Hungary

American Journal of Economics and Sociology, The,  Dec, 2000  by Balazs Konya

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In 1989, the two above-mentioned agrarian models still worked in symbiosis, namely the smallholders' farming model based on private ownership, which was maintained though legally restricted, and the dominant one, namely the big-farming model based on collective ownership. [13]

IV

Post-Communist Land Programs

AT THE TIME of the 1990 parliamentary elections, the Smallholders Party (FKgP) proposed to reestablish the situation prevailing in 1947. In the first program of the FKgP, adopted in 1988, a land tax based on periodically reassessed market value was included, but this stressed the legal restitution to all those who were cheated out of their possessions by the Communist regime, and it was later silently disregarded.

It was hoped by the FKgP that all those who were forced into the cooperatives might take advantage of the entrepreneurial farming model based on private ownership. However, the majority of the laborers and employees working previously in the socialist agrarian sector were unprepared to try this model and unwilling to face the risks and responsibilities inherent in such a venture, to say nothing of the lack of financial support for investments in machinery, building projects and the purchase of fertilizers, pesticides, etc..

The opposite view was proposed by the Socialist Party (MSzP), which broke away from the Communist Party (MSzMP) led by Kadar. Its proposal excluded any legal restoration and precluded the break-up of the undivided collective ownership of the cooperatives.

The Liberal Party (SzDSz), which in 1990 became the most important opposition party, refused the two extreme proposals and envisaged a step-by-step privatization with the elimination of the agrarian monopolies within the framework of the newly created agrarian free market. Several members of Parliament of this party became members of the Hungarian Henry George Society, and advocate to this day the rating of land values by municipalities.

The standpoint of the Conservative Party (MDF) led by Prime Minister Jozsef Antall, the biggest force in the governmental coalition, was pragmatic and was changed several times. It rejected the outright reprivatization of land and introduced instead "compensation bonds" as a more or less symbolic indemnity for the illegally confiscated properties. The law concerning "compensation bonds" was first issued in June 1991 and subsequently modified according to the interests of the prevailing pressure groups. Since the land bases to satisfy the needs of the holders of these bonds were inadequate, the bonds began to depreciate as the land auctions had to be postponed.

After the 1994 elections, the Socialist Party (MSzP) obtained a majority (54 percent) in Parliament and formed a coalition government with the Liberals. The most urgent task in the agrarian sector was to clarify the intricate situation created by the contradictory trends produced by the execution of the laws concerning compensation bonds and the privatization of land. Really, the bureaucratic regulations stemming from the in-themselves inconsistent laws were in contradiction with the just-beginning market processes.