EKIP– Expert Club for Economics and Politics A Different Opinion
The economic bankruptcy of socialism has long been convincingly proven by Ludwig von Mises and Friedrich Hayek. In the absence of private ownership of the means of production, there is no market, and without a market, money prices cannot be formed. Without prices, rational production, construction, etc. cannot be organized. Apart from this, it is impossible for the bodies that manage the economy to collect, process and send to the various production units all the information about the needs for raw materials, materials, machines, etc. The arguments of Mises and Hayek are solid and correct, but this in no way prevents the attempt to build a socialist economic model. An additional theoretical difficulty for the creation of such a model is the fact that Karl Marx does not give any instructions on how to organize a socialist economy. And for true communists, Marx's writings are the beginning and end of all knowledge.
Imposing the Stalinist economic model in Bulgaria.
The Bulgarian communists in power are not troubled by such theoretical conundrums. They build their economic model by closely following the advice and principles that come from the big socialist brother in Moscow.
Private property and market mechanisms were abolished or severely restricted. This did not happen all at once, but by the end of the 1940s the process was complete. The offensive against private property, in various forms, began in the autumn of 1944. Property of those convicted by the People's Court (established to try the rulers guilty of Bulgaria's involvement in World War II on the side of Hitler's Germany) or property believed to have been acquired through speculative activity was confiscated. In 1946, the insurance business was nationalized, and the following year a state monopoly on foreign trade was established. The logical end of this process was the adoption of laws on the nationalization of industrial enterprises, mines and banks in December 1947. Over the next two years, about 7,000 enterprises were nationalized, most of them small. Later, nationalization also covered large urban property.
Strategic economic decisions are made by the highest party bodies. Through central planning, the party-state allocates resources and directs economic development according to its own vision of building an industrial society. Central planning is established as the main lever for economic growth. A bureaucratic system of party-state institutions has been built, which exercise leadership and control over the socialist economy. The main indicators and goals of economic policy are laid down in five-year plans, which are adopted at party congresses. They primarily adopt quantitative growth indicators.
Bulgaria was deprived of even the formal signs of economic independence. The USSR cruelly suppressed all attempts to build an economic system with national specificity. In 1949, the prominent communist activist Traycho Kostov was executed, who timidly tried to oppose the total economic subordination of the country by the USSR. For similar reasons, the Minister of Finance Ivan Stefanov, the Governor of the Bulgarian National Bank Ts. Tsonev and other prominent business figures were later convicted. Until 1956, economic advisors from the USSR were appointed to the main economic ministries of Bulgaria, who tacitly managed these institutions.
The private savings of the population were also affected. This was done with two monetary reforms. The first was carried out in March-April 1947. The old banknotes were replaced with new ones. Citizens were allowed to exchange 1 old lev for 1 new one, but only for amounts up to 2,000 levs. All funds above this amount were kept as a deposit in a bank and were exchanged at a ratio of 4 old levs for 1 new one. The reform shrank the money supply, but also liquidated a large part of the savings of the population, thus reducing its purchasing power. The second monetary reform was carried out in May 1952. The official exchange rate for old to new levs was 100 to 4, but it was applied to the recalculation of the cash and assets of state and cooperative enterprises. The exchange of available old money for new money for citizens takes place at a rate of 100 to 1. When exchanging money that is on deposit in a bank, a ratio is also applied that reduces part of the savings.
Collectivization of agriculture
Immediately after September 9, 1944, the first attempts at socialist restructuring of agriculture were made. Their essence consisted in the state forcing peasant owners to enter into Labor Cooperative Agricultural Farms (TKZS). The rulers believed that through this type of cooperation, the fragmented farms would be consolidated and, as a result, productivity in the sector would increase. Agricultural cooperatives were subject to easier state control, they made it possible to extract resources from agriculture and redirect them to other sectors of the economy. In 1945, as a result of pressure from local structures of the Communist Party on farmers, 400 new TKZS were created with approximately 950,000 decares of land. The action was stopped, since the communists had not yet consolidated their power in the country.
In 1946, an agrarian reform was carried out. Private agricultural lands over 200 decares were expropriated for a fee (over 300 decares for Dobrudja). The formed state land fund also included lands of commercial and industrial enterprises, state lands, municipal pastures, etc. From this fund, over 530,000 small-property rural households were subject to land acquisition. By the beginning of 1948, 135,000 households received about 1,300,000 decares of land. This reform fits into the tradition from the time of the independent management of the Bulgarian National Socialist Union of Farmers (1920-1923). It was more politically motivated than economically motivated and did not change the small and fragmented nature of Bulgarian agriculture. In addition, very soon the peasants who received land were forced to enter the TKZS.
The pressure to massify collectivization was renewed in 1948. Laws effectively nationalized large agricultural equipment, and private leases were also abolished. The most important means of forcing peasants to enter the TKZS was the system of mandatory state supplies. Under it, a large part of the production of private farms was seized by the state and paid for at negligible prices. Many rural households were forcibly deprived of even the means of subsistence. Some were forced to buy grain, milk, etc., in order to hand over state supplies. The so-called kulaks or wealthy peasants were subjected to particular pressure. Some of those who resisted collectivization were interned in the camp in Belene. As a result of the enormous state pressure in the autumn of 1950, collectivization accelerated. By the end of 1951 it covered 52% of rural households and just over 60% of arable land. Forced collectivization was temporarily suspended on Stalin's explicit advice in 1952.
The last wave of collectivization began in 1956 and lasted until the end of 1959. 95% of rural households entered the TKZS. With the end of collectivization, the consolidation of cooperative farms began. Thus, within approximately a decade, the socialist restructuring of agriculture was carried out. It was associated with a violation of the principle of voluntariness, which is the basis of the cooperative movement and leads to the alienation of the peasant from the land, which leads to a decrease in interest in the quality and quantity of the produced products. Collectivization of agriculture is not a mandatory part of the socialist economic model. Such a thing was not implemented in Poland and Yugoslavia, but Bulgaria closely followed the example of the Soviet Union.
The abolition of private property, the forced collectivization, to the greatest extent alienated Bulgarians from labor and the values associated with it. Although primitive and often poorly effective, conscious labor is among the specific features of the Bulgarian peasant. Even the farmers imprisoned in the Belene concentration camp as opponents of collectivization, fulfill the inflated labor standards, guided by the conviction that when one works, one must work truly, regardless of the violence exerted against them. Because even labor in itself is a value. Without the existence of private ownership of land, within a few decades this value was successfully destroyed.
In the years after the end of collectivization in agriculture, production increased in volume, but its constant characteristics were the waste of raw materials, materials and finished products, low-quality production, long downtimes for machine repairs, organizational problems, etc. Through administrative decisions and pressure from the central government, measures were taken that were not tailored to the specifics of Bulgarian agriculture and thus often caused harm instead of benefit. The low efficiency of investments casts doubt on the economic sense of the changes in agriculture.
Agriculture gradually ceased to be the main sector of the Bulgarian economy. It was rapidly industrializing. It is precisely to industrialization and the overall results of the so-called socialist economic modernization that we will pay attention in the next publication about Bulgarian socialism.
Image source: socbg.com
