A Hungarian Lesson

From Karl Polanyi
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Text in English to re-read

Events in Hungary might be expected to have an immediate bearing on the question of socialist planning. Yet in spite of the months of dire emergency that followed upon the cruelly quenched revolt of the party reformers against the Stalinist leadership but little is heard about the upheaval’s economic causes, if any. This should caution against rash inference however plausible they may sound.

Most of evidence used here was gleaned from the files of a Hungarian Communist literary weekly, the journal of the Writers’ Association. The sparse but revealing facts needs to be handled with care if the elements of the pictures are to fall in place. Even before the death of Stalin, Hungarian Communist writers and poets sporadically succeeded in passing on signals, if ever so faintly, of a universal discontent. Precarious balance between a faltering censorship and courageous self-assertion was the indicator which time and again gave away the growing points of dissatisfaction. Soon after Khruschev speech of Spring 1956, brief, forceful documentaries began to appear in the ‘Literary Gazette’.

Reports were chiefly of villages and rural towns, not of the industrial metropolis or the countryside factories. Yet the course of the uprising showed the working class as an eruptive force which became a block of heroic resistance while the hostility of the peasantry to Communist leadership, though fed from a thousand grievances, did not add up to a revolutionary factor. This ignoring of the workshops was only partly due to reviving tradition of village exploring [23] among Hungarian writers. The fact was, that, if to touch upon the land question was risky, to delve into conditions in the factories would have been not only suicidal, but indeed a psychological impossibility for Communists who were incapable of realizing that the industrial workers had turned away from the party. To the last they misread the sullen silence for a sign of political apathy. But they were excellent interpreters of the mood of the countryside. While destitution, near-starvation or other symptoms of an economic collapse were singularly absent from their descriptions, the bitter resentment which they voiced concerned almost entirely matters of economic administration. The explanation of this apparent contradiction was that complaints did not center on a sharply declining standard of life, but on maladministration, cases of monstrous waste, back-and-forth changes of general direction involving pressure on the population to shift from village to town and back – then the whole movement was reversed once more. Such a subject matter would naturally appeal to rural sociologists. The peasant’s economy in his personal life, a bad administration hampers his dealing with fare, beasts and field; his complaints are in the nature of a groan in response to a bodily hurt. Though fairly wall off, he may yet be driven into a state of hard resistance to what must appear to him as senseless and arbitrary acts of harassing interference. Eventually, he will be obstructing and sabotaging the administration while abhorring any swing back to a reactionary regime which would sever him again from the land.

Actually, the administrators of the Hungarian economy were not inept, nor did they lack of judgement, technical experience and devotion to their task. That a harsh and tyrannical bureaucracies reached such [24] a pitch and eventually resulted in a scandalous all round management must needs have a cause of its own.

The key to these contradictions should be sought in the unique conditions in which the Hungarian socialist regime functioned, and the dangers of which were not apprehend until after the event. Irrespective of the peace treaty, during the whole period in question, Hungary was under a close, strictly enforced foreign rule – a circumstance that want unheaded because it had been traditionally deemed a matter of small account between socialist countries. Such a combination was even believed advantageous to the smaller and weaker of the two. Anyway, the fact of rule by Russian controllers was never openly acknowledge by other side. At first it was credited to the obvious condition of Hungary as vanquished country; later on, after the peace treaty had been signed and defeat ceased to be relevance, it was hidden from the public eye by mutual connivance. The heart of the matter remained a well guarded secret. It was an astonishing exploit of underground statesmanship on an international level that the Hungarian administration, both political and economic, was at all times controlled from Moscow with an immediate check established through the presence of Russian controllers, on the go of, often in the inconspicuous role of an office worker.

A careful analysis of Hungarian maladministration over the critical decade would reveal what appeared to the individuals below as the inchoate ravings of a group of madmen at the top, to have been else than the inevitable consequences of foreign rule in a socialist economy.

A capitalist state as a satellite can put up with a considerable measure of open or hidden foreign rule.[1] The individual citizen [25] ma be hit by the burden of taxation caused by reparations or other contributions his country is charged with; opportunities for profitable business or employment may be impaired. But external pressure does not here affect the minutiae of daily life in response to the domestic situation in the dominant country.

