Belly Up in Hungary

Last week's announcement read like the obituary of any failed company. Because of falling demand, lagging technology and tough competition, IGV, a business-machine and precision-tool manufacturer, was going bankrupt. The difference was that IGV is based in Budapest, and the liquidation was ordered by Hungary's Minister of Industry. It was perhaps the first admitted bankruptcy ever in the East bloc.

In theory, bankruptcy, like unemployment, ought to be impossible in a Communist country, where the means of production are controlled by the state. But Hungary has been tampering with Marxist economic dogma since 1968, and it now permits the existence of privately run restaurants and other small businesses. In April, further reforms were approved to make Hungarian products more competitive in Western markets.

IGV had been foundering for some time. The blunt, bureaucratic notice of bankruptcy placed responsibility on officials directing the firm. Said the report: "The company could not adjust to the new conditions as its organization and management were not of the required quality." IGV's plants will now be sold or reorganized and absorbed by other companies. Most of the 1,300 workers need not worry about unemployment. According to the Ministry of Industry, they will be offered new jobs.