Agricultural Economics and the Agrarian Lobby in Hungary Under State Socialism

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Agricultural Economics and the Agrarian Lobby in Hungary under State Socialism

Zsuzsanna Varga Eötvös Loránd University, Budapest [email protected]

Abstract

Following the revolution in 1956, Hungary’s agrarian policy went through changes and reforms unprecedented within the socialist block. The most important reform was the abolition of the system of compulsory delivery. This article aims to outline how the political change affected agrarian economics and also highlights the significant role played by some scholars, with their latent presence and their policy suggestions, which the Kádár Government had the courage to support in November 1956. With the emergence of the so-called Agrarian Lobby, of the intertwining networks of politicians, administr ators, and scientists of the agrarian sector, the personal and intellectual preconditions had already been in place before 1956. Institutionalization, however, could only come about after the partial rehabilitation of market economy. The post-1956 political leadership could only meet the challenge of re-defining the relationship of the state and the agricultural cooperatives with the contribution of professionals. At the same time, the shape and nature of Kádár era agrarian economic research were also affected by the alliance between the practitioners of the field and the emerging network of agro-politicians and administrators, the Agrarian Lobby. Two key figures, Ferenc Erdei and Lajos Fehér, shared the responsibility for the better performance of agriculture. This paper also pays attention to the way their cooperation on this reform policy-oriented research was realized and the key role it played in the Hungarian agricultural cooperatives’ emancipation from the bonds of the kolkhoz model in the 1960s.

Keywords agrarian economics – agrarian lobby – Hungary – socialism – revolution of 1956

Agricultural Economics 285

By the turn of 1956–57, it was decided that the Kádár government,1 whose rise to power had been strongly supported by the Soviet Union, should extend the reprisals not only to the participants of armed struggle but also to intellectuals involved “in the preparation of the counter-revolution.” The functioning of the Hungarian Writers’ Association was suspended on 17 January 1957. The same was the case with the National Association of Hungarian Journalists three days later. Simultaneously, they launched a campaign to put well-known writers and journalists involved in the revolution under arrest (Standeisky, 1996: 191–212). The government applied a wide range of reprisals in several groups of intellectuals between 1956 and 1963. György Péteri provides a detailed analysis on the mechanism of the “purges” using the example of the Institute of Eco- nomics of the Hungarian Academy of Sciences (Péteri 2004a). In the same period, representatives of a closely related academic area, agrarian economics, experienced an entirely different process. To them, an opportunity presented itself to revitalize their discipline. My attention was drawn to this discrepancy between the two scholarly fields while conducting my research on the socialist agrarian lobby (Varga 2013). In the present study I shall explore how the political changes of 1956 led to the revitalization of the agrarian economics. From the late 1940s the Stalinist academic regime expected agrarian economic research to provide help in the practical problems of the newly established socialist cooperatives.2 To evoke the historical context, I shall discuss the conditions in both the agrarian sector and this special scholarly field in the period between 1953 and 1956. In the central part of the study I am giving an overview of the personal as well as the institutional conditions of this revitalization based on the Research Institute of Agricultural Economics of the Hungarian Academy of Sciences (in Hungar- ian: Agrárgazdasági Kutató Intézet=aki). I pay special attention to the political struggles that surrounded the emancipation of this discipline. Finally, a case study from the 1960s will be integrated to offer some insight into the cooperation between agrarian economists and the agrarian lobby (leading party and

1 The official name of the Kádár government was the Hungarian Revolutionary Worker-Peasant Government. 2 In the literature dealing with the socialist agriculture, “cooperatives” and “collective farms” are usually used as identical terms. However, we should be aware on the one hand of the fundamental difference from the Western-type cooperatives (for example Dutch or German ones), and on the other hand of their different meanings in various countries in different periods. In my paper I prefer to use “cooperative” or “cooperative farm,” since this term was generally used in the contemporary sources.

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286 Varga state functionaries actively promoting the divergence from the Stalinist model in agriculture). i The Historical Context

The issue of the Stalinist modernization of agriculture in East Central Europe was put on the agenda in 1948. This meant more than mere collectivization; it actually involved subordinating the agricultural sector to the interests of forced industrialization (Swain 2014: 499–502). Before the launch of collectivization, at the turn of 1948–1949, there was an important theoretical debate in Hungary within the leadership of the communist party.3 In the course of the debate, the policy of Mátyás Rákosi (the first secretary of the hwp) and Ernő Gerő (the secretary responsible for the economic policy), who were willing to satisfy Soviet demands even at the price of radical moves, clashed with the stance taken by Imre Nagy, who was the leading communist agrarian expert (Rainer 2009: 48–52). Nagy warned of the dangers and negative consequences of rapid and aggressive collectivization. He stressed that the vast majority of the Hungarian peasants were skeptical about the idea of Soviet-type collective farming. In order to avoid economic and social disturbances, he recommended a long and gradual multi-sectoral transition. For his views Imre Nagy was labelled as right-wing and revisionist, and in 1949 he was expelled from the Politburo of the hwp (Rainer 2009: 48–52). I discuss this antecedent because after Stalin’s death, Soviet leaders con- fronted Rákosi and Gerő with the fact that the economic sector most severely affected by crisis was agriculture. They referred back to the aforementioned debate and recommended Imre Nagy for Prime Minister (Varga 1992: 234–269). It is true that he was the only one among the Muscovite leaders of the hwp who was considered an agricultural expert owing to his family background, his studies, and experiences as a researcher in agricultural economics. The background of the severe agricultural crisis was the following. Regard- less of the scope of violence applied by the communists, they did not manage to break the peasants’ resistance towards the kolkhoz. By the turn of 1952–1953, the first campaign of collectivization, launched in 1949, had failed (Ö. Kovács, 2014: 215–221). Meanwhile the agrarian sector had been completely disrupted: the standard of production did not reach that of the period before the war

3 The name of the communist party in Hungary between 1945 and 1948: Hungarian Commu- nist Party (hcp), between 1948 and 1956: Hungarian Workers’ Party (hwp), between 1956 and 1989: Hungarian Socialist Workers’ Party (hswp).

