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Toward Understanding the Balkan Economic Thought (I)

Toward Understanding the Balkan Economic Thought (I)

No. 7-8, Sep.-Dec. 2017 » Bridging News

The notes that follow are a preliminary summary of our observations and studies in the field of Balkan economies and economic thinking as well as of scholars engaged in the subject of economic traditions in the Balkan region. The main characteristics of economic thinking in the Balkans set forth below must not be regarded as established definitively but rather as the first approximation towards the elucidation of the Balkan type of economic thought (BET).

Noteworthy is the fact that there are significant differences between the economic traditions and thinking among the individual Balkan countries. To this effect, there is great diversity in the Balkans. However, this is no impediment to the attempts at finding common macro characteristics thereby searching for a more delicate diversity at a second stage.

The examples have been taken above all from Bulgaria, Romania, and Turkey and partially from Yugoslavia. We have more knowledge and information about these countries. 

Core traits 

We may start with the statement that the Balkan economic thinking is practically oriented (or this is at least its visible side) and it brings to the fore the solving of immediate outstanding tasks. The Balkan economic thinking is short-term and operative. It avoids in-depth analytical procedures and long-term forecasts and projections. The Balkan thinking is related to the good practices of the past, above all to those of the recent past, and to the experience of the developed countries. To this effect, it is inertial and imitational-empirical[1].

Further on, the Balkan economic thinking is precisely “economy as household” rather than “economical”. This means that economic activity is not rationalized in scientific (in positivist) terms, it is rather regarded as embedded sociologically in the political, institutional and cultural environment. It is no accident that in many Balkan languages, above all in the Slavonic languages, there are two terms namely “economic as household/stopanstvo/privreda/hozyastvo” and “economical” (in Russian as well but with a definite similarity with the German language and with the German economic terminology). The Balkan nations’ economic thinking is concrete, national, it lacks the striving towards universality, all-humanity, globality of generalizations which is characteristic of the developed European countries and even of Russia. This can be partially explained by the absence of original and independent philosophical trends in the Balkans (the exceptions are probably Romanian nihilism and the school around T. Maiorescu)[2]

Balkan eclecticism 

Thus, we come to the second feature of the Balkan economic thinking – it is eclectic and, in some cases, even syncretic, i.e., it is undifferentiated, holistic. It is eclectic in the sense that it unites and combines in a whole – whether automatically and controversially, whether more harmoniously and not controversially – elements and standpoints from various often mutually contradicting analytical traditions.

The Balkan economic thinking is practically oriented and it brings to the fore the solving of immediate outstanding tasks. It is short-term and operative. It avoids in-depth analytical procedures and long-term forecasts and projections. The Balkan thinking is related to the good practices of the past, above all to those of the recent past, and to the experience of the developed countries. To this effect, it is inertial and imitational-empirical.

Thus, for instance, in the late 19th century, the Bulgarian elites and economists – and it may even be claimed that, broadly, Balkan economists – offered models of development marked for their overt eclecticism and, at first sight, ambivalence. Actually, this is the so called “liberal nationalism” or “national liberalism”. However, the latter manifested their logic from the positions of modernization and economic civilization (Nenovsky and Penchev, 2015). Back then, the main objective was to achieve a political and economic development of the nation, to build a national state and to modernize it, as well as to catch up with the developed countries.

If we actually confine ourselves to the Bulgarian economic thinking, it has always represented an eclectic overlap of several layers: European/Mediterranean/Ottoman/Slavic/national (Nenovsky and Penchev, 2015).

The above mentioned eclecticism or the striving for united theoretical principles and positions of various analytical traditions continued though subdued between the two world wars (see, for instance, I. Kinkel, V. Madgearu, the textbooks by G. Danailov and D. Mishaikov, etc.). To this effect, a characteristic quotation by Ivan Kinkel would be useful.