No so in a socialist economy. Along with its technical and economic advantages goes the adverse fact that a mere flicker at the center reverberates through the whole system and by the time a shift of policy reaches the shop, the family the individual, it will have grown into a devastating blow. Any measure taken in response to the zig-zag of a foreign party line, or an eventual deficit in a foreign economy works as an erratic, arbitrary command with effects blindly destructive of the social and economic tissue of the country thus exposed to external domination. Hence the irreducible requirement that the ultimate meat of power in a socialist community free from foreign rule.

The term satellite which is politically so revealing, is economically confusing. For a political satellite may well be economically a separate state. Its political dependence may than cover up its economic separateness. Whether politically dependent upon the Soviet Union or not; economically ‘inseparable’ from the Soviet Union or not, Hungary has an inflation not shared by the Soviet Union nor alleviated in its consequences for the individual worker. The obvious of monetary and trade policy – in foreign loans and exports. Political dependence from the USSR alone prevents her [26] from turning to these expedients. Her foreign trade monopoly would in no way hinder her from applying the monetary and trade policies she needs. But a man bereft of his arms and legs is not more helpless than a socialist state has its own national currency and labour system and yet is not free in its foreign economy. Its enslavement to the ruling state is more absolute than anything that is known to history. And yet, such a state, we repeat, is not cut off from the world’s capital and commodity market through loans and exports. Its foreign trade monopoly would permit it to do either, or both.[2]

Foreign rate is as the root cause also apparent of a deadening bureaucratism. The organs of the socialist state and municipalities are unable to absorb the party organs which have originally set them up, because the foreign direction works entirely through those same party organs. The vital separation of party and state is impeded from the top. A threefold layer of bureaucracy insulates the citizen from the seat of power, since the double layer of party organs and state organs is overlaid by a foreign party bureaucracy, welded to the leadership of the national party bureaucracy. Democratization may be extended to important fields, it may mitigate in many ways the damage and suffering. But as to the cause of the disease, it remains outside the scope of democratization. At all crucial points – factory, local government or trade union – it is restricted to empty formalities and, if pressure for self-rule is maintained, results in lipservices, fraudulent proceedings, an increasingly complex system of pretences, eventually creating in the politically still active part of the population a veritable Babel of moral confusion. It is only a question of time, and not too much time at that and distrust ad disillusionment form into a [27] hard core; behind a screen of apathy, intense hostility takes root. Let, then, {aons} striking event in common human terms illuminate the scene, and the affects will be like an earthquake. In an historical instant the depth to which the fibre of the nation has been eaten away, stands revealed. The disclosure of Rajk’s innocence was such an event. The Rajk trial, in the context of the Slanaky, the Kostov and the other purges had been broadcast as an accusation against Tito, and Budapest was far outdone by the shrill tones emanating from Moscow. Yet Rakoai shouldered the awful responsibility of the judicial murders, pretending, in loyalty to Moscow, to be acting on behalf of an independent sovereign body. This made the disclosure of the truth about Stalin, in February last, into an admission of the innocence of Rajk, and with overwhelming force into a shattering revelation about the regime in Hungary – political and economic. Secret utter subjection to foreign rule had worked its paralyzing effect on the increasingly socialist economy.

History has taught us to interpret ‘foreign rule’ in terms of language, culture, national statehood. In the light of what has been said, a warning is called for. Neither currencies nor social services are culture traits of a specifically national character. Their separateness is not like that of language or music, the rhythm of speech of folkways. A community linked by a common currency shares a price level that determines real wages and material prospects, social services comprise a people in a commonalty of conditions of assistance. Both price level and security transcend nationality and culture. Far be it from us to underrate the cultural factor in nationhood, or the national roots of the historic state. But the state that has to be truly sovereign under socialism is not so much the home of a nation, as simply the [28] habitat of a people. The Hungarian tragedy in its economic ramifications was not in the first place an outcome of national frustration – it was the consequence of a carefully camouflaged, stringently exercised foreign rule over a socialist economy.

Manuscript on the margin : “The general”.


  1. Handwritten between the line: “governement from outside”.
  2. Handwritten, on the margin: “How ? This is the vital {____t to afalbof out}”.

Text Informations

KPA: 37/01 (28 p.: 4 times, 7 typed pages). Three versions; I chose the last version, that seems the best.