What was the perception and social function of money in the former socialist economies you are studying?
Citizens in Eastern European socialist regimes experienced money differently, but one common thread stands out: in the immediate postwar period, many saw their national currencies inferior compared to those of the pre-war regimes, and especially to Western hard currencies. To change this unfavourable perception, socialist states employed a variety of public finance instruments, such as government bonds (as pictured above), direct taxes, mortgage and consumer loans, and lotteries to stabilise the value of money, leading to mixed political outcomes.
Postwar Hungary is a good example of why public perceptions of money are relevant, even in authoritarian regimes. Until the 1956 Revolution, Hungarian citizens struggled with incomes and savings that barely covered basic needs, despite the Communist Party’s claims to the contrary. These frustrations boiled over during the Revolution, forcing the regime to introduce reforms aimed at improving and levelling the material realities of socialism, taking into account people’s experiences and expectations of money’s value in order to create a stable currency capable of competing with the West.
How did money shape the relations of these economies with the international community?
While citizens’ generally negative outlook on their national currencies remained strong until the system changes of the late 1980s, some important shifts began to take shape already from the 1960s onwards. By the 1960s, raising welfare and real wages, in ways that could be immediately experienced by the public, became a key priority for socialist governments. This new policy objective had a major impact on the way socialist regimes managed their international relations and sought to compete in the global economy.
Under public pressure, governments across the region embarked on modernising their economies through foreign loans from Western banks, which became more accessible during the oil shocks of the 1970s. But by the 1980s, this growing reliance on Western lenders left socialist states exposed to global economic shifts from which they had previously been somewhat more shielded from. Paradoxically, by that point, socialist authorities seemed to have adopted the dominant Western view of money as a neutral economic tool, something that just facilitates market exchange, rather than as a form of power, as Karl Marx had already recognised in the nineteenth century.
The monograph that I am currently working on, based on my PhD and tentatively titled ‘Contesting Money: The Politics of Time, Value, and the Common Good in Postwar Hungary, 1945–1958’, looks at the roots of this dynamic. It explores how socialist Hungary’s management of internal social tensions tied to monetary inequalities shaped not only social and economic policies but also political changes in the 1950s, with important implications for how the country specifically, and indeed the region as a whole, approached globalisation in the decades that followed.
What was the effect of these processes in the collapse of the communist regimes and the development of market economies in Central Eastern Europe?
These social dynamics of contesting the value of money from within played a pivotal role not only in the collapse of socialism at the end of the 1980s but also in how neoliberalism was embraced by the 1990s, laying the groundwork for the rise of populist economic programmes from 2010 onwards, driven by the persistent reproduction of systemic inequalities through our monetary governance.
Hungary is again a striking example of how monetary inequalities have historically shaped economic ideologies and political transformations in the region. The turbulent transition from a planned to a market economy left Hungarian citizens struggling with wages that lost value year after year. While some economists highlight that citizens have been compensated during this transition with a greater selection of goods and services (i.e. ‘freedom of choice’), recent empirical studies reveal the profound social consequences of these transformations, as shown by the mortality crisis and declining health indicators of the 1990s due to deindustrialisation. As a result, many who lived through this turbulent period became disillusioned with their worsening circumstances and their ‘liberal elites’ and increasingly sought solace in populist rhetoric.
Today, the rise of cryptocurrencies and other digital currencies projects are pushing us to rethink our monetary systems. From the perspective of your research, what do you think is the impact of these developments on the use and perception of money?
Much like ‘socialist money’ of the early twentieth century, today’s cryptocurrencies are often touted as revolutionary alternatives to national currencies, with significant emancipatory potential, promising to free citizens from the oppressive economic structures of the state and the banking sector. This argument, however, overlooks the anthropological and historical fact that money has always been a social relation and, for most of human existence, has been produced into circulation by a central authority. Crucially, the economic value that currencies have a claim on is also socially produced by individuals of different social status and with different levels of political power.
Without a regulatory political framework, cryptocurrencies in their current form are at odds with the normative social function of national currencies, which unwittingly negotiate inequalities between different segments of society, thus creating a relatively stable economic order. Instead, cryptocurrencies tend to fuel speculative bubbles that risk further destabilising our existing political and economic institutions.
What my research on currencies in socialism suggests is that the solution to our current economic problems is neither to grant unchecked power to new unaccountable monetary entities nor to eliminate our current undemocratic institutions that have legal prerogatives over the production of money, such as the state or commercial banks. Rather, the crux of the issue lies in the insufficient democratic transparency and accountability of our global and national monetary governance. I think the socialist experiment with money has shown that only by addressing these issues can we foster a more stable and equitable economic future.
Szinan Radi is a Max Weber Programme Fellow at the EUI Department of History. He is a socio-economic historian working at the intersection of history, economic sociology, and economic anthropology. His research considers the temporality of money, political economy, and everyday economic life in post-war Eastern Europe.
Photo credits: Tóth Numizmatika