Kinkel (1883-1945) is an interdisciplinary scholar who tried to analyze thoroughly the economic development, that is, simultaneously from the standpoints of political economy, economic history, sociology and even psychoanalysis (i.e., Kinkel’s analysis of social revolutions). According to Kinkel as regards sociology, any type of methodological monism that overstates certain types of factors (economic factors in particular) is being dismissed:

A universal sociological method encompassing and explaining all phenomena of social life is not applicable nowadays as it would be scientific absurdity […]. If none of the old universal methods satisfies us today, could we at least construct a new monistic method in sociology? We must explicitly state that in principle, given the contemporary state of sociology, this is not possible! Even if another sociological genius was to appear in our times of the stature of Kant or Marx wishing to construct a new synthetic method, the latter would still have to incorporate the self-contained principles of all individual methods constructed in sociology over the recent years, that is to say, this method would essentially be not a monistic, but an eclectic one. (Kinkel, 1931, 193) 

It is noteworthy that, after the collapse of communism, eclecticism re-emerged. An evidence to this effect are most textbooks as well as the attempts at theoretical generalizations of the transition and the economic past of the region. Surprisingly for the Western readers, most of these works combine principles of various Western schools. That is explained by the fact that economists from the region (partially excluding Yugoslavia) were detached from scientific discussions worldwide. They had focused their efforts on the development of the “Political Economy of Socialism”, an extremely scholastic and even harmful area (the way it was set forth). Today, the economists in the Balkans strive to make for that lack of knowledge by resorting to many Western authors, regardless of whether that is necessary, which however guarantees their legitimacy and enhances their reputation. 

The practical minds 

The Balkan nations’ economic thinking is concrete, national, it lacks the striving towards universality, all-humanity, globality of generalizations which is characteristic of the developed European countries and even of Russia.

The normative character (anti-analyticity) of the Balkan economic thought is closely bound with its practical and eclectic character. The normative economic postulates have been taken from past national practices or borrowed from the practices of the developed countries. But, even when they provide arguments based on Western theories, the Balkan economists bring to the fore the normative aspects and elements of those theories rather than their analytical potentialities. In other words, instead of using the analytical part of theories as an instrument of searching for their own practical solutions, the Balkan economists borrowed the solutions offered by other countries and regions.

That process of bifurcating towards normativeness or of a normative “distortion” of thought and theories (as S. Demostenov liked to refer to that on another occasion) is typical above all for backward and modernizing economies and regions (Russia, Asia, Latin America; there are also many examples even from Africa). Well-known are the in-depth modifications of leading Western theories and of Marxism in particular which emerged in economically and politically underdeveloped Russia in the late 19th century and turned into programs of change.

Having not been influenced directly by Russia, though part of the economic and social ideas came from there, we may suppose that the agrarian character of the Balkan region has provoked a definite modification towards normativeness of economic agrarian schools. Let us take two examples[3]

Balkan agrarianism 

Today, the economists in the Balkans strive to make for that lack of knowledge by resorting to many Western authors regardless of whether that is necessary, which however guarantees their legitimacy and enhances their reputation.

The first example: as is well-known (but with some reservations), an attempt was regularly made during the rule of A. Stamboliiski (1919/1920-1923) at introducing agrarian regime and a systematic economic transformation in favour of peasants (Bell, 1977). The original idea concerning “labour land ownership” (as well, with some reservations) emerged in Bulgaria (defined by Raiko Daskalov during his stay in prison).

There were similar extreme agrarian schools in Romania as well, though their recommendations had not been applied in practice. They emerged through the Russian Narodniks and partially through Marxists (who had emigrated to Romania and were mainly Moldovans) and as a result of the purely Romanian reactions to the structure of land ownership in Romania (the existence of large landowners). “Poporanism” and the “new feudalism/neoiobăgia” of C. Dobrogeanu-Gherea and C. Stere and later “the Chayanov type of agrarianism” of V. Madgearu (chairman of the Agrarian bloc in Europe) were according to us the manifestation of original agrarian theories. They had clear-cut objectives for a deep social change. Actually, all agrarian economists in the region were active politicians.

