of fabrics, shoes, and other light industry products.41

The Ukrainian Institute of Assortment of Light Industry Products and Clothing Culture (UIALegprom) was founded in 1977. It was entrusted with the task of coordinating the work of and providing methodological guidance for the creative team, which dealt with the creation of a new fashion range. The institute’s responsibilities included studying the demands of buyers for light industry products, organizing advertising, and promoting products through television, radio, and print media, organizing art and technical councils, developing, in cooperation with research institutes and fashion design organizations, proposals for introducing a new range of fabrics and other materials clothing and footwear manufacture.42 It should be noted that the Institute of Assortment of Light Industry Products and Clothing Culture operated only on the territory of the Ukrainian SSR and the RSFSR.

The fashion corporations described above interacted with each other, forming a single mechanism aimed at the development of the Soviet fashion industry. The approach to the design and creation of clothing was meticulous and thought-out to the smallest detail. At the same time, there was a high corporate culture at the all-union, republican, and local levels. Methodological meetings, contests and fashion shows, creative business trips, and employee exchanges were regularly held at the all-union and republican levels. For example, the All-Union Fashion House designer Vyacheslav Zaitsev often visited fashion houses in Soviet Ukraine, where he gave lectures and shared his experience in fashion design.43

To unite the team at the local level, joint creative trips were organized to cultural and historical places, as well as “skits” (kapustniki).44 Designers were given creative days and had opportunities to go on creative business trips both within the country and abroad. There were cases when one specialist had the opportunity to work in three Ukrainian fashion houses (Lviv, Kharkiv, Kyiv).45 The cohesion of the team is also indicated by the fact that when the new building of the Kyiv House of Fashion Design was being built, all employees tried to be involved in the process. At the same time, Svetlana Titova, the director of the fashion house, donated her precious jewelry, throwing it under the foundation of the new building of the fashion house as it was being laid. (Fig. 1.) All of the above served to build a sense of unity among the various colleagues and coworkers, and this made it possible to establish horizontal connections within the fashion house and between fashion houses both within the republic and at the all-union level.

Figure 1. Svetlana Titova (on the right), the director of the Kyiv House of Fashion Design, throws her precious jewelry under the foundation of the new building of the fashion house as it is being laid, 1973. (Private collection of the Kyiv Fashion House designer Lydia Avdeeva, with Lydia Avdeeva’s permission)

Ukrainian Fashion Houses: Structure, Operation, and Cooperation

Opening

The Ukrainian SSR was one of the main centers of fashion development in the Soviet Union. There were six fashion houses located in the largest cities in Soviet Ukraine. The first house of fashion design, which was created in 1944, was in Kyiv.46 Ten years later, the Lviv fashion house opened.47 During the period of its existence, the Lviv fashion house was reorganized several times. In 1962, it was transformed into the Design and Engineering Institute of Light Industry. Shoe and knitwear laboratories were opened at the institute, as was an artistic and experimental laboratory for creating sketches for fabrics, embroidery, lace, and various haberdashery and a laboratory for weaving and printing fabrics. In 1968, it was made back into a fashion house.48 In the period beginning in 1958 and stretching to the end of the 1960’s, Odesa, Donetsk, Kharkiv, and Dnipropetrovsk established their own fashion houses.49 Much like during the Khrushchev period, the 1960s, 1970s, and 1980s saw the opening of specialized fashion houses in the Ukrainian SSR as well.

Fashion houses with general orientation were entrusted with the task of designing and developing clothes for industrial production and making samples which would be used abroad as examples of the fashion work being done in the Soviet Union. It was also responsible for publishing in fashion magazines, holding fashion shows, and educating Soviet society by implementing the “correct,” ideologically consistent canons of Soviet fashion.

The specialized fashion houses, including the Republican House of Footwear Samples, the Republican House of Leather and Haberdashery Goods, the Republican House of Knitwear Samples “Khreshchatyk,” the Republican House of Workwear Samples, the Republican House of Model Household Items, served as supporting fashion organizations.50 In practical terms, there was a need for them, because the main principle of creating fashion collections was the stylistic combination of all elements, or in other words, the creation of an ensemble (clothing, shoes, hats, leather goods).

Each Ukrainian general fashion house specialized in a unique range of products. For example, the Odesa House of Fashion Design worked on the creation of leisure clothes, Kharkiv fashion house focused on light women’s dresses, Dnipropetrovsk on children and clothing for teenagers, and Donetsk on creating women’s outerwear.51 The Kyiv and Lviv fashion houses developed an entire product range and were the leading modeling centers of Soviet Ukraine.52 It should be noted that such specialization by region was a feature of Ukrainian fashion houses.

According to Nadezhda Nikiforuk, the director of the Lviv House of Fashion Design, the Lviv institution was considered the leader in the field of clothing design in Soviet Ukraine.53 In particular, this was influenced by its relative proximity to Poland, from where it was possible to be the first to get “information from all over the world,” as well as the generations of old Lviv masters who had significant experience in clothing design.54 However, according to official documents, the Lviv fashion house was considered the second in the republic by capacity after the one in the capital.55 It should also be emphasized that all fashion houses were directly subordinate to the Ministry of Light Industry of the Ukrainian SSR. The fact that two fashion houses were under the same leadership at once is a characteristic element of the Ukrainian fashion industry.

Constant competition between the Kyiv and Lviv fashion houses contributed to their transformation into fashion corporations which had a certain degree of autonomy and also exerted an influence on the development of fashion and fashion trends in Soviet Ukraine. This fact is also confirmed by the number of employees and their extensive structure. From the perspective of the total number of workers in fashion houses in 1962, the largest number of workers was in Lviv (370 people) and Kyiv (298 people) and the smallest was in Dnipropetrovsk (100 people).56 This indicates the importance of these fashion houses.

Structure and Operation

The structure of fashion houses was quite extensive and consisted of many departments and workshops.57 Based on the example of the Lviv Fashion House, these included the departments of planning and production, supply and sales, implementation, culture and propaganda, design outerwear, light dresses, rationing of raw materials and the development of technical documentation, and experimental and methodological workshops.58

Separately, a department of so-called “exposition hall” (demonstratsionnyy zal) workers was created, where models were employed to wear garments and show them to the public). In 1968, 16 people were officially employed in this department, including two laboratory assistants and 14 models.59 This fact indicates the relevance of this profession and its perception as a necessary position in fashion houses. In the employment record, the position was listed as a “clothing demonstrator.”60 It should be emphasized that it was quite difficult to get this position, because alongside a given applicant’s appearance (including his or her measurements), his or her education, knowledge of languages, and reputation were also taken into consideration, as was the question of whether he or she belonged to the Communist Party. These various considerations were regarded as important because so-called clothing demonstrators often traveled abroad to show fashion collections, and they were expected to represent the country appropriately.61

Fashion shows were held both inside and outside the buildings of fashion houses. There were two halls in the houses of fashion design, the exhibition hall and the exposition hall. The exhibition hall was open daily, except on weekends, and it was accessible to the general public. Collections of fashionable clothes by seasons were shown in the exposition hall. These kinds of fashion shows were held for the Soviet population once a week.62 Each fashion show was accompanied by comments from an art critic.63 The art critic provided details for each item of clothing, indicating its style, fabric, the age for which it was sewn, where it could be worn, and what other garments and accessories it should be worn with.64 A striking example is a shot from the film The Diamond Hand (Brilliantovaya ruka), directed by Leonid Gaidai, in which the art critic describes each item of clothing at a fashion show for the Soviet public. Such detailed information was needed in order to ensure that a woman who attended a particular show would understand which items would be most suitable for her and what things she might be able to sew at home on her own.65 (Fig. 2–4.)