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Agricultural Economics 287

except for the year 1951 when weather conditions were extremely favorable (Pető and Szakács 1985: 204–212). Hungary was in need of imported food. In Hungary by 1953 the new socialist cooperatives had been cultivating a little short of 40 percent of all arable land (Pető and Szakács 1985: 212). In order to overcome the crisis, the government led by Imre Nagy had to rely on individual farms which at the time provided the bulk of agricultural products. The first steps of the New Course agrarian policy reflected the recognition of this reality. It was even further accentuated in the medium-term resolution concerning agricultural development adopted by the government in late 1953. It was preceded by the establishment of a scientific committee initiated by Imre Nagy in the autumn of 1953 (Romány 2006b). He was not only the master- mind behind this comprehensive project, but he continued his control over it. He drew up a detailed schedule and took part in the discussions whenever he could. He called together 150 agrarian experts to work out a long-term program for developing agricultural production. Many were invited who were not party members (Dénes Penyigei, János Mócsi, János Erdei, Imre Rázsó, etc.), so he invited scholars whose main “sin” was their “reactionary” past, which meant that they gained their knowledge and experience in the interwar period, in the “Old regime.” This was the first sign of the rehabilitation of expertise stigma- tized as “bourgeois” until then. Prime Minister Imre Nagy asked the participants “to work out those measures the government should carry out using their knowledge, scientific preparations and practical experience” (Nagy 1954: 402). The goal was to work out a three-year long agricultural development program which could encourage private peasant farms to increase their production, as they were still the most important factor of the agrarian sector. To achieve this, the categories of market economy should be used instead of those used in planned economy. The one month that the young communists who held the leading agricultural posts of the nomenklatura spent with this sundry company on Szabadság Hill was like an intensive training for them (author’s interview with Imre Dimény, 17 October 2011). This group of people later kept track of those who participated in the so-called “hill committee.” I consider the initiative of Imre Nagy an important predecessor of scientific agrarian economic thinking. It is important to add that among the allies of the Prime Minister Lajos Fehér and Ferenc Erdei were those who did a lot to promote this new type of thinking in public. Both men played important roles after 1956 and that is why I should briefly introduce them. Lajos Fehér’s role was important as a journalist at that time. Fehér had joined the illegal communist movement as early as 1942. It was at that time that he formed a close relationship with post-1956 party leader János Kádár.

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288 Varga

Lajos Fehér came from a peasant family. He received a degree as a teacher but worked mostly as a journalist. His father suffered the effects of collectivization himself, the harassment he went through contributed significantly to his pre- mature death in the early 1950s. This might have played a role in Lajos F ehér becoming an engaged supporter of agricultural reforms and the policies of Imre Nagy. He took an active part in popularizing the measures of the New Course as a journalist. From the summer of 1954 he edited the agrarian column in the central party newspaper called Szabad Nép (Papp 2010: 249–263). Ferenc Erdei, who later came to play a key role in revitalizing agricultural economics, became an important ally of Imre Nagy’s in 1953. The Prime Min- ister Imre Nagy made Ferenc Erdei responsible for the Ministry of Justice then in 1954 for the Ministry of Agriculture. Apart from his role in the government, Erdei is also interesting because he created contact for the Prime Minister in another direction. Owing to his interwar activities as a rural sociographer and as a politician of the National Peasant Party he had wide ranging relations and with its help he played a key role in awakening the moral sense of young members of the nomenklatura with rural background. There was another contact point between Ferenc Erdei and Imre Nagy: scientific research and science policy. Agrarian economic research was at the heart of Erdei. In 1954 he became the chairman of the Committee for Agricultural Farm Organization of the Hungarian Academy of Sciences, so he had a forum to promote real economic thinking and the rehabilitation of the concepts necessary for it. Besides his own publications, he started various debates, too (Varga 2013: 42–43). Interestingly, even though both Imre Nagy and Erdei were committed to the deeper scientific exploration of agricultural problems, they did not establish a new research institute for this purpose. We can assume that they had deemed the crisis so severe that they concentrated all their efforts on managing the practical problems of agriculture. They settled for the establishment of a department of agriculture in the Institute of Economics launched in 1954 under the leadership of István Friss (Péteri 2001: 47–79). They delegated many of their followers there. For example, Ferenc Donáth, an agrarian politician recently released from prison, became the deputy director. Imre Nagy’s PhD student, the economist Ferenc Fekete, became the editor-in-chief of the new journal, Közgazdasági Szemle. Later on, Fekete took part in working out a comprehensive program for economic policy “Tézisek a gazdaságpolitikai munkaprogram kialakításához” (Theses to establish a political economic work program), which was completed by the end of November 1954 (interview with Ferenc Fekete by Gyula Nagy, 1988, oha 13). The chapter on agriculture was compiled by Ferenc Fekete himself. As János M. Rainer put it “the chapter on agriculture contained the longest critical section, it discussed the agrarian development

