The funeral
8th May 1980. The funeral of Josip Broz Tito, President of Yugoslavia.
From Moscow came Leonid Brezhnev, General Secretary of the Soviet Union; from Washington, Vice-President Walter Mondale and the President’s mother, Lillian Carter. Margaret Thatcher came for Britain, Helmut Schmidt for West Germany, and from the other Germany came Erich Honecker. President Sandro Pertini represented Italy, François Mitterrand came from France. Nicolae Ceaușescu came from Romania, János Kádár from Hungary, Todor Zhivkov from Bulgaria and Edward Gierek from Poland.
Prince Philip represented the British Crown.
Indira Gandhi of India and Kenneth Kaunda of Zambia; Julius Nyerere of Tanzania and Robert Mugabe of the newly independent Zimbabwe. Saddam Hussein came from Iraq, Hafez al-Assad from Syria, Yasser Arafat for the Palestinians. From North Korea came Kim Il Sung.
Four kings, six princes, thirty-one presidents, twenty-two prime ministers and forty-seven foreign ministers were among the representatives of more than a hundred countries who came to Belgrade.
Kings and princes stood beside Communist Party secretaries; NATO leaders beside Warsaw Pact rulers; revolutionaries beside monarchs; democrats beside dictators.
Few men who possessed no empire, commanded no superpower and ruled a country of barely twenty-two million people could have summoned such a congregation.
It was testimony to the peculiar position Tito had made for Yugoslavia. Communist but outside Moscow’s command; European but neither Eastern nor Western; a founder of the Non-Aligned Movement who could receive Brezhnev in Belgrade and dine with Western leaders without becoming the client of either.
And close friend to Sophia Loren and Gina Lollobrigida.
Yet there was another reason the spectacle was so remarkable. The men and women assembled around Tito’s coffin represented a political world that was itself approaching its end. Brezhnev had two years to live. The Soviet Union had eleven. The Warsaw Pact would disappear with it. Yugoslavia, whose unity appeared embodied in the old Marshal being carried to his grave, had barely another decade before it began to tear itself apart.
Some of the statesmen watching would themselves be overthrown, imprisoned, executed or driven from office. Borders would move. Countries would vanish. New ones would appear. For one day in Belgrade, however, they were all still there.
As with Edward VII’s funeral seventy years earlier, the importance of the gathering is clearer in retrospect than it could have been to those who attended it. Tito’s funeral was not merely the burial of the man who had ruled Yugoslavia for thirty-five years. It was one of the last great moments of the post-war world before the picture began to come apart.
Another world coming to an end
I am back in the Balkans, just over the border from the former Yugoslavia. And once again the world around us is changing.
The neoliberal orthodoxies that dominated the period after the Cold War have fallen out of favour, but no-one has a clear idea what comes next. Countries are experimenting with tariffs, industrial policy, subsidies, public ownership and economic nationalism. The post-war settlement — the rules-based international order and all that entailed — increasingly appears to be coming to an end.
The last eighty years haven’t been free of wars. Far from it. But they have been largely free of direct conflict between the great powers, just as the period leading up to the death of Edward VII had enjoyed its own long period of relative great-power peace. We are living through another period when assumptions that once seemed permanent suddenly don’t.
I have written before about how he created the most unusual Communist regime in Europe — and the first Communist country to win Eurovision. The economic system Tito created asked some questions about capitalism and markets that we seem to have forgotten.
The Yugoslav experiment
After breaking with Stalin in 1948, Yugoslavia industrialised at extraordinary speed. For much of the post-war period its economy grew at around 6% a year, while income per head rose rapidly and millions of people moved out of agriculture and into the country’s expanding towns and industries.
Even after the oil shock of 1973, Yugoslavia initially proved surprisingly resilient. The OECD recorded growth of more than 7% in 1979, with industrial production expanding by around 8%, and noted that the slowdown since the oil crisis had been considerably less severe than in most Western economies.
And this wasn’t simply Communist statistics. The World Bank described Yugoslavia’s post-war economic performance as impressive: employment, investment and incomes rose rapidly while the country was transformed from a predominantly agricultural society into a modern industrial economy. GDP per head in Yugoslavia as a whole compared favourably with Portugal, although it remained behind Greece and Ireland.
But averages concealed enormous differences.
Slovenia was already considerably richer than the Yugoslav average, Croatia was relatively prosperous, while Kosovo remained desperately poor. Yugoslavia contained places as well off as capitalist Western Europe and the developing world within the borders of a single country.
There were already cracks in the economic picture by the time Tito died. Inflation was high, foreign debt was rising and the current-account deficit was becoming increasingly difficult to finance. These problems would dominate the decade after his death. But viewed from 1980, the preceding thirty years had nevertheless produced one of Europe’s most striking economic transformations.
The locksmith’s economy
Tito was unusual among Communist leaders. He had actually been a skilled tradesman. He trained as a locksmith and mechanic and worked in factories and workshops across central Europe before becoming a revolutionary. He retained an enthusiasm for mechanical work even as President.
And the economic system he created made a distinction that has largely disappeared from modern Western politics. It wasn’t simply between the state and the private sector. It was between small private enterprise and large concentrations of private capital.
Yugoslavs could run shops, restaurants, farms and workshops. What they generally couldn’t do was to build enormous privately owned corporations. Big industry belonged instead to Yugoslavia’s system of socially owned, worker-managed enterprises.
