On paper, it looked wonderful, the kind of scheme that the young Karl Marx might have dreamed up. Workers were made responsible for running their own factories -- with a whole gamut of economic rights in addition to their political rights.

In practice, it has turned into another dream that failed.

For the past three decades, "workers' self-management" has provided Communist Yugoslavia with its claim to ideological originality. For Tito and other Yugoslav leaders, it was a convenient way of distinguishing their brand of socialism from the Kremlin's after they broke away from the Soviet Bloc in 1948.

As the first country to seek to implement the idea of workers' self-management on a wide scale, Yugoslavia became an object of study by left-wing theoreticians eager to know whether it was possible to combine the free-market device of capitalism with the Marxist idea of the collective.

The five years since Tito's death have proved disappointing for the believers in "Titoism." The ideological gloss has been taken off the system of self-management by a series of major economic setbacks, including the highest inflation rate in Europe and steadily rising unemployment.

A foreign journalist returning to Yugoslavia after a few years' absence encounters a growing sense that self-management -- at any rate as practiced until now -- is making it more difficult for the country to get out of its economic crisis. Radical reform is opposed by a network of bureaucratic oligarchies claiming to be making decisions in the name of the workers.

Yugoslavs now seem divided over whether self-management is totally unworkable or whether it has never really been tried.

"Whenever we have a self-management meeting at our theater, everybody wants to play Hamlet," a Belgrade actress complained. "You can't run a theater like that. You need one person with creative ideas telling the others what to do."

"What we tried to do was praiseworthy in many respects. We were going in the right direction by trying to introduce greater economic democracy, but then we switched to something else," said Mihajlo Markovic, a philosophy professor at Belgrade University.

Critics like Markovic say that Yugoslavia took a wrong turn in the 1960s and 1970s, when Tito halted tentative steps toward greater political democracy and got rid of thousands of efficient managers after accusing them of usurping the workers' rights. With some notable exceptions, self-management turned into little more than a ideological fig leaf for Communist Party control.

By contrast to other communist-ruled countries whose economies are guided by vast central planning apparatuses, Yugoslavia is committed to the principle of free competition among enterprises. But the ideal of a perfectly functioning market has been sabotaged by the fragmentation of the economy into thousands of more or less autarkic units.

The key unit in the system is the Basic Organization of Associated Labor -- a group of up to 500 persons bound by a series of contractual agreements with other such economic units. In theory uneconomic units should go out of business; in practice, this rarely happens. Losses usually end up being "socialized," meaning that they are taken over by the state.

A frequently cited example of the resulting economic fragmentation is the country's railway system, now split up into no less than 365 such basic organizations.

The Belgrade newspaper Politika recently complained that it was taking up to five or six days for freight trains to travel 200 miles. Every time a train crossed a frontier of one of Yugoslavia's six republics and two autonomous regions, the engine had to be changed, it said.

For similar reasons of local nationalism, each republic boasts its own oil refinery, even though none of them are fully used. Until the debt crisis hit Yugoslavia a few years ago, it was even possible for individual republics to contract foreign loans for development projects without informing the federal bank in Belgrade.

At the level of individual communes, power tends to be wielded by a handful of people who include the local Communist Party secretary, trade union leader and mayor. Rational economic decisions are sacrificed to the political desire of attracting as much investment as possible into the locality and embarking on grandiose projects.

"It's like a feudal system with a dash of socialism thrown in," an economist in Belgrade commented.

The very complexity of self-management -- involving endless meetings and mounds of documentation -- makes political manipulation relatively easy. Yugoslav politicians speak in a language that is virtually incomprehensible to ordinary people, using a mass of complicated acronyms and strange ideological concepts.

The basic law of self-management was adopted 10 years ago. It contains nearly 700 articles and was the brainchild of Edvard Kardelj, a former schoolmaster from Slovenia who died several years before Tito.

"Kardelj introduced far too many details into his theories of workers' self-management. It's so detailed that it is no longer self-management," Vojislav Stanovcic, a professor of political science at Belgrade University, said.

Another academic laughingly recounted what he said happened when he took his responsibilities as a self-manager seriously after he was appointed to a committee supervising the health services.

"I did my best to read all the mounds of material I was sent and make constructive suggestions. Everybody got irritated with me because I made the meetings go on even longer. After a few months, they stopped sending me invitations," he said.

The breakdown in self-management has been reflected in an increase in the number of wildcat strikes, theoretically a contradiction in terms when the factories are owned by the workers. Recent strikes have taken place at the Stari Trg zinc mine in Kosovo and the dockyards in the Slovenian port of Koper.

Most strikes are settled fairly swiftly after the "elected" management promises to improve pay and working conditions. In Koper, however, there were reports of local "self-defense committees" invoking "emergency measures," including firing or demoting 23 strike leaders.

As Yugoslavia has run into economic difficulties, interest abroad in self-management seems to have declined. A few years ago, delegations arrived regularly from countries such as China to analyze the Yugoslav experiment and see what could be learned from it. These days, many Yugoslavs say they have fallen behind China in ideological inventiveness.

In recent years, Yugoslav politicians have become more modest in their claims for self-management, no longer speaking about it in quite the same visionary terms as before Tito's death. Little attempt is made to suggest that it is an ideal ideology, merely that it happens to be suitable for Yugoslavia with its decentralized political system and many different ethnic groups.

Asked whether Yugoslavs really believed in their system -- in the way, for example, that most Americans believe in the merits of capitalism -- former prime minister Mitja Ribicic replied diplomatically: "Well, they believed in it more when things were going more smoothly."