 

 

 

Figure 4. Fashion show at the October Palace of Culture in Kyiv, 1962

TsDKFFA od. obliku 2–109980)

 

Visiting fashion shows were held in factories and plants, at universities, and at other public places. Soviet art critics and fashion designers often held lectures to familiarize the population with the latest trends and promote Soviet style and fashion. Based on archival materials, these visiting fashion shows were popular and in demand among Soviet citizens.66

The department of Culture and Clothing Propaganda was in charge of organizing fashion shows and thematic lectures which influenced the formation of perceptions concerning fashion among Soviet citizens. The department consisted of art critics and fashion consultants who systematically prepared the necessary materials for the print media, radio, and television.67 It also contained the most recent foreign literature on fashion and fashion magazines, which were translated, carefully reviewed, and scrutinized by the fashion consultants.68 The staff also included a photographer who regularly shot fashion shows and work processes and took pictures of items of clothing for periodicals published in the republic, primarily fashion magazines. The Lviv house of fashion design had its own photo laboratory, which was headed by Tanas Nikiforuk.69

Fashion magazines and booklets in which new fashion trends were popularized among the Soviet population were mainly published in the capital by the Kyiv House of Fashion Design. Certain attempts to organize the publication of the Zhurnal mod (Fashion Magazine) were made by the Lviv House of Fashion Design.70 In 1959, the fashion house published two editorials of the fashion magazine, but due to the decision according to which fashion magazines could only be published by the fashion houses which were regarded as important on the level of the entire republic, pub of the magazine ceased.71 This suggests the dominance of the fashion house in the capital. However, the Kyiv Fashion House did not publish a fashion magazine with circulation as wide as, for example, the Tallinn Siluett. Basically, the magazines published by the Kyiv Fashion House were small booklets. The most popular Ukrainian fashion magazine was Krasa i moda (Beauty and Fashion), published by the publishing house Reklama (Advertising), which was also in Soviet Ukraine. Most of the items of clothing featured in the magazine were designed by the fashion houses in the capital and made in the Kyiv clothing factories. This once again underlines the dominance of the fashion houses in Kyiv. Other fashion houses were able to make patterns and illustrations of the new clothing models that were sold to the public. Also, there was a practice of using periodicals to inform the Soviet citizenry about the purchase of clothing patterns in a particular house of fashion design.72

The Role of the Designer and the Creation of Fashion Collections

Fashion designers played an important role in the formation of collections and fashion trends in general. Since the task was to create their own Soviet fashion (without blindly copying Western trends), designers had to create original and distinctive items. Artists developed motifs and patterns drawing on folk art, in particular, and actively designed folk themes. For example, Lviv fashion house artists went to the villages in the Carpathian Mountains, where they collected materials and studied embroidery, fabrics, and jewelry and created a folk costume based on what they had found. They were assisted by employees of the Lviv Museum of Ukrainian Art, the Museum of Ethnography and Arts and Crafts, and art critics from the House of Folk Art. They organized classes on various types of Ukrainian arts and crafts, such as embroidery, weaving, knitting, and needlecraft.73

In addition, Lviv artists drew sketches for fabrics and independently produced fabrics on hand machines, which made these fabrics unique.74 They also engaged in cooperative endeavors with masters of folk art from Kosovo.75 In 1959, the Lviv fashion house established its own weaving workshop, where hand-made looms were used to produce fabrics in the Ukrainian folk style, both decorative and for tailoring.76 The garments and fabric created in this experimental textile laboratory were presented at prestigious international exhibitions (in cities such as Marseille, Tokyo, and Leipzig).77

Fashion designers who had higher special education and proved to be capable artists in the creation of new items of clothing for mass production or as samples of presentation were given a creative day once a week.78 On this day, they did not come to work. Rather, they were able to visit art museums or galleries, work outside or in the library, and spend time outdoors or in the mountains.79 In short, they did everything that might inspire them to create a new collection of clothes. Once in six months, they had to report on their creative work. Those who did not report on time were deprived of the right to use their creative days for the next six months.80 To increase their skills and further the improvement of the designs for sample items of clothing and developed sketches, fashion designers were also provided with studio days.81 Advanced training courses were held in which participants studied the composition of a drawing,82 for instance, and there were creative business trips, after which reports were submitted.83

To maintain fair competition among designers, contests were often held for the best samples of new garments. There was a book of reviews at the exhibitions in which visitors could write their impressions of a certain item, often noting the creator of the garment in question.84 Competitions for the best item of clothing were also held among light industry workers at both the all-union Soviet level and within the republic.

In the process of preparing the collection, fashion designers worked very closely with clothing makers and clothing demonstrators. Fashion collections were developed according to certain regulations. The director of the fashion house and the chief art director were responsible for the final results.85 Collections were divided into industrial and exhibition formats. Industrial collections served as a guide for garment enterprises and were aimed at introducing the items in the collection into mass production within the country. Exhibition collections were also regarded as a forward-looking undertaking (perspektivnaya kollektsiya). Samples of exhibition clothing were included in seasonal collections for display to the public and for international fashion shows and exhibitions.

Particular importance was attached to the exhibition collections, because the garments made by Ukrainian fashion houses represented not only the republic, but the whole country. The best fashion designers were selected for the production of such collections. For example, in the Kyiv House of Fashion Design, two leading fashion designers were always engaged in making sketches for exhibition collections, namely Lydia Avdeeva and Hertz Mepen.86 The sketches made by the designers were approved by the art council. After the sketches were approved, the designer and constructor in the team began to create items of clothing. During this time, clothing demonstrators constantly came to try on the clothes which were being made by the designers involved in the process. Each piece of clothing existed in only one version and was sewn for a specific clothing demonstrator. When the collection was completed, a mini-show of clothes was held with the participation of demonstrators, where the art council approved the final products. The best items were selected for inclusion in the final collection, and things with certain defects were eliminated.87

The Art Council of the Ministry of Light Industry of the USSR was responsible for all areas of light industry. Art councils for various branches of light industry were singled out separately from it. In 1967, there were 17 such art councils in various fields.88 For example, there were art councils on silk fabrics, hats, garments, knitwear and hosiery, footwear, textile haberdashery, etc. Usually, the council consisted of 25 to 40 people. It included a chairman, a deputy chairman, the executive secretary, and members of the art council.89 The members of the art council were representatives of the Ministry of Trade of the USSR, the State Planning Committee, the Planning and Production Department of the Ministry of Light Industry of the Ukrainian SSR, research institutes, the Republican House of Assortment, sewing and specialized fashion houses, and large sewing enterprises.90

In the fashion houses, art councils for garments, divided into big and small, were held. Big councils met approximately once a month and included economists, representatives of trade, the Ukrainian Research Institute of Light Industry, the State Planning Committee, chief art directors, fashion designers, and clothing makers.91 Small councils met as needed and included representatives of a one of the fashion houses, specifically the director, the chief art director, the chief clothing maker, and fashion designers. They discussed and resolved whatever issues needed to be addressed. There were also councils at sewing enterprises.

It should be pointed out that new items of clothing were not released without the approval of the art council. Furthermore, samples of clothing images of which had been published in periodicals had to be pre-reviewed and approved by the art council before being published. (Fig. 5–6.) These facts show the significant influence of art councils on the development of fashion in the country, and they also offer a grasp of the bureaucracy of the processes.

Foreign Fashion Exhibitions

The Lviv and Kyiv Houses of Fashion Design actively participated in foreign exhibitions and fashion shows and successfully represented the Soviet Union on the international level. For example, they were involved in creating a collection of clothing for fashion shows in countries such as Canada, France, the USA, Belgium, and Argentina.92 There were cases when Ukraine and Ukrainian fashion were singled out separately, for instance at the World Exhibition in Montreal (Canada) in 1967.93 The Soviet Union was represented by four fashion houses (Kyiv, All-Union, Leningrad, and Riga) and three socialist republics (Ukrainian, Russian, and Latvian). For the collection of fashion clothing of the Ukrainian SSR, 160 ensembles of women’s and men’s clothing were made. The collection was based on the use of folk clothing motifs from various regions and districts of Ukraine. Over the course of a month and a half, the Kiev Fashion House held 80 fashion shows, and a film was made about Ukraine and Ukrainian fashion.94

One finds evidence of great interest in the Ukrainian collection in the 383 instances of positive feedback in the guestbook from different countries, including the USA, Canada, England, France, Switzerland, and Argentina. There were also many articles in the foreign press, for example, in the newspapers Montreal Star, La Presse, and Ottawa Citizen.95 In particular, attention was focused on the modernness of Ukrainian fashion. According to an article in the Montreal Star entitled “Kiev fashions ‘play’ to a crowded Expo house,” “the colors might have been considered conservative by Western tastes, but most of the designs were up to any Paris or New York standards.”96 In an article entitled “La mode de Kiev: plus americaine que cosaque,” correspondent Michele Boulva pointed out that “the typical Russian or Cossack fashion, which is so popular to meet, has almost disappeared. According to the fashion show in the Russian pavilion, the American and European influence is felt in most of the items presented.”97 Thus, on the international level, Ukrainian fashion was identified by its use of folk traditions combined with modern forms and silhouettes.

Cooperation

When creating collections, fashion houses collaborated with other Ukrainian light industry enterprises. These enterprises included specialized fashion houses (footwear, knitwear) and related light industry enterprises. Such enterprises provided fabrics for creating fashion clothes, as well as additions to clothing ensembles (shoes, accessories).98 In general, Ukrainian designers preferred to work with domestic fabrics and materials, so each fashion house collaborated with certain textile and related enterprises when creating their collections.99 In particular, this was due to the orientation to the domestic market and well-developed Ukrainian light industry.