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Agricultural Economics 289 that took place after 1945 completely in accordance with Imre Nagy’s concep- tion and proposed a slow transition towards cooperatives” (Rainer 1999: 132). Due to the fight for the power with Rákosi and the political changes in the Soviet Union early in 1955, the Hungarian leadership was ordered to Moscow, where Imre Nagy in particular was criticized for his New Course policy. Since Nagy was not willing to perform self-criticism, he was firstly labelled once again as right-wing and revisionist, then in April 1955 relieved of all his offices. It was not only he who was demoted from the central decision making organization, but several of his supporters were deprived of their positions. Erdei was sacked as the Minister of Agriculture in 1955; János Matolcsi, the leader of the Department of Agriculture of the Central Committee became the new minister. Lajos Fehér was also sacked from Szabad Nép. However, a remarkable continuity can be observed among the leaders working in the second and third lines of the party-state’s economic policy apparatus. At the Ministry of Agriculture Gábor Soós, Gyula Nagy, and János Hont kept their positions. With their help, Imre Dimény, who was Ferenc Erdei’s PhD student and worked at the Ministry of Agriculture between 1951 and 54, was accepted into the National Planning Office as the leader of the Main Department of Agriculture. Károly Garamvölgyi also remained with the National Planning Office (Varga 2013: 43–47). There was a young generation, in their late twenties or early thirties, whose members, even if they did not take part in the collectivization campaigns in the Rákosi era, were in important positions of the nomenklatura before 1953. The Thaw in the wake of Stalin’s death gave a chance for this group, whose members were mostly of peasant origin and had agrarian degrees and among whom there were several students of the Györffy College and the People’s Col- lege, to face the problems that were suppressed and silenced in the previous years and to act to improve the situation. I interviewed several persons from this group and they unanimously said that Imre Nagy’s New Course proved to be a turning point in the shaping of their way of thinking and values. So it is understandable that the new way of thinking that was favored by Imre Nagy was retained and carried on by this group. It was helped by the fact that Imre Nagy’s ally, Erdei, had some space to maneuver left because he was responsible for agriculture as the Deputy Prime Minister (Huszár 2012: 342). A further push towards the return to the liberally oriented reforms came from the 20th Congress of the Communist Party of the Soviet Union held in February 1956. At the Congress, the Minister of Agriculture openly admitted that until recently the agricultural organizations had neglected the economic issues, cost accounting, and in general economic calculations too. As an illustration of the reactions of Hungarian agrarian economists, I am citing a

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290 Varga contemporary article written by Ferenc Erdei, president of the Committee for Agricultural Farm Organization of has, entitled “The 20th Congress Showing the Way for Our Research in Agricultural Economics and Farm Organization”:

The prominent event of the 20th congress for our science is that aspects of economic efficiency have been highlighted. This marks a true turning point among conditions where the emphasis had been on more developed techniques of production or an increased crop capacity. We had not previously examined if the application of a more developed method is economically efficient or not, or if the impressively large crop capacity is in proportion with the expenditure devoted to it … although practice has sent us a rather clear warning as to its necessity. erdei 1956: 3

In the months between the 20th congress and the revolution in October, Ferenc Erdei, in his role as Deputy Prime Minister, activated the reform-communist network that had been established between 1953 and 1954 (Varga 2013: 47–52). As a result of this, critical analyses were conceived in various institutes of the central agrarian administration (like in the National Planning Office under the leadership of János Márton and the secretariat of Erdei) that included recommendations for possible solutions, too. But this time they were put in the drawers. These drafts contained shocking statements going against the privileged ideological-political dogmas like: “The majority of our cooperative farms, vis- à-vis individual peasant farms, produce less, sell less product, have a lower income, and have their hands tied by more bureaucracy.” Or: “In the future we must not mechanically follow the practice of the construction of Soviet kolkhoz, but take into account our unique characteristics” (mnl ol m-ks-288. f. 28/1957/5. ő.e.). Special attention was given to the system of compulsory delivery of agricultural products. The end of 1956 would see the expiration of the three-year compulsory delivery system that came into force on January 1, 1954. Even though the system of compulsory delivery was introduced in Hungary during the Second World War, it was later upheld during peace time as well. It was a key element of the Stalinist system of socialist agriculture. It served as a main channel to squeeze national income produced in the agriculture into the industrial sector (Erdmann 1993: 77–93). Most recommendations formulated in institutions of economic administration in Hungary in the first half of 1956 were aimed at a gradual cutback. The common argument was that compulsory delivery had an extremely negative effect on the interest of peasants, and consequently on the

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Agricultural Economics 291 quantity and quality of agricultural production. Even the idea of abolishing it completely in the near future came up. The following citation is a good example of the opinion taking shape on the eve of the revolution, where the Party center’s Agricultural Department had the following position on the future: “In order to assure the producers that their work would be properly rewarded, the present pricing system had to be modified … and the regime of compulsory deliveries abandoned” (mnl ol m-ks-288. f. 28/1957/5. ő.e.). ii Revitalization of the Market and the Agrarian Economics

On 4 November 1956, the intervention by the Soviet army sealed the fate of the Hungarian revolution and war of independence. The Kádár government encountered general dissent, armed opposition, and strikes throughout the country (Békés, Byrne, and Rainer M., 2002: 364–382). The national strike of industrial workers was a particularly severe problem, since this group had long been regarded as the traditional base of the communist party. Under such circumstances, there was no way for the government to engage in a fight on two fronts. It was imperative that they sought possibilities to pacify the peasantry that made up nearly half of the country’s population. A confrontation with the peasantry, which controlled food stocks, would have had unforeseeable consequences. In this emergency situation, the government fulfilled the economic demands made by the peasantry at the time of the revolution (Varga 2007: 155–176). Of the corrective measures the abolition of compulsory delivery was the most significant as it occasioned a sharp break with Stalinist concept of the socialist agriculture. This significant decision was forced along by various fac- tors. Already on 30 October, the Imre Nagy government, recognizing the key demand of the peasantry, declared the abolition of compulsory delivery. In these conditions the Kádár government not only refused to revoke the mea- sure of the Imre Nagy government, but in the interest of consolidation claimed ownership of the idea of ceasing the compulsory delivery system. This was symbolized by the Presidential Council’s legislative decree no. 21 of 12 Novem- ber, which retroactively to 25 October cancelled the compulsory delivery of agriculture crops and products (TRHGY 1956: 62) Compulsory delivery had been considered an integral part of the Stalinist planned economy and Hungary was the first socialist country to take the step of abandoning it (Wädekin 1982: 65). Instead of coercion, the party-state was now establishing commercial relations with the agricultural producers (both peasants and cooperative farms), and trying to give them market incentives to

