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SOCIAL STRUCTURE AND INEQUALITIES IN OLD
SOCIALISM AND NEW CAPITALISM IN HUNGARY
Zsuzsa FERGE*
Institute of Sociology and Social Policy, Eötvös Loránd University
Budapest, Pázmány sétány 1/a. H-1117; e-mail: fergesp@ludens.elte.hu
Abstract: The structure of state socialism was stifled by totalitarian power yet inequalities
persisted. The stratification by the ‘character of the work done’, a combination of
power/authority, knowledge, working conditions etc. was veiled by the official ideology
about the near-equality of two ‘classes’ and about the abolition of poverty. Social
inequalities were studied in the 1960s and 1980s in these terms, showing a structure that was
shifting upwards in two decades, where social distances decreased in some respects, but
where the reproduction of inequalities already started, and the lack of freedom was
increasingly keenly felt. The structure of new capitalism seems to be based on capital
ownership and the position on the labor market, though the old professional categories still
have some validity. The new structure produces much larger inequalities and new forms of
poverty. The threat of lasting poverty and exclusion looms large.
Keywords: poverty, social inequalities, exclusion
SOCIAL STRUCTURE AND INEQUALITIES
In the mid-1960s I was trying to find an answer to the question why social
inequalities were larger then they should be by the declared ideology of the regime, by
its self-image, and also by my sense of justice. At that time however, after the years of
violent dictatorship were over, those differences were not particularly visible. The
most basic inequality deriving from the power relations was taboo, and the
consequences of the power gap remained hidden, or existed in the absence of
democracy and the rule of law. The inequalities of physical and social life chances, the
facts of wealth and poverty were not only covered up by power but also by economic
dynamics just about to emerge. Yet in the relatively permissive climate of the times
inequalities could be explored and were actually described by the first research into
1417-8648 © 2002 Akadémiai Kiadó, Budapest
Review of Sociology Vol. 8 (2002) 2, 9–33
STUDIES
* My thanks go to Andrea Deák for her help in clarifying my ideas, to Adrian Sinfield for helpful remarks
and encouragement, and to my colleagues for fruitful discussions.
social stratification (KSH [Central Statistical Office] 1966; Ferge 1969).Today, the
old question arises for me in a different form. Why have social inequalities grown so
suddenly and so spectacularly in comparison to the previous regime? Abundant, often
parading and conspicuous wealth and extreme poverty have both become parts of our
every day life. Today, they are not in contradiction to the ideology of market
fundamentalism (Soros 2002), playing an important role in politics. Rampant
inequality however, is in conflict with the sense of justice of the majority. By 2001
there is an overwhelming majority considering the current inequalities excessive. I
believe that a brief review of the structural changes in Hungarian society over the last
half century provides a valuable perspective, which can help to deepen our
understanding of the current problems of inequality, poverty and exclusion.
HOW MUCH HAS THE STRUCTURE CHANGED?
The transformation of the relationships shaping the structure of society can be
interpreted in many ways. Tamás Kolosi (2000) distinguished three approaches.
According to the first opinion, called Weberian, but based on American theories of
stratification, both the socialist as well as the capitalist societies are hierarchically
organized and their structuring mechanisms are almost the same. It is only the strength
of the effect of political, economic and cultural dimensions of inequality that is
different. Followers of the second approach, also in Kolosi’s opinion, use the Marxist
class distinction and describe the two structures differently. According to them,
“inequalities in capitalist societies basically appear along the lines of ownership, while
in socialist societies state bureaucracy takes the place of the ‘exploiting’ classes”
(Kolosi 2000: 32). The third approach, worked out by Kolosi and close to Szelényi’s
view (Szelényi 1992) builds on the components of the other two theories, but adapts
them to the specific features of Hungarian social development. Society in both
formations is described by the duality of the structures of redistribution and of the
market. This is Kolosi’s L-model or Szelényi’s double triangle one. During the
systemic change the proportion and functions of these “two great forces organizing
society” have changed, particularly with reference to how they generate or moderate
inequalities. The two “forces” are at the same time two “mechanisms” as well, as “we
can perceive systemic change as a shift of the relative weight of the two organizing
mechanisms” (Kolosi 2000: 38). This description creates the impression as if change
had not been too radical.
In fact, there has been an ongoing debate whether there had been a ‘revolutionary’
change with the change of the system. Much depends on the Archimedean point, from
what level we look at the events. From a world history perspective continuity might be
stronger than discontinuity. State socialist societies belonged to the paradigm of the
industrial society progressing towards the post-industrial stage, or towards modernity
on its way to post-modernity. If however our starting point is the construction of global
systems defined on universal level, the practical disappearance of one of the systems
means a radical, revolutionary change. We adopt this latter perspective but focus only
on a single component, namely on Hungarian society.
Review of Sociology 8 (2002)
10 ZSUZSA FERGE
The next question should be what is meant by revolution. If the model is the French
Revolution, which not only created the conditions of a new social formation but also
meant bloody violence that physically annihilated the members of the former ruling
class then we have had no revolution. If the definition is limited to a series of events
that may radically change ideas, principles, institutions, relationships and roles
organizing society (and its differentiation) then a revolution did take place after 1989
in Central Eastern Europe, and perhaps it is still in progress here and there, mostly as a
‘negotiated’ one. It may be a matter of taste whether to use the term revolution. The
essence of my position is that the structural change was deeper than the one suggested
by the formulation that “the relative weight of the major system-organizing
mechanisms, redistribution and the market have changed”. It is the structuring forces
that have changed.
