The 1956 Hungarian Revolution: Hungarian and Canadian Perspectives

3. The Economic Platforms of the Re-formed Political Parties in 1956

3. The Economic Platforms of the Re-formed Political Parties in 1956 Susan Glanz The Great Depression and the two world wars created an atmosphere where both politicians and the public saw that direct government involvement in the economy was the only way of preventing the repetition of these destructive events. The involvement of the state in the post–World War II economy increased everywhere in Europe. For example, in both France and Great Britain, railroads, banking (both the Bank of England and the Bank of France), and domestic energy (coal in England; electricity in France) were nationalized and placed under the jurisdiction of semi-public directorships. Health care and transportation were nationalized in England. And, in France, nationalization was accompanied by state planning. The view that planning and nationalization are important for the smooth running of the economy became the accepted European norm. Hungarians felt the same way about the role of government. A public opinion poll conducted in 1945 found that 67 percent favoured nationalization of factories and 75 percent favoured nationalization of banks.1 The eleven years that passed between 1945 and 1956 did not change these sentiments and none of the parties in the coalition government formed in October 1956 demanded reversing the process of nationalization in post–World War II Hungary. In 1956, none of the parties—including those that were centrist—advocated for the re-privatization of industry. Glanz The Economic Platforms of the Re-formed Political Parties in 1956 53 Economic background In 1992 the University of Groningen’s Growth and Development Centre created a database that estimated the per capita GDP for most countries from 1950s on. See Table 3.1. Economists measure economic well-being and economic growth by looking at the growth rate of the per capita GDP. Based on the numbers in the table, Hungary’s economic growth between 1950 and 1955 was 23.8 percent. Economists also warn that conclusions reached by this process can be misleading because: a. when products are low quality and not durable, people will have to buy them again and again, b. GDP doesn’t measure the sustainability of growth. A country may achieve a temporary high GDP by over-exploiting natural resources or by misallocating investment, and c. quality of life is determined by many other factors besides physical goods. Today, we know that lack of choices for consumers and producers, low quality of products, and over-allocation of investments funds to heavy industry all existed in Hungary. We also know that the pervasive atmosphere of fear made life difficult and impacted negatively on the quality of life. To make the numbers in Table 3.1 meaningful, therefore, let us compare them to pre-war data. Hungary’s per capita GDP in 1935 was $2,471 and Austria’s was $2,926.3 So, in 1950 Hungary reached its 1935 GDP, while Austria surpassed hers by 26.7 percent. Table 3.1 Per Capita Real GDP between 1950 and 1956 in Selected European Countries, Expressed American Dollars c. 1950s2 Year Hungary Czechoslovakia Poland Austria West Germany 1950 2,480 3,501 2,447 3,706 4,281 1951 2,695 3,524 2,510 3,959 4,651 1952 2,762 3,598 2,521 3,967 5,046 1953 2,786 3,544 2,618 4,137 5,439 1954 2,850 3,652 2,715 4,555 5,797 1955 3,070 3,922 2,794 5,053 6,431 1956 2,906 4,110 2,864 5,397 6,839 54 The 1956 Hungarian Revolution: Canadian and Hungarian Perspectives A somewhat different data set was published by Iván Pető and Sándor Szakács, and is summarized in Table 3.2.4 Table 3.2: Per Capita Real Income in Hungary, 1950±1956 (1949 = 100), Expressed in American Dollars c. 1950s Year Per capita income for Per capita consumption workers and employees by peasants5 1950 102.8 112.7 1951 97.8 118.8 1952 87.5 106.6 1953 91.0 100.6 1954 115.0 111.0 1955 121.8 124.5 1956 129.3 131.2 Although both data sets in Tables 3.1 and 3.2 show 20+ percent growth between 1950 and 1955, Table 3.2 shows that this growth was not continuous. The standard of living fell between 1950 and 1952, and in 1953 it was still below the 1950...