The Hungarian Quarterly, 1996 (40. évfolyam, 153. szám)
ECONOMY - Györgyi Kocsis: Ten Years of Hard Labour. The Rebirth of Capitalism
Györgyi Kocsis E C O N O M Y Ten Years of Hard Labour The Rebirth of Capitalism " The burdens and ties generated over the I past fifteen years, during which time economic activity has lagged behind the development of the world economy, have proved to be more grave than the government's policies had anticipated." So went a communiqué concerning the very last of the so called "People's Economic Plans" for 1989 as it diplomatically recognized the failure of the socialist economic system. The Hungarian economy, incapable of adapting in the period that followed the Oil Crisis of the 1970s, had effectively begun to stagnate many years earlier; by 1988 inflation had reached double figures, and the national debt was mounting. A "creeping economic transformation" took place well before the first major event of the transformation, the June 1989 round table negotiations. From 1982 onwards, it was more or less possible to establish small enterprises, in 1986 the foundations were laid for a two-tier banking system, and in 1987-88 the two key pillars of the future market economy were created: tax reforms and a new Company Act. Györgyi Kocsis is on the staff of Heti Világgazdaság, an economic weekly. In 1989 the transitional government of Miklós Németh tried, unevenly, to pull the country further out of the dead end street of socialism. This became the liberó year (after the first appearance of disposable nappies), when prices of almost half of imports, and the majority of prices for products and consumables, were liberalized. The introduction of proper passports (to replace the old two-passport system, one for socialist countries, the other for the "West") was accompanied by measures easing the purchase of foreign currency. This famously resulted in a mass Hungarian shopping spree in Austria that year. Meanwhile, no measures were taken to stop the large state corporations from delivering goods to their (mostly Soviet) partners in a collapsing Comecon without receiving payment in money or in kind. It was in the interests of these firms, which had major political influence and which received enormous state subsidies, to maintain the rouble-denominated exports that accounted for almost half of all Hungarian exports at the time. The combination of measures taken and measures not taken took the country to the brink of financial catastrophe: the convertible currency current account closed with a deficit of 1.4 billion dollars, while the rouble-denominated currency account jumped to a surplus of 550 million roubles, four times 64 The Hungarian Quarterly