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Hungary's reforms

''They can, of course, close it down whenever they decide to,'' Laszlo Rajk remarked to this writer last year. He was speaking of the ''open house'' bookstore for unofficial Hungarian writings that for two years was housed in his apartment in midtown Budapest. It was, indeed, closed down by the Hungarian police a month ago.

Mr. Rajk is the son of a former Hungarian interior and foreign minister who was executed in the Stalinist years, then rehabilitated a few years later with an official admission that the treason charges against him had been faked.

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The son does not display any bitterness. Instead of dissenting from the reform system Hungary has followed since 1968, he has joined other young intellectual Hungarians in writing, producing, and distributing criticism and probing into areas where they think there is room for further reform.

Mr. Rajk's ''bookshop'' (the studio in which he did his work as a draftsman for the municipal architect's office) was formally open one evening a week. But callers were always popping in to browse or to buy typed and mimeographed copies of articles and books denied publication through normal, government-controlled outlets.

The bookshop had come to symbolize Hungary's relatively tolerant official attitudes toward criticism.

In December, the police called and removed duplicating machines as well as written materials. The homes of six other dissidents in Budapest were searched, and all were given warnings against continuing their activities. A month later, Mr. Rajk, who ignored the warning, was evicted.

What did these moves mean? Were they the start of a political crackdown? (Only shortly before, the party daily Nepszabadsag had sternly cautioned dissidents against going too far.) Did it signal what some observers saw as ''tightening'' the light reformist rein the regime of Janos Kadar had held on Hungarian affairs for more then a decade?

In retrospect it seems to have been little more than an ideological ''tidying up'' - to ensure that dissenting opinion remains within bounds - while on broad issues of government the leadership prepares for further reforms.

Dissent in Hungary has always been less significant and much less virulent than elsewhere in Eastern Europe.

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The Rajk episode and the rebukes to the more outright dissidents appear to have been designed to head off neo-Stalinist grumblings against ''liberalism'' both at home and among Hungary's hard-line allies.

Mr. Rajk and his friends - who did not oppose a ''socialist'' system as such but wanted to improve it - have already resumed some of their publishing activity, and the incident is no longer talked about.

Instead, much political discussion in Budapest centers on an apparent readiness to face up to some of the political questions posed by economic reform.

There seems to be a distinct possibility of pursuing this further - albeit with customary (and profitable) Hungarian caution - despite all the current economic difficulties.

The economic problems would be formidable even in a much larger country with more natural resources. Hungary, a landlocked nation of 10 million people in the heart of Europe, is critically dependent on foreign trade. It has to import 80 percent of its oil, almost all its iron ore, and at least 70 percent of coke and most other basic industrial materials.

Last year was tough going. Debts were comparable to Poland's and the per capita borrowing was the largest in the Communist bloc. Energy costs soared.

In the West there was a tendency to put a credit squeeze on Hungary because of martial law in Poland - despite Hungary's efforts to include some free-market methods in its attempt to cope with its problems.

''It was a terribly near thing,'' says one of Budapest's best economists.

A curb on expanding living standards was unavoidable anyway. If international bankers had not changed their attitude - (the International Monetary Fund provided some help in November and Western central and commercial banks came up with about $1 billion of new credit before the year was out) - Hungary could have defaulted, throwing the whole reform process into ruins.

As it is, necessity still dictates a substantial squeeze on domestic consumption and real earnings, as well as severe budget and investment cuts to give top priority to energy, energy saving, and boosting exports.

But the leadership - despite some diehard opposition within its ranks - is sticking to its liberalized economic policies. It is continuing a decentralization wave that has broken down a score of cumbersome monopolies into some 120 smaller, more manageable, and independent enterprises.

Some very tough credit and tax, performance, quality, and profitability criteria must be met before the National Bank supports an enterprise with fresh money. Investments must produce more exports for convertible currency and at the same time cut energy and other vital costs.

Meanwhile, the private sector - though still a small percentage of the overall economy - is being encouraged to a degree remarkable in any communist state. It gets nearer and nearer the Yugoslav margin.

Essential services give a quality to everyday life in Hungary that is lacking in such other East-bloc countries as Czechoslovakia and Poland, even though the latter has many more natural resources.

Above all the private sector ensures Hungarians cheap and plentiful food without queues, and major export gains.

New Soviet leader Yuri Andropov, even more than his predecessor, Leonid Brezhnev, seems to be saying Soviet farmers could learn a lot from their Hungarian counterparts. It was Mr. Brezhnev who first gave Budapest's methods an encouraging green light.

Next: the road to pluralism

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