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Author: Stoyan Bochev


Bulgarian Economic Thought in Years of Depression 1929-1939

So far we have presented the evolution of Bulgarian economy and overall political and institutional setting of the country since the wars. They determine the major issues facing economic science and subsequent economic policy during the Depression. These issues, however, require a certain baggage of economic and social knowledge, as well as a theoretical and intellectual stock of lore and methodology. Hence the question of the state of Bulgarian economic thought at that time and the main schools and methods which held sway on our economists.

In fact, Bulgarian economists were not at all many and mainly concentrated in Sofia, Varna and later Svishtov, where Higher Schools of learning were located and also in some state institutions such as the Bulgarian National Bank, Ministry of Finance, National Statistics Institute and some private banks. Especially active was the Bulgarian Economic Society (established in 1895 and closed in 1949), which acted as centre of numerous discussions and issued its own monthly Journal of Bulgarian Economic Society (JBES) — Spisanie na balgarskoto ikonomichesko drujestvo (10 booklets per year) released for the first time in 1896. In 1935 with the help of Rockefeller Foundation, the Statistical Institute for Economic Research at the Sofia University was established (with Oskar Anderson as its director) which became a major centre of quantitative and business cycle analyses of Bulgarian economy and brought together many talented young Bulgarian economists.

If we try to group Bulgarian scientists according to the Economic Schools to which they belong, with all accompanying conditionality, five groups emerge:

— The first group (A) comprises the older generation economists (Georgi Danailov, Boncho Bonev, Alexander Tsankov, Andrey Lyapchev, Yanaki Mollov), immersed in and sharing the liberal theoretical postulates of the classical political economy, with some admixture of influence from the German historical school and an inclination to periodization of economic evolution, evolutionism, historicism, etc. Most of them graduated economics and law in Germany or Russia. The classical school was perceived in through the prism of its German variant or the Russian interpretation, which is characterized by different types of syntheses (such as Mikhail Tugan-Baranovsky, Peter Struve and others). These economists were involved in economic policy and state affairs from very early. They view the government as an important economic actor, although theoretically they do not ask themselves why it should be so. One interesting statement by Lyapchev goes like this: “Probably Geshov’s practice could have been luckier, had he not succumbed to the historical school in political economy, because by assigning too much significance to individual events the weaker minds are misled to such an extent that they lose hold of natural common sense and start using in their practical activities parallelisms instead of casting light on the path by way of general principles.”

This statement of Lyapchev speaks more of his views on the method, and less of Ivan Evstatiev Geshov’s outlook (1849-1924), whose leanings are less toward the historical school than to classical political economy. Based on recollections of Geshov himself, he was under the strong influence of John Stuart Mill, and even attended Jevons’s lectures during his long stay in England.

Later, most of the economists from this group are under the influence of the marginalist school, which quickly spreads across Europe. This, however, happens through other theories and a number of theoretical syntheses (such as that of Tugan-Baranovsky who combines elements of the labour theory of value and the theory of marginal utility. If we need to express this in figurative terms, in microeconomics these scholars are proponents of the classical school, while in macroeconomics and in economic policy they follow the German historical school. Accordingly, these positions kept them away from having a special theory on crises and depressions as such issues were rarely an object of the theories they shared, while it was in general assumed that economy is self-balanced. Of course, most of them were familiar with the ideas of crises proposed by Sismondi, Malthus or Marx, but these were seen more as a departure from the common rule.

— The second group (B), which I would qualify as close to the previous one, consists of the more prominent proponents of the historical school, the theory of protectionism and the role of state, although they share as a whole the principles of liberal economy. These are scholars, in whose economic theories the classical theory component diminishes, starting earlier and at a much faster speed. Most of them graduated in Germany (not all of them though), to mention a few such as Konstantin Bobchev, Georgi Svrakov, Stephan Bochev, and Kiril Nedelchev. According to Kiril Nedelchev: “Late Prof. Werner Sombart would often stress in his lecturing that the goal of the economic science is to teach us think economically and that nothing is more dangerous than our wish to apply in its entirety pure theory into practice. There is no such thing at all as an eternal, fixed and best economic system. In life, that is practice, everything is relative and evolutionary; therefore in the field of political economy every phenomenon should be regarded as something new and transient, i.e., the general economic principles are limited in time and space. Hence, the conclusion that when resolving economic tasks one needs account for the conditions existing in a given place and at a given point of time. Bulgarian economy also has its specific conditions, which we should at all times bring to the foreground when examining our economic tasks.”

