Document de Recherche n° 2010-27 « Bulgarian Economists during The Great Depression » Nikolay NENOVSKY Laboratoire d'Economie d'Orléans – UMR CNRS 6221 Faculté de Droit, d'Economie et de Gestion, Rue de Blois, B.P. 6739 – 45067 Orléans Cedex 2 - France Tél : 33 (0)2 38 41 70 37 – 33 (0)2 38 49 48 19 – Fax : 33 (0)2 38 41 73 80 E-mail : [email protected] - http://www.univ-orleans.fr/DEG/LEO BULGARIAN ECONOMISTS DURING THE GREAT DEPRESSION. NIKOLAY NENOVSKY LE STUDIUM, Associated Researcher at LEO (University of Orleans) and ICER E-mail: [email protected] June/September 2010 Orleans/Sofia . The paper was written during my stay in Orleans, Le STUDIUM (2010). Parts of the earlier versions were presented and discussed at Intenrational conference in Corfu, Greece, organized by Alpha Bank, September 2010, and at University of Orleans reserche seminar in Ocrober 2010. The discussions and comments with many researchers were very fruitful and helpful for completing the study. Summary: The history and analysis of the theoretical discussions and policy interpretations of Bulgarian economists during the Great Depression has rarely been an object of study. I present my views on two main issues. The first deals with the question of how the Bulgarian academic community interprets the Great Depression, in what theoretical models Bulgarian economists think and the practical solutions they offer. The second issue is concerned with identifying the main channels, the main factors leading to the formation of these models and of the Bulgarian knowledge of crises and depressions. The paper is organized in six chapters. The second one offers a brief survey of the Bulgarian economy prior to the Depression. The third, respectively, presents the Bulgarian economic thought on the eve of the Depression grouped in five intellectual traditions. In the next chapter we present two main models of interpretation of the Great Depression (cyclical and structural), as well as different forms of the structural model (“German planning”, “Keynesian discretion”, or “Marxian revolution”). The last two sections explain the evolution of economic thinking following the main phases of the crisis (deflation and agrarian crisis; monetary and banking crisis, and, finally, administrative economy within the German zone). In the final section we discuss the specificities of the Bulgarian interpretations of the Great Depression and provide some concluding observations. Résumé: L'histoire de la pensée économique bulgare des années trente, l’analyse des débats théoriques et de la politique économique pendant la Grande Dépression ont rarement été l’objet d'étude. Dans ce papier je présente mes réflexions sur deux questions principales. D’abord, de savoir plus sur comment la communauté universitaire bulgare a interprété la Grande Dépression, dans quels modèles théoriques des économistes bulgares ont pensé et quelles solutions pratiques ils ont offert. Ensuite il s’agit d'identification des canaux et facteurs principaux conduisant à la formation de ces modèles théoriques. Le document est organisé en cinq chapitres. La première offre un bref aperçu de l'économie bulgare avant la Dépression. Le second, respectivement, présente la pensée économique bulgare à la veille de la Dépression, regroupée en cinq traditions intellectuelles. Dans le troisième chapitre, je propose deux principaux modèles d'interprétation de la Grande Dépression (conjoncturels et structurels), ainsi que les différentes sous-variantes du modèle structurel («la planification à l’allemande», «discrétion keynésienne», et «révolution marxistes»). Les deux dernières sections expliquent l'évolution de la pensée économique en fonction des principales phases de la Depression (la déflation et la crise agraire, la crise monétaire et bancaire, et, enfin, l'économie administrative au sein de la zone allemande). Finalement, dans la conclusion, je discute les spécificités des interprétations bulgares de la Grande Dépression. Key words: history of economic thought, Great Depression, Balkans economies, Bulgaria JEL codes: B 10, B 20, B30, N13, N14, G01 2 I Introduction The history and analysis of the theoretical discussions and policy interpretations of Bulgarian economists during the Great Depression has rarely been an object of study. There were some researches during the socialist period within the confines of the so-called Marxist political economy which, although useful, are for their greater part marked by certain ideological clichés (see Nathan and Berov, 1958, chapter XI; Grigorov, 1960; Nathan, 1964; Nathan and al, 1973). In the post-communist period Rumen Avramov (2007) analysed different aspects of Bulgarian economic thinking when analysing Bulgarian economy in a long-run historical perspective and Martin