There was another option for cooperation which involved the development of technical documents and the implementation of fashion houses’ designs into the mass production of clothing.100 The technical documentation consisted of patterns and sewing technology for a certain product.101 Annually, more than 70 percent of the entire industrial collection (technical documentation) was made in fashion houses in the republic.102

It should be emphasized that such documentation was not free of charge, but agreements were concluded and a fixed fee was set for the development of a certain product. Thus, this was one of the ways in which fashion houses earned compensation. It is noteworthy that Ukrainian fashion houses were not limited in their cooperative endeavors to sewing enterprises from their regions.103 For example, as of 1970, the Odesa House of Fashion Design had provided technical documentation for 54 garment enterprises throughout the Ukrainian SSR.104 In contrast, the system of regional consolidation for the provision of technical documentation was relevant for fashion houses in the Russian SSR.105

Furthermore, Ukrainian fashion houses were able to conclude contracts with sewing enterprises both throughout the territory of the Ukrainian SSR and in other republics of the Soviet Union, as well as with socialist countries.106 However, this mainly applied to the Kyiv and Lviv fashion houses. Quite often, fashion designers and clothing makers and engineers from the production department visited sewing enterprises to provide practical assistance in the manufacture of certain items of clothing.107

It should be noted that the vast majority of garment and knitting enterprises in the Ukrainian SSR had their own experimental shops, laboratories, and sections which were also engaged in the development and creation of new items and styles of clothing.108 For instance, the state audit of 1962 showed that the Vorovsky Sewing Association in Odessa had its own experimental workshop where 52 people were employed, including 13 designers and clothing makers. At this time, Kharkiv had experimental sewing laboratories in 14 out of 15 sewing enterprises, where 53 fashion designers and clothing makers were employed.109 The situation was similar in Dnipropetrovsk, Donetsk, Kyiv, Lviv, and other Ukrainian cities.

In addition, some factories were able to cooperate directly (legally or illegally) with foreign enterprises. According to archival materials, the Lviv garment factory Mayak tried to cooperate with the United States in 1963 (Maidenform, Phoenix Сlothes firms).110 Based on oral history materials, the Tinyakov Kharkiv garment factory sewed clothes for France, and the Lviv shoe company Progress sold shoes for the GDR in the 1980s.111 As Kharkiv resident Mikhail Stanchev recalls, “[o]nce I went to Lille in France. We were in a sewing shop, where we were encouraged to buy a suit according to French fashion. However, I then heard someone say, ‘Do not rush to buy, it is all made in Kharkiv on Tinyakovka.’”112

Though garment factories generally used the materials produced by the fashion houses, clothing samples could often differ from the originals. This was particularly influenced by the availability of the necessary fabric, accessories, and equipment and the production capacity at a given factory, as well as the amount of time allocated for the manufacture of a certain item of clothing.113 It should be noted that there was a disparity in the development of heavy and light industries in the Soviet Union. Hence, light industry suffered from insufficient capacity and technical backwardness of the technological base. In addition, not all garment factories were able to sew clothing prototypes in the version prescribed in the technical documentation due to a lack of necessary materials.

As a result, a given sample was adapted to the production conditions at the factory and to the available fabrics and accessories. In addition, there was a stronger focus on quantitative indicators than on qualitative ones in the planned Soviet economy. (Fig. 7.) The caricature on this topic from the Ukrainian satirical magazine Perets’ (Pepper) is telling. (Fig. 8.) In this depiction, an item of clothing introduced in a fashion house and the same item of clothing in a garment factory differ greatly.114

It should also be noted that the consumption of raw materials and fabrics at light industry enterprises was subjected to control. In particular, there was a Laboratory for Rationing Raw Materials and Fabrics with authority within the republic located on the territory of the Kyiv House of Fashion Design. It was entrusted with the task of analyzing the consumption of materials in garment factories. Laboratory specialists (an engineer and a fabric distributor) visited textile factories and checked the consumption of fabric for garments produced by enterprises. If the amount of fabric consumed exceeded the norm, the specialists offered their own cutting system, which was more economical. Thus, the overall savings that the factory could achieve were revealed.115 In turn, the factory was obliged to comply with the laboratory’s recommendations.

Conclusion

Fashion in the USSR underwent a gradual transformation from something which was perceived as negative by the Soviet authorities to something which was perceived as positive and having a role in the evolution of a socialist society, though this process was admittedly complex. Soviet fashion was opposed to Western “bourgeois” fashion and had a clear ideological tone. Through the development and creation of “socialist” fashions, the Soviet authorities sought to show the advantages of the USSR over the capitalist countries not only in heavy but also in light industry.

As of the second half of the 1940s, the active development of light industry in the Soviet Union and the Ukrainian SSR in particular was a characteristic feature. Several state institutions were created for the development of the fashion industry and its promotion in Soviet society (fashion houses, research and control organizations). Fashion houses were given a crucial role. They were the main fashion corporations responsible for Soviet fashion’s image both within the country and abroad. Methodological meetings, fashion shows and contests, creative business trips, and employee exchanges were regularly held at the all-union, republic, and local levels.

The Ukrainian SSR developed an extensive system of clothing design, which included the Ukrainian Institute of Light Industry and Clothing Culture and six general orientation and five specialized fashion houses. This fact indicates that the Ukrainian SSR was one of the main centers of clothing design in the Soviet Union. Along with the development of technical documentation and new clothing samples for introduction into mass production, the fashion houses produced exhibition samples that were part of the seasonal collections for public display within the Soviet Union and at international fashion shows and clothing exhibitions.

Art councils played a crucial role in shaping the fashion trends and developing Soviet fashion in general. They included representatives of the Ministry of Trade, the Ministry of Light Industry, the State Planning Committee, research institutions, fashion houses, and big garment factories. All clothing samples had to be checked given approval by the art council before they were released and before images of them were published in magazines. This indicates the significant influence of the art councils on the development of fashion in the country, as well as the bureaucratization of the process and strict censorship of this direction.

Fashion houses served as clothing design centers and at the same time acted as fashion promoters for the Soviet citizenry. They regularly presented new fashion designs and developed permanent collections of new items of clothing, which were displayed in their exhibition halls. They also organized group trips to factories, plants, and institutes, where they showed their new fashion collections and made reports on how to dress tastefully.

Archival Sources

Derzhavnyi arkhiv Lvivskoi oblasti /Gosudarstvennyy arkhiv Lvovskoy oblasti [State Archive of Lviv Region] (DALO)

Perepiska direkcii firmy “Mayak” s inostrannymi firmami za 1963 god [Correspondence of the Mayak management with foreign firms in 1963], f. R–2002 “Lvivska shvatska firma ‘Maiak’” [Lviv sewing firm Mayak], op. 1, d. 55, l. 1–6, Lviv, Ukraine

Prikazy i direktivnyye ukazaniya Ministerstva legkoy promyshlennosti za 1967 god [Orders and directives of the Ministry of Light Industry for 1967], f. R–2002 “Lvivska shvatska firma ‘Maiak’” [Lviv sewing firm Mayak], op. 1, d. 352, l. 1–141, Lviv, Ukraine

Derzhavnyi arkhiv mista Kyieva / Gosudarstvennyy arkhiv goroda Kiyeva [State Archive of Kyiv] (DAK)

Kniga otzyvov i predlozheniy za 1951 god [Book of reviews and suggestions for 1951], f. R–1219 “Kyivskyi budynok modelei Ministerstva lehkoi promyslovosti Ukrainskoi RSR” [Kyiv House of Fashion Design of the Light Industry Ministry of the Ukrainian SSR], op. 1, d. 25, l. 1–18, Kyiv, Ukraine

Materialy (akty, otchety) po okazaniyu pomoshchi shveynym fabrikam Ukrainy za 1954 god [Materials (acts, reports) to provide assistance to Ukrainian garment factories for 1954], f. R–1219 “Kyivskyi budynok modelei Ministerstva lehkoi promyslovosti Ukrainskoi RSR” [Kyiv House of Fashion Design of the Light Industry Ministry of the Ukrainian SSR], op. 1, d. 62, l. 1–192, Kyiv, Ukraine

Materialy okazaniya pomoshchi shveynym fabrikam i otchety po komandirovkam za 1957 god [Garment factories assistance materials and business trips reports for 1957], f. R–1219 “Kyivskyi budynok modelei Ministerstva lehkoi promyslovosti Ukrainskoi RSR” [Kyiv House of Fashion Design of the Light Industry Ministry of the Ukrainian SSR], op. 1, d. 113, l. 1–27, Kyiv, Ukraine

Otchety o tvorcheskoy komandirovke po obmenu opytom v gorod Moskvu i Leningrad, 1960 god [Reports on a creative trip to exchange experience to Moscow and Leningrad in 1960], f. R–1219 “Kyivskyi budynok modelei Ministerstva lehkoi promyslovosti Ukrainskoi RSR” [Kyiv House of Fashion Design of the Light Industry Ministry of the Ukrainian SSR], op. 1, d. 161, l. 1–12, Kyiv, Ukraine

