When political change arrived in the early 90s, the Soviet bloc countries differed considerably in their socio-economic systems and in the degree of political elbow-room they afforded to the public expression of ideas and opinions within the limits the party-states had set. In Hungary’s "soft" dictatorship, the government’s grip on economic processes had been gradually slackening since 1968, with the state’s influence concentrating on investment. Consequently, publishers, museums, concert halls, art galleries, theatres, cinemas, and latterly the electronic media presented a great variety of schools of thought, philosophies and styles in a range that went well beyond the officially approved "socialist realism". Indeed, the definition of the latter changed over the last two decades of the system, while still remaining vague. According to official cultural policy guidelines, works of art in the latter category enjoyed goverment support, cultural products not considered hostile to socialism were tolerated, whilst those deemed inimical to socialism were banned. Over the years the distinction between the first two became increasingly blurred. Apart from overtly anti-socialist and anti-Soviet works such as Orwell’s Animal Farm and 1984, Koestler’s Darkness at Noon or similar books produced by authors in Hungary, the third category included works which didn’t meet the prudish, petty bourgeois tastes and moral convictions of the ruling elite. Nevertheless, with generational and educational changes, even this third category was gradually reduced in size.

Censorship was part and parcel of the editorial work in publishing houses. (There was no formal Board of Censors as such; guidelines were issued and writers, editors and publishers engaged in a form of self-censorship.) In exchange, the Hungarian government, just as those of the other Soviet bloc states, offered economic security, indeed well-being to "workers in the cultural field". Organized into state-sponsored and controlled associations, such as the Writers’ Association, and into Funds, such as the Literature Fund, a system of advances on future contracts, prizes, publishing opportunities, retirement pension schemes, health insurance regimes, subsidized housing and hire-purchase credits, summer resort homes, mandatory percentages of state investments set aside to purchase objects of art, free foreign travel and secured market and financing all provided security for even mediocre talent that toed the party line. Punishment for non-observance took the form of withdrawing some or all of the above benefits for a shorter or longer period, or in forcing the "heretic" into having to earn a living from non-creative work. However, it should be said that, to a minor extent, some alternatives to state support emerged in the form of independent sponsors, of which the Soros Foundation is the best known. These started operating in the final stage of the party-state and fostered what the state only tolerated; however, they did not provide regular financial support for what the authorities prohibited.

Outstanding talent, especially if it was acknowledged in the West or had a strong following at home, was lavishly remunerated and enjoyed a high degree of tolerance by the authorities, in whose terms of reference such talent expressed unorthodox views and methods.

Let me add that in the lean years of socialism, from 1979 to its collapse, the real value of subsidies to culture gradually declined and sociological studies started to point out that subsidies such as cheap opera, concert and theatre tickets helped the well-to-do and the target-group of the working class, lower white-

collar workers or farmers did not take advantage of these benefits: the fact that supply is inexpensive does not alter the target-group’s preferences for operetta and musicals instead of opera, Agatha Christie instead of Tolstoy, and so forth.

The collapse in the early nineties of firms supplying the Soviet and related markets reduced GDP by almost 30 per cent and sharply reduced tax-revenues, producing inflation that at one point touched 30 per cent, and also devalued existing benefits. It led to a reduction of the cover provided for the financing of cultural activities and, last but not least, of the subsidies that made books, cinemas, opera and theatre cheap; the result was that the bulk of the public, affected by unemployment and stagnating incomes, drastically reduced its demand for cultural goods. A new public and magnanimous sponsors emerged, among them the big multinational companies, as well as nouveaux riches with mostly unsophisticated tastes, and they were immediately besieged by a host of prospective clients.

In other words, the fear of a return to the conditions of the 1930s was felt, this being a decade which, though paradoxically now thought of as a golden age for the arts, and especially literature, was also a time when the majority of those engaged in the arts in Hungary was pauperized and exposed to the political exigencies of the government and prize-granting foundations. The government dispensed jobs, mainly in the teaching professions, state and municipal commissions and access to broadcasting, and all of this in accordance with the loyalty of the artists concerned. The idea of making use of writers and other creative artists was developed by one of the regime’s more able statesman, a minister of the interior (and, at another period, chairman of the Hungarian Broadcasting Corporation) Miklós Kozma, who himself was the son of a good poet, Andor Kozma. An attempt was made by anti-German and by Anglophile as well as Francophile circles led by a lady of high intellectual capacities and influence in high society, a gifted film and stage-designer, Klára Tüdős. The liberal, to a significant extent Jewish, bourgeoisie supported the literary periodical Nyugat; the more radical elements among them supported the short-lived Szép Szó. One of the most influential foundations, the Baumgarten, whose prizes and stipends were both financially and artistically important for poets and writers, reflected the orientation of the non-extremist, highly educated, liberal neo-Catholic middle class and it showed a certain bias against those whose politics were left of centre. Other foundations, restricted in number, were for the most part affiliated to religious and political groups, and in most cases the priorities, tastes and views of the members of their awarding bodies were crucial. Attempts to organize mutual help by outstanding writers such as the novelist Zsigmond Móricz (in the form of the Economic Association of Writers) had neither a major nor a lasting impact.

