Eugen Varga 101: The Famous Soviet Economist

Zatrun Published at May 01, 2023

In this article titled “Eugen Varga 101: Who is the Famous Soviet Economist?”, we will delve into everything you need to know about Eugen Varga, the renowned Soviet economist of Hungarian origin, that our readers at Zatrun.com are curious about.

Who is Eugen Varga?

Eugen Samuilovich “Jenő” Varga (born Eugen Weisz), the Hungarian-born Soviet economist, was born on November 6, 1879, in Budapest, and passed away on October 7, 1964, in Moscow.

Eugen “Jenő” Varga was born to a poor Jewish family as Jenő Weiß (written in Hungarian as Weisz). His father, Samuel Weisz, was a teacher at an elementary school in Nagytétény, while his mother was Julianna Singer. Eugen “Jenő” Varga studied philosophy and economic geography at Budapest University. In 1906, he began writing for socialist and academic journals, particularly on economic topics. He gained some fame before World War I for his debates with Otto Bauer on the origins of inflation in the Austro-Hungarian Empire. During this time, he was among the leading proponents of Marxist Centrism, alongside Karl Kautsky and Rudolf Hilferding.

Career Life:

In February 1919, Eugen Varga joined the newly formed Hungarian Communist Party. He served as the People’s Commissar of Finance and later became the President of the National Economic Council during the short-lived Hungarian Soviet Republic led by Béla Kun. After the overthrow of the Soviet Republic, he fled to Vienna.

In 1920, he went to the Soviet Union with Arthur Holitscher. Here, he began working for the Comintern and specialized in international economic problems and agricultural issues. From 1922 to 1927, he worked in the trade department of the Soviet embassy in Berlin. From 1927 to 1947, he was the director of the Institute of World Economy and World Politics. In the 1930s, he became an economic advisor to Joseph Stalin. He survived the purges of the 1930s, in which Béla Kun and other Hungarians were executed.

During World War II, he consulted the Soviet government on post-war compensation issues. He attended the Potsdam Conference in 1945 as an expert. Like most of the citizens living and working in Moscow, he joined the Communist Party of the Soviet Union, but also continued to remain active in the Hungarian Communist Party. He was the author of economic reports discussed at Komintern congresses between 1921 and 1935. His writings extensively examined the international economic situation by using the official economic data of many countries to evaluate quantitative trends in output, investment, and employment. He also extensively researched German imperialism.

Eugen Varga 101: The Famous Soviet Economist

Personality:

According to Soviet diplomat Alexander Barmine, who later defected to the West, Eugen Varga showed “the most disgusting thoughtlessness” by requesting a private train compartment while traveling by train to Moscow with delegates for the Fourth Comintern Congress. Barmine believed that Varga should have been content with a bed in a first-class carriage. Barmine wrote, “The small luxuries of power make people dizzy.”

Another Soviet defector, Abdurakhman Avtorkhanov, writing under the pseudonym Alexander Uralov, described Eugen Varga as possessing “the meticulousness of a German bureaucrat, the stubbornness of a Russian accountant, and the flexibility of a poor Easterner.” Avtorkhanov also described Varga’s institute as the most advanced in tracking stock fluctuations, envied even by the brightest stockbrokers.

Post-War Debate:

In 1946, Eugen Varga published his work “The Economic Transformation of Capitalism”, in which he claimed that western governments had accumulated great power over the management of capitalist economies at the end of the Second World War, which brought them closer to socialist economies, even making it more permanent. He was praised by Kremlin supporters in the West as a “pro-Western” figure and an advocate of the Marshall Plan, but this result was quite unpleasant for Soviet conservatives who believed that capitalism was going through an extreme and perhaps fatal crisis.

In May 1947, at a closed meeting called by the Soviet Academy of Sciences and Moscow University, Varga “was attacked by most of the participants for his writings, if not all.” Nikolai Voznesensky, the head of Gosplan and a member of the Politburo, who was a strong figure at the time, also criticized the book and wrote a book accusing “certain theorists with empty views”.

Varga’s book was condemned at an economics and political experts meeting in May 1947, and the institute he presided over was closed and joined Gosplan. Although he was a prominent academic economist, his prestige had diminished – he was described as a “bourgeois economist” in the second edition of the Great Soviet Encyclopedia – but the fact that he was not dismissed or arrested suggests that he had strong protectors. In March 1949, Voznesensky was arrested and on March 15, Varga published a self-criticism letter in Pravda.

Years After Stalin’s Death:

Following Stalin’s death in 1953, Eugen Varga made a comeback. In February 1956, he wrote an article in Pravda that restored the reputation of Bela Kun. However, the new leaders in the Kremlin believed in peaceful coexistence, so they were not interested in Varga’s predictions that an “essential” economic crisis would erupt in the United States. After his death, a selection of his works were published in three volumes in the Soviet Union, Hungary, and East Germany.

Eugen Varga never returned to his birthplace of Hungary. He was invited to Hungary several times as an economic advisor because of his close relationship with Mátyás Rákosi. During this period (1945-1950), he took a special interest in the reforms carried out by the Communist Party in power, such as economic planning, pricing, and monetary reform. With the fall of Rákosi and the rise of the Kádár team during the 1956 Hungarian Revolution, Varga’s advisory work was no longer appreciated.