tenth congress of the hswp: economy and economic science

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TENTH CONGRESS OF THE HSWP: ECONOMY AND ECONOMIC SCIENCE Author(s): I. Friss Source: Acta Oeconomica, Vol. 6, No. 4 (1971), pp. 273-280 Published by: Akadémiai Kiadó Stable URL: http://www.jstor.org/stable/40728180 . Accessed: 14/06/2014 04:47 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Akadémiai Kiadó is collaborating with JSTOR to digitize, preserve and extend access to Acta Oeconomica. http://www.jstor.org This content downloaded from 62.122.77.48 on Sat, 14 Jun 2014 04:47:51 AM All use subject to JSTOR Terms and Conditions

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Page 1: TENTH CONGRESS OF THE HSWP: ECONOMY AND ECONOMIC SCIENCE

TENTH CONGRESS OF THE HSWP: ECONOMY AND ECONOMIC SCIENCEAuthor(s): I. FrissSource: Acta Oeconomica, Vol. 6, No. 4 (1971), pp. 273-280Published by: Akadémiai KiadóStable URL: http://www.jstor.org/stable/40728180 .

Accessed: 14/06/2014 04:47

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

.

Akadémiai Kiadó is collaborating with JSTOR to digitize, preserve and extend access to Acta Oeconomica.

http://www.jstor.org

This content downloaded from 62.122.77.48 on Sat, 14 Jun 2014 04:47:51 AMAll use subject to JSTOR Terms and Conditions

Page 2: TENTH CONGRESS OF THE HSWP: ECONOMY AND ECONOMIC SCIENCE

Acta Oeconomica, Vol. 6 (4), pp. 273-280 (1971)

I. Friss

TENTH CONGRESS OF THE HSWP: ECONOMY AND ECONOMIC SCIENCE

The author - himself a participant of the Congress - raises some ideas on topical problems of the Hungarian economy and on related tasks of economics.

The Hungarian Socialist Workers' Party held its Tenth Congress in No- vember 1970. The Congress of our party, playing a decisive role in leading so- ciety, aroused keen interest and responses both at home and abroad. And just- ly so since the congress tackled the most important present and future de- velopment problems of the Hungarian society engaged in building socialism, and also many questions of detail. The Congress evidently laid special empha- sis on, and treated at great length, the problems related to the economic foun- dations of social progress. This was made clear in the report of the Central Committee and was carried by the contributions of industrial workers, en- terprise managers, cooperative chairmen, by the speeches of the prime minister, party secretaries and council chairmen.

The basic tone of the contributions reflected the satisfaction of economic and political leaders as well as of simple workers with the healthy development of the economy and with the fact that the third five-year plan period had successfully been completed. Yet the contributions also showed our troubles, our concerns, and our deficiencies.

Much has been said about the economic tasks related to technological progress in enterprises and supervisory bodies, about raising the profitability of production, reducing production costs, about wage and income policies, the problems of income distribution in cooperatives, the supply of the popu- lation, consumer prices, price policy and costs of living, the tensions on the investment market and in labour economy, the organization of constructions, about the amalgamation and specialization of agricultural cooperatives, their association with state-owned enterprises, the large-scale industrialized stock breeding - mainly pig and cattle raising, - about the auxiliary undertakings of cooperatives, their good and bad aspects; and about the international con1 tracts of enterprises and scientific research institutes and laboratories aiming at the development of production. But here and now I do not wish to deal

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with these problems. I want to concentrate on the great processes and trends decisively influencing our whole economic development, and to approach them from the angle of political economy.

On the economic reform

The most important and significant source of our successes and results is the economic reform introduced on January 1, 1968, thriving, developing and ramifying ever since. "Relying on the experience of three years the Cen- tral Committee can state" - says the report - "that this instrument, though we are still learning how to use it, and are aware of the necessity of improving it - is already an effective weapon, helping our party and our people to solve the economic problems and realize our socialist efforts." The measurable re- sults of our economic reform are shown fundamentally by the successful com- pletion of the third five-year plan. These results also indicate that without slackening the fundamental principies of planned economy we have succeeded in increasing the planned character of management, the efficiency of planned economy.