The second example refers to adapting the ideas and theories of cooperatives as well as of the place and role of cooperative and popular banks. As is known, cooperatives became particularly developed in the Balkans between the wars. The ideas of the cooperatives were not a Balkan phenomenon, while the first cooperatives and cooperative banks emerged in the developed countries. The Western theories about cooperatives and cooperative banks were extremely modern in the Balkans between the wars. Many articles, brochures and books were published, there were numerous translations (the writings of Ch. Gide, for instance). There was hardly an economist from the region who had not tried to write about the role of cooperatives and cooperative banks. Many Russian authors were translated as well, such as the classical book about cooperatives by M. Tugan Baranovsky (translated in Bulgarian in 1922). The well-known Armenian and world-renowned theoretician of cooperatives V. Totomyanz lived in Sofia and wrote several books here before emigrating to Paris.

Unlike the ideas about the place and role of cooperatives and cooperative banks in the West, which had not always been in the focus of attention of economists, regarded above all as a buffer within the frameworks of the capitalist market economy (Ch. Gide, L. Luzzatti, H. Schulze Delitzsch, F. Raiffeisen, etc.), as well as in the sphere of consumption, the situation in the Balkans was more radical. The cooperative sector, be it in agriculture, crafts or finance, was instrumentalized as a leading and often as an alternative mechanism both of the capitalist and of the market economy. In many cases cooperatives were regarded as a third path, a compromise between capitalism and state socialism (bolshevism).

Instead of using the analytical part of theories as an instrument of searching for their own practical solutions, the Balkan economists borrowed the solutions offered by other countries and regions.

It is true that this type of normative philosophy of cooperatives was typical for the Russian cooperative supporters (e.g., the book by Tugan Baranovsky on a new social order which was viewed critically in Western Europe). However, the Bulgarian, Romanian, and, to our knowledge, the Yugoslav economists as well had hardly been under the influence of that book. It was rather an issue of an independent adaptation and interpretation of Western cooperative ideas. Such “extreme” normative views about the cooperative as a fundamentally new and alternative economic form can be found in the works of the Romanians V. Madgearu, V. Slavescu, G. Mladenatz (although they did always follow from the logic of the rest of their works), and also of D. Mishaykov (his textbook, the last chapter), I. Palazov, H. Ganev, and so on. 

The role of the state 

To sum up, the Balkan economic thinking is a state-centred one, it is statist. The state, its role and economic functions and policies have always been in the centre of academic and applied research. Everything has been refracted through the state – business practice and economic thought alike[4].

The state had increasingly figured in the economic theories since the 19th century which was a reaction to the late formation of national states in the region (basically in the 19th century and, for some of them, in the last third of the 19th century). It was the result of belated modernization and industrialization. Most countries in the region were under the influence of practices and institutions of the Ottoman Empire for a long time (Kuran, 2010). The state was also preoccupied with the tasks of “civilizing” and achieving the living standards of the West European countries.

We must not forget that throughout the greater part of their history, the Balkan countries have been poor and agrarian countries, and industry developed slowly and with difficulties. That urged, for instance, G. Danailov (1872-1939) towards the end of his life to reassess his positions regarding the possibilities of a rapid industrialization, Danailov being one of the first economists in Bulgaria to publish serious scientific articles about the role of industrialization in 1900. In 1936 he wrote:

“Bulgaria is an agrarian country. This is not only a formal expression but a reality. Bulgaria is the peasant; the peasant is Bulgaria. It is hardly anywhere else that the perception of the peasant of his power and importance in the life of the country is so vividly manifested as it is in Bulgaria. [...]. Bulgaria is, I think, the only country where under a parliamentary regime there is not an agrarian, but a peasant party. [...]. The Bulgarian peasant is an excellent and ardent stockbreeder; good cattle is his ideal. He does not care in particular where and when his child sleeps, his wife takes care of it; but the Bulgarian peasant does not go to bed before he has taken care of the cattle. [...] ... when we refer to the social structure of Bulgaria we must regard the peasant as a central figure, as the source of the forms and relations of the people's life in the country”. (Danailov, 1936, 3-6, the underscored is in original)  

The leading role of the state in modernization is understandable. The state fits the catching-up model of A. Gerschenkron, as well as the German tradition of economic theories of catching-up development (see Sylla and Toniolo, 1992). It is not surprising that the German historical school, and later on a number of “organicist schools” as well (such as the managed corporate and other economies, the various types of Marxism) found favourable conditions for spreading in the Balkan region (Psalidopoulos and Cardoso (Eds), 2016; Nenovsky and Penchev, 2016).