This wasn’t some small-business paradise. The system could still be bureaucratic But the underlying distinction is interesting. The local locksmith and the industrial conglomerate were not regarded as economically equivalent merely because both could be described as “business”. The different treatment of small and large businesses drove economic growth.
The Chinese experiment
There is an interesting echo of this in the greatest economic success story of the last half-century: China.
China’s transformation after 1978 is often described simply as what happened when Communists discovered capitalism. The reality is considerably stranger. Markets were progressively opened, private businesses flourished and foreign investment poured in. Hundreds of millions of people moved into a new urban middle class and Chinese manufacturers began competing around the world.
But China never abandoned state ownership or industrial planning. The commanding heights of the economy remained heavily influenced or controlled by the state.
Since the financial crisis, China has doubled down on industrial strategy, building extraordinary positions in industries including solar panels, batteries and electric vehicles.
There are differences to Tito’s model. Yugoslavia’s great enterprises were supposedly socially owned and managed by their workers, whereas China’s large state companies remained firmly under government control. But both systems rejected the neat choice between central planning and the free market. And both recognised that a small private business and a huge corporation aren’t necessarily the same economic animal.
China eventually went much further than Yugoslavia in allowing private capital to accumulate. But it still developed an economy in which millions of private businesses operated alongside enormous state enterprises and an interventionist government prepared to direct investment towards industries it considered strategically important.
Both China and Yugoslavia experienced fast economic growth while rejecting the economic orthodoxy that dominated the West after the Cold War. What if the important distinction isn’t between state and private enterprise, but between businesses of radically different sizes and economic power?
The upside-down free market
Because Western economies have gradually created something close to the reverse. Large multinational corporations can move capital and profits between countries, employ armies of lawyers and accountants, lobby governments and spread the fixed costs of regulation across billions of pounds of turnover.
A small business can do none of those things. It doesn’t always follow that large companies literally pay less tax or face fewer regulations than small ones, although there are some glaring examples where that is the case. .
But the relative burden is very different. The cost of filing a return, complying with employment law, obtaining a licence or understanding a new regulation barely registers in the accounts of a multinational. For a business employing five people, it can consume a significant proportion of the owner’s time and profit.
The OECD has repeatedly found that tax and regulatory compliance costs fall disproportionately on smaller businesses. More recent research also points to the consequences: complexity can discourage new firms from entering markets and existing small businesses from expanding. At the other end of the economy, increasing market power allows incumbent corporations to protect their position.
The irony is that an economic settlement created in the name of free markets may have made markets progressively less free for the businesses most dependent upon them.
When corporations become states
The consolidation of economic power created massive political power. Some of the world’s largest technology companies have become increasingly entwined with the state itself. The American defence and security establishment now depends heavily on technology supplied by companies such as Microsoft, Google and Palantir.
At the same time, the US government has become increasingly willing to use its own economic power to protect American technology companies abroad. The Trump administration has explicitly threatened tariffs and other retaliation against countries imposing digital taxes or regulations it believes discriminate against American companies. In 2026 Trump went as far as threatening 100% tariffs against countries introducing digital services taxes.
This is something rather stranger than the free-market capitalism we were promised at the end of the Cold War.
Giant corporations provide governments with strategically important technology. Governments award them enormous contracts. And the power of the state can in turn be deployed against foreign governments attempting to tax or regulate them. It isn’t quite the Japanese zaibatsu of the 1930s, but the family resemblance is uncomfortable: private economic power, technological power and the interests of the state becoming increasingly difficult to separate.
After neoliberalism
None of this means we should copy China, or recreate Tito’s Yugoslavia. Yugoslavia’s economy ultimately ran into profound difficulties; China’s spectacular growth has produced its own bubbles, debts, inequalities and distortions.
But the failure of those systems in some respects doesn’t mean every question they asked was wrong. For forty years Western economic policy has tended to divide the world into state and private enterprise. Privatise the latter, constrain the former, introduce competition and allow markets to do the rest.
But perhaps we have been drawing the line in the wrong place. I’ve worked in big and large organisations, public and private. The big difference isn’t between public and private, but between big and small. Big organisations are all the same whether public or private. As big business gets closer to government they become more like the civil service.
A self-employed plumber, a family restaurant, a twenty-person engineering company and Amazon are all technically private businesses. Economically and politically they have almost nothing in common. One depends on the rules established by the state. The other may possess sufficient economic power to change what those rules are.
And increasingly it is the smaller business that experiences our supposedly deregulated economy as intensely bureaucratic, while the largest corporations possess the resources to navigate regulation, minimise taxation and bargain with governments.
If we want to return to an era of stronger economic growth, perhaps we need to reverse some of that. Not deregulation for everybody. Not nationalisation for everybody. Make it easier to start, run and grow small businesses. Reduce the fixed bureaucratic costs that bear most heavily upon them. Restore competition where markets have become dominated by a handful of corporations. And be much less frightened of regulating economic power simply because that power happens to be privately owned.
Tito wouldn’t have found the distinction particularly revolutionary.
He was a locksmith, after all.
https://api.pageplace.de/preview/DT0400.9789633862018_A36189737/preview-9789633862018_A36189737.pdf
https://www.jstor.org/stable/10.7829/j.ctv4cbhw6