Economic Control and the Structural Interdependence of Organizations in Hungary at the End of the Second Reform Decade

In 1981 a major research project was launched by the Institute of Economics of the Hungarian Academy of Sciences to study the organizational system of the economy. In this paper the two leaders of the project report on the results, relying on several hundred analyses and case studies as well as on a debate on the findings conducted within the Institute. The grave functional disturbances of the Hungarian economy, recurring from time to time, indicated already in the 1960s that the socialist transformation, nationalization, and the collectivization of agriculture, as well as the planned economy based on the former had led to such obsolete and bureaucratic management as to put a brake on Hungarian economic development and hinder its catching up with the more advanced countries. The reform of the Hungarian system of economic control and management, proclaimed in 1966, sought to assist in solving this problem. The two decades since then have supplied important evidence about the opportunities that socialist ownership of the means of production provides for substituting the exclusive role of govemmental administration in economic control with a planned regulated market, and about the difficulties arising in such a process.