The fear of a reversion to the 30s raised a great hue and cry, primarily on the part of artists hoping to see the restoration of former governmental sponsorship in order to avoid a total collapse in Hungarian cultural life, arguing the absence of a new public, new sponsors or new, non-state-subsidized publishing houses, theatres, exhibitions. Yet the last couple of years has shown that such fears have no real foundation: there have never been as many publishing houses, theatres, journals, book titles published, or as high auction prices for objects of art as in these last three years of the nineties. (One unique phenomenon is a quarterly, Parnasszus, devoted solely to poetry and criticism, which is wholly supported by a businessman of not over-extensive means.)

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In some of the arts, considerations of economics can be valid, particularly those concerned with the efficiency of inputs in terms of output and vice versa; they can be applied to those workshops of the entertainment industry which occasionally produce art, such as film studios or the musical theatre. They resemble factories in organization and technology to a smaller or greater degree (film) or big manufactures (opera, theatre), and use modern commercial techniques such as franchising (e.g. Lloyd Webber’s musicals). These economic considerations may be applied to a certain degree to major workshops in painting and sculpture. The second generation of the Brueghel family used division of labour through specialization in portrait, flower and landscape painting, Rodin employed hand and foot and other experts; thus elements of an Adam Smith division of labour at the manufacture level are not alien to painting, architecture or sculpture.

Economics may approach this competition from the demand side using the instrument of marginal utility, especially of the law of diminishing utility. This law states that, after some point, successive equal increments of a good yield smaller and smaller increases in utility, directing demand into other fields of satisfaction. But what is the objective yardstick with which to measure utility? Especially where the creative and performing arts are concerned?

It is better, perhaps, to turn to Edgeworthian indifference analysis, an analysis of consumer demand based on the notion of ordinal utility. The consumer is perceived as having a finite amount of money to spend and as being confronted with given prices for all the goods and services he may consume. He will then decide on some set of quantities of goods and services, given his tastes, the money available and the prices. In an international context, the theory of competitive advantage may be utilized. Welfare economics would welcome governmental redistribution in subsidizing culture, supply-side economics would insist on funding by consumers plus sponsors, neo-Keynesians would approve of increasing demand by governmental expenditure and so forth. Different schools of economics would suggest contradictory courses for legislation and funding.

Yet, even if economics had a uniform attitude towards art, I should emphasize that such generally accepted theories as David Ricardo’s on competitive advantage cannot be applied, even in extremis. Thus, a calculation in the ‘80s showed that Hungarian agriculture had a competitive advantage only in the production of tomatoes. Nevertheless, nobody in their right mind, not even diehard politicians, would have concentrated all Hungarian human and physical capital on the production of tomatoes. Likewise, if only the USA, China, Japan, Spain and Russia have, languagewise, a large enough market for film pro- duction, does that mean that smaller language groups should abandon the making of movies?

This again does not necessarily entail budgetary subsidies. In the ‘30s, Hungarian films were prepared in more than one version (usually German, but also in Serbo-Croat and others). In the sixties, when the Czech and the Hungarian "new wave" produced excellent films, they were shown, dubbed or with subtitles, in the West. The absence of commercial success and the limited audience of film connoisseurs was not due to the limitations imposed by language, but by the fact that these products were not demand driven.

A product of art embraced by the market is not neccessarily of low quality, and the converse is also true. This applies also to positive or negative judgements passed by experts or the "members of the guild". Tolstoy loathed Shakespeare, Van Gogh was unable to sell his pictures even though his family traded in art objects. The Eyre Report on the provision of opera and ballet in London is considered by some members of the panel discussing it as "one of the most important documents for the future of the art form", while "the cynics are not so sure" (Andrew Clark, Last Chance Saloon for London Opera, Financial Times, March 23, 1998).