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Free enterprise eases the control of collectivism

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There's a small ice cream shop on October 6 Street in downtown Budapest that usually has a line out onto the street. It's privately owned. This is just one part of Hungary's thriving small-business sector, its entrepreneurial activities encouraged by a communist government.

At the state-owned Ikarus bus factory in Szekesfehervar, about 35 miles west of here, some of the better employees are offered weekend work under special contracts to ''customize'' big passenger buses to meet the desires of the buyers. The workers make more money than they would on overtime; the company gets more value for its costs. Further, when there aren't enough rail cars to handle bus deliveries, three small private companies bid for contracts to drive some buses to Hamburg for overseas shipment to customers.

These activities, too, are part of an extensive effort to introduce more flexibility, efficiency, and enterprise into a socialist economy. Hungary, a small nation of 10.7 million in the middle of Europe, is engaged in a fascinating economic experiment. It is attempting to mix the advantages of the market system into a basically communist economy - so far with considerable success.

Hungary's Socialist Workers' Party has not given up basic control of the nation. It tolerates only limited dissent. But the party, since Jan. 1, 1968, has been gradually moving to decentralize the economy, make prices more realistic and incentives more effective. The ''New Economic Mechanism,'' as it was dubbed, is seen as a necessity in a nation too small and too short of natural resources to be an industrial power, and thus highly dependent on international trade.

Hungary did try the Stalinist route of forced heavy industrialization after World War II, and it remains stuck today with a loss-ridden steel company and a marginal aluminum works.

''Both industry and services were overcentralized, too big, too slow, too bureaucratic,'' recalled Tamas Ory, general manager of the National Council of Industrial Cooperatives and expert on small business.

The purpose of the New Economic Mechanism, which continues to evolve, is to encourage people to start their own new businesses or, if employed within a state company or cooperative, to exercise more initiative and be more efficient, Mr. Ory explained.


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