Heading Toward Modernization?

[...]

Initially, communism was propagated as the most progressive phase in history, indeed, its fulfilment and final state. However, from 1963 on, references to communism and socialism became less emphatic. The political elites and ideologists argued that Hungary would reach, and in the not so distant future, actually surpass, the economic development and living standards of the capitalist countries; they thus were thinking in terms of modernization, even though the word itself was taboo for a long time. In other words, the system was meant to be legitimized by the ability of the Bolshevik model - forced investments, one-party dictatorship, socialist values and norms - to produce a more rapid economic development than the capitalist societies of North America and Western Europe. Or, to put it another way, modernization was to be achieved without a powerful middle class, democracy or a modern mentality. Added to this was Hungary's extremely unfavourable geopolitical position with the Soviet Union, fundamentally distrustful of even the slightest modernization of society and politics.

The apparent cause of the collapse of the East European socialist regimes was the clearly visible failure of this attempt at modernization, most spectacular in the economy. (Ehrlich, Révész, 1994). Nor could it happen otherwise since, as János Kornai (1993) pointed out, an efficient market economy was impossible as long as the overwhelming majority of the means of production were owned by the state; the system of state ownership could not be dismantled in a one-party dictatorship, since that was precisely what the authority of the party relied on. Thus the roots of failure should be sought in the regime's politics and ideology.

Elsewhere (Andorka, 1994), I attempted a more thoroughgoing hypothesis explaining for the failure by using sociological concepts such as anomie and alienation. With the constantly rising suicide rate and growing alcoholism, the spread of mental disorders, neuroses and depression under socialism, the question arose even in the 1980s whether the cause of these phenomena was not to be sought in the system of values and norms of society. Sociological research into such manifestations of anomie and alienation as the uncertainty of values and norms, the loss of faith in the future and in the meaning of life, the sense of being at the mercy of outside forces and powers beyond one's control, etc., led to the conclusion that this syndrome was not only widespread but its dramatic growth started at the end of the 1970s (when questions of this kind had first been raised). I suggested, as a hypothesis, that the cause of all these had been the totalitarian, or, at a later stage, authoritarian, character of the system which deliberately created a feeling of being at the mercy of authority, and also deliberately destroyed traditional values and norms as well as the communities which might have offered some sort of protection against authority. According to Dahrendorf (1979), the essence of progress is extending the range of options open to the individual. This also implied social bonds and commitments. It may be said that the totalitarian - later, authoritarian - system narrowed down the options as well as destroying social ties. Not only did it not tolerate political democracy but it also prevented the emergence of genuine communities and the spread of what I would call a modern mentality, and thus made the evolution of modern society impossible.

[...]

Economic transformation, on the other hand, has been much less successful than was hoped initially. Although the government in power between 1990 and 1994 tried to avoid any shock therapy, economic conditions produced a major drop in GDP (around 19 per cent in 1993), inflation has been high for years (the price index in 1995 was 402 per cent of that of 1989), unemployment, a phenomenon unknown since the end of the Second World War, rose to 13 per cent in 1993, and the fall in the number of available jobs was even greater. In consequence, average per capita real income declined considerably, even if not at the same rate as GDP (in 1993 it was 11 per cent lower than in 1989). However, in 1993 the economic decline was halted, GDP has risen to a small degree since, and unemployment has also fallen somewhat. At the same time, though, the average per capita real income, following a temporary rise in 1994, dropped below the 1993 level in 1995 and was 13 per cent lower than in 1989. Thus, from a macroeconomic aspect, the worst of the economic crisis has passed but at the household level, impoverishment is still on the increase.

At first sight it may seem that the change in the structure of ownership has progressed far, since the bulk of commodity production, services and, in conjunction with those, employment, takes place in economic units in private hands. Ownership relations, however, are far from clear. On the basis of case studies conducted in Hungary, Stark (1994) arrived at the conclusion that special combinations of state and private ownerships had emerged. Formerly state-owned enterprises, transformed into shareholders' companies, were founding private companies, and a considerable proportion of the shares in the state-owned companies had gone over to private hands. With "recombinant ownership" it is difficult to decide whether a company belongs to the state or is privately owned. This dichotomic model, however, does not suit the Hungarian economy. In his view, in Hungary, a peculiar new type of capitalism is in the making, a type very different from Anglo-American and Continental European, and even more from Far-Eastern capitalism. This special Hungarian or Central and East European solution is functioning, but it is not at all certain that it is capable of furnishing the basis for an efficient modern market economy.

[...]

It follows from this that I don't agree with either the overly optimistic or the very pessimistic images of the future. Where Hungary is concerned, I find Francis Fukuyama's (1994) otherwise engaging optimism - according to which the end of history has been reached, and the liberal market economy and democracy have won an irreversible victory - to be premature. Neither do I share, however, the pessimism of Offe (1992) who finds it hardly conceivable that transition to a market economy and democracy could be accomplished at the same time. (As a third objective, Offe mentions national development and, in connection with that, the territorial issue which, however, does not cause problems in Hungary.) I do not see it as inevitable either that, as Przeworski suggests (1991), in Eastern Europe, democratic regimes incapable of carrying out reforms will alternate with authoritarian ones which technocratically enforce the changes required by a market economy attitude but which are overthrown because of social resistance, as has been the case, according to him, in Latin America. I think that the future of the present Hungarian attempt at modernization is open, and it is up to everyone of us whether it will be more successful than the earlier, failed attempts.

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