By the early summer of 1989 Hungary had become a de facto multi-party system, albeit still within a one-party structure.footnote1 Numerous political forces operated openly, experiencing minimal official harassment, with meaningful if unequal access to the media. Virtually all significant actors, including the reform wing of the Hungarian Socialist Workers’ Party (hswp),footnote2 agreed that the forthcoming elections would be fought with no built-in majority for any party, and that the hswp should enjoy no privileged status in parliament or any other sphere of social or economic life. All advocated reforms in education and the social services which would offer new possibilities for private initiative. All averred that Hungary’s economic future lay in a ‘mixed economy’, with a large private sector, in which competing insurance companies would play a significant role, in which there would be extensive foreign participation, and in which links with the Council for Mutual Economic Assistance (Comecon) would be weakened, while those with the European Community (Common Market) strengthened.

In other words, all significant political actors envisaged a socio-economic future for Hungary which is the very antithesis of what most, in both East and West, regard as socialist.footnote3 Why is this? What has happened? The standard account runs somewhat as follows. Hungary introduced ‘market socialism’ in 1968. Its foreign debt has grown constantly ever since, and has become the biggest per capita debt in Eastern Europe. Living standards have stagnated, if not fallen. The economic crisis is now so acute it requires political as well as economic reform. The hswp has finally accepted the bankruptcy of the socialist economic project and is offering both to share the burden of power, by introducing a multi-party system, and to create an open market economy.

This account is not inaccurate, as far as it goes. But it leaves all the important questions unposed. Readers of New Left Review are unlikely to be impressed by an account which suggests a necessary contradiction between political democracy and socialism, still less by its converse that political democracy and market economies necessarily go together. Yet, superficially, this is a possible interpretation of Hungarian events, and one that will be the most attractive to the political Right. In order to progress beyond it and understand the significance of Hungarian demands for political pluralism, the restoration of ‘civil society’ and a ‘mixed economy’, a deeper examination of Hungary’s socialist model and its current crisis is required. What sort of ‘market socialism’ was introduced in 1968? When did the foreign debt get so large? Why? Where have the new political parties come from? Why was the self-management model of 1985 abandoned so quickly in favour of limited liability companies, a stock market and ‘external’ ownership of state assets? How will state assets be re-privatized? Who will buy? By focusing on the detail of how the current situation has developed, this article will attempt two things. First, it will suggest that, while the assumption of automatic incompatibility between political democracy and socialism is facile, the economic crisis which Hungary’s socialism underwent resulted in a structural requirement for some form of effective political pluralism, and multi-party politics is its traditional vehicle. Second, the article will endeavour to demonstrate how Hungary’s abandonment of classical socialist, certainly Marxist, economic ambitions via first ‘market socialism’ and now a fully-fledged market economy was a reasoned response by individuals of socialist persuasion to pressing problems inherent in the economic model. It was not the ideology of a bourgeoisie rampant. That is to say, Hungary’s current crisis can be located within a socialist problematic. But in order to do this, we need to have a clear picture of what has happened, why it has happened, and what is likely to happen next. Here, speculation as to what this might mean for socialism will be restricted to some brief concluding remarks.

A recurring theme in Hungarian political writing of the 1980s, both ‘dissident’ and openly published, was the decline of ‘civil society’. Between approximately 1948 and 1951, it was argued, Hungary, together with other Eastern European societies, lost all forms of social organization that were not connected, directly or indirectly, to the Party. Associations of all kinds were banned, as politics, and the single omnipotent ruling party, invaded all spheres of social life. Non-party, social life—‘civil society’—disappeared, only to re-emerge in a greatly restricted form in the late 1970s and early 1980s.footnote4

As a term of political analysis ‘civil society’ was never particularly precise, covering anything that was not the Party and its politics.footnote5 But whatever its precise meaning, openness, the rule of law, and the presence of independent organizations and parties were central components, and in this sense it would seem to have returned. Political developments have gone far beyond breathless wonderment at what is allowed, at what the monolithic Party machine sanctions or closes its eyes to. Almost everything is allowed. Those who are politically active know that, and, in only a matter of a few months, have come to expect it. What is more, the hswp is no longer monolithic. As we shall see below, it is both split internally and anxious to shed its special status with regard to the state. This is not to say that the new-found freedoms are constitutionally secure. They are not. Nevertheless, by the early summer of 1989 Hungary had developed a vibrant political culture, in which there were no taboo topics—be it 1956, Hungarian minorities abroad, the choice of national coat-of-arms, the size of management bonuses, the presence of Soviet troops, the compulsory teaching of Russian in schools; in which demonstrations were not only permitted, but had become unexceptional; in which the broadcast media encouraged political debate, and the market for written media had become glutted with three hundred publishers, half-a-dozen new periodicals, and the former samizdat freely available; and from whose discourse the word ‘comrade’ had almost entirely disappeared.