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292 Varga produce more food. The significance of all this was that market forces were being applied, albeit to a limited extent, in one of the main sectors of a socialist economy. There were other corrective measures introduced in November and Decem- ber 1956. As a result of them, two-thirds of the existing collectives dissolved themselves and several hundred thousand private agricultural units started functioning in their place. The general trend was for formerly landed peasants to leave the cooperatives and for those who originally had little or no land to remain on (mnl ol m-ks 288.f. 28/1957/11. ő.e.). The agricultural sector, thus, was yet again dominated by individual farms. Since the food supply of the entire country depended on them, their scientific exploration became indispensable. Before 1956, research had focused on socialist large-scale farming. The communist party saw agricultural science as the driving force behind this large-scale “modernization project.” In this situation, development of the scientific research had largely been determined by the political intolerance that expected instant solutions in the organization of agricultural cooperatives. The problems of Soviet-style cooperatives and state farms became the focus of agricultural economic research. It was no accident that the name of the discipline changed to “farm organization” (üzemszervezés) instead of agricultural economics (agrárközgazdaság) (Kovács 1999: 15–18). Ferenc Erdei became a key figure in the post-1956 revitalization of this scholarly field. As we have already seen, in the first half of the 1950s, he had been, in his role as minister of agriculture, involved in the Stalinist modernization project. While holding this office, he faced daily the tragic consequences of the forced transfer of the Soviet model onto Hungarian agriculture (Huszár 2012: 328–333). As I have already mentioned, Imre Nagy appointed him to significant offices during the New Course as well as in the course of the revolution. As Deputy Prime Minister, Erdei took part in the government sessions all along until 2 November. Erdei was arrested on 3 November 1956, as a member of the Hungari- an delegation sent to Tököl to negotiate the withdrawal of Soviet troops. He was commissioned by Imre Nagy and served as the civic leader of the delegation (Huszár 2012: 357–361). Two questions in his life story that are unclear to this day is how long he had been held captive and due to whose intervention he had been freed. According to the author of his biography, Kádár turned directly to Khrushchev on his behalf. What we do know for certain is that after his release in December he made the decision never to take any political positions again. He intended to return to agrarian economic research (Huszár 2012: 362–364). On 1 January 1957, Erdei was appointed director of the Institute for Agri- cultural Farm Organization of the Hungarian Academy of Sciences. In five

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Agricultural Economics 293 years the name of the institute changed again, remaining through to 1989 the Research Institute of Agricultural Economics (aki). We can form a picture of the initial period of the Institute based on the notes left in Ferenc Erdei’s legacy and the letters he had sent to the hswp’s Village Department (later renamed the Agricultural Department) of the Cen- tral Committee apparatus. As 1956 turned to 1957, the situation developed such that this department became the meeting place of all those critical of the agricultural policy of the Rákosi period (Romány 2006a: 120–122). This did not happen by chance, as Lajos Fehér was named the director of this department in early 1957. He was a committed believer in the new agricultural policy that served as the spine of the 1953 New Course, and further, he insisted on it after the removal of Imre Nagy in 1955. It is important to note that the Soviets had serious reservations about him, and he had several disagreements with János Kádár over November and December 1956. Kádár, however, supported him nevertheless, given that he had known Fehér in the illegal communist movement (Papp 2010: 267–269). In Erdei’s letters to Lajos Fehér, the importance of empirical studies was a dominant issue right from the start. This parallels the phenomenon described by Péteri as “naive empiricism” in connection to the initial research program of the Institute of Economics (Péteri 2001: 50–55). Erdei believed that the first step towards finding the way out was to get acquainted with the actual situation of Hungarian agriculture. This is why he had paid special attention to establishing a database for the institute right from the beginning (mnl ol m-ks-288. f. 28/1957/3. ő.e.). The main reason behind this was that there had been little to no statistical records on topics he had considered essential (e.g., the computa- tion of income and cost). In February 1957 Erdei wrote to Lajos Fehér about the importance of reliable statistical data and criticized the previous mode of knowledge production that ignored facts and privileged ideological-political authority. He emphasized that if the practitioners of the agrarian economics do not start off from the real situation of agriculture, agrarian policy may go amiss again. The data relied on by the researchers at the institute came from the institute’s own regular surveys covering 120 cooperatives and 150 individual peasant farms. Thus they created a unique source of data that brought them a number of external assignments. Determining prices, for instance, was the authority of the National Pricing Office. And even though the Office had its own Department of Economics, they requested Erdei’s institute to send them their relevant papers on a regular basis (Csete 2010: 99–100). A great deal needed to be done when it came to regular statistical observa- tion of incomes and costs. The prevailing economic ideology of the Stalin era declared that profitability was irrelevant in a planned economy. The manag ers