With the reform thousands of economic leaders have come to age by being freed from a paralysing tutelage. Of course, coming to age does not turn every young man or woman into a mature grown-up, nor has the reform turned every economic executive immediately and automatically into a good manager standing on his own legs and making adequate use of all possibilities avail- able. Perhaps there was nobody immediately affected by a sudden great change. Some managers missed the earlier close control, at least for some time, but later started to familiarize with the new methods. These have already born excellent results, and even better ones are expected in the future.

But how to use the reform well and how to improve on it? Evidently, we must learn to handle the regulating system in a way required by the com- plexity of the system to be regulated. Some major regulators, those constituting the basis of enterprise policy, must be kept unchanged and the others changed quickly, boldly and flexibly, as soon as they are found to fail to lead to the ex- pected and desired results or to have unforeseen or undesirable side-effects. We must dare to make also experiments ! We have not yet succeeded, with any of the regulators, in achieving a decisive change in the field of technological progress, though some initial results can be already registered. It is, however, also true that we cannot boast of great ingenuity in the service of technolog- ical development, nor have we displayed any major enterprising activity. Much better use could be made of the possibilities provided by the develop- ment fund, sharing fund, enterprise taxation and foreign trade for promoting progress in this field. Let us try to approach it from various angles, learning

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and utilizing what we can learn from countries developing at a quicker pace than ours. Of course, this is easier said than done. Not only the enterprises must learn how to make use of the reform, but so must the authorities setting the regulators and the leaders co-ordinating the activities of these authorities.

As emphasized at the Congress, the economic reform is of great impor- tance also for the democratization of the economy and of public life. It has ex- panded the scope of responsibilities, the sphere and extent of interestedness, enhancing the degree of engagement of those concerned. It has mobilized hun- dreds of thousands to discuss and study problems they never dealt with earlier. However, it goes without saying that the possibilities have not turned into reality overnight in this field either. It takes time for people to realize their possibilities, to learn how to live up to them, until it becomes their blood, and, until earlier rights and duties turn into everyday practice.

On the economic integration of socialist countries

While the economic reform is exerting manifold and mostly favourable effects on our whole economy and beyond, another development trend of high importance, the economic integration of socialist countries, has just started to unfold. One of the contributors to the Congress dwelt lengthily on the prob- lems involved.* When tracing the sources of this trend, we must, as a matter of fact, reach back to the emergence of the economic world system of socialism. Integration necessarily results from the development of the forces of produc- tion. Scientific and technological progress leads to the socialization of labour in several branches of production for which the national frameworks are nar- row in countries of small and medium-sized area and population. In other words: there are branches of production, as e.g. metallurgy and some branches of the chemical industry where efficient production is only possible on a large scale exceeding the possibilities of small and medium-sized countries. Sover- eign countries with small area and population exist, and will continue, for a long time to exist, even in the socialist camp where production extends across frontiers into other countries, without abolishing the economic and political autonomy and independence of the socialist countries.

Increasing socialization of production affects not only the growing scale of efficient production, but also research and development, where, in fact, ma- terial and intellectual requirements are growing even faster, and the efforts to transcend frontiers are even stronger. The situation is similar in market research, marketing, in the production of spare parts, etc. This involves the

*. See the paper by R. Nyers, pp. 285-299. Ed. note.

1* Acta O economica 6, 1971

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necessity of a highly diversified, close and far-reaching economic cooperation, of a high -degree coordination of various economic activities, i.e. of economic integration.