THE PATTERN OF THE STATE SOCIALIST STRUCTURE
It is for the first time that I am making a public effort, surely unclear in many details
as yet, to re-think my ideas on social stratification and structure formed in the
mid-1960s, and to try to interpret the present structure. All this is done in the
framework of a short paper that has the express task to show the interconnections
between the existing structures on the one hand, and inequality and poverty on the
other.Social structure is perceived here as a system formed by the connections of
relationships. The decisive force shaping the structure of state socialism was, even in
its relatively peaceful periods, the mode of operation of the central power and the
relationships defined by it. The strong asymmetry of power relations meant that on the
one side there was a small group of people having or possessing actual power (the
nomenclature, or elite or, maybe, the political ruling ‘class’), whereas on the other one
there was the overwhelming majority almost fully excluded from the opportunities of
access to legitimate power. The means of such exclusion was ‘legal chaos’, the unclear
hierarchy of legal norms, and the use of law as a political means1. Though
constitutionally there were ‘civil’ and ‘political’ rights (Marshall 1965), the
Constitution could be overruled by any lower level legal norm, even by a ministerial
order. Hence rights existing on paper became void. Thus the political class could
decide on the creation, distribution, and redistribution of material and symbolic
resources in an authoritative manner and consequently about the position people or
groups could take in all those areas. Absolute power deepened the social distance
between ‘those on the top’ and the others into an abyss. In fact, the political ruling class
lived in a segregated special world in most East-European ‘socialist’ countries and
hardly used the public goods made available for the people. They were served by
guarded, luxury residential areas, separate hospitals, cars with darkened windows,
separate rest-houses and separate shops. One could say that they practically excluded
themselves ‘upwards’ from the body of the society with whose members they were
unable to maintain ‘civic’ relations based on equality.
Review of Sociology 8 (2002)
SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 11
1 I thank Gábor Juhász for this explanation.
In a research made in the early sixties I could not handle that power relationship.
Therefore I split the concept of power into two. One aspect of power was defined as
socially relevant decision-making, an activity that ‘belonged to the social division of
labor’. The other aspect was described as oppression and violence ‘for their own sake,’
a situation when power ‘was alienated’ from society and from its actual social
functions. Of the latter aspect I only said that it had not belonged to my topic (Ferge
1969: 96–97).
Nevertheless power relations by themselves say nothing about the further content
of dictatorship, about what actually power wanted? There is a plethora of answers to
this question, starting from big power ambitions to the mere lust of possessing power.
All this may apply to many of the holders of absolute power of those days, but it does
not help to find an answer to our question, namely how power wanted to shape actual
situations of life, or how it ‘allowed them to be shaped’, and what kind of a system of
inequalities and what ‘stratification’ could emerge as a result. More or less everything
can be predicted about the fate of freedom from the dictatorial nature of power
relations, but nothing is predictable from it about the fate of inequalities.
In order to understand the objectives of power one cannot neglect the ideology in
the name of which the actual goals were set. From this perspective, to put it briefly,
state socialism was an experiment to catch up with the West, to ‘modernize’ and
civilize society according to an official ideology which wanted to organize a new
society based on socialist ideas. In fact the question concerning stratification was
incorrectly formulated in the 1960s. The real enigma was not why inequalities were
‘too large’, but why they could decrease so significantly compared to pre-war
Hungary. Dictatorial means can only explain the phenomenon partially. Several
processes and institutions with the aim to reduce inequalities emerged that
corresponded to the perception of social justice of the majority. So much so that they
could have been introduced by non-dictatorial means as well. In fact the will to
mitigate inequalities was by far not limited to the transformation of the distribution of
material resources but encompassed rights, life chances, forms of communication and
symbolic systems. If we follow the categories of Marshall then apparently, while the
civil and political rights were rendered formal, or were eliminated, social rights, and
economic rights, such as the right to work, culture, health care, social services, those of
the personality, etc. were realized. I use the word ‘apparently’ because I am not
convinced that social rights may exist without the essential (substantial) assertion of
civil and political rights, as they can be guaranteed just by those two other types of
rights. In any case social rights are certainly more legitimate, stronger and less easy to
repeal if they are claimed and fought for by means of civil rights, and voted
democratically for by means of political rights than if they are gifts from above.
Part of the changes was in fact a majority demand right from the outset, and in that
sense they were legitimate. Such were, during the first years after 1945, the efforts to
discard feudal titles and forms of behavior, patronizing, humiliating addresses. The
distribution of land in 1945 of big estates to small holders was also essentially
legitimate. In later years, it was legitimate to assure free and universal access to many
public goods, to expand the redistribution of welfare, to develop the so-called major
systems of social care, or to assure ‘the right to work’ even if the obligation to work
Review of Sociology 8 (2002)
12 ZSUZSA FERGE
also meant a restriction of rights (at least for men). Some other equalizing efforts
gradually became legitimate, as was the case with gender equality. And naturally a
number of equalizing pressures could never become legitimate; society – on its way to
freedom – got soon rid of them, such as use of the address ‘Comrade’ which was
replaced by the often awkward use of outdated addresses such as ‘Sir’ and ‘Madam’.
In sum the lessening of inequalities was an ideologically based objective of power.
