Enterprising Hungary shows up East-bloc rigidity

Hungary has sounded the only hopeful note in East Europe's present bleak economic outlook. While its East European allies cling obstinately to economic orthodoxy, Hungary has reacted with more imaginative flexibility to both its own shortcomings and damaging world conditions.

The recent Romanian and Polish Communist Party congresses were marked by glum talk about meager prospects and the need for people to work harder. The possibility of adapting the rigid system, which largely has produced this unfortunate state of affairs, was not even considered.

Hungarian party leader Janos Kadar, on the other hand, opened his congress with a reminder that "we cannot be independent of world trends." He indicated that he would restore the economic reforms that had been diluted in the mid-'70s under the impact of world recession. Profitability and efficiency alone would determine pay packets, not to mention an enterprise's continued existence.

Mr. Kadar did not minimize the country's problems. He did not gloss over the slowdown in improving consumer goods. But the confident way in which he could talk about all this -- sometimes gravely, sometimes humorously (which is itself highly unusual at a party congress) -- reflected the Hungarian regime's more imaginative approach.

It also confirmed the extent to which Mr. Kadar, who came to office under Soviet sponsorship amid the bitterness of 1956, has subsequently established himself as the one really popular leader in Eastern Europe today.

Western observers agree that the explanation lies in his credibility as a modest, down- to-earth, but warm personality, plus the combination of what most Hungarians now accept as an essentially prudent regard for the demands of the Soviet alliance with a broad, conciliatory national approach in domestic affairs.

Relative ideological tolerance has been accompanied by flexible economics that have produced beneficial links with the West and established solid gains in living standards.

As a result, Hungary has for a decade been much less troubled by political dissent and the general public dissatisfaction that are increasingly evident in the other East European countries.

Within the bloc, "Kadarism" increasingly seems an appealing halfway house for those aware both of the pressing need for change and the limited room for it.

Many Czechoslovaks were so inclined in 1968, though the radicals then said it was "not nearly enough." And finally the Russians moved in to block any reform anyway.

Twelve years later, however, the country's subsequent political impasse and its persistent economic stagnation have impelled the Prague leadership to take some limited steps.

It has just adopted a "set of measures" for the '80s, a voluminous document that, in theory, covers all the essentials -- more flexible planning, investment , cost and export effectiveness, more leeway for management, higher pay for better work actually done.

But it contains no suggestion of reform -- like the market-minded program of 1968 -- or of adjusting methods to modern trends, with genuine management independence from the centralism that stifles most initiative. The view seems still to prevail that the system itself is really all right, that all that is needed is to make it function better.

While the rest of Eastern Europe is at least reducing growth rates, Romania plans to expand industrial production at an almost inconceivable pace -- given prevailing world conditions -- of 9 percent yearly over the next five years. It talks of energy self-sufficiency (from possible but as yet unproven Black Sea reserves) by 1990.

To do this, living standards, which are already the lowest in the area, must be virtually frozen, with no prospect for any substantial improvement until at least the early '90's.

Poland faces a daunting financial squeeze this year from charges due on debts to the West estimated now at $18 billion.

In his first official speech, the new premier, Edward Babiuch, announced cutbacks in raw material imports and energy, an investment slowdown, and an all-out drive for quality and export.

He told "all citizens" that austerity is the "order of the day" and foreshadowed further price rises. But for purely political reasons, subsidies on food, rents, and heating will continue, with a cost to the economy equal to the enormous Western debt.

The recent urgings of the party's "liberals" for reforms have been ignored. Warsaw's leaders -- like those in Prague and Bucharest -- still avoid structural changes or the kind of decentralization that Hungary is experimenting with.