Product Market and Capital Market in the Light of the Experience of the Hungarian New Economic Mechanism

Abstract

Economists are seldom — many would say never — lucky enough to have their theoretical propositions tested empirically in a way sufficient to pronounce on the validity of the theories. The ceteris paribus clause is usually the main culprit: ‘other things’ are simply not equal … We cannot pretend therefore that the experience of the Hungarian New Economic Mechanism (NEM) provides us with the decisive proof of the virtual impossibility of expecting product markets to operate properly without simultaneously opening up these markets for factors of production, especially the capital market. Nevertheless, the fact that most analysts of the experience of the Hungarian NEM point to this flaw in the 1968 blueprint as the major reason for the new system falling short of expectations has to be taken as an important point of departure both for practical thinking on reform and for theoretical considerations (or reconsiderations, as in our case).KeywordsLabour MarketCapital MarketCentral PlanningSocialist EconomyState EnterpriseThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.