By Laszlo Andor
BUDAPEST — A new economics textbook by the chief editor of the main economics journal of Hungary says that the main difference between transformation and transition is, that the first is a slow and gradual process, while the latter is fast. However quick this transition is supposed to be, the people are getting tired of it.
In 1989-90, most people welcomed the arrival of political liberties — a first experience for many. People were enthusiastic, and the fall of walls and dictators was followed by a short-lived bout of euphoria.
In 1992, the problems of the real economy came to the fore in popular interest. The previously popular statesmen were now measured by their economic performance and found weightless.
Values that were guiding stars in 1989-90 have suffered serious depreciation. Nobody denies that political freedom, civil rights, national sovereignty and integrity, and the rule of law are all beautiful institutions. But people expect decent living standards, material stability, economic and environmental security too.
In 1992, the Hungarian economy continued to be affected by negative trends that were considered provisional at the beginning of the transition. Although the origins of the economic crisis can be found in the international disintegration and the debt crisis, the major causes of the present decline are internal. Gross national product decreased, and will probably fall further this year.
Behind the lack of internal demand are acute sicknesses of the real economy. There has not been any solution to the financial crisis of the corporate sector, the structure of the economy has not been modernised sufficiently, and uncertainties about the change in ownership have worsened the situation.
Industrial production declined 20% in 1191 and 10-15% in 1992. Because of massive disruption in the relations of ownership, the decline in agriculture production will increase from the 13-18% of 1992 to 15-20% this year.
As a result, unemployment, approximately 100,000 (2%) at the end of 1990 and 400,000 at the end of 1991, was 750,000 at the end of 1992 and may reach 1.2 million in 1993.
In addition, a 22% inflation rate hit wage earners in 1992. Contrary to government forecasts, it is likely to be even higher this year, especially if a new system of value added tax is introduced as planned by the ministry of finance. If popular or opposition pressure prevents new VAT rates coming into force, the government will undoubtedly find other means to cut purchasing power.
After the spectacular collapse of the communist economies, the belief was strong that the purest possible capitalism would result in economic recovery and the best possible living standards for most of the people. "By the end of the century we will be members of the European Community", the government says, and most people take this as a guarantee that by that time our economic development will approach the average level of the EC — or, at least, it will be much closer to the standards of Austria, the consumer standards of which exercised a very strong effect during 1989-90.
Such illusions were encouraged also by leading Western politicians — Bush, Thatcher and Kohl, who visited Hungary one after the other in the crucial years. Visits of French peasant leaders, who demand the elimination of the Hungarian agricultural surplus before their delegates will allow Hungary into the EC, remain hidden from the public. So do the terms of the associate membership agreement signed by Hungary and the EC in 1991.
Not many people paid attention either, when, in 1989, newspapers published the statements of some World Bank experts, according to whom the Hungarian people did not deserve the living standards they enjoyed.
People have not yet come to terms with the market economy at all. "We already have market prices, we want market wages too", trade unions said not so long ago. The logic of this naivety comes from the fact that since price reforms were introduced, all price increases have been justified by the requirements of the market. Thus "market" became a synonym for "high", and "market wages" means high wages.
Because of Hungary's high foreign debt throughout the 1980s, the IMF became perhaps the most important source of economic policies, and it remained extremely influential after the political changes. Its paramount policy items — privatise, liberalise and deregulate in all circumstances — coincide with the interests of the strongest groups of the managerial layer in industry and banking, who think of themselves as the most likely owners in the new Hungarian capitalism.
The unpopularity of the government of Prime Minister Jozsef Antall leads to more authoritarian forms of rule. But popular support of the opposition is not strong either.
The main reason is that the liberal parties, which are the main opposition, criticise the government from a platform of even harsher austerity, even faster marketisation and even more radical "systemic change". They organise mass demonstrations when the jobs of a few dozen top media officials and journalists are threatened, but their eyes remained dry while unemployment rose 7
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Unfortunately, the left forces have not yet been able to escape from the influence of liberal economics, which prevents them offering an alternative road of development for the country. The social changes that inevitably follow the liberal transition project create a fertile soil for crime and hostilities, and eventually give rise to fascistic tendencies in politics. Thus liberalism, which was very strong three years ago, has created not only its own grave-digger, but that of democracy too.
The more we experience the new east European capitalism, the more we have to rethink the balance sheet of the Communist regimes. In the West, the socialist experiment of the East is usually described as having achieved no more than a politically oppressive and economically uncompetitive society. But the new world does not seem to be better at all. Mentioning mass unemployment, rising fascism and war is enough to contrast what we did not have in the region during the postwar decades and what we have now.
If the Communist experience is an argument against socialism, the present developments have to be an even greater case against capitalism.
It is very hard to see how the new regimes can stabilise themselves and provide safe prospects for the majority of society. The case of Lithuania, which gave unexpected support to the Democratic Labour Party at the elections in October, shows that people are not happy with the new tendencies, and appreciate at least a part of what they have meant by socialism, even in a country which did not voluntarily join the Communist camp.
There is a broad consensus in Hungarian society that socialism, as it existed before, cannot and should not come back. But it is becoming more obvious that what people missed in the past regimes was not more liberalism and not more nationalism, but more democracy.
Many observers in the West believe that the Hungarian economy is
freer than it was during rigid central planning. In reality, economic decision making is much more centralised now in the hands of a new narrow elite. After the liberal moment of 1989-90, and having seen the damage of capitalist restoration, the 20-year experience of Hungarian market socialism looks better and better.