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"The Economy That Most Closely Resembled The Prout Model Was During The Last Years Of Communism In Hungary"

Statement by Dr. Támas Toth, Professor of Economics at Corvinus University of Economics in Budapest for the last 40 years. [Dr. Toth studied there (when it was called Karl Marx University), as well as at Harvard University and Stanford University. He taught for a few years as a visiting professor in the United States before returning to Hungary. He gave these remarks at the press conference in Budapest releasing the Hungarian edition of "After Capitalism: Prout's Vision for a New World."]

I love this book because all of it speaks to my heart. I already told to Dada that I consider it utopian and a bit naïve, especially for this corner of the world.

In my opinion, the economy that most closely resembled the Prout model was during the last years of Communism in Hungary, from the late 70s until 1988. During that time the economy was relatively strong and stable, and people had some feeling of security. Quality health care, education and childcare was free to everyone, and mothers were given three years of paid maternity leave. More and more reforms were implemented, and the control of the Soviet Union was weakening year by year.

For example, we had agricultural cooperatives, but each member had about one acre of "homestead plot" around their house that they could cultivate intensively and sell their produce freely in the market. The difference in prices between the state shops and the open market was very slight, and fruits and vegetables were bountiful. Surveys showed that 60 percent of the total agricultural produce in Hungary was from homestead plots. At that time, you could find 40 types of apples in summer! Now you can only find 3 types of oversized apples with no taste.

In the 80s the government encouraged so-called "small cooperatives" of maximum 100 members. For example, at that time we formed a small cooperative in the university with 69 professors and graduate student teachers. It worked perfectly. Everyone got a share of the income for their survival, and in addition they got different shares according to their performance. This system satisfied both needs - everyone got enough, but those who contributed more got extra.

I love in your book that you are not for absolute egalitarianism, that there are incentives. The best example of absolute egalitarianism is the Israeli kibbutz, which was never originally a religious unit. They were formed by socialist Hungarian Jews that emigrated from Transylvania, which is now part of Romania. They had absolute egalitarianism there. When enough income was generated, they built an additional room on every house. There was a complete lack of specialization, which contributed to a lack of motivation. Absolute egalitarianism holds back the performance of people.

There is an economic opinion that the optimum salary difference between the minimum and maximum should be 6 to 10 times. From the end of the 70s until 1988, this was the pay ratio in Hungary. It was much less than in capitalist countries, but it was much more that in other Eastern European countries. And somehow it worked. But the lack of democracy killed the whole system, and when communism fell in 1988, more than 90 percent of the cooperatives, which were considered a Communist institution, were closed down.

Today the media shows lifestyles, and everybody wants to follow it. There are more than 200 countries in the world, but Hungary joined the richest 40 in the European Union. Every laborer now wants the pay level of Western Europe. It's just not working, it's impossible to do that.

It's easy to speak about inner health and inner peace, but I see Hungarian ladies going crazy in shopping centers. They would be happiest if they could take the whole shop home, but unfortunately there is no space in their house for everything. That's the model the media pushes on people: consume, consume, consume. We build a temple to that.

And Dada predicts that the global economy will crash in one year!

If we continue this way, something will surely happen. I don't know what
will collapse. Imagine the same density of cars in India or in China as in America. It means the whole world will become one big traffic jam. I have seen this already in Croatia, where cars are just standing still. So I calculated that if all the Croatian cars are on the road and 20,000 foreign cars are visiting, with 8 meters per car, all the transportation of the country would stop, what to speak of their economic and environmental problems.

I am absolutely schizophrenic in some sense. In my heart I have always been with the proletariat. Yet I teach international marketing, that is my saleable skill, and it is in great demand in Hungary today. I always try to present different cultural attitudes and perspectives from around the world (American textbooks are filled with only American examples). At the same time I hate the consequences of what I teach. Some of my students work for multinational corporations and help them to exploit the Hungarian people.

When I used to teach in the United States, students felt nervous if I talked about exploitation. Now in Hungary, to talk about that is forbidden! I teach my courses and try to quiet my conscience by presenting this dilemma to my students. This is the reason why in my profession, many of my colleagues hate me. Yet out of the 50 graduate students in the department, 40 chose me as their mentor.

Dada is an optimist, but I am a pessimist. I hope he is right, but I think there is little chance for that. [END]