Ivanov (2001, 2005) when discussing the interwar economic history and foreign debt issues. The only especially dedicated publication on Bulgarian economic discussion of the Great Depression is by Stefan Kolev (2009) who addresses the main points of discussions and shows the main protagonists in them. His article gives a range of starting points for new research and new interpretations. Stefan Kolev draws a parallel with the theoretical discussion in Bulgaria today, stressing, however, the higher training and lore of Bulgarian economists of that time and their detailed and original analyses as compared to the almost missing or very poor analyses of Bulgarian scholars today1. My ambition is to elaborate and present my views on two main issues. The first issue deals with the question of how the Bulgarian academic community interprets the Great Depression, in what theoretical models Bulgarian economists think and what practical solutions they offer. And most importantly, what makes them gradually realize the structural characteristics of the crisis, and what is the socio-economic model in which they see the future state of the economy. This is achieved by elaborating typical elements leading to their theoretical and practical models and emphasizing the specific Bulgarian interpretation of depression and the contribution of the Bulgarian economists. 1Although this is a topic for a different discussion, I hold to say that I fully share this opinion, and so we are at least two of us. A comparative analysis of the debates on the crisis during the Great Depression and today’s depression is made by Nenovsky (2009). 3 Second, to identify the main channels, the main factors that lead to the formation of these models, of the Bulgarian knowledge of crises and depressions. The first channel touches primarily on the role of the economic and social reality, the economic, political and social problems of the Bulgarian economy in that period. The second main channel concerns the sources of intellectual and theoretical concepts that form the theoretical baggage of Bulgarian economists, the schools and ideas that influenced them, and how this happened. Such theoretical investigation could give information and ideas of how economic knowledge is formed in general and in peripheral countries in particular. This could help us judge about the value of knowledge and the role of small and peripheral countries for the development of economic science. Of course, that would require a huge archive, as well as considerable historiographic and analytical work. To begin with, in my view it makes sense to distinguish between two basic, figuratively speaking, inward information channels or driving forces that shape the Bulgarian economic thought in this period. The first one we could call a channel of the socio- economic reality and problems facing Bulgaria and world economy, which is external to scientific thought. The second – a cognitive channel – relating to the evolution and transmission of economic thought itself. In the first case, economic theory either forestalls or lags behind the needs of a historical period, of economic problems and tasks. In the second case, it is a self-regulating system with its own internal diffusion and evolutionary mechanisms, or it has to do with the formation and dissemination of knowledge as such2. Within the second, or cognitive channel, we can differentiate between two sub-channels, which shape the Bulgarian economic thought, namely, one – coming from the past – from the inertia of economic knowledge and theories of crises already presented in Bulgaria (mainly classical, Marxist, and subjectivist school), and yet another – coming from outside 2 One note is appropriate here. The indicated scheme of the two major channels clearly reveals some similarities with Marx’s idea about the dialectics of the base (production or economic relations) and the superstructure (economic theory is part of the superstructure), with the base playing a leading role and the superstructure having some autonomy, etc. All the more so that a number of studies on thought place a different stress on “the role of economic environment on economists” (Gide and Rist (2000 [1944]), IX), or the opposite direction of influence – of economists’ ideas on economic environment (Keynes is one such example), and of a more complex view – Schumpeter (1983 [1954]). The above differentiation holds also similarities to the methodological interpretation of Riccardo Faucci’s History of Economic Thought, who distinguishes external (exogenous) interpretation, from the perspective of environment, and internal (endogenous) history, through the perspective of theory itself. Both views on thought have their weak points. With the first, one could fall into relativism