The above two groups of economists (A and B) look highly upon Werner Sombart, particularly in the last phase of his creative development when he proclaimed the so-called directed, planned and social economy, organized a visit to Bulgaria in the period 25 October - 2 November 1932 and had numerous translations of his works (Sombart, 1932, 1935, 1938). The same group of economists (notably K. Bobchev) organized the visit of the Romanian professor and politician Mihail Manoilescu in 1933, founder of an original theory of protectionism. It would be curious to note that Georgi Svrakov, despite the strong influence of Sombart, is the most exhaustive and accordingly prime promoter of the ideas of Keynes and his “General Theory of Money” (1936).

— The third group of scholars (C) are entirely proponents of the subjectivist school and methodological individualism in its Austrian variant, and they consistently apply its methodology (Simeon Demostenov, Dimitar Mishaikov and Naum Dolinsky, at least in the beginning). Naum Dolinsky reviews Boris Bruzkus’s book “Die Lehren des Marxismus im Lichte der Russischen Revolution” issued in German in 1928 in Berlin, which was later on popularized and issued with a foreword by Hayek, who expounds the fundamental economic infeasibility of building planned economy and socialism in Russia. Dolinsky showed the relationship of the book with Ludwig Mises (“Gemeinwirtschaft”, 1922) and Peter Struve’s ideas (“Economy and price”, 1913). Most of the authors in group B, especially Demostenov and Dolinsky, virtually do not take part in the practical life and remain armchair scholars. As to crises, while not presenting special studies, they nevertheless share the approach of the monetary explanation of overinvestment and bad investment, which is genetically induced from the types of goods and the structure of the investment process (these theories are developed by Ludwig Mises, Friedrich Hayek and other German and British economists).

— The fourth group of scholars (D) is mostly comprised of a younger generation, who could conditionally be called monetarists and quantitative economists (Slavcho Zagorov, Asen Hristophorov, and Asen Chakalov). For their greater part they are under the influence of quantitative methods and the newly emerged business cycle analyses. Asen Hristophorov is among the few Bulgarian economists who studied in an English university (London School of Economics, 1931- 1934) and who fell under the influence of economists in the vanguard in the field of monetary theory and economic cycle (Hawtrey, Pigou, Canon, and later Keynes). Through Hayek, who was in that period very popular in England, he also took many ideas of the cycle from the Austrian school, which he applied at a later stage in relation to war economy and in analyzing the role of central bank monetary discretion. Slavcho Zagorov, who studied in Germany and was for a period of time director of the Bulgarian Statistics Institute, was in correspondence with the leading econometricians of that period and published an article about the prices in USA in the "Journal of Political Economy" (1934).

The above economists, under various forms, are under Oscar Anderson’s (1887-1960) influence in business cycles economy. The Institute ran by him was visited by famous economists, specialists in conjunctural analyses. Oskar Morgenstern, for instance, held two lectures on 2 - 3 April 1935 (Morgenstern, 1935, 1936). The famous Russian economist and white émigré Peter Struve, who worked in Belgrade at that time and was not exactly specialist in business cycles, also had to hold a lecture on the topic (Struve, 1937). To the majority of economists belonging to this circle the problems of the crisis genetically relate to those of the cycle; the crisis is a phase of the cycle; crises are not fundamentally structural; they are not systemic and can be understood and analyzed in quantitative terms (by means of constructing a set of indices trough different statistical techniques). Certainly, the strong influence of the new German theories of directed economy and Bulgaria’s inclusion into the German economic zone can not but impact these publications and analyses.

— The fifth group (E) includes the adherents of Marxism in its more orthodox forms, such as Karl Kautsky, Rosa Luxemburg, Lenin’s theory of imperialism, or Hilferding’s financial capitalism. A prominent figure here is Dimitar Blagoev (1856-1924), founder of Marxism and first translator of “Das Kapital” in Bulgaria. Among the names in this group we could mention Vasil Kolarov, Hristo Kabakchiev, Georgi Bakalov, Georgi Dimitrov, and Todor Pavlov, although most of them are not professional economists, but mainly jurists or political figures associated with Soviet Russia. In 1933, during Werner Sombart’s visit to Sofia, Ivan Stefanov (under the pseudonym V. Borisov) and Jacques Nathan (pseudonym B. Kamenov), Sava Ganovsky (pseudonym Trudin) published a critique of Sombart from the standpoint of Marxism. These economists have thorough knowledge of Marx’s theory of value and added value, its laws of the economic and social evolution and formations, productive forces and relations of production, foundation and superstructure, and class struggle. They were familiar with Rosa Luxemburg’s new studies on capital accumulation and Vladimir Lenin’s works on imperialism and his theory of the general crisis of capitalism. The crises in this model are seen as a genetic extension of the contradictions of capitalism expressed in a concentrated form as contradiction between “the social character of development of productive forces and the private capitalist mode of appropriating goods,” between overproduction and under-consumption of workers who do not obtain the full product of their work, as well as the increase of the organic composition of capital and the different types of disproportions between subdivision I and II”.