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294 Varga of agricultural cooperatives neglected economic efficiency. Their main effort had been to fulfil the so-called quantitative requirements like the average yield, milk yield, etc. This means that the cooperatives had no information as to how much the production of a certain product had cost them. In Hungary, Erdei and his group played a pivotal role in the “rehabilitation” of economic categories such as cost accounting, net income, profit (Csete 2010: 96–97). They redefined the conceptual tools of agrarian economics. They paid special attention to introducing cost accounting to cooperatives. Due to the prevalent attitudes of the 1950s, they had to engage in a number of heated conflicts to have profitability indexes accepted not only in the theory of socialist agrarian economics but in the process of political decision-making, too. We can, thus, establish that the focus of the Institute had been the exploration of the partial resurgence of market economy. To this end, they launched a basic research on the topic of cost accounting, this being the basis for price policy regulation. This could, however, not be the sole focus of the Institute. Their research activity was seriously affected by the sharp debates concerning the possible direction of the economic policy of the hswp following the first emergency measures. As the consolidation process pushed forward, the Kádár government was less and less inclined to revise the former, pre-1956 Stalinist economic policy. A good example of this is where the recommendations made by the reform committee headed by István Varga ended up. In December 1956 the Kádár government decided to review the entire economic management system. However, in May 1957 their proposals were shelved. Credit received from the Soviet Union played a decisive role in this (Szamuely 1986: 189–192). We know that the work led by economics professor István Varga essen- tially remained within the confines of expert committees and was removed from the agenda before the wider public could become familiar with it. In contrast, the hswp’s future agricultural policy was debated in several forums all across the country. In his memoirs, Lajos Fehér’s deputy János Keserű wrote: “In total we debated the plan with close to ten thousand people and incorpo- rated the opinions of 1,500 people in the unified guideline program” (Keserű 2007: 81). In the revision of agrarian policy, it was a different issue, due to Lajos Fehér bringing the debate outside the walls of the party center. Some 15,000 individuals participated in these debates throughout the country. Ferenc Erdei, too, was intensively involved from the start. Many letters sent to Lajos Fehér have been preserved that took an agrarian economic perspective to highlight the problems of forced Stalinist modernization (mtak Ms 5875/1-2., 5878/2-4., 5883/4., 5884/5.) The widespread national debate also offered an excellent opportunity for the informal pre-1956 social network to further expand and gain strength. What

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Agricultural Economics 295 also helped achieve this goal was the fact that, in the first half of 1957, there had been a great number of personnel changes in the state and party apparatus. Taking advantage of this, Lajos Fehér could use his political influence to put individuals sharing his views in important positions. Imre Dimény, an aspirant of Ferenc Erdei, was appointed vice president of the National Planning Office. Ernő Csizmadia, an aspirant of Imre Nagy, was appointed to the Department of Agitation and Propaganda at the party center. This had gained the lobby important positions to convey its views to the apparatus through appr opriate channels (Varga 2013: 257–258). As a result of the above–mentioned consultation, a document entitled “The- ses of Agrarian Policy of the hswp” was completed. Members of the agrarian lobby regarded this document as their program throughout the socialist era. Since it had never been announced as a formal party resolution, the Stalin- ist groups did not consider it binding. They used every opportunity to challenge and attack it. Leaders of the Ministry of Agriculture were particularly active in this process. These were Minister Imre Dögei and his deputies: Mihály Keresztes, András Magyari, Antal Márczis, and Mátyás Szőke. They clinged to the Stalinist agrarian policy and considered every change in agriculture since November 1956 harmful (Sipos 1991). Conflicts between the networks around Fehér and Dögei related to almost all topics. They included the abolition of compulsory delivery, too, since the Dögei group considered it a threat of capitalism returning. Many at the various levels of the management in the agrarian sector hoped that the abolition of delivery was meant to be a temporary tactical concession that could be restored after the government had regained strength. At the meeting held for the agricultural department heads of county Party committees, Lajos Fehér characterized the views of the Dögei group as follows: “People like this want us to put an end to farmers’ incentives. I don’t think that any responsible Party or state functionary would dare to suggest that we should discontinue making the peasants and their cooperatives economically interested in increased production, which was so hard to achieve. I think none of us here, not even responsible corporate functionaries, would accept responsibility for that. That is why, in our agricultural policy, we insist that incentives be secured for both individuals and collective farms” (mnl ol m-ks 288.f. 17. cs. 9. ő.e.). The results of the year 1957 had shown that the abolition of compulsory delivery had a very positive effect on the growth of agricultural output. The urban population could, hence, be supplied more efficiently than before (Pető and Szakács 1985: 433–437). This had been a crucial aspect for the political leadership that sought to compensate for its lack of political legitimacy with a policy

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296 Varga aiming to achieve higher living standards. Not only at this time, but for a longer period to come, this policy depended largely on food supply. This had ensured a good bargaining position for the agrarian lobby around Lajos Fehér. This stronger position was much needed in the following waves of debates concerning agrarian policy. In the heat of these debates, Erdei’s institute was repeatedly branded revisionist by Stalinist groups. Leaders of the Ministry of Agriculture and co-workers of the research institute under the supervision of the ministry published a number of articles denouncing the scholarly output of Erdei and his group. Under such circumstances it comes as a little surprise that Erdei was keen to establish a forum for discussion and publication at- tached to the Committee for Agricultural Farm Organization of the Hungarian Academy of Sciences. The review entitled Gazdálkodás (Farming) was launched as early as 1957. It appeared at first once every three months, later every second month, and finally, from 1967 on, monthly. It was edited practically by the co-workers of the institute with Erdei being editor-in-chief until 1968. The choice of the title had been intentional, it had meant to represent the break with the Stalinist style of economic policy making. The single most important connotation of the term “gazdálkodás” was no doubt rational husbandry with resources, an economic order where decisions are based on professional expertise relying on factual information and not on ideological assumptions. One of the main objectives of Gazdálkodás was the dissemination of the results of latest scientific research concerning agrarian economics as well as sharing the experience of the most qualified experts of the area. “A long- awaited journal called Gazdálkodás [Farming] is going to be published for agricultural experts”—emphasized the text announcing the publishing of the new journal. “The success of farming mainly depends on the correct organization of the farm and the single production phases, on the recognition of economic conditions and possibilities, in short, on the organizational abilities and knowledge of the leaders … The main goal of Gazdálkodás is to publish the findings of scientific research in the organization of agricultural cooperatives and in agrarian economy and the best experiences of practical experts … Gazdálkodás gives information on the most recent scientific achievements in agrarian economy both in Hungary and abroad” (Erdei 1957: 3). It was also in- dicative that the content list was written in three languages from the very beginning: Hungarian, Russian, and English. The journal had three columns that facilitated the dissemination of the latest results of research and professional discussion. The column “Observer” published summaries of several pages. “News” reported on the conferences of renowned international organizations (cigr, ciosta, eaae, fao) or the characteristics of a certain country in telegraph style. It is also important