Yet many important inequalities persisted or new ones emerged. It was an important
question for research how best to capture the organization of inequalities within the
given power paradigm. Education, the regions, the character of the settlement (its
urbanization or size), the hierarchy of the managers and the managed, the branch of the
economy, income, social background were all imbued by major inequalities. A more
composite, more all-encompassing, structurally more relevant classification
capturing the articulation of society was nonetheless needed. The old Marxist
categories did not function any more; the new political class categories (that there is a
working class, a class of agricultural co-operatives, and a stratum in friendly relation to
both of them, the intellectuals) never captured reality. We therefore rethought the role
of work that assured livelihood, the role of the division of labor of work in
differentiating society.
It seemed that the position in the hierarchies of knowledge, of decision-making,
superordination and subordination, then the physical efforts one has to deploy, the
conditions of work, even for instance the place of living and social origin somewhat all
concurred to shape within the social division of labor “a job by means of which one
may earn a living”. The combination of these varied dimensions and relationship was
called “the character of the work done”. We of course knew that that this was mainly a
new term for classifications known as “socio-economic” groups, or occupational
groups. The new term wanted to convey a new rationality in defining the groups.
The character of work seemed to connect a number of the variables or dimensions
of inequality. The classification also seemed to correspond by and large to a “natural”
articulation of society that is a social construct widely accepted: people could identify
themselves with the groups proposed. We never assumed that the classification by the
character of the work will explain the majority of inequalities. We only supposed that
the concept is so intimately related to so many underlying structuring forces
(dimensions) that it will have some, often a large explanatory effect in case of most
inequalities.
The findings of the empirical research proved this point. The character of the work
done explained (was connected to) to a smaller or larger extent many types of social
inequalities. Research also confirmed that the groups based on the work formed a
hierarchy. No doubt some of the groups overlapped but the main trends were clear.
They could be used for a stratification model to present inequalities.
The emerging market in this approach is part of a story that is not visible in a rigid
scheme. Market interests, forms and movements did progress, but they were not the
only signs that society did not want to accept subduing forever. As time passed it
increasingly required some space for movement. Spontaneous efforts for freedom
gradually ‘infiltrated’ almost all phenomena. They were present in power relations, in
work processes, in informal incomes side by side with formal incomes, and so on. The
Review of Sociology 8 (2002)
SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 13
‘group by the character of work’ of a skilled worker working in a Gmk in the 1980s (in
a work team organized within the factory, with the factory’s assets, for jobs contracted
out by the factory), the shop assistant in the small town of Pápa, the economist who
was of aristocratic origin, the doctor who was a Jew, or the cabinet maker resettling
from Transylvania remained the same, but they started also to look openly for other old
or new identities and forms of self-expression. By doing so, they were opening doors to
freedom; they started to engage in spontaneous and autonomous activities. The duality
of redistribution and the market captures something of the conflicting unity of pressure
and autonomy (or constraint and freedom) in the field of economy. It cannot express
the omnipresent tension between the conflicting forces that continuously changed the
structure of society.
It is in fact difficult to describe this complexity and dynamism. The groups by the
character of work do not do justice to these movements either. They serve no more than
to describe an important form of stratification, which may also help to understand the
social structure. Nevertheless, I am trying to illustrate, in Figure 1, the relationship
between stratification and structure (which I could not handle earlier). Here I have
placed power (i.e. totalitarian power) outside of and above the social division of labor,
sort of holding it in a (deadly) embrace. I am trying to illustrate in this way the
character of power, which is decisive for society, but also separate from it.
INEQUALITIES IN STATE SOCIALISM – SOME EXAMPLES
The survey done in 1962 described the role of the character of work in shaping
stratification. Later researches have described many aspects of the ensuing social
changes. Few of them tried to investigate, though, the changes in inequalities in a way
comparable to the 1962 data. The data presented in Tables 1–5 throw some light on these
changes by using the same classification for 1982 as for 1962. These comparative data
are, as far as I know, first published here.2They offer a glimpse of the unquestionable
success of the experiment at modernization and civilization in certain areas. They prove
the early hypotheses of the 1982 research (Várnai 1982) that the whole structure has
shifted upwards and that social distances have been narrowed down in most fields.
Table 1 illustrates the rapid increase in the level of schooling. Table 2 shows the
transformation of the division of labor that was modernized although with serious
shortcomings (Andorka, 1997). The indicators of supply and the levels of consumption
improved considerably. Tables 3 and 4illustrate a rapid improvement in housing and a
continued reduction of inequalities after 1962. Tables 5 and 6describe similar changes
in the areas of some cultural habits or practices. The change of incomes shows the
Review of Sociology 8 (2002)
14 ZSUZSA FERGE
2 The Research Institute of the Hungarian Workers Party carried out a vast survey on social stratification
headed by T. Kolosi in 1982. I was asked slightly later to work, together with Gy. Várnai, on the
comparison with the 1962 data. The comparison was made difficult because the survey in 1982 did not
built into the research scheme the categories and the codes used in 1962. Györgyi Várnai reworked the
material and wrote several chapters. My part of the report, however, was never completed. The data
reproduced here are from the manuscript of Györgyi Várnai. I would like to thank her for the opportunity
to publish them and for the huge work she completed, which through my fault has remained unfinished.
same trend. In this case it may be suspected that such pressure on income differentials
must have generated tensions as it was conflicting with the interests of the stronger
groups, with the (neo-liberal) ideologies becoming globally more vigorous at that
time, and with international standards (Table 7). The ‘groups by the character of work’
explained a low and decreasing rate of the distribution of incomes both in the 1960s
and around 1980 (around 20 per cent first, less later). In terms of the quality of housing,
the explanatory factor was somewhat larger than in case of incomes. It was the largest
and increasing for cultural levels and practices (49 and 56 per cent).
