Hungarian People's Republic

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The Hungarian People’s Republic (abbreviated HPR) was an Eastern European People's Republic that lasted from 1949 to 1989.


Prior to the establishment of the Hungarian People’s Republic, Hungary was a semi-feudal nation, with very little industrial development and remarkably low quality-of-life. However, despite turbulent conditions, the people’s republic still managed to rapidly develop the Hungarian economy:

Despite war, depression, revolution, foreign occupation, and periods of near chaos, Hungary’s economy has advanced in the twentieth century from a near-feudal state to a middle-level stage of industrial development.

— US Federal Research Division, Hungary: A Country Study

Anticommunists forcibly replaced the republic in 1989. Nevertheless, despite the issues of the Hungarian People’s Republic, many Hungarians have since found themselves longing for its return. A poll conducted by Pew Research Center found that 72% of Hungarians say that most people in their country are actually worse off today economically than they were in the planned economy. The otherwise antisocialist Daily Mail published a interview with a lower-class Hungarian who told them about the guaranteed employment, decent education, free healthcare, adequate food, scarce violent crime, accessible culture, scarce advertisements, reduced poverty, and more.[1] Despite the pressures to assimilate into the planned economy, some Hungarian Roma agree, and say that they were safer in the people’s republic.[2]


The Hungarian People’s Republic was a planned economy. Although its economic development focused too much on heavy industry and too little on comparative advantage, it did successfully transform a semi-feudal state into developed country.

Historically, prior to World War II, Hungary was mostly agrarian. Beginning in 1948, a forced industrialization policy based on the Soviet pattern changed the economic character of the country. A centrally-planned economy was introduced, and millions of new jobs were created in industry (notably for women) and, later, in services.

— Encyclopædia Britannica, Hungary

The severe lack of natural resources facing the Hungarian economy forced them to depend almost entirely on Soviet imports.

The country’s general lack of raw materials has necessitated foreign trade, a concern that has dominated the economic policies of Hungarian governments since 1918, when the country lost much of the territory it held prior to World War I […] The Soviet Union was Hungary’s principal supplier of raw materials.

— US Federal Research Division, Hungary: A Country Study

Immediately after the establishment of the People's Republic, they instituted a traditional Soviet-style planned economy. However, in the late 1960s, an economic reform plan (known as the New Economic Mechanism, or NEM) was instituted, which somewhat restored the rôle of market forces, while retaining state ownership over the means of production, distribution, and exchange. The 1960s saw the state focusing on expanding industry.

During the 1960s, the government gave high priority to expanding the industrial sector’s engineering and chemical branches. Production of buses, machine tools, precision instruments, and telecommunications equipment received the most attention in the engineering sector. The chemical sector focused on artificial-fertilizer, plastic, and synthetic-fiber production. The Hungarian and Comecon markets were the government’s primary targets, and the policies resulted in increased imports of energy, raw materials, and semi-finished goods.

— US Federal Research Division, Hungary: A Country Study

After this period, the economy shifted focus towards consumer production with the introduction of the NEM:

By the mid-1960s, the government realized that the policy for industrial expansion it had followed since 1949 was no longer viable. Although the economy was growing steadily and the population’s living standard was improving, key factors limited further growth[.] The government introduced the NEM in 1968 in order to improve enterprise efficiency and make its goods more competitive on world markets.

— US Federal Research Division, Hungary: A Country Study

This time was marked by high rates of economic growth, and the Hungarian People’s Republic reached the level of a middle-developed nation:

From 1968 to 1972, the NEM and a favorable economic environment contributed to good economic performance. The economy grew steadily, neither unemployment nor inflation was apparent, and the country’s convertible-currency balance of payments was in equilibrium as exports to Western markets grew more rapidly than its imports. Cooperative farms and factories rapidly increased production of goods and services that were lacking before the reform. By about 1970, Hungary had reached the status of a medium-developed country. Its industry was producing 40 to 50 percent of the gross domestic product, while agriculture was contributing less than 20 percent.

— US Federal Research Division, Hungary: A Country Study

By the mid-to-late 1980s, the economy had achieved a very high standard of living compared to the prerevolutionary era. Food availability was high, and selection was relatively diverse:

In 1986 Hungary’s per-capita meat consumption was the highest in Eastern Europe, while its egg consumption ranked among the highest. Per capita consumption of meat, fish, milk and dairy products, eggs, vegetables, potatoes, coffee, wine, beer, and hard liquor all increased significantly between 1950 and 1984.

— US Federal Research Division, Hungary: A Country Study

Hungarians also had high rates of ownership for various consumer goods, and the quality of goods was increasing as well.

By 1984, 96 out of 100 households owned a washing machine, every household owned a refrigerator, and the ratio of television sets to households was 108 to 100. The quality and variety of durable consumer goods on sale had also improved.

— US Federal Research Division, Hungary: A Country Study

Despite the progress, the planned economy was not free from problems; an over-reliance on traditional plans (particularly in the early years) caused them to lean heavily on the development of heavy industry, ignoring other forms of production which would have better suited the republic’s material conditions. In addition, the economy’s enterprises and farms suffered from low levels of relative productivity, which contributed to a slowing of growth in the 1980s.

Although Soviet-type economic modernization generated rapid growth, it was based on an early 20th-century structural pattern and on outdated technology. The heavy industries of iron, steel, and engineering were given the highest priority, while modern infrastructure services, and communication were neglected. New technologies and high-tech industries were underdeveloped and further hampered by Western restrictions (the Coordinating Committee for Multilateral Export Controls) on the export of modern technology to the Soviet bloc.

