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Unformatted text preview: Economy of he Socialist Hungary - Handout Rebuilding and Communist Rise t Power (1945- 49) O
O Devastation due to the WW2, h ge human and material losses Sov1et military occupation Interim Govemment that includ d the Hungarian Communist Party (MKP) The Interim Government condu ts land distribution without compensation Though the Communists far not won the elections of 1945 and I947, due to Soviet
pressure, they had to be involve into the government with the control of economic
reconstruction and police I946 summer: largest hyperinﬂ' 'ion ever 1947: nationalization of the min .5, Communists push through the ﬁrst three-year plan
1946-47 the Communists gain 5 me popularity with the fast reconstruction 03(1947-48 the destruction of the o posing parties, gradual nationalization of banks, 0
O factories and ecclesiastical scho Is
1948: Enforced unity of the Co munist and Social democratic parties
August 20. I949: Hungarian Pe pIe’s Republic The Stalinist Command Economy 1949-56) 0
O O O 0 Copy of Stalin’s regime, led by ‘ Stalin’s best disciple", Matyas Rakosi (1949-56)
Party-state, personal gilt, comm nd economy. hierarchy of ownership forms. class
struggle, search for intemal ene ies, elimination of the middle class (“Who is not with
First ﬁve-year plan (1950-54): e pedited heavy industrialization ("Country of Iron and
Steel”) and militarization Fast decline in living standards t at led to a further shift of capital from the agriculture to
the industry (“wgpgfﬂﬁﬁﬂi ‘ ") Industry: energy-and capital-int sive development, quantity instead of quality, trade
relations shift to the East (COM CON), heavy reliance on Soviet raw materials First (failed) attempt of collectiv zation (1952-54) By 1953 the economy cracked d e to the militarization (military budget grew to 25% of
GDP) 1953-55 “Thaw”, after Stalin’s d ath and the economic collapse, Rakosi was weakened
1953-55 Prime Minister Imre N y slows industrialization and stops coIIectivization
June. I956: Rakosi is dismissed fter Khrushchev’s speech at the 20th Party Congress, but
this cannot prevent the revolutio1 that broke out on October 23, I956. Kadar' s Consolidation (195.6- 68) November 4, I956: the Soviet A my breaks down the revolution and reinstates the ) ((0 404%
Communist power. The new stro gman: Janos Kadar (1956-88)"? I'D/Ax
1957-61: retaliation, more than 2 O executed, thousands imprisoned )5} 7 lav- '4'" The New Economic Mechanism (1968) o The Party decided on the reforms in 1966 that began on January 1, 1968. 0 Key elements:
1) the direct commands and complex plan systems abolished, the new instruments of central intervention are: ﬁnancial controls and price systems 2) central distribution of means of production and materials were abolished
3) instead of the division, the approximation of international and domestic markets
4) encouragement of corporal autonomy, competition between firms, the W.
5) recognition of the importance of primary production in the agriculture 0 Concept: the increase of effectiveness and turn to the intensiﬁcation 0 Fear of political risks, inbuilt checks. opposition from orthodox Party leaders 0 The only comprehensive reform in the COMECON, “provisional”, but never revoked The Goulash Communism (1968-79) The NEM had an overall positive impact on economy, especially in the agriculture
Shortage on food eliminated, growth ofinternational trade, esp. with the COMECON
Remarkable growth in living standards in the late 1960s, early 19705 Mass housing projects “Socialist welfare state" Relatively more personal freedom “Goulash Communism”, “The Happiest Barrack of the Socialist Cam ”V Growth of the second economy (but Burn-out and deviances), growing inequalities
Oil shocks of 1973 and 1979 caused the open of the value scissor Increasing turn to foreign loans, rising international indebtedness OOOOOOOOOO Decline and collapse (1979-89)
, '// 0 Debt spiral, in 1982 Hungary joins the IMF (and completely joins the world economy)
W 0' aE>‘)Slowing economic growth, half-hearted reform efforts (refomrists vs. old leaders)
0 Rising role ofentrepreneurship
0 1985-89: Slowing economic growth tums to recession, rising inﬂation. declining living
0 1987-88, tax reform: VAT and personal income tax
0 1988: changes in the top Party leadership, legal preparation for privatization
0 1988-89: growing dissent, demonstrations, MW
0 1989 summer: negotiations with the opposition about the transfer of power
0 1989-90: chan e of re ime
g gr.) Arcs €0.674'/0‘ll04
Further readings: ‘7 Ne k5 ﬂea/136
Zsuzsa F erge (1980): A Society in the Making: Hungarian Social and Societal Policy194. -.75.
M E Sharpe.
Charles Gati (_ 1986): Hungary and the Soviet Block. Duke University Press.
Janos Komai (1980): Economics of Shortage. Elsevier Science Ltd.
Janos Kornai (1992): The Socialist System, T he Political Economy of Communism. Princeton
Paul Lendvai (2004): The Hungarians - A Thousand Years of‘Vicrozy in Defeat. Princeton
Ivan Szelenyi (1983): Urban Inequalities under Stare Socialism. Oxford University Press.
Ivan Szelényi (1988): Socialist Entrepreneurs. Embourgeoisement in Rural Hungary.
University of Wisconsin Press. ...
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- Fall '10