The improvement of the situation of women and the Roma from the perspectives of
schooling, employment, and income (not illustrated here with data) can be interpreted
also as a component of structural changes. It was true though that in case of both
groups their ‘emancipation’ by employment was a double-edged phenomenon. In case
of women progress meant that their rights undoubtedly strengthened, the educational
level of working women increased, and they started to be present in the upper regions
of the division of work, among leaders, managers and professionals. The other side of
the coin was that they became a majority in the worst positions, first of all among
unskilled laborers. A similar pattern applied to the Roma with less positive elements.
No doubt, their huge majority (over 80 per cent of men, around 60 per cent of women)
became regular wage-earners. Many became new, if low quality flats. The majority of
children started school with the kindergartens. Thus they started to climb the slope of
modernization and civilization. However, their qualifications did not follow their
employment opportunities. They could only arrive to the lowest steps of the hierarchy
of employment: most of them became and stayed unskilled or semi-skilled laborers.
The power gap could never be measured directly but, as totalitarianism was easing,
the depth of that abyss must have also been filling. On the other hand, the system
remained open at the bottom from certain perspectives. The concept and reality of
“social citizenship” was lacking; politics only regarded the employee as an acceptable
member of society. Those who did not become employees for any reason (either because
they lived too far away from work opportunities, or because they were bringing up
children on their own) could not even rely on public assistance to support themselves.
To sum up, structural relations were transformed through totalitarian power
relations, a dominant ideology, the abolition of private ownership in the name of this
ideology, and the social division of labor redefined by these elements. I do not think
that it was a class structure albeit it no doubt had a “political ruling class”. In my view it
was probably best described as a stratified social structure. The stratification could be
described in terms of the groups defined according to the work done of the active
earners. These (ultimately professional) groups could be empirically measured. They
described the articulation of society that was comprehensible and corresponded to the
everyday experience of people. Also the groups defined were part of the socially
constructed identity of people, they were not fully artificial. Although the system
operated with a lot of inherited and new inequalities, the structure remained stifled.
Spontaneous movements, spontaneous enforcement of interests, autonomous
definitions of one’s own identities all attempted to push back the walls of constraints
with some success. Yet the barriers to spontaneity and autonomy remained strong even
in the years of soft dictatorship.
Review of Sociology 8 (2002)
SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 15
POVERTY IN STATE SOCIALISM
The country was still poor in the 1960s. This, in addition to a relatively uniform
distribution of resources, involved that neediness was fairly general even at the end of
the sixties. 30 to 40 per cent of the population was very poor. Only the political elite
and their direct beneficiaries could be regarded as wealthy or at least well off.
A considerable economic growth starting from the end of the 1960s had its impact
felt very quickly due to increased employment, the spread of near- universal benefits,
an (artificial) price system subsidizing basic necessities that assured the coverage of
elementary needs even with low incomes, etc. Many of these elements had debatable
features. ‘Full employment’ for instance, one of the means was anchored in the idea
that work was the only basis of subsistence both theoretically and legally. With this
flaw, however, employment was so broad that everybody could find a job. Most of
those uneducated or disabled people who might be considered unemployable in an
exclusively profit- and productivity-oriented society could also find employment. By
the mid-1980s absolute poverty had decreased, and relative poverty (the rate of people
living below half of the average income level) had declined to around 5 per cent. As
general need was declining it became increasingly clear that the ‘spontaneous’ driving
forces of differentiation could not be eliminated by the will of power. It also became
clear that handing down cultural and social capital from generation to generation had
been in progress, and an earlier better situation would surface even if one generation
had sunk. (Institute of Sociology, 1984) It became clear also at that time that poverty
was not eliminated, and the chances of breaking out of poverty were rather different
and were historically and socially determined. Studies made in the 1970s and 1980s
severally called attention to the gradual closing of the channels of social mobility, and
to the increasing risks of inequality, poverty and exclusion. Yet as long as full
employment, the right to work, the system of price subsidies, universal services and
almost universal benefits remained more or less intact and the possibility of private
ownership was still limited, inequalities increased only at a slow pace, mostly from the
mid-1970s onwards.
