Hungary turns to former 'Communists': Hungary's move towards capitalism has produced a new political, economic and social crisis

We are republishing this article on the electoral victory of the former Stalinists in Hungary in 1994, first published in Socialist Appeal issue 23, July 1994. Following the trend of much of Eastern Europe Hungary in 1994 placed back in power the leaders and parties it had rejected just five years earlier. This article explains the background to the Socialists' victory.

(We are republishing this article on the electoral victory of the former Stalinists in Hungary in 1994, first published in Socialist Appeal issue 23, July 1994. Following the trend of much of Eastern Europe Hungary in 1994 placed back in power the leaders and parties it had rejected just five years earlier. This article explains the background to the Socialists' victory.)

Five years after the fall of the old regime, the former 'Communists' are back in office. Gyula Horn, the last foreign minister of the Stalinist regime, is set to become the new prime minister, after his party's' overwhelming victory in the May elections. What lies behind this incredible turn of fortunes for these once hated leaders?

Most of the key sectors of industry remain in state hands, yet the counter-revolution has already gone far enough. Unemployment has soared to around 700,000, over 10% of the working population. For those lucky enough to keep their job, the pressure for higher productivity is becoming unbearable.

In the month before the election, prices rose 1.2%, pushing the annual inflation figure up to 17.3%, and wages are not keeping pace. To make matters worse the biggest price rises were for water and heating which hit the poorest sections of society hardest. This mounting economic hardship is a direct result of the decimation of industry in the name of free-trade and profit-making.

Contemporary Hungarian economists are keen on quoting their classical predecessor Joseph Schumpeter, who described the cutting away of inefficient industry as 'creative destruction'. He was referring to a recession in capitalist society, when the destruction of the livelihood of workers is bad enough. In the context of contemporary Hungary it has succeeded in creating only inequality and poverty.

There is no doubt that for capitalism to succeed it must cut away non profit making industry, what could this mean if not that workers must pay with their jobs, wages and conditions, at work and at home, for the prosperity of a profiteering minority?

What kind of society has Hungary become? Ask its richest businessman! Gabor Varszegi, chairman of the Fotex retailing group, is said to be worth $100 million, or less than a carrot, depending on your point of view. He says that for a business to be successful, and he should know, it must cater for the wealthiest tenth of the population who now control half of its disposable income. This section of society is well catered for, as are foreigners, by all the trappings of prosperity on display in Budapest. Most workers do not share in this, it serves merely to remind them how poor they are.

Varszegi shares another secret of his success, always hire young people, he says, because they are uncontaminated by communism. He appeals for foreign capital for his businesses, "Its a once in a lifetime opportunity. Part of the world is on sale. It never happened before and it will never happen again."

Right-wing Coalition

For 5 years Hungary has been governed by a Right-wing coalition lead by the open representatives of the nascent bourgeoisie and foreign capital, the Hungarian Democratic Forum (MDF). It swept to power on a wave of anti-Stalinism, posing as its leading opponent and expropriating the memory of 1956. Naturally saying nothing of the role of the working class in the revolution of that year.

It profited from practical, behind the scenes, support in the elections from the French government, among others, and boasted of its connections with Western leaders. Westernisation and privatisation has been the cornerstone of its program.

The vision of a 'share owning democracy' briefly mesmerises some of the middle layers in society, before it evaporates in the light of day. But not before it has won a few votes. In their efforts to promote widespread share ownership, governments throughout the world have stretched their ingenuity to its limits.

The Hungarian government came up with the 'Preferential share purchase program' , giving interest-free loans for individuals to buy shares. As economic conditions for the masses deteriorates small investors are finding it harder to pay these loans back, while wealthy entrepreneurs have cashed in on cheap credit. All this is costing the government a fortune.

To make matters worse there was the scandal of Pal Teleki, the chief executive of the state holdings company, responsible for the privatisation program. He was forced to resign when it was revealed that his salary was being topped up by $130 000 a year by the US government.

Then there was the scandalous sacking of 129 journalists from the state TV channel, only months before the election. At first the government said it was for financial reasons but later admitted it was because they were 'Bolshevik cadres'

In 1992 the government took offence at one particular news program. The news editor was sacked and in response the journalists went on strike. Far from being Stalinists, as the government implied, many were dissidents under the old regime. Their real crime was defending independent journalism from government attacks.


As the MDF's popularity slumped its propaganda changed tack, passing references were made to assisting the Hungarian minorities in neighbouring countries and the defence of the nation from resurgent pro-Russian 'Communists' became its main theme. These desperate efforts however, failed to halt its decline. Economic realities are inescapable.

The Budapest Sun explained that the MDF was, "hurt by public dissatisfaction with the economy and a nostalgia for the late communist period when Hungarians enjoyed a higher standard of living and more social security."

Thus the principal organ of the foreign business community in Budapest admits that living standards have fallen since the so-called reforms began. Fighting to protect living standards is dismissed as 'nostalgia'. It admits that bearable conditions of life, and they were little more than that under Stalinism, are quite definitely a thing of the past.

Despite the MDF's occasional lapses into demagogy, the bulk of the election material was banal. Billboards featured candidates sporting identical statesman-like expressions, sitting beneath near identical vacuous slogans. What was there to choose between? An independent observer may be tempted to think the contest was between those pro- or anti- moustache. Is this what the struggle for democracy was for, the destiny of a nation determined by its opinion of facial hair?

As a general rule, workers do not read the fine print of election manifestos. If they are not empty words they are empty promises. Living experience decides, and the experience of the last 5 years points to only one verdict on the MDF and what it stands for. The working class voted for the Socialists because they do not 'stand' for capitalism, even if in practice the party's' program is unquestionably pro-capitalist.

The 'Communists' dropped the Hammer and Sickle in favour of the Red Rose in 1990. The new 'Socialist party' leader Gyula Horn, was once a member of the 'Communist' militia, who ruthlessly hunted down revolutionaries after the 1956 uprising. He now blames the failings of the old regime on 'Russian influences'.

Despite winning an overall majority, they are looking to form a coalition with the Centre-right, Free Democrats (SZDSZ). This is the classic method of a party looking to share the blame for unpopular measures it feels compelled to take. It has already signalled a desire to speed up privatisation and cut corporate taxes.


The Socialists have only fooled themselves into thinking that they have promised nothing. The contradiction between the new governments intentions and the expectations of those who voted for it could hardly be sharper. It must be resolved, and will be, over the next few years. The scene is set for a social explosion.

A blow has been struck against the open representatives of counter-revolution. Stalinism and now capitalism has been rejected. Only a Socialist program can now halt Hungary's decline into a poor satellite of European capitalism.

Hungarians are said to be a pessimistic race. The nation is renowned for its extraordinarily high suicide rate. Perhaps this is in part the product of a history of raised and dashed hopes, of liberation struggle and national oppression, of promises and betrayal. But history has a habit of turning things into their opposite. Despair and resignation can turn rapidly into the determination to fight, just as it did in 1956.