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Agricultural Economics 297 to mention the column “Current Literature,” since it listed, beyond already published material, also those articles from abroad that had already been translated by the Hungarian Agricultural Library. A copy of these could be pur- chased for a reasonable price. The above-mentioned columns of the journal emphasize an important di- mension of the professionalization of this arena. Erdei had made every effort right from the beginning to ensure that his co-workers were up-to-date with the latest developments in agrarian economic research not only from the socialist but also from the Western countries. It is well known that in the 1930s Erdei traveled to several Western European countries to study developed agriculture (Tamasi 1997: 19–35). After the Second World War, he made efforts to follow the results of Western agricultural development, which, in the years of closure in the Cold War was a rather difficult task, even for a Minister. The rapprochement following the death of Stalin made gathering information on Western developments easier, which quickly ensued in the areas of science and culture (Péteri 2004b). In the area of the economy, including agriculture, steps were taken in the interest of establishing East–west relations. Erdei had gained even more room for maneuver to realize these ambitions by late 1957, when he became the Secretary General of the Hungarian Academy of Sciences. While initially Lajos Fehér had supported the launch of the institute as a sort of patron, after the academic appointment of Erdei, this was less and less required. From then on, Erdei himself was able to secure a defensive shield around the aki. As a sign of that, he employed representatives of non- Marxist economics who had been sidelined earlier (András Hellei, Ernő Pataky, Lajos Szentirmay). Furthermore, he was able to provide refuge for those who had been sanctioned due to their role in 1956. These people included János Márton who had been removed from the National Planning Office because he served as the head of the revolutionary committee of the institute during the revolution. Árpád Göncz and Ferenc Donáth also found a job upon their release from prison. Erdei also employed Ferenc Fekete after he had been dis- charged from the Institute of Economics due to participation in the so-called, White Aid which meant raising money for the families of writers sentenced after 1956. According to Gyula Varga, a close colleague of Erdei’s, “A lively and colorful workshop was created providing place and work for many ‘dissidents’ who were quite divided amongst themselves too” (Varga 2010: 338). iii Economists and Lobbyists in Alliance

The debates concerning agrarian policy between reformists and Stalinists became especially sharp in 1958, because of the preparations for the final

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collectivization campaign. The institute led by Erdei had grown even more influential in this period since not only Lajos Fehér but other important representatives of the emerging agrarian lobby held regular consultations with them and ordered studies from them (mnl ol m-ks-288. f. 28/1958/3. ő.e.). Rezső Nyers, who served as president of the National Alliance of Coopera- tives (szövosz) at the time and later became a leading economic policy maker of the hswp and the key figure of the economic reform, recalled this period as follows: “Even as president of the National Alliance of Cooperatives I was against restrictive policy against the peasants, so I belonged to the Lajos Fehér group. At this time Ferenc Erdei was participating in our consultations. Antal Gyenes, Imre Dimény, Ernő Csizmadia, and János Márton also participated. I was involved. The Research Institute of Agricultural Economics was the base. Of course the entire group was under the aegis of Lajos Fehér” (Huszár 2004: 227). During the process of collectivization the relationship between Erdei and Fehér became rather intense. Based on their correspondence, we can recon- struct the contour of a division of labor between the two (mnl ol m-ks 288. f. 17. cs. 4–6. ő.e.). What stands out is that both of them were in a position to take the initiative; theirs had been not a hierarchical, dependent relationship even though Lajos Fehér had been a member of the Political Committee and a secretary of the Central Committee at the time. Lajos Fehér not merely commissioned studies, he also discussed matters with Erdei prior to important sessions of the Politburo and the Central Committee. They also discussed ways through which either of them could mobilize other members of their network.4 Erdei, for his part, made recommendations, too, not only concerning research topics but agrarian policy itself. These recommendations often ended with the phrase: “it is up to you, how and when all this can be put across.” This fine-tuned cooperation involved Erdei sending the text of important studies or lectures to Fehér in advance and asking him to gauge the potential political risk they involved.

4 The following case is an appropriate illustration of this. Lajos Fehér was on a visit to Bulgaria at the 7th congress of the Bulgarian Communist Party celebrating the victory of collectivization in agriculture (mnl ol m-ks-288. f. 28/1958/3. ő.e.). He recognised many interesting initiatives in the cooperatives (for example: land annuity) but was not able to get appropriate information during his short visit. He asked Erdei to send some reliable professionals from his institute to conceive a detailed study on the agrarian situation in Bulgaria with special regard to those elements that can be adapted to the conditions in Hungary (Csete and Erdei 1961). Later the network around Lajos Fehér succeeded to make payment of the land annuity compulsory.