Otchety o tvorcheskoy komandirovke po obmenu opytom v Vengerskuyu Narodnuyu Respubliku i gorod Rigu, 1959 god [Reports on a creative trip to exchange experience to the Hungarian People’s Republic and Riga in 1959], f. R–1219 “Kyivskyi budynok modelei Ministerstva lehkoi promyslovosti Ukrainskoi RSR” [Kyiv House of Fashion Design of the Light Industry Ministry of the Ukrainian SSR], op. 1, d. 142, l. 1–24, Kyiv, Ukraine

Perepiska s Glavnym Upravleniyem shveynoy promyshlennosti po voprosam proizvodstvennoy deyatelnosti Doma modeley (19 fevralya – 15 dekabrya 1955 goda) [Correspondence with the Main Directorate of the Garment Industry on the production activities of the Kyiv Fashion House (February 19–December 15, 1955)], f. R–1219 “Kyivskyi budynok modelei Ministerstva lehkoi promyslovosti Ukrainskoi RSR” [Kyiv House of Fashion Design of the Light Industry Ministry of the Ukrainian SSR], op. 1, d. 68, l. 1–90, Kyiv, Ukraine

Spravka o rabote Doma modeley za 1955 god [Information about the Kyiv Fashion House activity for 1955], f. R–1219 “Kyivskyi budynok modelei Ministerstva lehkoi promyslovosti Ukrainskoi RSR” [Kyiv House of Fashion Design of the Light Industry Ministry of the Ukrainian SSR], op. 1, d. 69, l. 1–81, Kyiv, Ukraine

Lvivskyi miskyi mediaarkhiv Tsentru miskoi istorii Tsentralno-Skhidnoi Yevropy / Lvovskiy gorodskoy mediaarkhiv Tsentra gorodskoy istorii Tsentralno-Vostochnoy Evropy [Lviv Media Archive of the Center for Urban History of East Central Europe] (LMA)

Nikiforuk, Nadezhda, director of Lviv Fashion House, interview by the Lviv Center for Urban History, Lviv, 2015, transcript, LMA, Lviv, Ukraine

Zalesskaya, E. Istoriya Lvovskogo Doma modeley odezhdy [History of the Lviv House of Fashion Design], 1980, Lviv, Ukraine

Rossiyskiy gosudarstvennyy arkhiv ekonomiki [Russian State Archive of Economy] (RGAE)

Doklady, dokladnyye zapiski, spravki i pisma, napravlennyye v TsK KPSS po razvitiyu otrasley legkoy promyshlennosti (6 yanvarya – 11 sentyabrya 1965 goda) [Reports, memoranda, information, and letters sent to the Central Committee of the CPSU on the development of light industry sectors (January 6–September 11, 1965)], f. 198 “Gosudarstvennyy komitet po legkoy promyshlennosti pri Gosplane SSSR” [State Committee for Light Industry under the USSR State Planning Committee], op. 1, d. 85, l. 1–44, Moskva, Russian Federation

Tsentralnyi derzhavnyi arkhiv hromadskykh obiednan Ukrainy / Tsentralnyy gosudarstvennyy arkhiv obshchestvennykh obyedineniy Ukrainy [Central State Archive of Public Organizations of Ukraine] (TsDAGO)

Pisma redaktsiy zhurnalov i izdatelstv o rabote respublikanskikh zhurnalov [Letters from the editors of magazines and publishers about the work of republican magazines], f. 1 “Tsentralnyi komitet Komunistychnoi partii Ukrainy” [Central Committee of the Communist Party of Ukraine], op. 70, d. 2385, l. 1–128, Kyiv, Ukraine

Tsentralnyi derzhavnyi kinofotofonoarkhiv Ukrainy imeni H. S. Pshenychnoho / Tsentralnyy gosudarstvennyy kinofotofonoarkhiv Ukrainy imeni G. S. Pshenichnogo [Pshenichny Central State Film and Photo Archive of Ukraine] (TsDKFFA)

od. obliku 0–207692, Soveshchaniye chlenov khudozhestvenno-tekhnicheskogo soveta Kiyevskoy shveynoy fabriki “Oktyabr” [Meeting of the members of the Art and Technical council of the Kyiv garment factory “Zhovten”], 1983 god, Kyiv, Ukraine

od. obliku 2–75686, Udarnitsy kommunisticheskogo truda Odesskogo shveynogo obyedineniya imeni V. Vorovskogo, vypolnyayushchiye normu na 130–150% v tsekhe [The leaders of the Communist labor of the V. Vorovsky Odessa Sewing Association, who exceeded the norm by 130-150% in the sewing workshop], 1962 god, Odesa, Ukraine

od. obliku 2–91364, Vystavochnyy zal Kiyevskogo doma modeley odezhdy [Exhibition hall of the Kyiv House of Fashion Design], 1964 god, Kyiv, Ukraine

od. obliku 2–98033, Demonstratsiya modeley odezhdy v Kiyevskom dome modeley [Fashion show at the Kyiv House of Fashion Designg, 1965 god, Kyiv, Ukraine

od. obliku 2–109980, Demonstratsiya modeley odezhdy v Oktyabrskom dvortse kultury v Kiyeve [Demonstration of clothing samples at the October Palace of Culture in Kyiv], 1962 god, Kyiv, Ukraine

od. obliku 2–111619, Gruppa khudozhnikov-modelyerov Kiyevskogo doma modeley obsuzhdayet novyye obraztsy odezhdy [A group of fashion designers of the Kyiv House of Fashion Design discusses new clothing samples], 1967 god, Kyiv, Ukraine

Tsentralnyi derzhavnyi arkhiv vyshchykh orhaniv vlady ta upravlinnia Ukrainy / Tsentralnyy gosudarstvennyy arkhiv vysshikh organov vlasti i upravleniya Ukrainy [Central State Archives of Supreme Bodies of Power and Government of Ukraine] (TsDAVO)

Perepiska s Gosplanom USSR i drugimi respublikanskimi organizatsiyami po voprosam legkoy promyshlennosti, 19 iyulya – 15 dekabrya 1962 [Correspondence with the State Planning Committee of the Ukrainian SSR and other republican organizations on the issues of Light industry, July 19 - December 15, 1962], f. R–2 “Rada Ministriv Ukrainskoi RSR. Vykonavcha vlada” [Council of Ministers of the Ukrainian SSR. Executive], op. 10, d. 959, l. 1–171, Kyiv, Ukraine

Spravka o demonstratsii modeley odezhdy v Sovetskom pavilone na Vsemirnoy vystavke v gorode Monreale (Kanada) Kiyevskogo Doma modeley USSR v period s 25 iyulya po 5 sentyabrya 1967 goda [Information about the demonstration of clothes by the Kiev House of Fashion Design in the Soviet pavilion at the World Exhibition in Montreal (Canada) from July 25 to September 5, 1967], f.572 “Ministerstvo lehkoi promyslovosti Ukrainskoi RSR” [Ministry of Light Industry of the Ukrainian SSR], op. 4, d. 332, l. 1–78, Kyiv, Ukraine

Ukrainian Fashion History Digital Archive [Tsyfrovyi arkhiv istorii mody Ukrainy / Czifrovoj arkhiv istorii mody Ukrainy] (UFHDA)

Avdeeva, Lidia, Soviet fashion designer, interview by Olha Korniienko, Kyiv, 2017, 2020, transcript

Mateyko, Katerina, Soviet clothing maker, interview by Olha Korniienko, Lviv, 2018, transcript

Nesmiyan, Vladimir, Soviet chief art director, interview by Olha Korniienko, Kyiv, 2017, transcript

Nikiforuk, Nadezhda, director of Lviv Fashion House, interview by Olha Korniienko, Lviv, 2018, transcript

Stanchev, Mikhail, interview by Olha Korniienko, Kharkiv, 2014, transcript

Tokar, Marta, Soviet fabric artist, interview by Olha Korniienko, Lviv, 2018, transcript

Uvarkina, Galina, head of the Republican Laboratory for the Standardization of Raw Materials and Fabrics, interview by Olha Korniienko, Kyiv, 2017, transcript

Yasinskaya, Elena, Soviet model, interview by Olha Korniienko, Kyiv, 2018, transcript

Viddil trudovoho arkhivu Lutskoi raionnoi rady / Otdel trudovogo arkhiva Lutskogo rayonnogo soveta [Labor Archive Department of the Lutsk District Council] (LAD)

Prikazy po domu modeley za 1968 god [Orders for Lviv House of Fashion Design for 1968], f. 56 “Lvivskyi budynok modelei odiahu ‘Halmoda’” [Lviv House of Fashion Design “Galmoda”], op. 1, d. 1, l. 1–204, Lutsk, Ukraine.

Bibliography

Primary sources

Bitekhtin, B. “Trudnosti shveynogo proizvodstva” [Difficulties of sewing production]. Dekorativnoye iskusstvo SSSR, no. 9 (1966): 12–13.

“Cholovikam” [For men]. Radianska zhinka, no. 12 (1970): 33.

“Dytiachi mody” [Children’s fashion]. Radianska zhinka, no. 12 (1959): 31.