Integration, as a programme, was raised at the April session of the Coun- cil for Mutual Economic Assistance in 1970. This should be understood in the sense that the leaders of the CMEA member countries decided to direct in- dividual efforts made hitherto in a more or less spontaneous manner, into coordinated channels leading towards a major common goal. But, however effective the agreement on the common goal to be attained is, it is the most difficult and complicated task to harmonize the economic activities of eight countries. Each of them is politically and economically independent. Each has a different population; different history and traditions; different geography, soil, geological conditions; different internal economic management systems; different structures, control, price and wage systems; different administrative systems; different economic, technological and cultural development levels; different productivities of labour and standards of living.

Since economic integration was put on the agenda, much work has been done and is being done in CMEA member countries to prepare integration. According to the experience of more than one and a half years, the first results appear or may be expected in prognostication, in the collation of plans, in coor- dination of production and in joint investments. More intensive preparatory activity is needed that the next five-year plan periods shall see changes in such problems as the approximation of the systems of economic management, convertibility, uniformization of price systems and customs tariffs. The steps taken mainly in planning and productive cooperation, and more so those to be taken in these fields, may be expected to have effects on technological pro- gress, and on raising the productivity of labour, as mentioned at the Congress.

It will be apparent from what has been said that with the progress of integration the CMEA countries will maintain and develop their hitherto close economic relations, and that these relations will bring about a qualitative change in their cooperation. For the smaller socialist countries these contacts have always meant safe sources of raw materials, on the one hand, and safe outlets for their finished products, on the other. This situation was very fa- vourable primarily for the smaller socialist countries, facilitating their plan- ning, yet also causing a certain complacency. The safety of markets failed to contribute to technological development, to the reduction of production costs, to the improvement of quality and to raising the productivity of labour. The stimulating effect of competition on intellectual activity was missing. Now, the advantages remain, but if they rely on production cooperation based on the most advanced technology and on broad research and development etc. efforts, they may be coupled with effective technological development and with a quick rise in the productivity of labour.

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On long-term planning

The third development trend and process of high importance - long-term planning (15 years or longer) is also related to the economic integration of socialist countries. The prime minister dealt with the problem in greater de- tail at the Congress. The socialist countries will continue autonomous plan- ning in the future, as they have done so far. Yet it has become clear that joint planning may offer much help in eliminating uncertainties concomitant to planning for two or more countries entering into production cooperation or into a relationship of buyer and seller. This help applies also to medium-term planning, but its importance is greater in long-term planning where, by the nature of things, uncertainty is greater than in the shorter run.

At the same time, long-term planning activities which have engaged a large number of planners, economists, statisticians, for more than three years already, have had a fertilizing influence on economic thinking in Hungary: they had a beneficial effect on the preparation of the fourth five-year plan. These activities started with a careful analysis of the living standard policy, industrial and agricultural policy of the seventeen-year period beginning with 1950, with a view to finding out what was correct, what were the mistakes or unavoidable shortcomings if any? When investigating shorter periods, such questions cannot be answered properly since both the origins and the conse- quences of decisions taken in economic policy of a period fall outside the limits of that period. For a scientifically founded answer the scope of investigations must be significantly expanded. Relating to a fifteen-year period, both ques- tions and answers may be bolder, and safer conclusions may be drawn on what can be useful in the future.

In long-term planning, the steady characteristics of importance, needs and development trends of our economy and policy come to the fore and are distinguished from what is transitory, momentary or temporary. This distinc- tion is not always or consistently possible in medium-term planning, and a mixture of the two may cause incorrect decisions.

In long-term planning, many details regularly appearing in medium-term plans must be disregarded, ab ovo. Many an important problem must be left open for lack of information necessary for decision. On the other hand, as re- gards plannable investments, production, etc., long-term planners have rela- tively great freedom and broad opportunities to select the solutions and variants that may seem best, because, in contrast to medium-term planning, their free- dom of manoeuvre is not or hardly limited by investment projects started or planned, or by earlier decisions relating to, or affecting, the economy. Changes inducing structural transformation can, of course, be planned much better in long-term plans than in medium-term ones, as e.g. the plan of transforming the pattern of fuel consumption which has covered several five-year plan periods.