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This cooperation played a role in the sacking of Imre Dögei, the Stalinist minister of agriculture. After getting rid of him, in the second half of the collectivization campaign (1960–61), Fehér—relying partially on suggestions made by Erdei—was able to put across a number of measures with the party leadership that helped mitigate the damage caused by the collectivization (setback of production, shortage of labor, etc.) that emerged anew similarly to the previous campaigns of collectivization (Varga 2014: 454–458). These measures were designed by Erdei and Fehér to make the kolkhoz system that had been very strange for Hungarian peasants more or less workable. They made a number of important suggestions with the objective to turn peasants into genuine stakeholders in the economic success of their cooperatives. Let us examine one of these suggested measures in detail: the special forms of remuneration taking shape in the practice of agricultural cooperatives. According to the kolkhoz Model Charter, it was the moral responsibility of each peasant joining the collective to work diligently for the common farm. Fehér and Erdei, however, were aware that Hungarian peasants forced into the cooperative by signing the admission statement and deprived of their independent farming would not give their hearts and souls to work for a common farm. Already in the early half of the 1950s, significant deviations from the Model Charter of the kolkhoz occurred in the actual practices of the Hungarian cooperatives. These departures from the Soviet model asserted themselves in the bottom-up initiatives by which the peasants received their remunerations. The methods applied were adjusted better to their traditions, needs, and interests (Varga 2016: 262–282). Indeed, the main aspiration of the lobby was to make the political leadership accept these practical forms of remuneration that had been developed locally, as they managed to motivate members in achieving a better quality of work for the common good. The most famous of these departures was the so-called Nádudvar method. In essence, it made sharecropping, a method previously branded as a feudal relic, acceptable again (Romsics 2012: 76–77). Amidst the process of collectivization, Lajos Fehér and his group could only make the top leadership accept these initiatives coming from below as temporary concessions. When the collectivization had been completed, however, the question arose whether the cooperatives should be forced back to the “ideo- logically correct” kolkhoz model or the modifications that emerged should be accepted and allowed to stay put as a Hungarian Sonderweg. The network led by Fehér, in their effort to fend off the conservative communists and to defend the more liberal and economically more rational alter- native, relied to a great extent on the arguments developed by the agrarian

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300 Varga economists at Erdei’s institute. The institute had been following and analyzing the changes in the local practices of remuneration for years. Based on their studies, the Ministry of Agriculture issued guidelines in its official gazette, Mezőgazdasági Értesítő (Agricultural Gazette), at the beginning of each year, which contained recommendations for agricultural cooperatives on the available forms of remuneration that would motivate cooperative peasants to work more and with better quality. Significantly, these recommendations were in a sense illegal or only partially legal since they deviated from the kolkhoz Model Charter. In my own research work I succeeded in tracing the advancement of local initiatives with regard to forms of remuneration from the categories “for- bidden,” “tolerated in the local practice,” and all the way to “legalized” (Varga 2013: 96–120). This unique interaction between the top leadership and the cooperatives worked well in those areas of the country where the local party leadership had reformist leanings. There were a great number of villages and smaller com- munities, however, where local leaders stuck with the Stalinist rules. In coping with the defiance of the provincial party-state, Lajos Fehér and his network tried to create a legal and administrative environment in which the autho- rization of local initiatives coming from below would be independent from the attitude of the local party-state apparatus. To this end, they initiated a comprehensive agricultural reform program (mnl ol m-ks-288. f. 4. cs. 45. ő.e.). Erdei’s institute played a major part in conceiving this program. Erdei himself rendered major assistance for Fehér as a mediator towards the party- state apparatus, still stuck to a significant extent in the methods and reflexes of the Stalin era. Himself having been a top apparatchik in Rákosi’s agricultural management, Erdei had an extensive social network in the party-state and an excellent knowledge of its mechanisms. An instructive example for this is the session of the Central Committee of hswp held 28–30 March 1962 concerning agrarian issues. Methods to give cooperative peasants incentives to increase their work effort and efficiency constituted one of the focal issues. Many of these incentives (forms of remuneration) developed in the daily practices of the cooperatives and deviated sharply from the kolkhoz model (mnl ol m-ks 288.f. 4.cs. 46–47. ő.e.). Lajos Fehér saw to it that Erdei was invited to the session as Director of aki. In his speech, Erdei argued and pleaded to accept the solutions emerging in local practices with the following words:

There are a number of issues of organization, income distribution, and management that the collectives solved themselves. Remarkably enough, the cooperatives have been progressing in this area in the past few years

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without waiting for central instructions. The statutes of the cooperatives and the existing legislation regulating this field are to a large extent obso- lete. The central authorities have not imposed any mandatory methods either. I approve of things having happened this way, because it helped the development of the right approach appropriate to changing conditions. What is more, with regard to remuneration for work, the cooperatives were encouraged by the Central Committee and all the organs to find solutions on their own [that are] best for local circumstances. This made it possible that a number of original, interesting, and highly successful methods of management, organization, and remuneration have come to be used in our cooperatives. Word about these solutions reached and influenced other cooperatives … in many cases original and interesting solutions emerged being of interest even from a theoretical point of view. One can say, they are of greater interest than the whole available literature on this subject, considering the nebulous phase in which research in the area still finds itself. mnl ol m-ks 288.f. 4.cs.47. ő.e. 236

The Central Committee meeting proved to have been a watershed in the ten- dency departing from the Stalinist kolkhoz model. Hungary’s political leadership legitimized the unique interaction characterizing the relationship between the cooperatives and the agrarian policymakers mediated by the agrarian economists. This was, then, the first big step towards providing the cooperative peasantry with economic incentives. A major obstacle, however, was still in the way of the agrarian reformers. One of the pillars upon which the Stalinian kolkhoz model rested was the so-called residual income principle. In the Soviet kolkhoz, the wages of the members were not considered as an item of the production costs. Thus, the amount they received could not be known and made available until the end-of-the-year balance sheets had been produced. If this affected the propensity to work among the cooperative peasants, it certainly did so as a disincentive. Based on their regular surveys conducted through several years in 100 cooperatives, Erdei’s research institute published findings and data in the early half of the 1960s that showed the negative impact of the residual income principle. These publications led to the cost accounting debate where the dividing line went between the so-called “net income” and “gross income” positions, the latter arguing for the preservation of the residual principle. The economists of Erdei’s institute claimed that rational economic management without wages being identified separately among the current costs of the cooperatives’ economic activity was impossible. They also developed a method to calculate “the reasonable fee for work” to be