I am referring to studies and research on poverty although many affirm today that
the previous regime made poverty a taboo for ideological reasons, and therefore no
research could be undertaken. The first part of the above statement is true, but the
second one not quite. The first thorough study on poverty, based on a special statistical
survey, was carried out by István Kemény in 1968. The circulation of the book was
prohibited by politics somewhat later, yet it has become well known, and has become a
classic today (Kemény 1992). There have been a number of smaller surveys and
sociographs, focusing on poverty, published but not widely read. But even important
pieces of research have gone almost to oblivion. The results of the 1982 survey on
“stratification models” already mentioned were published in nine volumes. Two of
them dealt uniquely with poverty. One of them, Deprivation and Poverty by Ágnes
Bokor, was published as Volume VI (and later as a self-contained book see Bokor
1987). Volume VIII edited by Ágnes Utasi (1987) dealt only with marginal situations
and marginalized groups. It was realized by the researchers that many groups have
been missing from the large sample either due to their low numbers of because of the
Review of Sociology 8 (2002)
16 ZSUZSA FERGE
peculiarities of sampling. Many of them were supposed to be poor or marginal. Special
surveys have been organized to capture the situation of these groups. One of the
sampled groups consisted of unskilled laborers often changing their jobs (a sample of
1026 people). Another sample was taken from among tenants living in workers’
hostels, who were not regular commuters and were assumed to live there because they
did not have a flat (a sample of 680 people). One hundred in-depth interviews were
made among the homeless, tramps, drug abusers, and the like. A relatively large
sample focused on the Roma living at the poorest Gypsy colonies (1946 families, a
sample of about 10,000 people). This huge amount of information has been left largely
unexplored.
The findings suggest that there were in the former system as in our days “old” and
“new” poor, only partly different from the poor of today. Their number and
composition changed in each period depending on politics, on the economic situation,
on the maturity of the pension system or on the size of the labor market. In the 1960s
the “old poor” or traditional poor were the pre-war day-laborers and farmhands, or
their descendants working now as unskilled agricultural workers on state farms or
co-operatives; those doing odd jobs and unskilled work in cities; people living in small
villages that were not yet reached by any amenity of civilization; and the majority of
the Roma on the verge of losing an old, very poor way of life and not having yet a
foothold in the new society. Besides them there were, as always, families with many
children, particularly families with only one wage-earner; and single parents. At the
beginning of the 1960s, the majority of the elderly were also poor because pensions
were low and covered only the smaller part of the elderly population. Part of them were
new poor if their property had been confiscated or their pension cut, and part of them
were traditionally poor because the elderly of poor families had always been in a
precarious situation. In addition there were some partly new, and partly old marginal
groups, tramps, the homeless relying on workers’ hostels, and people with various
impairments. All those groups together involved a large number of people in the
1960s. The “new poor” of them were mostly the “déclassé” of politics, former
aristocrats or upper class people who (if they did not leave the country in time) lost
their wealth and job, were often expelled in the early fifties from their home to the
countryside, and slowly came back to the towns from the late fifties still only in lowly,
menial jobs.
By the 1980s, the number of the poor had radically decreased. Economic growth
“trickled down” through jobs and earnings, and also by means of the public “irrigation
systems”. Extended employment, the maturation of the pension system covering
practically everybody, the relatively high and almost universal family allowances
ensured at least a modest livelihood and stability in many walks of everyday life. Jobs
were available for everybody: according to my calculations made in 1982, the number
of actual (albeit not registered) unemployed was between 1 and 2 per cent among men.
Deep poverty hit those who could not find any job and were not related to the labor
market in any way. An old person who was not entitled to old age pension could only
receive low social assistance, if at all. If the husband “disappeared” and the woman
was left alone with several children, she was not entitled to any kind of assistance. That
is, the system continued to be open at the bottom. A minor part of the ‘traditionally
Review of Sociology 8 (2002)
SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 17
poor’ remained poor or needy: they were agricultural laborers or unskilled workers
living in remote villages or run-down city areas, and the Roma continuing to live in
Gypsy colonies the number of which had been rapidly decreasing.3The situation of the
elderly relatively improved while that of people with large families relatively
deteriorated. Structural reasons still played a significant role in the reproduction of
poverty, a process that was mostly ignored by the authorities. Official politics always
tried to individualize the reasons and to blame the victims for their fate (Cf. e.g.
Gönczöl 1991).
THE SCHEMATIC DESCRIPTION OF THE STRUCTURE
OF HUNGARIAN ‘NEW CAPITALISM’
The system change is usually described as a switch from command economy
(planned economy) to market economy, and a switch of the totalitarian regime to a
multi-party parliamentary democracy and to the rule of law. All this is true. From a
structural perspective I believe, though, that the key issue is not that the market has
become the most important institution organizing society. In my view the basis of the
structure is formed by the rights and relationships enabling the operation of the market
economy, particularly the right to private ownership and to free contract, and the
relationships generated by the possession of capital and by the labor market.
I argued above that in authoritarian state socialism total power divided society into
the powerful and the powerless, practically severing any relation between the two
excepting the relation of oppression (always felt but not always visible). This system
of power defined or at least wanted to define all other structural relations, their mode of
operation, and the sites of their linkages in the structure.
The power relations that dominated the socialist structure have been replaced by
capital relations. Property relations also play a basic role in shaping society, and they
also divide society in two (as shown in Figure 2). However there is a large degree of
interdependency between the two parts of the social space – labor depends on capital or
on the employer (be it the state). No doubt business capital (and business relations)
can dominate political power (Szalai 2001). The figure cannot show for instance how
dense the system of relations is between large capital and the top management in
politics or the economy. Yet the structural relations are different from what they were.
Private ownership became decisive, and the part played by political power is less
all-important than it was. Political decision making has become one of the internal
structuring relations of the social division of labor.
Meanwhile the social distances between the top and the bottom of both hierarchies
–within those who possess and who do not possess capital – are huge. Inequalities run
wild particularly among the owners of capital. Capital owners are in fact grouped here
by the size of their capital and the number of their employees.4This is a simplified
solution, the two criteria could be separated (Figure 2).
