Planning and truth: the Bulgarian 1963 reform and the problem of profitability

ABSTRACT

The conventional account of socialist planning proposes that annual plans were sets of imperative requirements that kept the economic actors from planning for themselves and doomed them to inefficiency. This article claims that planning was an intricate mechanism of negotiations between economic, political and social actors, mediated and regulated, but never actually subdued by the communist party based on an analysis of the Bulgarian 1963 reforms, largely neglected by the historians. Furthermore, the conventional account claims that the 1960’s economic reforms intended to repair the socialist economies by supplementing planning with market elements, such as profit and credit, yet the reforms were compromised by the political elite. This article claims that, on the contrary, the reforms intended to repair the socialist economic system by inscribing mechanisms of horizontal bargaining in its very core, irreducible to the vertical bargaining described by Janos Kornai.

KEYWORDS:

• Socialism
• planning
• market
• Janos Kornai
• Michel Foucault
• Bulgaria

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. A fully-fledged account of the genealogy of anxiety about the truth hidden between the lines of the plan would require a much longer discussion of the economic situation after World War II. In the Bulgarian case however, the reliability of the planning process was questioned already in 1949 in the context of the food shortages experienced by the country despite the fact that it was a leading Southeast European producer of wheat (Central Committee of the Bulgarian Communist Party 1949, 8–9). In the following years, the attempts to reshape the planning process were focused on agriculture. In 1955, the Politburo endorsed a project intended to minimize the planning indicators in the sector and hence ‘to stimulate the self-initiative of the producers’ and to stop ‘the current practices characterized to a significant extent by the attitude of treating the plan as a template that should be reproduced irrespective of the real situation’ (the socialist bureaucracy had already invented a term for the latter, ‘template planning;’ Politburo 1955, 9, 1).

2. The brigadeer movement, set up in 1946, was mostly composed of young people who volunteered to work on the major construction projects launched by the socialist authorities, usually without a salary. Between 1946 and 1948, more than 70,000 brigadeers built a city, Dimitrovgrad, a road through the Balkan mountains, more than 50 km railways, 2500 km electric lines, 10 power stations, 2 dams etc. After 1948, the Komsomol started to organize the movement, and until 1989 it involved practically all the pupils, students and soldiers in the country, mostly in agricultural work, for about a month every year.

3. The advantages of Kornai’s account of the socialist planning are salient if one contrasts it with earlier and less informed accounts, for example (Ellman 2014, 22–38).

4. Following Foucault (2004b, 37–39) and Michelle de Certeau (1990, 46–47), in this article, I consider truth not as a correspondence to the state of affairs nor as a coherence to a system of beliefs, but rather as a value produced by technologies of power and knowledge and reflecting the balance of forces in a particular situation. To simplify this economic perspective on truth, let me propose as a working hypothesis that a statement is true if it has truth-value, and it has the value of truth if it can circulate as truth among the social actors in a particular situation or, in other words, to the extent the social actors can exchange it with others without being challenged (and therefore to the extent that if one wants to contend felicitously that the opposite is true, she or he would need to command uncommon knowledge or power).

5. Take for example the canonical definition of price in the 1950s: ‘It is important to take into account that the established formula for calculating the prime cost PC = c + (v), i.e., prime cost is equal to the sum of the value of the means of production (c) and the value of labour force (V), is the same in both capitalism and socialism. As to the prices, one has to emphasize that they are in principle grounded on the prime cost (costs of production), but the state can enforce deviations so that the price of an industrial product exceeds its prime cost (profit), or the price is short of the production cost (loss), or the price can match the prime cost. The price of a good in the socialist society of the USSR is grounded on its value or on the costs of its production. But taking into account the need to strengthen socialism, to improve the living standards of the workers, the Soviet state fixes the particular price of any type of good produced by the state companies or sold in the state retail system, and therefore the Soviet state decides on the extent in which the retail price of a good deviates from its real value. In consequence, the socialist society takes out the wild fluctuation of prices characteristic of the capitalist industrial goals, as well as the speculative increase in prices brought about by the capitalist monopolies, which is the norm in the United States’ (Voznesensky 1948; 102; Yordanov 1950).

6. For an exemplary justification of the reforms by an act of negative veridiction focused on an actual case, Factory 15 in Karlovo, see (Central Committee of the Bulgarian Communist Party 1963b, 116–117).

7. Historians of socialism have often claimed that the concept of profit was masked under the concept of yield (see for example Asselain 2013, 1–2). But this was not the case, at least in the Bulgarian context. On the contrary, profit supposedly provided a stimulus for efficiency even before the 1963 reforms. In the 1950s, the profit was calculated by subtracting from the market price of the product its prime cost and the relevant taxes (quite unlike the yield, which was calculated as the ratio of raw materials to a unit of production, for example 143%, or 1,43 kg. of 92% wheat flour per 1 kg. of bread). Since the market price of a product was decided by the Central Planning Committee on a national level and it was mandatory for all the national producers, if a company managed to work more productively, then it could make the product at a lower prime cost, and therefore it could receive more profit (Central Committee of the Bulgarian Communist Party 1963b, 1–2). In fact, the 1963 reforms rearranged the already established economic mechanisms rather than invented new ones, by entitling the economic agents to negotiate prices between themselves, and by entitling the companies to make autonomous decisions on how to invest their profit instead of reporting it to the authorities, which often expropriated the reported profit in order to fund of strategic importance.

8. The account of the planning process proposed in 1963 and implemented in 1968 is based on (Central Committee of the Bulgarian Communist Party 1963b, 100–101).

9. In the sense of Foucault (2004a, 58–59).

10. Detailed arguments for that see in (Petrov 2017; Ganev 2007).

11. Indeed, in the 1960s the Bulgarian State Planning Committee was visited by a number of Hungarian and GDR delegations, and Bulgarian representatives studied closely the credit system of Czechoslovakia (see Central Committee of the Bulgarian Communist Party 1965, 222–223). Later on, in 1968, Hungary indeed introduced a new planning system featuring a simplified set of indicators, counterplan, and profit conceived of as an indicator of economic performance. The Hungarian reform however was much deeper (in the sense of Janos Kornai) as it allowed limited private initiative (Ellman 2014, 64–65). GDR on the other hand chose not to reform the planning process, yet it introduced the state holdings as a mechanism of coordination (67).

12. Many researchers believe that the Bulgarian reforms have been crippled because the BCP leadership feared the Soviet response (see for example Lampe 1986; Fewel 1981). However, such fears, as well as the alleged pressure from Moscow, did not leave traces in the surviving documents, in contrast with the widely documented concerns about the problems brought forth by the implementation of the new planning system on a national scale (see for example Central Committee 1972, 110–111).

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Todor Hristov

Todor Hristov teaches critical theory at the University of Sofia and sociology at the University of Plovdiv, Bulgaria. He is an author of a number of books and research articles in critical theory, governmentality studies and historical sociology. His most recent book is Impossible Knowledge: Conspiracy Theories, Power and Truth (London and New York: Routledge, 2019).