The Failure Of Socialized Housing Policies In Hungary
Introduction:
In 1983 the Hungarian government introduced a new Housing Act which overturned the essentials of the housing policies that had been in place since the Hungarian Working People’s Party had first taken office in 1948. The emphasis in policy would now be towards the private provision of dwellings and allocation would be done through the market. The previous housing policies had attempted to assert the dominance of the state as the central source of housing provision, by trying to suppress market mechanisms through nationalization, rent controls and subsidies. The underlying aim of housing policies was a desire to correct social inequalities that had been at the heart of the policies in the previous capitalist era. The aim of this study is to explore how socialized housing policies came to be abandoned in favour of the market.
The Economy:
The period under consideration (1948 to 1989) is one during which great transformations have taken place in Hungary. Under the leadership of the Hungarian Working People’s Party (which became the Hungarian Socialist Worker’s Party in 1956), Hungary began a programme of building socialism. State power was reorganized through a purge of reactionary civil servants from the state apparatuses, and the subsequent admission to the administration of workers and peasants.
The Second Economy:
The second economy developed prior to the reform period which began in 1968. It operates on a private, marketlike basis and has become integral to the national economy. It arose through poverty and the gaps and inefficiencies in the planned economy. Large scale industry did not provide for many consumer related needs, so small scale enterprises, that were either individually or family based, formed to fill these gaps, providing both consumer goods and services, and supplementing the low incomes earned in the formal economy. The second economy consisted of legal, semi legal and illegal activity. Private agricultural production, residential production (construction) and some retail trade formed the legal private sector.
The Economic Reform And Housing Policies:
The New Economic Mechanism (NEM) introduced in 1968 aimed to shift economic management from the central plan to the market, emphasizing profitability as a success criterion. Wages were no longer to be set centrally, but rather in enterprise s, and prices would be determined by actual costs. It also aimed to secure the movement of labour into efficient branches of industry, to increase the productivity of factors of production through incentives linked to economic performance and to achieve a balance between supply and demand by facilitating flexibility in the response to variation in demand. The NEM did not, however, dismantle some important facets of central planning. Fundamental macroeconomic decisions were taken at the center. Large enterprises fought to protect their interests, leading to a process of recentralization.
The Construction Industry:
The promotion of a nationalized building industry was a central element to the development of a socialist housing policy after the Hungarian Socialist Workers Party came to power in 1948. The construction industry contained within it all the elements which characterized industry as a whole. Its establishment was essential for the post war reconstruction programme. Its promotion is characterized by the introduction of mechanized methods of production which led to the formulation of large scale enterprises, typical of the Soviet model. This accorded with the development of a Fordism model in industry in general while at the same time building activity formed a substantial part of the second economy.
The Social Context:
It is not the purpose of this work to provide a detailed social analysis of Hungarian society. It is, however, important to situate the object of this study, housing policies, in its social context. In the literature, the question of how social structure in “socialist” societies is analyzed is addressed by a number of authors. Given that fundamental differences exist between capitalist and “socialist” social formations, the question arises as to whether the same analytical criteria can be used to examine the social structure in both.
Conclusion:
This chapter has attempted to place the provision of housing policies in Hungary into its economic and social context. After 1948 the economy was restructured and industrial investment followed a Soviet model. It emphasized investment in heavy industry to the exclusion of consumer goods. It displayed characteristics associated with Fordism, in particular, it lacked flexibility and was thus unable to adapt to changed circumstances. Arising from the inadequacies of this strategy, a second economy developed which provided many consumer goods and services and operated on a market basis.
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