In order to propose more information about the five groups mentioned, below are systematized notes and commentaries on the economic approaches of Bulgarian economists:

• In 1920 a Free University of Political and Social Sciences was established in Sofia.

• In the period 1929-1938 a second economic society was established (Society of Academic Economists), which set forth to resolve, in its proclamation documents at least, more theoretical tasks. The Economic Thought journal (Ikonomicheska Misal) came out in 4 issues per year. However, neither the authors (most of whom went down unnoticed), nor the articles in the journal were up to the needs of theory and in some respects those of Bulgarian Economic Society were even less so.

• Georgi Danailov (1872-1939), the most prominent professor of that lime, studied in Moscow (A. Chuprov), later in Vienna, Berlin, Munich (G. Schmoller, L. Bretano, maintained especially close relationship with Werner Sombart, with whom he kept correspondence and organized his visit to Bulgaria in 1932. An interesting fact is that Danailov, who took part in the peace negotiations after the end of WWI, was a popularizer of the books of John Maynard Keynes and Francesco Nitti, both criticizing the viciousness of peace contracts.

• Boncho Boev (1859-1934) studied in Moscow and Hale. He was popularizer of Karl Bucher’s ideas, adapted a questionnaire on Bulgarian industry after Bucher’s methodology, with whom he co-authored a publication in 1889 (presumably they maintained contact).

• Alexander Tsankov (1879-1959) studied in Sofia, Breslau, Munich and Berlin, a long-sewing politician, prime minister, died an exile in Argentina.

• Andrey Lyapchev (1866-1933), a politician from the democratic party, with no special economic education (a man from practice); however, he attended lectures in Berlin, Zurich, Paris and London and spent some time in Vienna. In Tsankov’s opinion he had neither “the methods of a researcher nor the systematicity of a scholar, a stranger to Marxism and Cateder-socialism alike, a proponent of the classical theory and the gold standard as a technical and moral institution”.

• Yanaky Mollov (1882-1947), an agrarian economist, studied in the Timiryazev Agrarian School in Moscow.

• Ivan Gueschow was mentioned in a footnote (however, the context remains unclear) by Vilfredo Paretto in his “Corso di economia politica”, Paretto (1905). In his study, Paretto cited a speech that was delivered by Ivan Gueschow in the late 1895, where the latter gave a quantitative example of agio, i.e., of a positive correlation between the increase of agio on gold and an increase in number of silver coins in circulation (it is unclear, whether this refers to Argentina or to Bulgaria).

• Dimitar Mishaikov (1883-1945), pupil of G. Danailov, studied in Sofia, Munich and Berlin. A special evidence of his following the methodology of subjectivist school in a Mengerian variant is his textbook “Fundamentals of political economy” (1943) and “A short course in theoretical political economy” (1926)), the abridged edition of Mishaikov’s textbook.

• Simeon Demostenov (1886-1968) studied in Saint Petersburg (Struve) and later on in Berlin (1912-1914). Simeon Demostenov is an original author, an exceptional authority on the history of monetary theories and proponent of the Austrian school, who criticizes and develops further the Austrian theory of money and value along many lines (his theoretical exchanges are mostly with Carl Menger and Ludwig von Mises). Demostenov is the author of the original theory of monetary universals (“Universale monétaire”), general concepts and categories of money, which determine the global-to-national money ratio and the substantialism, nominalism, or functionalism of monetary theories, respectively, as well as the author of the functional interpretation of money as a “universal and immediate instrument of demand”. In the summer of 1913, while still a Russian citizen, he worked in Menger’s private library, and most probably during that stay he attended Carl Menger’s private seminar. Simeon Demostenov, being a foreigner, felt more comfortable in the field of theory, although he held important economic positions in Russia during the war and made one of the most interesting and painstaking microeconomic analyses of the behaviour of prices and foods (1915). Demostenov’s works, being a paragon of application of the Austrian subjectivist school, and the fact that Demostenov made a very to-the-point and well-grounded critique of Marx’s theories were perhaps the reasons why they fell under the ideologized critique of Bulgarian Marxist economists.

• Slavcho Zagorov (1894-1965) studied in Bern, Insbruck and Leipzig and served as director of the National Statistics Institute.

• Asen Hristophorov (1910-1970) graduated from the London School of Economics.

• Ivan Stefanov (1899-1980) studied in Berlin (with L. Bortkevich as his mentor), held left ideas and was member of the French, German and Bulgarian communist parties already in the 1930s.

