Primitive Accumulation of Capital: A Case of the City of Varna
by Bozhin Traykov
This article looks at the changes that occurred in the city of Varna in relation to the primitive accumulation of capital as a precondition for new forms of capitalist social, economic and cultural relations. These changes are connected to the neoliberalization process, and characteristic of the countries of Eastern and Southeastern Europe. No matter what those that monopolize the management of the city are called, what is essential is the naturalization of Varna’s residents’ removal from democratic decision-making on how the city should develop. Varna’s residents have become external observers of the privatization and commodification of their city.
My argument is based on new readings of Karl Marx’s concept of primitive accumulation. Marx uses the term ‘primitive accumulation’ sarcastically in order to criticize naïve explanations of the initial accumulation of capital by the diligence of hardworking, entrepreneurial individuals (Marx, 1990). Marx’s critique exposes the ideological fantasy behind such claims, stemming from bourgeois political economists at the time, and shows the structural and systemic violence that makes the accumulation of capital possible. David Harvey points out that Marx’s critique illustrates how the liberal dream of a free market does not lead to a harmonious state, but, on the contrary, creates conditions for increasing social inequality that can be managed only through violence (Harvey, 2005).
According to this reading of Marx, the process of accumulation, which Harvey terms ‘accumulation by dispossession’, should be analyzed not only historically, but also logically (i.e. as a necessary mechanism for the formation of capitalist social and economic relations) (Glassman, 2006; Sassen, 2010). Marx also points out the inevitable violence accompanying this process. In order to create capitalism it is necessary to erode and gradually destroy non-capitalist social relations. For example, social life during state socialism is characterized by a fairly low level of commercialization. There are numerous public parks and public spaces where people socialize outside of the commercial logic. Primitive accumulation, including a corrupt privatization process, leads to forceful changes in non-commercial social relations. Not surprisingly, the Bulgarian state’s transformation from socialism to capitalism (known as ‘the transition’) is described by sociologist Vasil Prodanov (2007) as ‘destructive and accompanied by gigantic economic violence’.
Current liberal apologists of capitalism in Bulgaria are not blind to the rapid increase of violence and crime that occurred shortly after 1989. However, instead of a systemic approach, they are concerned with the moral aspect of the new market players, focusing on their moral failings (such as organized crime) that originated from the former Communist Party elite, i.e. the nomenklatura and State Security (DS), who acted as the repressive apparatus modeled under the KGB. Today, 26 years after the end of the Eastern bloc, communism continues to be the main explanatory mechanism for the ‘faults’ of market economy. Liberals view the capitalist system as a priori perfect, which is why they search for external causes for the indelible effects of the capitalist system – inequality, corruption and violence. For liberals, such effects are to be ascribed to Russia’s sinister role, to communists, cultural deficits, the Bulgarian mindset, etc. Contrary to those explanations, this article takes a systematic, analytical approach that exposes the narrative of the bad nomenklatura, which built bad capitalism in Bulgaria.
What happened in Bulgaria should be seen as primitive accumulation of a specific form, always accompanied by forced seizure and impoverishment. According to Marx, usurpation of public property began as individual acts of violence and constituted a form of primitive accumulation that eventually, after many years of struggle, were legitimized by the state. Marx writes: ‘the law itself…becomes the instrument by which people’s land is stolen’ (Marx, 1990, p. 885). His historical example is England, where state property was transformed into huge, private agricultural estates. Marx (1990) writes about public land grabs, but the coercive privatization of public property, the grabbing of public resources in urban areas, etc. are also forms of primitive accumulation. We can view the violence of organized crime in the Bulgarian context as examples of violent theft that is later legitimized by the state.
Instead of a comparative reading of capitalism, according to which there are different kinds of capitalism, I view the capitalist system as a singular whole (Hardy, 2014). The driving engine of the capitalist system is the expansionist aspect of capital in the name of global market formation. This process of gradual invasion of new spaces and regions for capital accumulation influences and restructures nation-states. My understanding in relation to global capitalism follows that of Etienne Balibar (2001), who warns that often the effects of political-economic processes are taken to be their causes. Organized crime and its transformation into a legitimate economic elite is not a cause but an effect of the transformation process of the state. The processes that relate to this effect are usually outside of the public discourse.
