Is Adam Smith leaving Bulgaria?

Recently, the prophecies that capitalism is going away have become more and more frequent. One of the most profound researchers of capitalism is Adam Smith. Therefore, it is worth checking to what extent his ideas are accepted and/or rejected by Bulgarians. This way we will assess whether he, and with him capitalism, are going away from Bulgaria?

Adam Smith (1723-1790) was a Scottish moral philosopher and economist. His most famous work is The Wealth of Nations. In it, economic growth is explained by the division of labor. The division of labor, in turn, stems from a person's innate tendency to "exchange, substitute, and barter one thing for another," and measures to expand the market promote the further division of labor and, therefore, the enrichment of all. Adam Smith's intellectual legacy is not limited to the presented model. It encompasses many elements of economic and social organization, economic history, relations between people, public finances, etc.

What and when did Bulgarians accept from Adam Smith?

Adam Smith draws attention to the important role of capital in the emergence of successful and wealthy bourgeois societies. According to him, a population that supports itself from industry and trade, i.e. from the application of capital, is prosperous and wealthy. And capital “grows as a result of thrift and decreases as a result of waste and dissoluteness”. Even before the Liberation, this thought of Adam Smith was widely spread among Bulgarians. It became an alphabetical truth for every educated person. For example, in the first new Bulgarian textbook “A Primer with Various Teachings”, published in 1824 and prepared by Petar Beron, we find the following recommendation to young Bulgarians: “If you do not save, you will soon become poor”. The textbook is not an original work, but a translation from Greek. It is unlikely that even the author of the original used Adam Smith. However, apparently, the idea of thrift as a way to accumulate capital was accepted in Bulgarian society. Advice on thrift became an integral part of the content of other popular pre-liberation textbooks. They revealed one of the main ways in which bourgeois ideology and practice penetrated Bulgarians and contributed to their revival.

Adam Smith was among the first critics of the outdated, but still popular today, concepts of mercantilism such as bans on the import and export of certain goods, etc. He was a supporter of free trade, without completely rejecting the importance of tariffs. One of his important findings concerns the consequences of the ban on the export of wheat. According to him, it limits the cultivation and improvement of the land, while freedom of export works in the opposite direction – it encourages cultivation and improvements. In the Ottoman Empire, until 1838, the export of wheat was prohibited, i.e., no wheat was exported from Bulgarian lands, and as Adam Smith predicted, agriculture was primitive and low-productive. In the same year, the empire concluded a trade agreement with Great Britain, under which the bans on the export of grain were abolished. Later, similar agreements were signed with other countries. Wheat is a major product of Bulgarian agriculture, and through these agreements the market for Bulgarian producers expanded. Wheat exports increased, a number of Bulgarians became involved in export trade. The first Bulgarian large merchants and entrepreneurs appeared. And they were the main drivers not only of economic, but also of cultural and political modernization during the era of the Bulgarian Renaissance.

After the establishment of the Bulgarian Principality, some of Adam Smith's liberal ideas were woven into the Tarnovo Constitution. More importantly, however, part of the Bulgarian intelligentsia also adopted concepts whose origins can be traced back to the Scottish economist. Thus, they were imposed on the life of the country. A. Smith emphasized the importance of personal interest in economic activity. In 1895, the literary critic Dr. Kr. Krastev wrote that in their actions "mere mortals are guided by their interests" and that over time, under this system, conditions would be created "so that everyone would have more to do with being honest than with being dishonest." Adam Smith noted the need for a judicial branch that was independent of the executive branch. In this way, there was no danger of justice being sacrificed to politics. In Bulgarian society in the decades after 1878 By the 1920s and 1930s, albeit slowly and with many difficulties, a relatively independent and competent judiciary was established. It became a guarantee of individual freedoms and security.

What of Adam Smith's ideas are rejected by Bulgarians?

Adam Smith was not an anarchist, but he subjected the importance of state structures to critical analysis. He found that very often more harm than good results from them. First of all, the work of officials in state structures is unproductive. This does not necessarily mean harmful, but a careful and unprejudiced assessment of the social harm or benefit of each type of unproductive work is necessary. The growth of wealth could occur as a result of the disruption of the “natural course of things” by human institutions. Smith's opinion is that great nations never become poorer from the extravagance of private individuals, but they do happen to become poorer from the “extravagance and unreasonable actions of the state”. For this reason, the claim of monarchs and ministers to limit the expenses of private individuals is defined as “the greatest impertinence”. Adam Smith is extremely skeptical of public debts. Without any qualifications, he states “The practice of public debts has gradually weakened every state that has adopted it”.

Bulgarian reality shows numerous examples of disregard and rejection in practice of the principles defended by Adam Smith. In the first years after the Liberation, Bulgarian statesmen resorted to external loans, which were very often used unwisely. For the majority of the Bulgarian intelligentsia, the state became an instrument for achieving all sorts of goals, as well as a source of employment and salaries. In 1902, P. Germanov, who was the head of scientific and statistical research at the Ministry of Trade and Agriculture, noted that for poor and underdeveloped countries it was particularly harmful and dangerous to view the state as an “omnipotent being” that could do anything. However, this very principle imposed itself in Bulgarian reality. P. Germanov stated that Bulgarian statesmen had thrown the country “into the whirlwind of state socialism”. This also contained “the greatest political and economic danger for our young state”. At the end of the 19th century, Dr. Krastev also noted that in Bulgaria there was "an administrative staff, lazy, wasteful, pretentious and lavish."

Adam Smith categorically warns of the danger of gathering representatives of the same "craft". Their conversations always turn into some form of conspiracy against the public (consumers). Bulgarian reality, especially in the second half of the 1930s, sees the consequences of the abolition of markets, the gathering of representatives of the same "craft" and the rapprochement of these representatives with people in political power. Obtaining profitable orders or the opportunity to make profitable deals occurs through the mediation of political power, when paying significant bribes, which are subsequently "knocked out" by reducing workers' wages. The state creates privileged monopolies that stop private initiative, ruin the commercial system and give scope to bureaucracy. For every enterprising young person, there are much more real incentives to turn to state and municipal administration and avoid employment in the private sector or in entrepreneurship. The monthly income of the owner of a medium-sized store in the capital is equal to the salary of a civil servant. The civil servant has no conflicts with tax authorities, suppliers, clients, etc. However, civil service also has its price. In practice, in the 1930s, all administrative positions in Sofia were given out for bribes and through intercession. It seems that in Bulgarian society, even before private property was completely abolished, it was believed that it was not needed.

Where to in the end?

During the long communist night from 1944 to 1989, Adam Smith's principles for a good economic and social order were almost completely forgotten. Even then, there were sensible economists like Prof. Georgi Petrov who advocated the restoration of a market economy and its combination with state ownership of the means of production. People with such convictions are a minority and experience a number of difficulties in substantiating their concepts, but their activities give reason to believe that Adam Smith did not leave Bulgaria. After the collapse of the communist experiment, the old practice of simultaneously accepting and rejecting it was restored for 30 years.

In the conditions of a pandemic, it is worth recalling a paradoxical detail - Adam Smith considers the work of doctors to be useful, but unproductive. And in order to continue the evolutionary path of slow and difficult development, one must produce. If we follow Adam Smith's logic, the conclusion is that it is not enough to listen only to doctors. This is how we arrive at the answer to the question in the title. It is not yet clear whether Adam Smith is leaving Bulgaria. Where he will go depends on the choices that each of us makes every day.

Did you like it? Take a minute to support the EKIP on Patreon!