Efremova, L. “Modelyer rabotayet dlya promyshlennosti” [Fashion designer works for industry]. Dekorativnoye iskusstvo SSSR, no. 4 (1965): 16–19.

Fedosieieva H. “Donetskyi budynok modelei u hostiakh u ‘Radianskoi zhinky’” (Donetsk Fashion House visiting the Soviet Woman Magazine]. Radianska zhinka, no. 7 (1965): 32–33.

Ivanova, H. “Pro vykhovannia smaku” [About the education of taste]. Radianska zhinka, no. 10 (1961): 22.

Kalashnikova, N. “Yak odiahatys zi smakom” [How to dress tastefully]. Radianska zhinka, no. 4 (1958): 30.

“Khochesh buty krasyvym?” [Do you want to be beautiful?]. Radianska zhinka, no. 4 (1964): 19.

Khokhlov, H. “Palta” [Coats]. Radianska zhinka, no. 4 (1964): 19.

“Malechi” [For children]. Radianska zhinka, no. 6 (1969): 32.

Malikova, H. “Mody 1965 roku” [Fashion of 1965]. Radianska zhinka, no. 9 (1965): 28–29.

Mertsalova, M. “Chto chereschur, to plokho” [Too much is bad]. Rabotnitsa, no. 11 (1964): 30.

“Moda i vyrobnytstvo” [Fashion and production]. Krasa i moda, Summer 1979, 36.

“Mody” [Fashion]. Radianska zhinka, no. 8 (1957): 31.

Oleksiienko, L. “Navit u liutomu – soniachnist” [Sunshine even in February]. Radianska zhinka, no. 2 (1970): 30–31.

Perets’, no. 6 (1965): 1.

Rovna, T. “Ansambl – tse modno” [The ensemble is fashionable]. Radianska zhinka, no. 1 (1976): 31–33.

Rovna, T. “Medali za krashchyi odiah” [Best clothes medals]. Radianska zhinka, no. 10 (1956): 32–33.

Rovna, T. “Moda sohodni i zavtra” [Fashion today and tomorrow]. Radianska zhinka, no. 7 (1967): 30–31.

Rovna, T. “Mody tsoho roku” [This year’s fashion]. Radianska zhinka, no. 2 (1966): 29–30.

Rovna, T. “Za narodnymy motyvamy” [Folk motifs]. Radianska zhinka, no. 7 (1967): 33.

“RSFSR” [Russian Soviet Federative Socialist Republic]. Zhurnal mod, no. 3 (1977): 23.

Rudenko, O. “Nevianucha krasa” [Unfading beauty]. Radianska zhinka, no. 3 (1982): 24–25.

“Sovetskoye modelirovaniye i promyshlennost – dlya naroda” [Soviet design and industry are for the people]. Zhurnal mod, no. 3 (1977): 2–3.

Strizhenova, T., and S. Temerin. “Sovetskiy kostyum za 50 let. Chast II” [Soviet costume for 50 years. Part 2]. Zhurnal mod, no. 4 (1967/1968): 1 (attachment).

“Ukraina” [Ukraineg. Zhurnal mod, no. 3 (1977): 25–26.

“Vizerunky dlia rushnykiv, servetok, zhinochoho odiahu” [Drawings for towels, napkins, women’s clothing]. Radianska zhinka, no. 6 (1966): 33.

Volovich, M. “Spetsialnoye khudozhestvenno-konstruktorskoye byuro” [Special art and design bureau]. Dekorativnoye iskusstvo SSSR, no. 11 (1963): 6.

“Zadum i vtilennia” [Concept and embodiment]. Radianska zhinka, no. 6 (1971): 30–31.

Zhukov, N. “Vospitaniye vkusa. Zametki khudozhnika” [Education of taste: Artist notes]. Novyy mir, no. 10 (1954): 159–79.

“Zovnishnii vyhliad” [Appearance]. Radianska zhinka, no. 3 (1966): 24.

 

Secondary literature

Bartlett, Djurdja. FashionEast: The Spectre that Haunted Socialism. Cambridge: Massachusetts Institute of Technology Press, 2010.

Bezvershuk, Zhanna. Potrebnosti, vkusy, moda [Needs, tastes, fashion]. Kiev, 1987.

Golybina, Antonina. Vkus i moda [Taste and fashion]. Moscow: Znaniye, 1974.

Gronow, Jukka, and Sergey Zhuravlev. Fashion Meets Socialism: Fashion Industry in the Soviet Union after the Second World War. Helsinki, 2016.

Gronow, Jukka, and Sergey Zhuravlev. Moda po planu: istoriya mody i modelirovaniya odezhdy v SSSR, 1917–1991 [Fashion according to plan: The history of fashion and clothing designing in the Soviet Union, 1917–1991]. Moscow: IRI RAN, 2013.

Kostel’na, Maria. “Diialnist ukrainskykh budynkiv modelei odiahu v 60–80-kh rr. 20 st.: kontseptsii rozvytku modnykh tendentsii” [Activity of Ukrainian fashion houses in the 1960s–1980s: Concepts of of fashion trends development]. Visnyk Lvivskoi natsionalnoi akademii mystetstv, no. 24 (2013): 37–48.

Kostel’na, Maria. “Tvorchist dyzaineriv ukrainskykh budynkiv modelei seredyny XX – pochatku XXI st.: etnichnyi napriam” [Creativity of designers of Ukrainian fashion houses of the mid-20th–early 21st centuries: Ethnic Direction]. PhD diss., Kyiv National University of Culture and Arts, 2016.

Lebina, Natalia. Muzhchina i zhenshchina: telo, moda, kultura. SSSR – ottepel [Man and woman: Body, fashion, culture. USSR – Thaw]. Moscow: Novoye literaturnoye obozreniye, 2014.

Lebina, Natalia. Povsednevnaya zhizn sovetskogo goroda: normy i anomalii. 1920–1930-e gody [Everyday life of a Soviet city: Norms and anomalies. 1920s–1930s]. Sankt-Peterburg: Zhurnal “Neva” – Izdatelsko-torgovyy dom “Letniy Sad,” 1999.

Parmon, Fedor. Kompozitsiya kostyuma [Costume composition]. Moscow: Legprombytizdat. 1985.

Stitziel, Judd. Fashioning Socialism: Clothing, Politics, and Consumer Culture in East Germany. Oxford: Berg, 2005.

Tkanko, Zenovia. Moda v Ukraini 20 stolittia [Fashion in Ukraine in the 20th century]. Lviv: Vydavnytstvo “ARTOS,” 2015.

Tokar, Marta. Akvarel. Khudozhnii tekstyl [Watercolor: Art textiles]. Lviv, 2010.

Zakharova, Larissa. “Kazhdoi sovetskoi zhenshchine – plat’e ot Diora! Frantsuzskoe vliyanie v sovetskoi mode 1950–1960-kh godov.” [A Dior dress for every Soviet woman! French influence in Soviet fashion in the 1950s–1960s). In Sotsial’naya istoriya. Ezhegodnik 2004, 339–70. Moscow: Rosspen, 2005.

Figure 2. Exhibition hall of the Kyiv House of Fashion Design, 1964

(TsDKFFA od. obliku 2–91364)

Figure 3. Fashion show at the Kyiv House of Fashion Design, 1965

(TsDKFFA od. obliku 2–98033)

 

Figure 5. Meeting of the members of the Art and Technical council
of the Kyiv garment factory Zhovten’, 1983

(TsDKFFA od. obliku 0–207692)

 

Figure 6. Fashion designers discuss a new collection
at the Kyiv House of Fashion Design, 1967

(TsDKFFA od. obliku 2–111619)

 

Figure 7. Focus on the number of items of clothing produced.
The leaders of the Communist labor of the Vorovsky Odessa Sewing Association,
who exceeded the norm in terms of the number of items of clothing, 1962

(TsDKFFA od. obliku 2–75686)

 

Figure 8. A caricature from the satirical magazine Perets’ (cover) showing the contrast between an item of clothing as presented by a fashion house and the same item of clothing in use after production in a garment factory, 1965

The paper focuses on cooperatives—seen as business enterprises—in the First Czechoslovak Republic (1918–1938) and the period of 12 years after the communist putsch (1948–1960). It compares the functions of cooperatives, the limits placed on their (semi-)independent business activities, and their chances to decide for themselves in the market economy and the centrally planned economy. Drawing on the methods of business history and economic history, the study seeks to answer the following questions: 1. Were the cooperatives in the First Czechoslovak Republic really fully independent companies running their business on a free market? 2. Were the cooperatives in the Stalinist and early post-Stalinist Czechoslovakia really subordinated subjects in a centrally planned economy? 3. Are there any real connections in the functioning of cooperatives in these two eras? In other words, is it possible that something of the independent cooperatives survived and that the traditional interpretations (according to which the two eras were completely different and even contradictory) can be seen in new and more accurate ways?

