Free enterprise is alive and profiting in Hungary

If you want to understand one of the ways Hungary, almost alone in East Europe, manages to make its economy work . . . meet Jozsef Molnar.

Mr. Molnar is proud of his semi-basement workshop on Felka Street here. It has whitewashed walls, a well-swept floor, and several lines of well-cleaned lathes and other machines in a space not more than 30 by 20 feet.

He hands you his card - Opel, Ford, Fiat, Renault, Austin, it announces - and a larger one inscribed ''ethics for craftsmen,'' which lists 16 points.

''They stress workmanship, quality of materials and final product, and fair prices,'' he explains. There is a customer complaint book, too, a copy of which must by law go to the local licensing authority. Molnar is a precision metalworker - and a symbol of a rare East European version of ''free enterprise.''

This workshop was his until 1949 when the new communist regime nationalized it. He got it back after the 1956 uprising and could start up on his own again. Only a few such units were permitted then.

Today, however, he is one of 2,000 skilled craftsmen in many trades and one of a whole army of small, private enterpreneurs (as they are openly and officially called), artisans, and shopowners whom the Hungarian government is encouraging to fill grievous gaps in everyday consumer needs. It is said there are between 20,000 and 30,000 in Budapest alone.

''There is plenty of work for all,'' Molnar says.

When he reopened, he had no financial credits, as new shopowners get financial aid from the authorities. He had to shop around to assemble an old plant from pre-war factories, some already 30 years old.

He still has this old plant with its German, Russian, and Hungarian machines. Working mostly for automobiles, he turns out intricate bits of vital mechanisms that would still be virtually unobtainable here but for him and his like.

''I can make you a water pump for any make of Ford,'' he says, ''or a new bearing for the back axle. Or even a sliding gear for a sports glider!''

Working a 10-hour day, he reckons yearly to gross some 600,000 forints (about (plus their social insurance), and income taxes, he has about 7,500 forints ($ 220) monthly for himself. This is about two to three times the average monthly wage. And with his wife earning 4,000 forints monthly, ''it is enough,'' he says. ''We are content.''

Judging by the prints on his workshop walls of Hungary's 1896 millenium, Molnar is clearly a traditionalist who lives for his craft and the free exercise of his skill as much as for the money.

A considerably bigger operator is young Laszlo Szulyovszky. He was an architect with a construction company and the municipality before starting out on his own last year.

He is now leader of a company that has six partners (including his architect wife), and undertakes the complete range of housing and industrial design, reconstruction and modernization of old blocks or tumbledown individual houses. He buys the materials and then subcontracts the actual work to small, private building cooperatives. As many as 20 outside architect collaborators are called in on the bigger jobs.

As one of three original investors, Mr. Szulyovszky is the manager, though neither this title nor ''board of directors'' is legally recognized. And he is - for official purposes - the ''common representative.'' He and his partners vote on all orders and planning themselves.

''Our order book is full,'' he says. ''And we are discussing our program for the first quarter of 1983. We have just landed our biggest job yet, for total rebuilding of a great old apartment block erected at the start of the century. The redesigning includes refurbishing the decorative statuary of the time which all has to be preserved.''

Until last year, Mr. Szulyovszky never earned more than 6,200 forints monthly. His income is now three times that, after taxes and based strictly on profitability. ''But it means much more work,'' he says, ''and full responsibility.''

''People come to us,'' he says, ''because we are cheaper and we work faster on the basis of cost effectiveness. If we are behind contracted finishing time we pay penalties.''

State enterprises disturbed by this lively free competitive presence in their own easygoing midst may not like it. But the leadership seems firmly committed to the private and invaluable entrepreneurship sprouting up not only in the cities, but also on the big state cooperative farms. They are boosting their own efficiency in leasing off various jobs to ad hoc groups of their own members.

''We want many more,'' says a government economist, ''but people still have not yet got enough confidence.''

It will take time before this new private sector adds up to even 5 percent of an otherwise socialized economy. But there are fewer administrative obstacles than before and, says Mr. Szulyovszky, ''I think we are in an era where changes are taking place more quickly.''