The German historical school was efficient because it brought to the fore the phases, stages or steps to be taken by the Balkan economies to catch up with the developed European countries. In this historical evolution of the country, the state was the main economic engine. The ideas of the German schools (historical and organicist) have usually figured (though in a different form) in the theoretical models, concepts and ideas of the Balkan economists. Moreover, that was so despite the fact that those economists were educated and had developed within the frameworks of other schools and traditions. This is partially explained by the fact that most theorizing economists in the region were active economic and political figures.

The state had increasingly figured in the economic theories since the 19th century which was a reaction to the late formation of national states in the region. It was the result of belated modernization and industrialization. Most countries in the region were under the influence of practices and institutions of the Ottoman Empire for a long time. The state was also preoccupied with the tasks of “civilizing” and achieving the living standards of the West European countries.

There are many examples. One of them could be the activity of I. E. Geshov (1849-1924), a prominent Bulgarian economic politician, National Bank Governor and scholar. Although initiated in the economic science by the marginalist and utilitarianist Stanley Jevons (and was recognized by Jevons himself as the best student)[5], subsequently Geshov actively used the German historical school. Geshov emphasized the role of the state. During the famous debate in the late 19th century in Bulgaria about which sector had to be the growth leader, “agriculture or industry”, he noted[6]:

“During my first ministerial functions in 1894-97, I, guided by the principle of "the greatest happiness for the greatest number of citizens", did everything possible in the situation at the time to provide conditions for a better livelihood, for the rapid progress of the vast majority of our people – petty farmers. At the same time I was the first to resort to the interference of the state in favour of non-agrarian producers: imposed an increase of import duties; drafted a law on the stimulation of industry thereby contributing to opening jobs for workers so as to lay the basis of the social care which is unthinkable, if efforts are not made to guarantee jobs for the workers.” (Geshov, 1916, 37-38) 

(To be continued.)

[1] Magliulo (2015) defines three dimensions of economic thought – Culture, Policy, and Theory. In our interpretations, Culture could be associated with informal institutions, Policy – with the formal institutions and interests, and Theory – with the ideas and different theoretical approaches. Then the BET could be compared with the Western and the Central European ET according to these three dimensions (differences, similarities, dependence and dialogue). The three dimensions could be reduced to some dichotomies. For example, Culture could be either individualistic, or communal; Public Policy could be viewed as pursuing either common interest public policy, or public policy captured by private interests. And, finally, Theory could be reduced to either rationalistic and positivist approaches, or to comprehensive, sociological studies. A fourth dimension needs to be added – the reaction to Geopolitical tensions. Here, the dichotomy could be defined as either pursuing a neutral and balanced policy, or following closely one particular core country.

[2] This is a difference as regards Russia and Germany, where philosophical thinking was clearly manifested.

[3] See Daskalov (2014) for more details as regards agrarian policy and thought in the Balkan region. 

[4] An example to this effect is the mechanism of monetary stabilization during the 1920s and the return to the gold exchange standard. Unlike the Western countries including authoritarian Italy where the stabilization was mainly a market one, in the Balkan countries (maybe because of their large foreign debts) the monetary stabilization took place under the full dictate of the state on the currency market. Thus, for instance, after the war, in Serbia and in Bulgaria in particular, there was almost no stabilization period as regards the currency market (for a few months around 1922 and later around 1928 under the LN pressure). 

[5] Geshov thought that Jevons was better than Mill and Ricardo and that he was the only one capable of explaining Bentham to students.

[6] It is noteworthy that the liberal Andrey Lyapchev subsequently criticized Geshov for his commitment to the historical school, e.g.: “Geshov’s practice would have probably been more fortuitous had he not succumbed to the historical school in the political economy because by attributing great importance to individual phenomena it tempted the weak minds so that they lost the link with the sound natural reason and began to use parallelisms in their practical activity instead of general explanations.” (after Bobchev, 1933, 540). Although Lyapchev himself actively used the instrument of the state e.g. in the monetary stabilization of the 1920s.

 
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OEconomica No. 1, 2016