Reforms OLDRICH KYN: THE RISE AND FALL OF THE  ECONOMIC REFORM IN CZECHOSLOVAKIA

 

OLDRICH KYN: ECONOMIC REFORM IN CZECHOSLOVAKIA

 

I. Introduction

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Before August 21, 1968, the Czechoslovak economic reform had been considered the most far-reaching reform in Eastern Europe. It is not anymore. It still may be interesting to review briefly the short period of reformist movement in Czechoslovakia and show how far the economic reform really went and at what point the process was reversed. 
To measure the progress of the economic reform, however, is not easy. 'the result is very different, depending on whether we base our judgment on: (a) writings of academic economists, (b) writings or statements of planners or party leaders, (c) documents already approved by government and party organs, or (d) the actual state of the economy.

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Passing from (a) to (d) our impression might be that less and less was actually accomplished. Some people might, therefore, be inclined to consider the real state of the economy as the only relevant question. It is, however, not so. In a command economy it is not only the day-to-day coordination of economic processes but also the process of organization that is highly centralized. Any institutional changes have to be decided at the top and approved by the Communist Party Central Committee. Therefore, the shift in the ideas and preferences of the ruling elite was extremely important if the economic reform was to be implemented. Without their approval no reform could have taken place nor could a proposal for reform be publicized. They would never have approved anything like the market, free pricing, or workers councils if their views had not been drastically changed. To develop the new theory and persuade people in the ministries, the Planning Commission, and the CP Central Committee to accept it was not at all easy. But once it was done, a substantial step toward reform was guaranteed.

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During most of the Stalin era, and even for some time after his death, the development of economic theory did not have any important influence on economic policy. The rulers would first make a pragmatic decision; then the role of theory was to find an ex post theoretical justification of it. But this time it was different in Czechoslovakia. Theoreticians first made a proposal to change the economic system, and then--surprisingly enough--politicians did accept it, though not immediately and without hesitation. This can be partly explained by the more liberal attitude towards economic science in the early 1960's. Different views were allowed to be expressed and discussed. With better tools and less danger of the accusation of revisionism, economists were encouraged to suggest new ways to organize the economic system. But probably more important was the fact that Novotny had no other solution at hand. The economic situation in 1962-63 was so bad that he clearly saw that something had to be done with the economy. 

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So it happened that people from research institutes and universities rather than planners and party "aparatchiki" originated and stimulated the movement towards the economic reform, and thus played a true leading role in the Czechoslovak economy for a moment. And that was a sin which must not be forgiven. "The more serious shortcoming was, that from the early beginning of the work [on economic reform] a group of self-confident economists was formed, which in fact monopolized all further work on the reform, and gradually appropriated the right for issuing final judgments." (1)

 

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