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Hungary's brand of perestroika

IF restructuring is an uphill struggle in the Soviet Union, it is more like a downhill coast in Hungary - with the problems of control which that implies. Reformers there have been at it awhile. Hungary's free-market experimentation goes back 20 years.

Results have included periods of relative prosperity for Hungarians, compared with their Eastern European neighbors. In the past few years, however, the country has been in the doldrums. Expansion has stopped, inflation has taken off, wages have stagnated. Foreign debt, $13 billion worth, is a dampening fact of life.

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The country's answer to these problems, as articulated by its new Communist Party chief, Karoly Grosz, is to plunge ever more deeply into free-market economics. Private enterprise is being encouraged; Hungarians can form their own businesses and hire up to 500 employees. Stock and bond markets are being nurtured. The taxation system includes personal income and value-added levies - unheard of in the Eastern bloc.

Politics is being revamped, too. Political associations are springing up, giving expression to varying shades of liberalization. An independent youth union is thriving. Mr. Grosz says he sees no obstacle in allowing political participation by parties other than the communists. And what if those other parties someday get more votes?

The Hungarian leader hedges on that one. Nobody doubts his commitment to Communist Party primacy. Still, Grosz is clearly willing to take reform into regions where even Mikhail Gorbachev won't venture. And the Soviet leader has indicated his willingness to see what the Hungarian version of perestroika reaps.

Hungary, with its willingness to shed huge chunks of economic orthodoxy, may provide the best test of Mr. Gorbachev's belief that communism's state-orchestrated approach to economics can be made to work.

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