Review of Sociology 8 (2002)
18 ZSUZSA FERGE
3 See J. Szalai, in this volume.
4 Hierarchy within the ownership of capital is similar to E. O. Wright’s approach. Otherwise the principles
of the two constructs are different.
Those possessing no capital appear in the labor market as supply. Their position
depends on whether they can or cannot find a place there, or at least some
related-related entitlement for some benefit. The second part of Figure 2 distinguishes
four main groups: those who have a stable job in the primary related market; those who
are not in employment but have with some regularity legal, short-term contracts to
carry out some task as self-employed that is entrepreneurs without capital; those who
only have a place irregularly or only in the black (illegal) market; and finally those who
have no place at all in the labor market. Part of the latter may have access as of right to
some employment-related benefit connected to their earlier job (pension, sickness or
unemployment allowance). Those who have no employment-related rights may or
may not get social assistance on citizen’s right. The subsistence of those with odd jobs,
those doing ‘atypical’ jobs, those with sub-contracts, those working in the black
market and those who are totally excluded is insecure: their rights to a modicum of
welfare as well as their labor rights are usually weak.
In Figure 2 the second and fourth columns give examples in terms of the character
of the work that may be performed at a given level of capital, or at a given position in
the labor market. I also added rather tentatively class labels to these positions. The
question marks indicate that I am not sure whether the new Hungarian capitalism can
be described in class terms or not. At this point only the top groups and the bottom
groups are clearly visible, and both may be theoretically circumscribed and
empirically found. The multitude between the top and the bottom offers a mixed
image. It is certainly very differentiated according to various criteria such as income or
education, and also (as will be shown below) according to the character of the work.
Class contours, however, are not visible, not even looked for. Political discourse as
well as academic research focus in the last decade almost exclusively on the “middle
class” in the singular or in the plural. Workers, let alone the working class seem to have
disappeared from the vocabulary. It ought to be further explored what is the role in this
void of real – as yet badly understood – changes, and of recognized or veiled political
and economic interests. In this paper I have to leave this question open.
Figure 3 covers all those who are active either in the capital market or in the labor
market. The people are classified according to the character of the work done that is
still understood as the embodiment of many underlying dimensions or relationships. I
select here two of them, the relationships formed according to the level of power and
authority, and those formed according to marketable skills. The groups at the
cross-sections of these dimensions are named. The labels are similar but not identical
with those of state socialism. For instance I use the term “manager” instead of “leader”
as a hint to the spread of “managerism”. The terms “expert” and “professional” are
used instead of “intellectual” as a hint to the changing role of autonomy in the
professions. Some categories that exist are not named as yet: the labeling of the
increasing number of those working in services is still missing. Household work is still
left out from the social division of labor. The positioning in the social space of people
excluded from the division of labor at the bottom is uncertain. On the whole the labels
of the categories according to the work done are only partly adjusted to the new
conditions: they need rethinking and research.
Review of Sociology 8 (2002)
SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 19
The models presented for the new capitalist structure as incomplete as they are may
be empirically tested. Some data will be presented below. According to them the
“groups defined by the character of work” still have social relevance both as
structurally determinant forces, and as descriptors of social stratification. Further
research is surely needed not only to test the relevance of the categories, but also to
adjust better the hypotheses to reality. The future of this model is of course entirely
unsure. We do not know what will happen to the social inequalities when with
economic growth the whole structure will hopefully shift upwards. Uncontrolled
inequalities may exacerbate social divisions, may lead to self-chosen exclusion at the
top and forced exclusion at the bottom. Many believe that on the contrary
post-modernity involves a loss of importance of great narratives and, together with
them, the weakening of social determinism, the gaining of momentum of individual
choices and the program of “the aesthetization of life” (Featherstone 1995). For the
time being, though, indeterminism may play an increasing role in the middle of the
social space while many present and future attitudes, tendencies and chances are only
too predictable at the top and at the bottom.
THE INEQUALITIES OF THE MARKET ECONOMY
Structural relations do not predefine the scope of social inequalities in capitalism,
either. The analogy is not complete though with what has been said about state
socialism. I assumed that if power is totalitarian everything becomes predictable about
the fate of freedom, but nothing is predictable about the fate of inequalities. In
capitalism both aspects become undetermined. A market economy will not necessarily
assure full civil and political liberties except for the right to private ownership.
Capitalist market economies could in fact co-exist with fascist or military
dictatorships. Meanwhile the developments of the last decades seem to show that a
globalizing market economy enforces more democratic power relations, that market
freedoms may promote political freedoms (at least formally). Inequalities are
necessary concomitants of capitalism but their extent is not predetermined. The history
of Western Europe in the 19th and 20th centuries, and particularly after World War II
tells after all a story of how inequalities can be moderated without an extensive
impairment of freedom rights and even at times by extending certain liberties.
The state could use two main means to mitigate inequalities generated by the
market. One of them was labor law, an invention of the 20th century (naturally after a
long pre-history in the 19th century). When labor rights have gained ground after
World War I and particularly after World War II the complete defenselessness of
workers was abated. Their rights got stronger and individual work contracts were
slowly “surrounded and permeated by collective rules guaranteed by law” (Castel
1995: 93). In effect labor law transformed manual labor into a socially respectable
activity.
