Goulash Communism and Neoclassical Economics in Hungary
Goulash Communism and Neoclassical Economics in Hungary
After World War II, the Hungarian Communist Party took control of the country's political life and immediately launched a socialist experiment based on the Soviet model with its characteristic central planning, hierarchical enterprises, and state ownership of the mode of production. The Soviet model was also imposed on the profession of economics and neoclassical economics was declared “bourgeois” by Party leaders because of its ideological ties to capitalism. The result was a novel form of market socialism known as “goulash communism.” Neoclassical economics served as an analytical tool and a normative model for Hungary's reform economists to develop this kind of market socialism. This chapter explores Hungary's goulash communism and its New Economic Mechanism reforms of 1968. It also discusses how Party-state elites promoted an apparently narrow form of neoclassical economics, which actually maintained existing hierarchical institutions.
Keywords: Hungary, neoclassical economics, New Economic Mechanism, goulash communism, Hungarian Communist Party
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