Today one can often meet people who enjoy reminiscing about the eighties; claiming the economy was ‘healthier’ and that people had a higher standard of living. Statements like these are often used today as means to further manipulate and sway public opinion by creating a false sense of nostalgia for the ‘good old days’.
The eighties marked the final stage of a general crisis in socialism in Eastern Europe. In an attempt to salvage power the ruling communist parties tried to introduce several major economic reforms. In Bulgaria this was a 1987 reform dubbed “The July Concept” whose objective was to preserve the political status quo while attempting to conjure up a sort of market economy. The July Concept claimed to denounce the monopoly of state ownership and planned economy. The reforms however were unsuccessful for the most part. In the new political and economic conditions facing Europe a half-attempt like this one came too little, too late.
At the end of the eighties domestic and international developments showed the time for simple reform had passed and it was, instead, time to replace the Soviet system altogether. This required a wakeup call: a painful but swift return to the economic principles of capitalism of which Eastern Europe had distanced itself so radically after the Second World War.
In 1984 two shifts occurred which signaled the start of a new dawn. The first of these was an attempt by the ruling Communist party to introduce privatization in the form of new economic policy. This privatization was made possible through the creation of small companies using public funds, mainly from Mineralbank and the Bulgarian Industrial Association. The idea was to manage state funds as private; to increase the competitiveness of the industry selling to Western markets in currencies and buying much needed modern, Western technology for the Bulgarian industry. The latter were especially crucial to the transformation.
The second shift was felt by managers in the socialist state as they began gaining access to high technology through Western sources. To action its new objectives the state had become more ‘open’ and the highest level in the Communist Party began seeking contact with Western capitalists of the caliber of Robert Maxwell and Josef Strauss who visited Bulgaria several times over the years. The country held several forums called “East-West” which introduced foreign companies, potential investors, importers of technology systems, and new equipment for the Bulgarian economy.
At the same time, but more importantly, before Gorbachev came to power in the Soviet Union, Bulgaria managed to successfully utilize the priority economic relationship it had with its ‘big brother’ and imported cheap raw materials from the Soviet Union. Some of this was processed and re-exported. To avoid irritating its ‘Soviet comrades’ the Bulgarian communists separated out revenue share for various communist regimes in developing countries. However, foreign income was mainly utilized to import technology outside COMECON.
Change also began to be felt by citizens in the mid-eighties. A small part of the income in foreign currency was used to diversify the gray domestic market. On the basis of “new economic policy” small companies were created abroad - mainly in Austria and the FRG.
These years were the most successful in terms of standard of living in socialist Bulgaria. Although the standard was incomparable to that of a democratic country with market economyand significantly inferior to that of other socialist countries such as the GDR and Czechoslovakia, it was nevertheless higher than in countries like Romania, the USSR, and Poland for example.
With Gorbachev coming to power and increasing economic difficulties facing the Soviet Union, this short-lived advantage favoring Bulgaria disappeared quickly. The shortage of currency meant that the growing hole had to be filled by foreign loans - debt was on the rise.