EKIP– Expert Club for Economics and Politics A Different Opinion
Industrialization is one of the visible dimensions of the economic and social modernization experienced by advanced capitalist societies in the 19th century. The process of the emergence of industrial structures is a complex result of relative intellectual, economic and scientific freedom, security of private property and appropriate institutional arrangements. The communists place industrialization among their main economic goals. However, they miss the necessary conditions for its implementation. For them, state-implemented industrialization would prove the possibilities of the socialist economic model for accelerated development. The results of socialist industrialization, quite understandably, are very different from those expected.
The practical implementation of socialist industrialization in Bulgaria began in the late 1940s. It was planned and closely tied to the guidelines coming from the Soviet Union. Initially, Bulgaria directly followed Stalin's absurd concept of building an autarkic economic model. This meant that the country's economy should produce everything it needed to the maximum extent possible. Subsequently, Bulgarian industrialization was permanently tied to the secure and unpretentious markets of the other socialist countries, organized in the so-called Council for Mutual Economic Assistance. Bulgaria was to the highest degree isolated from contact with the international markets of capitalist countries. This isolation negatively affected the manufactured products, which turned out to be of relatively low quality and high price.
Bulgarian industrialization during the socialist period included the construction of numerous industrial enterprises in various sectors. The following can be mentioned: the Chemical Plant in Dimitrovgrad, the Metallurgical Plant "Kremikovtsi", the Metallurgical Plant "Lenin" in Pernik, the Nitrogen and Fertilizer Plant, Stara Zagora, the Soda Production Plant "Karl Marx", Devnya, etc., etc. The listing of industrial sites built during the socialist period creates the impression of enormous progress. A more detailed look at the condition, functioning and production of socialist enterprises quickly changes the first impression. A recent study revealed the extremely high rate of industrial injuries in industry. In 1986 alone, 486 fatal occupational accidents were registered in the country, and this is far from the worst year. It is no exaggeration to say that the Bulgarian socialist industry kills.
MK "Kremikovtzi"
The overall picture of the Kremikovtsi Metallurgical Plant is indicative of the serious shortcomings of socialist industrialization. Its construction began in 1960. The first capacities of the plant were officially opened on November 5, 1963. In the following years, new structural units were opened and by 1989 the plant consisted of 15 divisions. The number of employees exceeded 20,000 people in the 1970s and 1980s.
The archival documentation of "Kremikovtsi" shows that from the very beginning of its work, serious problems can be found, which remain unresolved until the end of the socialist period. The deadlines for putting the individual production units into operation were not coordinated and often not observed. This leads to the production of semi-finished products that are too expensive and unnecessary for the Bulgarian economy. In addition, other chronic shortcomings are noted: the postponement of repair and restoration work, insufficient provision of spare parts, transport difficulties, shortage of transit and ferry wagons, etc.
The plant suffers from a lack of labor. There are many reasons, but the most important of them are: difficult working conditions, lack of housing, unregulated transport, etc. A constant problem is the low qualification and low interest of workers in the results of their work. Since the late 1960s, several reports have been preserved on the quality of production and on violations of technology and defects in Kremikovtsi. They state: poor organization of work in individual units, frequent downtime, inconsistent quality of cast iron, poor quality raw materials, irregular supply of raw materials, with the latter being loaded into contaminated wagons, which in turn has a negative impact on quality, etc.
The financial results of the work of MK “Kremikovtsi” show that by 1989 the enterprise was on the verge of collapse at least twice. In 1974, the financial situation of Kremikovtsi reached a critical point. The archival documents state that in the first and last quarters of the year the plant was insolvent. Bankruptcy was avoided with financial assistance from the state. However, in the early 1980s, the situation repeated itself. In the annual Report on the business activity and economic situation of the plant for 1981, it was noted that it “was in financial difficulty and impaired solvency throughout the year”. There was no change in the situation for 1982. The state again helped with subsidies and other funds. However, the information about the poor financial situation of the enterprise continued until 1989. They were obviously systemic and could not be overcome. Support from the central government cannot be endless either, because there are many enterprises similar to Kremikovtzi.
The debt crises of the 1960s and 1970s
The machinery and technology used in Bulgarian industry are Soviet, which often means that they are far from world standards. When equipment is purchased from capitalist countries, Bulgaria is forced to pay with its limited reserves of convertible currency or take out loans that prove extremely difficult to service. The country's debt increases to the point that in the early 1960s it faces bankruptcy. Bankruptcy was avoided by the sale of 23.5 tons of the BNB's gold reserves. This was carried out between 1962 and 1964. By the end of 1964, the BNB's gold reserves were only 2.1 tons. The first debt crisis of the communist regime was a consequence of the lack of competitiveness and export potential of the Bulgarian economy.
In the 1970s, the scenario repeated itself. From 1973 to 1978, the country's foreign debt grew rapidly, from 1.254 billion foreign currency leva to 6.083 billion. Western banks lent money to Bulgaria because they counted on the USSR to resolve any problems with debt servicing. By 1976-1977, the situation with Bulgaria's foreign debt became untenable and for the second time the communist regime was threatened with bankruptcy. The intervention of the USSR was crucial in overcoming the second debt crisis. After a personal meeting between T. Zhivkov and Soviet leader L. Brezhnev, significant supplies of cheap oil were secured for Bulgaria, high prices were guaranteed for Bulgarian exports to the USSR, etc. Bulgaria re-exported the oil it received from the USSR, which was sold at international prices - i.e. significantly more expensive than the price at which it was delivered. With the foreign exchange earnings received, the country managed to overcome the external debt crisis, which began to steadily decrease until 1984.
The Bulgarian economy entered a new debt spiral in the second half of the 1980s, and this time it ended with the de facto bankruptcy of the socialist economic model in 1990.
Everyday life
The macro-characteristics of the Bulgarian socialist economy directly affect the everyday life of ordinary people. It is hampered by constant shortages of various consumer goods. It is not that everything is constantly lacking, it is simply that at one moment some goods are lacking, at another there are insufficient supplies of others. The situation is well illustrated by the words of the Bulgarian-French intellectual Tsv. Todorov – “ Everyone goes out with a bag in the morning, but does not know what to fill it with: everything is so hard to find that you buy products when you find them, not when you need them. You go out to look for onions, you find nails: you buy them”. Added to this are the long waits for the purchase of a new car or home, the electricity regime in the 1980s, in which the electricity supply for household subscribers was limited during a certain period (for example, there was electricity for two hours, then there was no electricity for two hours). Constant shortages give rise to massive and widespread corruption. In (secret) sociological surveys again in the 1980s, it was found that almost 77% of respondents stated that bribes exist everywhere in our country.
The ruling communist party is trying to solve the visible economic problems with various half-hearted reforms. Since the late 1970s, a policy has been resorted to, officially defined by the ambiguous term self-sufficiency. Part of the total production of agricultural goods is allowed to be carried out on private farms. The state government allows for private economic activity in some marginal service sectors. This in turn gives impetus to the use of state machines, tools and other assets for private benefit. In conditions of deficit, a specific type of entrepreneurship is born, it is focused on services, trade, illegal currency exchange, production of various goods for mass consumption that cannot be produced by socialist industry. These entrepreneurs are a rather perverted form of classical entrepreneurship, because they exist in conditions of state-created deficits. Many of them like the centralized socialist economy because it guarantees them a secure and permanent clientele.
The overall results of the socialist economic model are not impressive. Bulgaria remains poor even compared to other socialist countries in Eastern Europe. The regime that ruled in the name of the people put the citizens of Bulgaria in the humiliating position of dreaming of the most elementary material goods.