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302 Varga paid to the members of the cooperative. As preparations for comprehensive economic reforms progressed in Hungary and the contours of the “new economic mechanism” emerged, their arguments received increasing attention and acceptance. The new legislation on agricultural cooperatives introduced in 1967 incorpor ated the fruits of the successful collaboration between the politicians and high-level administrators of the Agrarian Lobby and the agrarian economists (Varga 2002: 201–218). This collaboration also helped enhance the autonomy of the Erdei Institute during the 1960s. The growing importance and influence of the Institute is best illustrated by the fact that in 1965 it merged with the Institute of Agricultural Organization of the Ministry of Agriculture. The name of the new institute after the merger remained Research Institute of Agricultural Economics. The tasks of aki after the merger was defined in the founding document as follows: to carry out scientific research in agriculture in terms of economics, agrarian economics, microeconomics, and organization studies; on the other hand, to work out proposals and provide experts’ opinions to inform scientifically the policies of the national authorities overseeing agricultural production (Márton 1970: 12–13). In these years, Erdei took important steps to make the Institute more visible internationally, too. In the first third of the 1960s, the institute achieved significant results in the establishment of an international professional network. The first achievement was the participation of the institute’s co-workers in the 11th congress of the ciosta (Commission Internationale pour l’Organisation Scientifique du Travail en Agriculture) in 1962 in Switzerland. The Polish and the Hungarian were the only delegations from socialist countries at the conference (Hellei 1962: 84–85). As part of the Western trend, agrarian economics became increasingly imbued with agrarian economic content. This had been the reason Hungarian agrarian economists thought it would be useful to join this association. The Hungarian participants in their reports emphasized the usefulness of being able to follow an international consensus reached on labor cost calculations in agriculture. As a next significant stage of international networking, Hungarian researchers took part in the 12th congress of the icae (International Conference of Agricultural Economists) held in Lyons in 1964. Through this move, Hungary practically reestablished its contact to the international organization that had been suspended since the end of the 1940s. Even though only two co-workers of the institute participated, the institute compiled a sample of their scholarly output in English, printed them in 100 copies, which were then distributed among the participants of the conference. As the international isolation of Hungary decreased after 1963, Ferenc Erdei managed to acquire funding for study trips to Western Europe for an

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increasing number of the institute’s researchers. Due to the exchange program of the Ford Foundation, from 1964 on, the road was open for some of them to the us, too (ábtl 2.7.2. 41-9/58/64.): “The East European programs of the Ford Foundation facilitated a considerable mobility across the systemic divide (between capitalism and socialism) of various groups of academic and economic elites” (Péteri 2009: 387–388). Erdei managed to arrange even for Ferenc Fekete, who earned the ill-will of the authorities for his activities during the 1956 revolution, to work on a PhD thesis in the us between 1968 and 1971. Professor Earl O. Heady was his adviser with whom Erdei had been in a close collegial relationship since 1962 (author’s interview with Gyula Varga, 15 November 2013).

Conclusions

As is generally known, the revolution in 1956 is an important turning point in Hungary’s political history. It is, however, by no means common knowledge that, following the revolution, the agrarian policy had seen changes and reforms unprecedented within the socialist block. The single most important reform was the abolition of the system of compulsory delivery. It was not merely a change of economic-political technique, it was made possible and brought about by profound political change. While the main objective of this article has been to outline the manner in which this political change affected agrarian economics, I have also highlighted the significant role played by the latent presence and policy suggestions of representatives of the scholarly field, which the Kádár Government had the courage to support in November 1956. The history of the emergence of what we came to know as the “Agrarian Lobby” between the years 1953 and 1956, vis-à-vis the intertwining networks of politicians, administrators, and scientists of the agrarian sector, reveal also the reasons and background for the resurgence of agrarian economics occurring quickly and without a central party resolution in early 1957. The personal and intellectual preconditions had already been in place before 1956. Institutionalization, however, could only come about after the partial rehabilitation of market economy. The need to redefine the relationship between the state and agricultural cooperatives presented the post-1956 political leadership with a challenge that it was unable to meet without the contribution of professionals. But the shape and nature of Kádár era agrarian economic research was determined not merely by this initial situation. They were also affected by the alliance between the practitioners of the field and the emerging network of agro-politicians and administrators, the Agrarian Lobby. The two key personalities, Ferenc Erdei and Lajos

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Fehér shared a responsibility for the better performance of agriculture (and shared the wish to secure an improved life for the people of the countryside). I have brought a number of examples of their cooperation in my paper. The case that I paid the most attention to is a great example of how the cooperation on this “reform-policy oriented research” worked in practice and the key role it played in the Hungarian agricultural cooperatives setting themselves free from the bonds of the kolkhoz model in the 1960s.

Bibliography

Archival Sources Állambiztonsági Szolgálatok Történeti Levéltára (Historical Archives of the Hungarian State Security) ábtl 2.7.2. 41-9/58/64. Belügyi Tájékoztató jelentések. A Ford Alapítványal kapcsolatos tapasztalatokról [Information reports concerning Internal Affairs on the experience gained regarding the Ford Foundation]. 1964.

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