Keywords: Business history, centrally planned economy, cooperatives, Czechoslovakia, economic history, free market economy, 1918–1938, 1948–1960

Cooperatives were very important economic subjects both in interwar and postwar Czechoslovakia. Their origins go back to the second half of the nineteenth century. Cooperatives played important cultural and national roles in the modernization of society, but they were not major factors in economic development or growth in the less developed regions of East-Central European countries after the 1860s.1 In contrast, in Bohemia, Moravia, and Silesia cooperatives were key players in economic development and in the process of economic modernization. In the interwar period, the cooperative network was widespread both in cities and in smaller towns and rural settlements. The membership base reached several million, and cooperatives had enormous assets. Nobody really questioned the fact that cooperatives were an important component of the Czechoslovak economy.

After World War II, the economy of Czechoslovakia was of a mixed type. It was a strongly regulated market economy in which the state authorities interfered and which had a huge share of state-owned enterprises (especially the industrial ones). The cooperatives experienced a big revival in 1945–1948, successfully finding their position in the new era. The communist coup d’état in February 1948, however, created an entirely new situation. With the centrally planned economy on the rise, the roles of the cooperatives as businesses and enterprises were significantly reduced or absolutely eliminated. Nevertheless, even in 1948–1960, the cooperatives played important roles in the Czechoslovak economy and Czechoslovak society.

According to the traditional, “classic” interpretations of the history of cooperatives (which are only rarely found in the secondary literature, as almost no serious scholarly inquiries were done about cooperatives after 1989), the cooperatives were independent enterprises which functioned in a free market without any major state or political interferences during the First Czechoslovak Republic (1918–1938). On the other hand, the period of the centrally planned economy (since 1948) has been seen as an era of absolute state dominance over the economy, in which nothing remained of the autonomy of cooperatives, which are seen as having been absolutely subordinate instruments of state economic policy. 2 I am certainly not going to question the fundamental systemic difference between the two eras. However, in this paper, I am going to ask whether this general view is entirely correct or whether one sees traces of some similarities or even continuities between these two eras. In other words, is it possible that something of the traditional, allegedly independent cooperatives survived in the Stalinist period (1948–1953) or in the early post-Stalinist period (1953–1960) in Czechoslovakia?

The choice of the two periods under comparison is based on a standard periodization of Czech economic and social history.3 In 1918–1938, the First Czechoslovak Republic established a liberal-democratic regime (seen as liberal-democratic from the perspective of the conditions of the interwar period) with a free-market economy. The Second Republic (1938–1939), following the shock of the Munich Agreement, was a very different political and economic system. The starting point of the second period is the communist coup d’état in February 1948. Although the drastic changes in cooperative policy didn’t start immediately (the newly established regime obviously had to deal with other, more important problems), the putsch in February opened the way to these changes. The second period ended in 1960, when a new constitution was adopted. It stated that the process of “establishing and building socialism” had been successfully completed.4 From the economic point of view, this statement was at least partially true, because the vast majority of property was in the hands or under the direct control of the state, and the economy was centrally planned.5

To answer the questions I have posed in this paper, I use traditional approaches of business and economic history. I compare the cooperative laws and principles, their organizational structure, and the forms of state control, regulation, and interference. I also use official statistical sources to analyze the important role of cooperatives in the economy. While these data have been available and published before, they have never been used to analyze the cooperative part of the Czechoslovak economy in this way.6

Cooperatives in the Market Economy of the First Czechoslovak Republic

In the First Czechoslovak Republic, the cooperatives continued to grow, much as they had in the 1870s, 1880s, and 1890s (depending in part on cooperative types, as the rapid development of credit cooperatives, for instance, started about 10 or 20 years before the growth of others). The rapid prewar growth resulted in a complex network with almost 12,000 cooperatives of various types.7

There is broad consensus according to which the First Czechoslovak Republic met the following two criteria: it was a liberal-democratic political regime (at least in the context of Europe in the 1920s and 1930s)8 and the economy was based on the principles of free market capitalism.9 Thus, the new state was a sort of “playground” not only for cooperatives but also for many other types of businesses. In this playground, the cooperatives built up strong positions, as the data presented below illustrate (Table 1).

 

Table 1. Cooperatives in Czechoslovakia in 193710

Type	Cooperatives	Members	Assets (mil. Crowns)
Agricultural	3,861	597,156	.
Housing	691	104,590	.
Consumer	1,541	1,100,069	.
Production (Workers)	609	32,694	.
Sales and Purchasing (Traders)	229	50,283	.
Others	467	89,416	.
Non-credit total	7,398	1,974,208	8,058,8
Credit	7,392	2,189,197	22,239,8*
District credit 10 **	656	471,462	4,828,2
Total	15,446	4,634,867	35,126,8

 

* For Slovak cooperatives deposits instead of assets (which are not available11)

** In 1936

Sources: Statistická ročenka Republiky Československé 1948, XV, 159–60, 199; Statistisches Jahrbuch der ČSR 1938, vol. 5, 186–87; Zprávy Státního úřadu statistického 1937, vol. 18, 221–24, 1104–5, 1166–67; Zprávy Státního úřadu statistického 1940, vol. 21, 32, 261, 507.

As Table 1 shows, the cooperatives were very important for the Czechoslovak economy. There were 15,446 cooperatives which had more than 4.5 million members. However, the number seems to be much higher because of two factors: usually, only one family member was an owner of a share in a cooperative and many people were members of more than one cooperative (e.g. a farmer might be a member of a credit cooperative and an agricultural cooperative, or a worker might be a member of a housing cooperative and a consumer cooperative). Assuming that the average family had approximately five members and that every person was a member of two cooperatives, we can estimate the real number of all “customers” or “users” of cooperatives to approximately 11.5 million people, which was more than 80 percent of Czechoslovakia’s population (14,428,715).12 The assets controlled by cooperatives, which came to more than 35 billion crowns, were about 48.7 percent (!) of Czechoslovakia’s GDP in 1937.13

The legislation passed by the First Republic respected the business and operational independence of cooperatives. It was based on the cooperative law of 1873, which at the time it was passed was outstanding and which remained effective until 1954. The founding of cooperatives was quite simple. The statutes had to be made and the cooperative had to be registered. The cooperative had to report all changes in statutes and all new people on the board of directors, which was elected by the general assembly, where all members could participate (directly or indirectly through delegates), vote, and be elected. The principle of voting was interpreted differently. In some cases, each member had one vote (generally in consumer cooperatives), while in others, the number of votes depended on the individual’s number of shares (generally in other cooperatives). Issues of liability were different for members and for the leadership. Members had liability with all the property (cooperatives with unlimited liability) or with the sum, which was a multiple of the member’s cooperative share. The sum was defined by statutes, and it was at least the same as the share. That meant that a minimum member’s liability was the share plus the same sum. On the other hand, the board of directors always had liability with all their property.14

The cooperative law of 1873 did not regulate the business activities, property, or distribution of profits among members. These matters were subject to the decisions reached independently by each cooperative. In the subsequent decades, only one important regulation was added. The law of 1903 forced the cooperatives to submit to a financial examination every two years. The examination (called “revision”) was done by state inspectors or by the cooperative union (see below).15

From the point of view of the state, cooperatives were seen as useful businesses which helped raise the standard of living of members of the lower social classes. Therefore, the cooperatives were subject to different taxes. While other companies generally paid 8 percent income tax, cooperatives paid only 2 per thousand tax on authorized capital yearly, which was an immensely low or, rather, de facto negligible amount. However, this tax rate applied only to cooperatives that restricted their business activities to members only.16 In other words, the taxes were low if the cooperatives worked as self-help companies which provided services to their members. However, if they acted as open business enterprises and provided services for everybody, they had to pay the same taxes as regular trade companies.

This created a lot of space for clashes between cooperatives and other types of companies. As one would have anticipated, the cooperatives frequently violated this regulation and provided their services to non-members. Their business competitors often made complaints on this matter, and the Czechoslovak authorities then had to deal with these complaints. The cooperatives, however, offered a simple defense in response to these accusations. They contended that the non-members for whom they had provided services were related by familial ties to members of the cooperatives and that the rules thus had not been violated. If this argument did not work, they claimed the problem was merely a mistake which had been made by particular employees (or cooperative officials). The authorities usually accepted this defense and fined the employees, and the cooperatives then compensated the employees for the fines. Obviously, this did not solve the problem. However, it was almost impossible to prove that any particular case was the result of the deliberate action of a cooperative. Generally, the cooperatives had an advantage in such cases. Often, however, the cooperatives and other business companies had good relations and collaborated. For example, in the process of market syndicalization in the 1920s and 1930s, the cooperatives made deals with other businesses to divide the markets.17

The organizational structures of the cooperatives were very complicated and hardly transparent in the First Republic. As early as the 1890s, the cooperatives had founded central cooperative unions to represent and advance their interests. Various unions existed even before 1918, and their numbers increased in the interwar era. Four important factors divided the cooperative movement:

Some cooperatives were organized on a professional basis, e.g., the cooperative of Živnostenská banka’s (the biggest bank in Czechoslovakia) employees. Such cooperatives usually joined apolitical cooperative unions.