— Encyclopædia Britannica, Hungary



Despite some problems, the Hungarian People’s Republic objectively provided clear benefits to the people in terms of healthcare and social welfare. Healthcare in prerevolutionary Hungary was of low quality, and the population suffered from poor health and low life-expectancy, but healthcare conditions began to improve significantly after the establishment of the HPR:

After the communist government assumed power in Hungary, it devoted much attention to meeting the specific health care and social security needs of the population. In comparison with pre-war standards, the average citizen received far better health care and social assistance as a result of the government's policy.

— US Federal Research Division, Hungary: A Country Study

Following World War II, health care improved dramatically under state socialism, with significant increases in the number of physicians and hospital beds in Hungary. By the 1970s, free healthcare was guaranteed to every citizen.

— Encyclopædia Britannica, Hungary

The social welfare system was also improved significantly, providing coverage to the vast majority of Hungarian workers:

In the late 1980s, the country’s pension system covered about 85 percent of the population falling within pensionable ages. Male workers could qualify for pensions at the age of sixty, female workers at the age of fifty-five.

— US Federal Research Division, Hungary: A Country Study

A broad range of social services was provided by the communist government, including child support, extensive maternity leave, and an old-age pension system for which men became eligible at age 60 and women at age 55.

— Encyclopædia Britannica, Hungary

As people began to live longer however, and access to social welfare was expanded, the system became was placed under more strain:

The number of pensioners had increased rapidly since the end of World War II as people lived longer and as pension coverage expanded to include additional segments of the population.

— US Federal Research Division, Hungary: A Country Study

In addition, various social ills, such as alcoholism, had begun to pose a problem for public health:

In the mid-1980s, the authorities were also discussing the growing incidence of substance abuse. The incidence of alcoholism had increased during the previous generation, and a high percentage of suicide victims were alcoholics. As of 1986, consumption of alcohol per person per year was 11.7 liters; consumption of hard liquor (4.8 liters per person) was the second highest in the world.

— US Federal Research Division, Hungary: A Country Study

To compound these issues, the HPR spent a percentage of GNP on healthcare, but it was low.

Western analysts estimated that Hungary spent only 3.3 percent of its gross national product specifically on health service (the 6 percent figure listed in most statistical data actually included some social services). This percentage was the lowest of any East European country except Romania (in comparison, the United States spent 11 percent of GNP on health care).

— US Federal Research Division, Hungary: A Country Study


Prerevolutionary Hungary had a highly élitist educational system, largely dominated by religious institutions:

Before the communist assumption of power in 1947, religion was the primary influence on education. […] The social and material status of students strongly influenced the type and extent of schooling they received. Education above the elementary level was generally available only to the social elite of the country. In secondary and higher-level schools, a mere 5 percent of the students came from worker or peasant families. Only about 1 or 2 percent of all students entered higher education.

— US Federal Research Division, Hungary: A Country Study

However, after the socialists came to power, they drastically reformed the educational system:

All this changed after the communist takeover of Hungary following World War II. In 1948 schools were nationalized, and the elitist German style of education was replaced by a Soviet-style mass education, consisting of eight years of general school and four years of secondary education. The latter consisted of college-preparatory high schools that approximated the upper four years of the gimnázium as well as of the more numerous and diverse vocational schools (technikumok) that prepared students for technical colleges or universities but in most instances simply led directly to mid-level jobs.

— Encyclopædia Britannica, Hungary

The Hungarian People’s Republic greatly expanded educational system too:

Attendance at school was mandatory from age six to sixteen. All students attended general schools for at least eight years. Tuition was free for all students from age six up to the university level. Most students actually began their schooling at five years of age; in 1986 approximately 92 percent of all children of kindergarten age attended one of the country's 4,804 kindergartens. By 1980 every town and two-thirds of the villages had kindergartens. Parents paid a fee for preschool services that was based on income, but such institutions were heavily subsidized by the local councils or enterprises that sponsored them.

— US Federal Research Division, Hungary: A Country Study

These reforms succeeded in drastically expanding the educational standards throughout the republic:

By 1980 only 29 percent of males aged fifteen years or older and 38 percent of females aged fifteen years and older had not completed eight years of general school, compared with 78 percent of such males and 80 percent of such females in 1949. About half of the students who completed the general schools subsequently completed their education in two years, through vocational and technical training. The remaining students continued their studies in a four-year gymnasium or trade school.

— US Federal Research Division, Hungary: A Country Study

Unfortunately, the system also suffered from similar problems to the healthcare and social welfare systems. Specifically, it was underfunded; the republic spent a very low percentage of GNP on education compared to other nations, which resulted in deficiencies:

Critics noted, among other things, that although Switzerland spent 18.8 percent of its national budget on education, Brazil 18.4 percent, and Japan 19.2 percent, Hungary allotted only 6.6 percent of its state budget to education. In the 1980s, the country experienced shortages of both classrooms and teachers, so that primary- school classes sometimes contained up to forty children. In many areas, schools had alternate morning and afternoon school shifts in order to stretch facilities and staff. Moreover, not all teachers received proper training.

— US Federal Research Division, Hungary: A Country Study


  2. Guy, Will (2001). Between Past and Future: The Roma of Central and Eastern Europe. Univ of Hertfordshire Press. p. 74. ISBN 978-1-902806-07-5.