Another set of means to contain inequalities was the broadening and strengthening
of social rights, a process usually described as the unfolding of the welfare state. The
global situation after World War II was particularly suitable to make certain
Review of Sociology 8 (2002)
20 ZSUZSA FERGE
self-restrictions, a subduing of individualism acceptable both psychologically and
ideologically. The spirit of times after the common sufferings promoted the growth of
institutions of solidarity. The existence of the socialist world was a threat for Western
Europe, and a challenge to prove that the market economy could surpass socialism
even in this respect, that capitalism could achieve even socialist goals better. The proof
was convincing in many countries both in the case of the right to work and the welfare
systems (Therborn 1995).
The situation has changed since then. Since the 1970s market forces started to
overwrite the welfare consensus and consensus about the desirability to contain
inequalities. Since Thatcher and Reagan a struggle has started for market dominance,
against public and solidarity institutions, for the unlimited enforcement of individual
interests and for market fundamentalism. In most countries, inequalities have rapidly
increased. This story and its connection with globalization are well known.
INEQUALITY AND POVERTY AFTER THE REGIME CHANGE
During the regime change two trends occurred synchronously. One of them was the
globally victorious march of neo-liberalism that was at its peak around 1990. The
program of liberating the market included both the dismantling of public welfare
systems in the name of the freedom of choice, and the weakening of labor rights in the
interest of liberating the labor market. The second trend took place in the countries
changing regimes. In these countries the oppressed interests wanted to assert
themselves. The new democratic politics offered the conditions for their realization.
One of the most oppressed interests was connected to the limitations of ownership and
wealth. These very strong interests used successfully the new freedoms to acquire
possession and wealth. The neo-liberal ideology provided a sort of moral basis for
enrichment without restraint. I think the simultaneity of the two processes or the
adding up of the amplitude of the two waves may explain why inequalities could run
wild without any legal, political or moral barriers. The outcome was a more unequal
distribution of a shrinking GDP. The consequences are well-known: mass
unemployment, impoverishment of the majority, deepening poverty, the contraction
and the changing principles of welfare systems, and growing insecurity of everyday
life.
As far as (measured) income inequalities are concerned, the multiplier between the
two extreme deciles increased from less than 5 in 1987 to around 10 in 2000. The
distribution of wealth is certainly greater but no data exist on this point. Table 8
describes the process whereby both relative and absolute poverty increased over
threefold from before 1989 until 2000.5Table 9 tests the hypothesis about the
relevance of the (somewhat renewed) groups of the character of the work. The
“capitalist class” is incompletely covered: entrepreneurs in our sample all have low or
very low capital belonging to the middle or the lower middle class in Figure 2. The
table reveals that the classification according to the character of the work is still of
Review of Sociology 8 (2002)
SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 21
5 For further details see É. Havasi in this issue.
extreme importance. The groups are almost unambiguously stratified except that there
were no big capitalists in the sample. The impact of this grouping is shown in case of
objective incomes, subjective income ranking, housing conditions, and the experience
of unemployment. There is a significant gap between manuals and non manuals –
probably greater than it used to be. Within the manual workers skills give some
protection. The semi-and unskilled workers fare worst in all areas of well-being. The
lower part of the table shows that the position on the labor market is also decisive:
those who are squeezed out are at the bottom of all the scales.
Poverty and the threat of social exclusion hit inordinately those at the bottom of the
“class” hierarchy. The most vulnerable continue to be those who have no material and
symbolic resources, and particularly those who have never had or who have lost their
connection with the world of labor. The laws of the labor market have changed. The
right and compulsion to work has changed. The right to work does not exist any more as
it is allegedly incompatible with market freedoms. The compulsion of work is no more
legally enforceable: “only” livelihood, access to social assistance depends on it. Due to
the lack of jobs a new group has emerged for the first time in Hungary among the poor:
young families that never had any relation to the labor market, who have started their
adult life on some kind of allowance or assistance, and whose children do not know any
other condition of life but poverty and hopelessness.6At least one of the parents does
some work when it is available, but this is mainly in the secondary or greyish economy
with very low pay and no labor rights. In the job competition the Roma became in
majority losers: they lost the foothold they so hardly acquired in the former system.
Another factor of impoverishment is the disturbed equilibrium between incomes
and prices. The rapid withdrawal of price subsidies and a wide range of marketization
have in fact created new forms of vulnerability to exclusion. The old non-market price
system (admittedly economically counter-productive) assured a fragile equilibrium
between low wages and the subsidized prices of basic commodities. After the
introduction of reforms wages remained low but the subsidies for basic needs have
been abolished while some less basic commodities became cheaper. Thus the
equilibrium was disturbed. Close to one tenth of all households have some housing
debts. One of the gravest consequences is that water supply may be cut in case of
non-payment. The increase in housing costs endangers housing security. Those who
are forced to leave their families such as divorced husbands can only resort to
homelessness because of the high price of sub-tenancy (or any other form of housing).
The increase of public transport costs hinders schooling and employment. The
marketization of public services and the withdrawal of public responsibilities are
increasingly supporting a danger voiced since long, namely that two-tier systems are
developing in case of former public services with a good-quality paying tier and a
public tier the quality of which may be deteriorating.
Our survey results throw some light only part of these problems. Here we may only
present the grave cumulative problems among the poor in case of those who have more
or less relationship to the labor market, and also the particularly grave situation of the
Roma (Table 10).
