Liberalization and its Consequences

Liberalization and its Consequences

A Comparative Perspective on Latin America and Eastern Europe

Edited by Werner Baer and Joseph L. Love

The essays in this volume describe, analyse and compare the achievements and the failures of societies that adopted market-based economies within a democratic polity after a long period of communist rule (Russia and Eastern Europe) or military authoritarianism (Latin America). Together, they also trace the rocky course of liberal economic policies over the whole twentieth century.

Chapter 6: Hungary's post-communist development in comparative perspective

Béla Greskovits


Baer 02 chap 5 19/10/00 11:48 am Page 126 6. Hungary’s post-communist development in comparative perspective Béla Greskovits INTRODUCTION1 ‘Transition to what?’ This major puzzle of the transformation studies appears to be solved in Hungary. In 1999 Hungary’s social system can be described as democratic capitalism. Viewed in the perspective of Hungary’s own past, this outcome is a successful one. The decade between 1989 and 1999 is the longest democratic period of this country’s post-World War I history. Furthermore, at the end of the 1990s Hungary’s economy is freer than ever before in the 20th century. In this chapter, first I assess Hungary’s present situation in the broader context of overall economic and political developments in post-communist Eastern Europe. I show that in the past decade no country of the region succeeded in getting much farther than Hungary in creating the conditions of economic freedom, while also improving its macroeconomic performance. Another indicator of Hungary’s success is its integration into the political and economic structures and institutions of the West. Where does the secret of Hungarian success lie? I shall argue that both the past and the present matter: the success is both due to the favorable legacies of the Hungarian version of socialism, and the patterns of resolving the conflicts between the capitalist and democratic components of transformation. Hence, in the third part I shall demonstrate how both the communist legacy and the post-communist democratic politics affected the process and the outcome of capitalist transformation. Given...

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