Hungary may edge closer to a free-market economy
Hungary's communists have just about decided to take the nation several steps closer to a free-market economy. At a meeting in mid-April, the Central Committee of the ruling Socialist Workers Party will consider a new batch of ''reforms'' to be implemented at the start of 1985, a high-level Hungarian official said.
Miklos Pulai, deputy chairman of the National Planning Office, said that consultations with the political leadership indicate the new measures will be approved by the party, thus assuring subsequent implementation by the government. ''As I see it, agreement has been reached,'' he noted. ''We expect no setbacks.''
Hungary began to liberalize its economy in 1968. There was a pause in the process during the world recession of the mid-1970s. But further reforms were launched in 1978, and by now Hungary has the most dynamic, unorthodox, and consumer-oriented economy in the Soviet bloc. There is even a thriving and growing number of private small businesses.
In an interview in his office overlooking the Danube River, Mr. Pulai summarized the planned next steps in the liberalization process:
* State-owned enterprises, which dominate industry, will get more independence from government ministries.
The state charter of these companies lists the products or services they are to produce. At present, they may change to different products for up to 30 percent of their production without permission from the ministry they report to. The new plan would let them make any product or provide any service their executives consider suitable.
The idea, said the high planning official, is to allow companies to find the best use for their capital.
Free-market economists would argue that this should result in the more efficient use of capital and in rising living standards. But conservative orthodox communist planners would maintain that they know better than state corporate executives how to invest capital.
Further, the new reforms call for the chief executive of a state corporation to be elected by the ''community of employees.'' At the moment, the industry minister or other ministers appoint the general managers of state enterprises and set their salaries and bonus systems.
This proposal, noted Mr. Pulai, arises from a comparison of the experience with state farms with agricultural cooperatives. In the former, the general manager is appointed by the minister of agriculture. In the latter, the head of the farm is elected by the members of the coop. Mr. Pulai says that research shows that the coops have a better performance than the state farms.
In addition, state companies will be free to form joint ventures with other such state enterprises or with foreign companies, private or state-owned. At present, such activities must be approved by the responsible ministries.
* A further effort will be made to bring the pricing system closer to the world-market system - i.e., the noncommunist or free-enterprise system.
Where Hungarian products or services compete in noncommmunist markets, the government has found correct market pricing a relatively easy matter. It has required domestic prices to be set at world prices - or move in that direction, in the case of subsidized food products, children's clothes, or other consumer goods.
But where specific Hungarian goods are sold only in the domestic market, the pricing question has been tougher. Under the new plan, domestic products are to be priced as if they were imported, plus customs duties.
Again, the aim is to force Hungarian industry to be more efficient and more competitive in the world market. Hungary exports nearly 50 percent of its national output, with a little more than half of those exports going to the communist nations and the remainder to the West.
Hungarian leaders are particularly keen to export more goods to hard-currency countries so the nation can buy the better technology and quality consumer goods of the West.
Mr. Pulai chairs an ''economic management coordination committee'' of some 25 deputy ministers or state secretaries, plus the heads of such economic organizations as the trade unions, chamber of commerce, artisans organization, and so on. The committee has been considering further economic reforms since the start of 1982.
Once the measures have been approved by the Central Committee of the party, they will be worked out in detail by the government. It could be, one observer here noted, that they will be watered down somewhat by what might be called ''pressure groups'' such as trade unions.
Mr. Pulai admitted that the new economic reforms are being launched by the nation's bureaucratic and political leadership. But he maintained that this leadership listened to ''the thoughts that come from below.''
No opposition to the reforms is anticipated from the Soviet Union. ''The updating of the economy is on the agenda of every socialist country,'' said Mr. Pulai.
One observer here said he had been told by a Hungarian official that reform was especially auspicious at the moment while the new regime in Moscow was still getting its feet on the ground.
When the reforms are in place, the Hungarian economy will more closely resemble that of a capitalist nation. But there will remain important differences. Small private businesses are permitted and even encouraged up to a limited size. But larger businesses can only be owned by the state or cooperatives.