Acta Oeconomica 6, 1971

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The role of economic science

Each of the three outstanding economic processes, i.e., the economic reform, the economic integration of socialist countries and long-term plan- ning, pose great problems to those engaged in economics. This, of course, ap- plies not only to scholars but also to practical people, to those working in the functional organizations, the ministries and enterprises. Earlier the idea pre- vailed that financial regulators were a matter for financial authorities and those employed by them, economic integration, a matter for economic minis- tries and their staff, and long-term planning, a matter for the National Plan- ning Off ice and its staff. Before decisions were taken, the relevant authorities had to be consulted, sometimes also maybe a few major enterprises, but science had nothing to do with this. How could scientists meddle with such practical problems ? Today, such ideas survive only in the minds of peoples adhering to old concepts and incapable of development. Our socialist society engaged in building socialism eventually makes everybody recognize that without the help of science such practical questions cannot be answered correctly in our country. Clearly, the same process induces also scientists to study prac- tice and join hands with practical people. The relations between practice and science are by far not fully satisfactory as yet, but they increasingly meet the requirements raised by a socialist society.

What society expects scientists to do is not only to follow practice close to life and answer questions raised by practice, but also to recognize - relying on the broadest possible analysis of reality, on experience - the new phenom- ena and development trends beginning to unfold or just in the making. This can only be achieved in cooperation between theory and practice. In a socialist society, to avoid practicism, which is almost inevitable in daily activities, those responsible for economic policy must either be scientists themselves - which is often not feasible - or at least closely join hands with scientists, which is generally possible. What we need is a scientifically founded economic policy with a wide horizon.

We have achieved substantial results in our economic and social pro- gress. Yet, we cannot rest fully satisfied with them. We have done much to make up for our earlier backwardness, but, as regards the economic develop- ment level, we have not come much nearer to the more advanced countries. It goes without saying that the backwardness in economic development, due to century-old historical reasons, cannot be liquidated in a few five-year pe- riods. But it is not self-evident that the productivity of labour does not rise in Hungary much quicker than in some of the developed capitalist countries and, therefore, the distance between us does not diminish, or at least not at the desired rate. This shows that we cannot satisfactorily avail ourselves of the superiority offered by the social ownership of the means of production. How

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I. FRISS: TENTH CONGRESS OF THE HSWP 279

should this superiority become manifest? It should become manifest in the absolute assertion of global social interests in every field of socio-economic re- lations, in the concentration of efforts on the most important objectives of society, in the utilization of resources in compliance with global social interests, and in a functioning of our whole economy - for all its complexity and the possible maximum autonomy of its parts - as if it were a single precise and perfect machine.

Today, however, neither the desirable concentration of forces, nor the completely satisfactory utilization of resources, nor the functioning of our economy like one single and perfect machine can be listed among our achieve- ments. This is illustrated also by the shortcomings voiced at the Congress and by the tasks listed in the decisions adopted. For the time being, there are e.g. impermissible tensions in the investment markets and in the labour econ- omy; the volume and the capacity of investments, the putting into operation of new productive capacities and the labour situation are not coordinated in a desired manner; there is much to be done in organizing the construction industry and in developing the production of building materials; greater care should be taken to assert an adequate price policy; deficiencies in wages pol- icy should be corrected, e.g., people performing work of higher quality should obtain higher average wages, but always in keeping with the general level of average wages.

The earliest possible attainment of such and similar targets by society requires a scientifically better founded economic policy and a closer coopera- tion between politicians and scientists to this end. Science, in this context, covers a wide scope of various disciplines, including sociology, jurisprudence, psychology, etc., with economics occupying a distinguished place among them. Proceedings in this direction, the Tenth Congress of the Hungarian Socialist Workers' Party will remain a source of stimuli and guidance in economics for a longer time to come.

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Acta Oeconomica 6, 1971

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280 I. FRISS: TENTH CONGRESS OF THE HSWP

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Acta Oeconomica 6, 1971

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