How can the fact that in Bulgaria organized crime (and in the case of Varna, TIM) played a major role in the process of violent primitive accumulation be explained?*Primitive accumulation is part of state transformation within the neoliberal model. Brenner, Peck and Theodore argue that neoliberalization should be read as a syndrome – that is, as a series of processes and activities, rather than a unified phenomenon with different outcomes. They advocate for tracing how this syndrome is reproduced in different contexts. Despite having heterogeneous effects, neoliberalization is a process of regulatory restructuring that follows the same operative logic of commodification to all aspects of social life (Brenner, Peck & Theodore, 2010). According to this logic, the state prioritizes market-driven solutions to important public and social issues. Depending on the specific or regional context, neoliberalization has to overcome and transform pre-existing institutions and structures. Therefore, driven by the same operative logic of concrete policies, neoliberalization can take many forms. In the Bulgarian context, neoliberalization has the task of restructuring the state-socialist model. We can view the process of primitive accumulation in Bulgaria as a dimension of the neoliberalization syndrome.
Global institutions here play the role of instruments for imposing neoliberal policies defined by the Washington Consensus as a medicine for indebted countries – first in Latin America, and later in Eastern and Southeastern Europe. Saskia Sassen examines financial institutions with headquarters in Washington – such as the IMF and the World Bank – as instruments of neoliberal policies that discipline through debt. Impoverishment and indebtedness of the population facilitate the process of primitive accumulation. Sassen (2010) sees a direct connection between these policies and the penalization of societies in indebted countries. The criminal structures of organized crime, and, in the case of Northeast Bulgaria, TIM in particular (Pardew, 2005), emerge as representatives of the new capitalist elite. TIM’s rise is part of a global process related to the idea of primitive accumulation as a mechanism for imposing capitalist social and economic (and therefore cultural) relations. Venelin Ganev’s (2007) argument that former political elites ‘prey on the state’ and Chalukov et al.’s (2008) writings about the contradiction between political and economic nomenklatura and its effect on the transformation from socialism to capitalism both fail to give a complete picture of the Bulgarian context. At the core of this transformation is the restructuring of the state within the neoliberal model; this process, albeit performed by internal political players, predominantly takes place on a global level, where the IMF and the World Bank play a vital role. (Appel, 2004; Sassen, 2010)
I should stress that the conditions imposed on Eastern and Southeastern Europe by these global financial institutions were for a much more radical neoliberalism than exists in the Western world. (Hardy, 2014) The IMF and the World Bank’s main condition for a loan is the so called ‘structural adjustment program’ (Appel, 2004). A key element of this program required the rapid privatization of the economy, which is what enabled the most corrupt privatization process in Europe to occur in Bulgaria during the government of Ivan Kostov (1997-2001).
Organized crime in Bulgaria was legitimized by institutional policy. According to Harvey, it is the state, with its repressive and legal mechanisms, that makes primitive accumulation possible (Harvey, 2005), and it is hard to imagine TIM’s rise without the state’s blessing (Bivol.bg, 2012; Spassov, 2012). If we trace organized crime’s chronology in Bulgaria, we will see that the so-called bandit years of the primitive accumulation of capital in the 1990s are not only linked to the dismantling of the repressive apparatus but also to the funding cuts to military and sports institutions. Many people formerly employed in those institutions moved into violent crime, such as racketeering and sex and drug trafficking (Nikolov, Y. & Mihalev, I., 2003; Pardew, 2005).
Currently, TIM is an enormous vertically and horizontally integrated economic empire in the Balkans that owns banks, insurance companies, fuel and chemical trading, shipping, transport, media, food production, etc. The black chronicle of its history has been documented by both Bulgarian and foreign journalists. TIM’s scope reaches far beyond Varna – in its early days its seashells business sought to enter the international market. In recent years, through the so called First Alley Project, TIM has managed to take a 122 acre bite out of Varna’s oldest public park, the Sea Garden.
The First Alley Project shows how under the pretext of inadequate funds for public projects, the municipal government prioritized a market solution of an issue of public concern. The municipality provided part of the Sea Garden to ‘Holding Varna.’ owned by TIM. One of the arguments for this decision was that putting the land in private hands would resolve the landslide issue that threatens part of the Sea Garden with imminent collapse. Even the governor at that time, acting on behalf of the state, granted unlimited rights to the ‘Holding Varna’ company, leaving the state to take responsibility for the actions of private players (Bivol.bg, 2012; Spassov, 2012). Returning to Harvey, we can see how the state’s abdication from financing public projects enables the process of primitive accumulation.