• Karl Kautsky’s book “The Economic Doctrines of Karl Marx” was translated in Bulgarian in 1896. Of the Russian books in political economy especially popular was Alexander Bogdanov’s textbook “A Short Course in Economics”, published in 1898 (only a year following its first issue in Russian). All Marxist authors (in addition to the above we could mention Hobson, Hilferding, Parvus, Gabriel Deville, partly the Russian sociologist Maxim Kowalevsky) were actively popularized by Dimitar Blagoev, who was well familiar with the economic theories of that time.

• Vasil Kolarov (1877-1950) studied law in Aix-en-Provence and Geneva. Bulgarian politician and international communist functionary (was well familiar with the subjective economic school in its Austrian variant).

• Georgi Dimitrov (1982-1949), Bulgarian politician and international communist functionary, General Secretary of Comintern.

• Georgi Bakalov (1873-1939) obtained his education in Geneva. As could be seen, a large part of the Bulgarian Marxists obtained their education in Geneva, where they associated with different representatives of left movements.

• Christian Rakovsky (1973-1941), Soviet diplomat and politician of Bulgarian origin, made a number of interesting analyses of the development of European economy between the Wars.

• Sava Ganovsky (1897-1993) studied in Hale, Berlin and Moscow in the post-communist academy, where Todor Pavlov (1890-1977) and Jacques Nathan (1902-1974) lectured and studied, respectively.

• Kiril Grigorov (1946), makes an erudite overview of the various approaches to the periodization of economics and the place a formational approach has in these theories.



Addendum: There was much noise when this book was published by a foundation "Bulgarian Science and Culture" in 1998. The editors of this "think-tank" Institute took some ferment from the State Archives before the socialist revolution; however, in their plurality they were erudite from the period of State Planned Economy in Bulgaria /1944-1989/ and were not prepared to give working explanation for Capitalism as a system. The work of this Institute continues until now in the 2010s in neo-Marxist style which is not subject to our commentaries.

There remains the restive work which ostensibly try to elucidate the landscape of capitalist development in Bulgaria from the first half of XX century. Here comes the case-study of economist Stoyan Bochev (1881-1968) as epitomized by the editors of the above mentioned Institute. The introductory essay is from circulation literature in English. It should be read in companionship with similar essays from our booklist — cf., A. Chakalov (1946) on GNP and quantitative economic methods; K. Grigorov (1946) on periodization of economic thinking, etc. There is much more to be written on the subject. Particularly important should be the correct ascertainment of sources and references. We continue to prepare our booklist for more comprehensive meta-analysis.

The fact that S. Bochev was chosen as binding figure for research activity in the 1990s was definitely non-random. Although his episodic appearance on pages of the "Journal of Bulgarian Economic Society" and some full-length monographs on "corporative capital" (Aktzionerni Druzhestva v Bulgaria), furthermore, the titular was altogether an insignificant personality in terms of wealth, academic holdings or else societal assets. His strength for eligibility came from a collateral that he had long time companionship to one of the most influential men in Bulgaria from that period — banker and politician Atanas Burov.

Curriculum Vitae of S. Bochev is written down. A mere estimate give several turning points: 1914-1925 ~ shareholder in "Ghirdap OOD", financial house; 1925-1934 ~ shareholder in "Bulgarska Turgovska Banka", private bank with credits from Lyon, France; 1934-1946 ~ shareholder in "Bulgaria Zastrahovatelno Druzhestvo", insurance company with international branches in Belgrade and Athens, liquidated from nationalization. Thus we see S. Bochev, with his 5% barrier capital, always at the right hand of financial magnate Atanas Burov. The former was a kind of personal valet to the latter, ipso facto.

The tumultuous times of the 1920s, 1930s and 1940s should be at discussion agenda in another presentations. One thing is clear, that Capitalism in Bulgaria was on its way and no matter how socialist historians try to denigrate the period there was a real money circulation and market in that country. There was a Trade Law with miscellaneous import and export tariff acts. There was recognition from International Financial Institutions (League of Nations), exemplified by attendance to the external and internal debts of Bulgaria. There was lastly a war-time period (1939-1945) that pegged Bulgaria to the Third Reich when 70-80% of the trade balance was covered by Germany. All those flashing points should be researched and documented carefully in the future.

Dignitary of present time does not allow us to enter into more particularities. Academic scholarship still owes a lot to modern generations and truth, sooner or later, will re-appear on the surface, ditto.


Picture 1: Sample illustrations on the text above.

(i). This is Department of Chancellery for "Bulgaria Ltd." (Premiere Societe Bulgare d'Assurances). Stoyan Bochev, as Director-of-Staff, is middleman on front row.



Copyright © 2011 by the author.