Stalinist economic system began to stagnate in USSR and Europe by late 1950s and they could not deliver all that was promised. This was truer for governments where USSR imposed its system. Polish economists were the first to voice the need for reforms but their leader Gomulka refused to initiate the reforms. Hungary implemented more economic reforms in the 1968. Developments in Soviet Union always affected its satellites in Eastern Europe. However some of them went ahead of USSR in bringing about the changes.

Five years of repression and Janos Kadar launched a policy of reconciliation. The slogan which caught on in 1961 was, “He who is not against us, is with us.” He cleaned the party of old and ineffective people and infused people even with little political exposure. They brought in fresh ideas and improved the economic systems. The model was called New Economic Mechanism and it was implemented from 1968. Within few years Hungary became a prosperous state. This was possible because there was least resistance and travel abroad was not restricted. When people travel to other countries they are exposed to different economic systems.

Yugoslavia was a communist country since 1948. After 1948 Tito promoted decollectivization of agriculture. He introduced ‘workers management’ in factories. Cultural and economic relations with the West were developed. Yugoslavs were permitted to work in the west. There they lived a frugal life and sent the saved money to the homeland. This in turn improved the investment capital and the economic situation greatly improved. The reforms made in Yugoslav influenced the economic process of other Eastern European states. Yugoslav Communist Party was changed into League of Yugoslav Communists which was to lead the development of the country and not dictate. Yet Tito was the supreme authority and he governed like a dictator. Yugoslavia was a struggling economy and had troubling nationality problems when Tito died in 1980.

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In Czechoslovakia market socialism was introduced in 1960 and there was opposition to Communist party. This brought about economic stability but social instability. Intellectuals always spoke against the socialist model and they were soon joined by students. Alexander Dubcek, the reformist was elected to power. The growing popularity shocked USSR and they attacked Czechoslovakia and restored Communism in 1968. Economy began to stagnate in 1980s in spite of Gustav Husak’s social contract and normalisation. In 1991 with the collapse of Soviet Union a seal was put to the centralized control of communism.