Towards Economic Reform in Hungary

Abstract

After World War II, Hungary expropriated private capital and instituted a policy under which the small producers united in co-operatives. Hungary has thus a socialist economy which retains the categories of a market economy, as for instance money, price, credit, profit, etc. Hungary built up her socialist economy according to the Soviet pattern. She introduced annual and five-year planning and an operative management based on compulsory plan indicators. She did so, among other reasons, because the economic mechanism of the Soviet Union had proved a very effective means to rapid industrialisation. We did not go , into a thorough examination as to whether the existing differences in social and, primarily, in economic conditions had set specific demands for economic mangement. We started out—at that time—from the hypothesis that the historically evolved concrete system of planning is the only conceivable system of socialist economy. But the forms of organisation, the methods of planning and the principles of economic regulation which emerged in the socialist countries after World War H reflected the economic mechanism of a given but short period. It has become increasingly obvious that those who regard the practice of one given period as the necessary and unalterable expression of socialist production and of planned economy, forego the possibility of developing a socialist society founded on maximum advantages. Therefore, a scientific discussion of the socialist economic mechanism had to come to the recognition that the economy of a socialist country can be built up in different ways. The argument about the various possible economic models of socialism reaches back to the early 'Fifties. At that time, the centralized control of the Yugolsav industry through direct plan instructions had been abolished, the 'self-management by workers' was introduced, together with economic instruments by the aid of which industrial activity was to be influenced, in order to ensure the implementation of the national economic plan.