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A Model of Reform for Communism?
| Article
# : |
16616 |
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Section : |
SPECIAL SECTION
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| Issue
Date : |
11 / 1989 |
2,201 Words |
| Author
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Ivan Volgyes
Ivan Volgyes is professor of political science at the
University of Nebraska. This article was presented at the
PWPA conference held December 18, 1987, in Washington, D.C.,
titled "Gorbachev's Eastern Bloc: The Uncertain Future." It
is reprinted from the book by the same title with permission
from PWPA. |
While it is likely that Hungary will have a genuinely democratic political system and a democratic constitution by next year, the real transformation of the economy has yet to be undertaken. To be fair to the government, of course, this is the hardest task.
Though several countries have gone from a dictatorship to politically pluralist system, Hungary has no examples of successful transformation of a communist centralized economy to a market economy from which to learn. Moreover, creating a mixed economy in which the private and the public spheres are truly equal and intertwined is inherently difficult. Property rights taken from the people cannot just be given back. Not much can be expected for the future of a system in which no price is real and no wage reflective of values produced. For Hungary or any socialist system to be successful in the long run, there must be a total reform of the economy.
To date, however, sweeping changes appear impossible. Successful reforms would entail closing all unprofitable enterprises, especially those in heavy industry. These closures would create unemployment of regional and national magnitude intolerable to the government--even though it is certainly not one that derives its support from the "working class." Such a real transformation would involve movement from heavy industry to service, electronic, and light industries, requiring a total revamping of the national infrastructure.
Hence, by no means short of eliminating the powerful lobbies and somehow acquiring foreign cash and technology can Hungary drag its economy into the modern age. This is extremely difficult because, first, Hungary owes $18 billion to the West and, by 1992, more than ninety cents of every dollar earned in hard currency will have to be repaid as debt service. And second, Hungary's state-dominant economy is still tied to the Council for Mutual Economic Assistance (COMECON) for much of its import and export needs.
Flaws in the plan
Creating a real market will be fraught with problems. Currently, it is impossible to find the real price of anything in Hungary. To illustrate this, one simply needs to consider that price supports, ranging up to 150 percent, are extended to some 30 percent of all goods produced. Additionally, wage funds remain restricted, and the punitive tax system is designed more to "punish" profitable enterprises than to eliminate unprofitable ones asking for ever-higher subsidies. Even the
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