In the multinational state of Czechoslovakia, the national cleavage was important in most advocacy (pressure) groups, including labor unions, as well as in the cooperative movement. Czech, Slovak, German, Hungarian, Polish, and Ruthenian cooperatives therefore joined particular unions defined by the nationality (language) of their members.

Some cooperative unions consisted of only particular types of cooperatives. As a result, there were exclusive cooperative unions, e.g., for traders’ cooperatives.

Finally, the cooperative unions were often components of a bigger framework of pressure groups led by political parties. Every important political party organized one or more cooperative union. This was typical for Czech, Slovak, and German cooperatives. In contrast, smaller national groups in Czechoslovakia did not split their strength and organized their cooperatives almost exclusively on the national principle.

There was a total of 85 (!) cooperative unions in Czechoslovakia in 1935 as a result of this diversity.18 The most important were the party-oriented ones. Of the 16,832 cooperatives, 13,399 (approximately 80 percent) were members of only eight of the biggest party-oriented unions (of the Czech and German social-democratic, Czech national-socialist, and Czech and German agrarian parties).19 We can assume that other party-oriented unions had a very significant share of the other cooperatives as members.20

The influence the political parties exerted over cooperatives was therefore quite extensive. However, there is no hint in the archival sources or in the secondary literature so far indicating that the cooperatives were submitted to any significant influence by the political parties in an entrepreneurial way. Their business strategies remained independent.21 However, the political parties often appointed their officials to leadership positions of big cooperatives or cooperative unions (these officials had to be elected by general meetings, which was not a problem because of the connections between the cooperative/union and the party). Among the members of the union leadership bodies (boards of directors or control boards), we often find senators, members of parliament, or even ministers, as well as important individuals with considerable public influence. Moreover, sometimes even the lower posts in cooperatives and unions were given to people who were close to the party’s leadership (their relatives or friends).22 These people were “rewarded” by the party through “good jobs” in cooperatives (much as the party’s VIPs were “rewarded” by being given posts on the board of directors in companies or high official posts in public administration). Indeed, giving (and taking) such “sinecures” was believed to be “normal” practice (or at least usual practice) in the First Republic.

There was, however, one more way for political parties to influence and even directly use the cooperatives. The cooperatives sometimes provided organizational and even financial support for a party’s (or its satellite organizations’) events. Once again, the research on this topic began only a year ago, but some particular findings have already been made. For example, the consumer cooperative Včela (the biggest cooperative in interwar Czechoslovakia, running its business in Prague and Central Bohemia and, after 1929, under the direct influence of the Communist Party) provided the communist “mass” organizations (such as a labor union, a sports union, a youth union, etc.) with more than 700,000 crowns (approximately 0.5 percent of its yearly retail sales) in the single business year of 1931–1932 (i.e., in the middle of a deep economic crisis!).23 When the parties did not influence the cooperatives’ businesses directly, they were nonetheless able to hinder their profitability (and thus influence their business strategies) indirectly.

The free business activities of cooperatives were limited in one more way. The unions (most probably regardless of their political profile, i.e., the apolitical cooperatives included) were aware of the fact that the cooperative network was sometimes too dense and that cooperatives were fighting one another. The unions tried to regulate the cooperatives, forcing them either to merge or to respect one another’s areas. Thus, they created de facto cartels.24 While this was definitely useful for smaller and less effective cooperatives (which were then protected against competition), for the bigger and more effective cooperatives, it was a restriction. The syndicates were quite usual in Czechoslovakia in the 1930s.25 The cooperative market was no exception in this way. On the other hand, this was still more a regulation than it was a means of controlling the cooperatives, which remained fully independent enterprises in other ways.

Cooperatives in the Centrally Planned Economy of the Stalinist and the Post-Stalinist Czechoslovakia (1948–1960)

The communist coup d’état in February 1948 marked the beginning of the 41 years of communist dictatorship in Czechoslovakia. Drastic changes in the economy started almost immediately. The mixed economy of the Third Republic (1945–1948) was replaced with a centrally planned one after 1948. The period between 1948 and 1953 saw the introduction of the first five-year plan, during which the Czechoslovak economy was increasingly transforming into a Soviet model (with the closest match coming in 1953–1958, when the new planning system, inspired heavily by Soviets, was introduced, according to which the whole economy was seen as a single “super-company”).26 This meant the drastic restructuring of Czechoslovak economy and society. Heavy industry (especially machinery, including the arms industry) was highly prioritized, and the primary and tertiary sectors were suppressed or not addressed at all. The whole economy was “nationalized” or “socialized.” Owners were expropriated and were given no compensations (indeed, they were often criminalized). Society started to be seen from the point of view of hereditary class struggle.

In this new context, the “playground” for cooperatives in communist Cze­choslovakia in 1948–1960 had the following characteristics: 1. It was a totalitarian regime (although it got a little “softer” after 1953, especially regarding the intensity of terror as a practice used by the police state).27 2. The economy was of a Stalinist centrally-planned type. Despite the slight “liberalization” of the political regime after 1953, Stalinist central planning in the economy survived in its most rigid form until 1958.28 However, after the monetary reform and the subsequent riots and strikes in June 1953,29 the “New Course” in the economy was announced. The most violent practices were brought to a halt and emphasis shift to some extent from heavy industry to light industry (including consumer products). After 1955, with the start of the second five-year plan (1956–1960), the “New Course” was abandoned, and the new wave of heavy industry build-up began.30

 

Table 2. Cooperatives in Czechoslovakia in 1937 and 194631

Type	1937		1946
	Cooperatives	Members	Cooperatives	Members
Credit	7,392	2,189,197	5,002	1,609,323
Agricultural	3,861	597,156	3,571	794,000
Housing	691	104,590	465	77,507
Consumer	1,541	1,100,069	1,439	1,057,548
Production (Workers)	609	32,694	539	40,355
Sales and Purchasing (Traders)	229	50,283	327	80,032
Others	467	89,416	325	110,572
Total31	14,790	4,163,405	11,668	3,769,337

 

Sources: Zprávy Státního úřadu statistického 1940, XXI, 507; Statistická ročenka Republiky Československé 1948, XV, 159–60; Smrčka, Vývoj družstevnictví, 211.

If we want to analyze the quantitative development of cooperatives in 1948–1960, it is worth pausing for a moment to consider their situation in the Third Republic (1945–1948). While the cooperatives were more or less suppressed and restricted during the period of Nazi occupation (1939–1945), in the Third Republic, they experienced a new revival. Their typology was very similar to the typology of the cooperatives in the prewar era. The most important figures in 1937 and 1946 are in Table 2. While the other cooperative types remained approximately at the same numbers, the number of credit cooperatives dropped substantially. Taking into account the drastic decline in the Czechoslovak population in 1939–1945 (ca 20 percent),32 the situation seems reversed: in the relative numbers, the strength of credit cooperatives was about the same, while the other types of cooperatives (as well as the whole cooperative movement) were significantly better off.

Inspired heavily by developments in the USSR in the 1930s and 1940s and sometimes under the strict influence of Soviet “advisors,”33 the roles of cooperatives had fundamentally changed during the few years after the communist putsch. Their traditional business, cultural, educational, and other roles were suppressed or even eliminated. The typology of cooperatives was reduced drastically. Credit cooperatives were “nationalized,” restricted in development and activities, and finally dissolved as part of the monetary reform of 1953. The broad variety of agricultural cooperatives was destroyed and only one type existed. The new collective farms (“United Agricultural Cooperative,” Jednotné zemědělské družstvo, JZD) focused on collective production and served as a crucial tool in the “collectivization” of businesses run by private farmers. Housing cooperatives survived, but they were submitted to strict state control, and any autonomous business activities were strictly forbidden. Consumer cooperatives seemed to grow, but this was an illusion created by the “socialization” of private traders and businesses. Their activities were fully controlled by the state. Production (workers) cooperatives were growing, due not only to the support of the state but also to the “socialization” of craftsmen. Sales and purchasing cooperatives were mostly dissolved, and those that remained were integrated into consumer or workers’ cooperatives. The same was the fate of the last group of “other” cooperatives.

As a result of these changes, generally, only four types of cooperatives existed in communist Czechoslovakia: collective farms, consumer, housing, and workers’ cooperatives. Based on the quantitative parameters only, the cooperative system seems to have remained relatively stable. The numbers of cooperatives and of their members in 1966 did not differ dramatically from the numbers in 1946 (Table 3).34 Moreover, if we take the dissolution of credit and traders’ cooperatives into account, the other types of cooperatives seemed to have been growing. However, this growth was mostly artificial and therefore illusory. Hundreds of thousands of people (or maybe millions) did not join the cooperatives voluntarily. They were more or less forced to join, either to avoid being persecuted or accused of a crime or to have a better chance of keeping the rest of their property. Some people were violently forced to join cooperatives during the “collectivization” of agriculture (the creation of collective farms) and “socialization” (a de facto expropriation) of small businesses.