The connection between the transnational capitalist class and TIM becomes visible when we trace some the group’s investment projects in the city of Varna. The scandalous First Alley deal shows the planning of hotels, casinos, luxurious yacht harbor – all projects typical of TIM’s limited imagination. Who needs any of these, especially in an area at risk of landslide? Future construction would overflow the beautiful coastline Varna and would only serve the capital interests of the ‘bourgeois aristocracy [that goes] from grand hotel to grand hotel or from castle to castle, commanding a fleet or a country from a yacht.’ (Lefebvre, 1996, p. 159)
Neoliberalization is a process by which every social activity leads to the reproduction of the capitalist system.This becomes visible when a public park is privatized and turned into a place for the accumulation of profit, for instance. Similarly, a building in the city center that hosted Varna’s current and budding artists, and also served as a meeting place for artistic circles, has been turned into a hotel-gallery called ‘Graphite’ (Derali, Topnovini.bg). Access to this new luxurious hotel is restricted only to those who can afford it. Varna’s Sea Garden was filled with pubs and bars, while future plans include numerous hotels; the city’s landscape now consists of five malls and about half a dozen of casinos.
Whether TIM is in control of the city’s infrastructure or not, the problem is not just one of organized crime. Indeed, TIM was formed as a criminal group by former navy seals from a secret military base in the People’s Republic of Bulgaria. It is a documented fact that TIM keeps Varna in economic dependence through violence, repression, and changes the social and cultural environment in the city. On the one hand, TIM enhances the formation of an apolitical individual, restricted in his/her social relations and sitting outside of the commercial logic. Varna’s inhabitants are not participants in deciding what shape the city should take, but are forced to be mere observers. Any attempts to show this undemocratic commodification of social life, either by direct protest or through artistic resistance, are sporadic.
On the other hand, the process of commodification is related to class exclusion. The more luxury hotels and commercial entities emerge in privatized public areas, the less space remains accessible for those who remain outside of the practices of luxurious consumption. Key to Marx’s understanding of primitive accumulation is the class division this process leads to. Depriving inhabitants of the city’s public spaces is characteristic of this kind of class division. It changes social practice such that possession of capital determines everyday life. Late capitalism is characterized by the tendency for city inhabitants to become more and more deprived of the right to define urban space. Henri Lefebvre argues that commodification of urban space brings about alienation: “the loss of feeling that there is an ability to achieve the possible, making the possible impossible” (Lefebvre, 1996, p. 21). When a building that has housed artists, where various artistic practices have taken place, is turned into a private hotel, this is an obvious example of how the possible becomes impossible. For Harvey, “capital often produces widespread alienation and resentment among the cultural producers who experience first-hand the appropriation and exploitation of their creativity and their political commitments for the economic benefit of others” (Harvey, 2012, p. 110). Losing the feeling of urban space as a home that permits various social and creative practices produces an enclosed environment, dominated by commercialization of everyday life. Instead of a city for its inhabitants, Varna has gradually transformed into a temporary destination for the transnational bourgeois aristocracy.
A reading of the post-1989 process of neoliberalization in Bulgaria, which takes various forms but is driven by the same operative logic, helps to debunk the myth of the bad capitalists that built bad capitalism. TIM’s actions in Varna and elsewhere have to be analyzed as part of the process of primitive accumulation – as a necessary mechanism for the formation of capitalist social relations. Reading the case of Bulgaria as part of this global process enables us to see that the problem does not lie in the bad moral character of the capitalist players that are building bad capitalism, but in capitalism itself. It is a capitalism that in its late form is driven by the logic of commodification of all forms of social life. Whether the privatized First Alley will contain mafia kitsch as a signature of TIM’s businessmen or would take on a more refined commercial shape if the privatizers were different is a matter of mere detail. The important point is that a neoliberal capitalist system will lead to the privatization of public space, no matter who the privatizers are.
Edited by Jesse Connuck & Neda Genova
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Image: A memorial to Plamen Goranov, who set himself on fire on 20 February 2013 during the anti-governmental protests in Varna.
Bozhin Traykov is a Ph.D. Candidate in Sociology at the University of Alberta, Canada. His research is focused on the processes of transformation of the Bulgarian state and society after the Fall of the Berlin Wall, with a focus on forms of nationalism and neoliberalism.