Ságvári Ágnes (szerk.): Budapest. The History of a Capital (Budapest, 1975)

Budapest in the First Twenty Years of the Council System (1950-1970)

the young, the introduction of free training facilities for the production of skilled workers and the organization of evening courses from primary school to university level. Budapest earned its position as the capital once again, not only as the centre and dissemination point of Marxist thought, the forum for creative ideas and intellectual ideas and intellectual discussion among the new Hungarian intelligentsia, but also on account of the workers and intellectuals spreading from the capital throughout Hungary who contributed to industrialization of the country-side, the creation of socialist large-scale agriculture and a new Hungarian intelligentsia.

The Counter-revolutionary Period

The development of a socialist economy in Hungary was pursued along the lines of the only model hitherto known. The lack of theoretical experience, which qualified the smallest deviation from Soviet practice as an ideological mistake, the cold war psychosis dominant at that time, justifying the forced pace of development, as well as the lack of raw materials, capital and reserves for technical development which set limits to the experiments from the very beginning, led to over-centralization, to an economic policy which ignored the particular conditions and resources of Hungary. It was this that led to the national economic plan being approximately doubled in 1951, for the central goal of this economic policy was the maximum increase in accumulation, on the assumption that this would automatically be accompanied by rapid economic growth. Wages however failed to keep pace with prices, and made no provision for differentials as between various types of work; over-centralized planning made difficulties in production and distribution. With no material provided there was no satisfactory increase in industrial productivity, let alone agriculture and the small-scale industries and crafts serving the population. The use of investment, which swallowed approximately 35 per cent of the national income was grossly inefficient; in the period of the first Five-Year Plan investment in the infrastructure and the service sector amounted to only a third of the total. The increasing burdens weighed most heavily on the population whose standard of living did not rise to the extent originally had been planned.

Economic and social tensions were further increased because the leadership underestimated the effects of these difficulties. This situation was exploited by the imperialist powers, in combination with counter-revolutionary elements within the country itself, believing the international situation suspicious—to spark the counter-revolutionary uprising of 1956. This uprising—which won the support of many politically uneducated and backward people—polarized the two sides and served as a lesson for the revolutionary forces in command of Hungarian political, state and economic life in the renewal and further development of the socialist system.

The counter-revolution—through the material damage caused to buildings and factories and the resultant loss of production—cost Budapest 1,400 million forints. But in December 1956—barely one month after the events—a resolution of the Hungarian Socialist Workers’ Party analysed its causes and laid the foundations of new political measures and economic decisions.

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