However, recent research has revealed that a traditional paradigm according to which the cooperatives were helpless victims which were forced by the regime to participate in “socialization” of private property is not entirely accurate. At least in the case of consumer cooperatives, some of them were very active in this process, sometimes even more active than one would have expected.35 It is plausible that the situation in workers’ and housing cooperatives could have been similar. After all, the cooperatives were traditional competitors of private businesses, and as noted above, relations between the cooperative and private business ventures were often near to hostile. It is possible (and probable) that many members of cooperatives may have felt that the process of “nationalization” and the creation of a socialist society represented a “final” and well-deserved victory (the fact they were wrong and the cooperatives would not be able to function as independent businesses under the new regime is another matter).

 

Table 3. Cooperatives and their members in Czechoslovakia in 1946 and 1966

Type	Cooperatives	Members	Cooperatives	Members
	1946		1966
Consumer			105	1,885,498
Workers			421	149,123
Housing			2,410	312,410
JZD			6,464	866,381
Total	11,668	3,769,337	9,400	3,213,412

 

Sources: Jelínek, 20 let JZD, 50; Archiv Muzea družstevnictví, Družstevní asociace ČR, Statistická ročenka Ústřední Rady Družstev, 1970.

The cooperative legislation was based on two laws. The first was the law about collective farms (JZDs) from 1949, which separated the agricultural cooperatives from other types for four decades. The most important goals of the JZDs were to contribute to the fulfillment of the central economic plan and to unite the lands of individual farmers.36 The law about “people’s cooperatives” from 1954 annulled the law from 1873 and created a new basis for cooperative activities. The goals of the cooperatives were now primarily to help build socialism and raise the living standards of the members of the cooperatives and all “working people.” Their activities were put under the strict control of the state, including the obligatory division of profits (not primarily among members).37 These two laws clearly show the communist perception of the functions of the cooperatives: They were not seen as businesses, but as tools in central planning and a new social and economic policy.

The organizational structure of the cooperative movement was extremely simplified during World War II, and only a few cooperative unions remained in operation.38 After the communist coup d’état in February 1948, these unions were dissolved, and all cooperatives were subordinated to the Central Cooperative Union (Ústřední rada družstev, ÚRD).39 In the subsequent years, the consumer cooperatives were forced to abandon cities (and sell products only in smaller towns and rural areas), and their organizational structure after 1956 followed the administrative division of the country (districts or okresy). This is why, by 1966, there were only 105 huge cooperatives. Similarly, the traditional small workers’ cooperatives were forced to fuse into conglomerates (although not district-based). In contrast, the collective farms originally created were often too small and therefore in many cases not sustainable. Bigger collective farms were founded, either by founding new farms or by merging several cooperatives into one, but only after 1955.40 This meant that the organizational structure was artificial, without any trace of a free development. In other words, the structure was crafted by the state/regime in the hopes that the new cooperatives would be able to fulfill their new roles.

It took the new regime some time to consolidate after 1948. Once it had done this, it started to reorganize the economy into a centrally planned one (as mentioned above). The room for independent or autonomous business activities of cooperatives was quickly shrinking. After 1950, there was generally no room left at all. The cooperatives became state-controlled instruments of the centrally planned economy. They could not plan even the simplest activities on their own. Moreover, they became part of a system of political indoctrination. In 1948–1953, almost all decisions were made on the basis of the state ideology. The “old” leaders were removed, and the new ones were installed into the cooperatives. The most important qualification of these new leaders was not expertise. It was membership in or loyalty to the Communist Party.41 The productivity and profits of cooperatives suffered a drastic setback, and the situation only began to improve since the 1960s.

There were several reasons for the destruction of cooperatives as independent enterprises. First, central planning was supposed to work better than the market economy (this proved an illusion, of course). Second, independent businesses were elements of the capitalist world, which the communist regime claimed to have “defeated.” Third, profit and effectiveness (fundamental for traditional business strategies) were no longer important economic factors. Instead, production was crucial. There was, however, at least one more reason that is often overlooked in the secondary literature. The reason was the practical application of the communist ideology. The cooperatives (as well as all other companies) were submitted to central planning not only in their activities. Importantly, the plan also expected them to be only marginally profitable. The regime did not want highly profitable companies, since according to communist ideology, profits would only have created a new “bourgeoisie,” i.e., a new class enemy.

Even in rare cases when the old leadership of a cooperative could have kept its position or the new leadership consisted of experts, this leadership quickly found itself struggling with the bureaucratic system of central planning, which was dominated by ideology. Despite their expertise and arguments, the leaders lost the disputes and had to comply. The best they could have achieved was to delay some of the decisions that were extremely disadvantageous for the cooperative (and this was possible only if the leaders were important members of the Communist Party and therefore had a strong “political background”).42

On the other hand, it is plausible that cooperative leaders were trying to find some new “quasi-business” strategies, for instance cooperating with other companies, to get better (“softer,” i.e. based on lower figures) plans for the cooperative, etc. This “quasi-market behavior” was quite common in industry, and some of the cooperatives may have used these kinds of schemes too. However, the secondary literature has not yet turned up any sources buttressing this assumption. To summarize, the cooperatives in the first decade of the communist regime were no longer independent businesses. On the contrary, they were de facto instruments of the state-controlled, centrally planned economy. Basically, they were no longer cooperatives. They had the legal form of cooperatives and were called so, but they had almost nothing common with traditional cooperatives. To the extent that there were exceptions, these were little more than oversights or individual gaps in the system.

Conclusions

In 1948–1960, the “playground” for cooperatives in Czechoslovakia was extremely different than it had been in 1918–1938. In the First Czechoslovak Republic, cooperatives were independent businesses which freely chose their business strategies. They experienced continual growth and their economic power was enormous. Their organizational structure was independent of the state and was therefore complex and even chaotic (over 80 cooperative unions existed in the 1930s). In contrast, after the communist coup d’état in February 1948, the cooperatives were not only subjugated by the state but became state-controlled instruments in a drastic restructuring of the economy and society. They were submitted to the centrally planned economy, which left no room for independent business activities.

The general description given above is no doubt valid in broad strokes. However, when seen from a closer view, the situation of cooperatives looks a little more diverse. First, the cooperatives in the First Czechoslovak Republic were under the strong influence of political parties, which sometimes forced them to support their activities (which created costs for cooperatives). Second, the cooperative unions tried to restrain the cooperatives’ areas, thus forcing them to establish some sorts of cartels (or better, syndicates). While this offered some protection for the weaker and less profitable cooperatives, the successful ones were limited in their activities (they could nevertheless always leave the union). And third, it is possible that even in the Stalinist era of 1948–1953 there was some very limited room for cooperatives, in which they could develop some sort of “quasi-market” business strategies of an informal character. However, there is no doubt that this room was very small, and trying to function in these “gaps in the system” was very risky. Further research will perhaps reveal the extent and limits of these activities.

One conclusion is undeniable: though there were some restrictions on cooperatives in the First Republic and there was also some (limited) room for autonomous actions by cooperatives after 1948, the economic and political systems in which they functioned in these two periods were qualitatively different. The cooperatives after 1948 were no longer free businesses. They were “socialist enterprises,” or in other words, tools of centrally planned production, trade, and agriculture, which were organized and controlled by the totalitarian state.

 

Archival Sources

Archiv Muzea družstevnictví [Archive of the Cooperative Museum]

Družstevní asociace ČR [Cooperative Association of the Czech Republic]

Statistická ročenka Ústřední Rady Družstev, 1970 [Statistical yearbook of the Central Cooperative Union, 1970]

Moravský zemský archiv v Brně [Moravian regional archives]

H 288: Ústřední jednota českých hospodářských družstev úvěrních Brno [Central Union of Czech Credit Cooperatives in Brno]

Korespondence svazu z let 1936–1937 [Business correspondence of
the Union], n.d.

Státní oblastní archiv v Praze (SoaPraze) [State Regional Archives in Prague]

Krajský soud obchodní [Regional Business Law Court], podnikový rejstřík [Business Register]

Družstvo hospodářských lihovarů pro prodej lihu v Praze [Cooperative of distilleries for the sale of alcohol in Prague]

Protokol zápisu z valné hromady Družstva hospodářských lihovarů [General meeting minutes of the cooperative of distilleries], 22. 6. 1931.

Družstvo Včela Praha [Cooperative Včela Praha]

Protokoly zápisů valných hromad družstva Včela, [General meetings minutes of the Cooperative Včela], 1918–1938.

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