Review of Sociology 8 (2002)
22 ZSUZSA FERGE
6 See Á. Simonyi in this issue.
CONCLUSIONS
The conclusions are rather unambiguous. As a result of structural changes material
inequalities in incomes, assets and living conditions have increased drastically. Risks
have increased in general while existential securities have declined. Processes of
impoverishment and exclusion are tangible. All that might sooner or later deeply affect
the physical and social life chances of the poor and their children.
Social inequalities have a characteristic feature: unless decisive efforts are made in
the opposite direction they will spontaneously increase. This is especially true for a
market society. The experiment of state socialism has proved that the abolition of the
market is no solution. The structure of a society cannot be shaped at will. An
overwhelming power ruins society while the removal of the market from the economy
destroys the economy. The same experiment, however, has also proved that efforts to
lessen inequalities and to fight exclusion can be made in a legitimate way if they
coincide with the interests of the majority of society and if they do not involve a severe
restriction of freedom. Whether these achievements will survive in the long run will
depend on to what extent did they become a public affair. It was the essence of
dictatorship that nothing could become a real public affair because the ‘public’ had no
part to play in shaping its own affairs. The new democracy may open new
opportunities.
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Osiris.
Bokor, Á. (1987): Szegénység a mai Magyarországon. [Poverty in Contemporary Hungary.]
Budapest: Magvetõ Kiadó.
Castel, R. (1995): Les métamorphoses de la question sociale. Une chronique du salariat. Paris:
Fayard.
Emigh, R. J. and Szelényi, I. eds. (2001): Poverty, Ethnicity and Gender in Eastern Europe
During the Market Transition. Westport, CT: Praeger Pub Trade.
Featherstone, M. (1995): Undoing Culture. Globalization, Postmodernism and Identities. Sage.
Ferge, Zs. (1969): Társadalmunk rétegzõdése. [Social Stratification.] Budapest: Közgazdasági
és Jogi Könyvkiadó.Ferge, Zs. (1979): A Society in the Making. Hungarian Social and
Societal Policy, 1945-1975. Harmondsworth: Penguin.
Ferge, Zs., Darvas, Á. and Tausz, K. (2002): Social Protection, Social Exclusion and Poverty in
Hungary. Report on the survey about Social Exclusion and Poverty in Hungary. Budapest:
International Labor Office, Central and Eastern European Team.
Ferge, Zs., Simonyi, Á. and Dögei, I. (2002): PSS Country Report for Hungary, part of the
People’s Security Surveys – PSS, Socio-Economic Security Programme. Geneva:
International Labor Office. Multigraphied.
Gönczöl, K. (1991): Bûnös szegények. [The Sinful Pauper.] Budapest: Közigazgatási és Jogi
Könyvkiadó.
Kemény, I. (1992): A szegénységrõl. [On Poverty.] In Kemény, I.: Szociológiai írások.
[Sociological Writings.] Replika, 79–84.
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SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 23
Kolosi, T. (2000) A terhes papapiskóta. A rendszerváltás társadalomszerkezete. [The Social
Structure of Systemic Change.] Budapest: Osiris Könyvkiadó.
Központi Statisztikai Hivatal [Central Statistical Office] (1966): Társadalmi rétegzõdés
Magyarországon. (15000 háztartás 1963. évi adatai) [Social stratification in Hungary. Data
from 15000 households in 1963.] Mód Aladárné vezetésével. Statisztikai Idõszaki
Közlemények, 90. kötet, KSH, 1966/11.
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népesség idõfelhasználása 1986/87-ben és 1999/2000-ben. [Time-budget of Life Style. The
Utilisation of Time by the Population in 1986/87 and 1999/2000.) Budapest: KSH.
Marshall, T.H. (1965): Citizenship and Social Class. In: Class, Citizenship, and Social
Development. New York: Anchor Books Edition.
MTA Szociológiai Kutató Intézet (1984): Egy korosztály életútja. [The Life Course of One
Generation.] Budapest: MTA Szociológiai Kutató Intézet.
Soros, Gy. (2002): Capitalism reconsidered. HVG, szeptember 7.
Szalai, E. (2001): Gazdasági elit és társadalom a magyarországi újkapitalizmusban. [Economic
Elite and Society in Hungarian New Capitalism.] Budapest: Aula.
Szelényi, I. (1992): Harmadik út? Polgárosodás a vidéki Magyarországon. [Third Way?
Embourgeoisemen in Rural Hungary.] Budapest: Akadémia Kiadó.
Therborn, G. (1995): European Modernity and Beyond, the Trajectory of European Societes,
1945-2000. London: Sage Publications.
Utasi, Á. ed. (1987): Peremhelyzetek. Rétegzõdés modell vizsgálat VIII. [Marginal Situations. A
Survey of Stratification Model. VIII.] Budapest: MSZMP KB Társadalomtudományi
Intézete.
Várnai, Gy. (1982): Struktúrális változások: 1963 és 1982. Rétegzõdés modell vizsgálat I.
[Structural Changes: 1963 and 1982. A Survey of Stratification Model I.] Budapest:
MSZMP KB Társadalomtudományi Intézete.
Wright, E. O. (1997): Class Counts. Comparative studies in Class analysis. Cambridge:
Cambridge University Press.
Review of Sociology 8 (2002)
24 ZSUZSA FERGE
APPENDIX
Table 1. Distribution of all heads and of active heads households by
groups defined according to the character of the work, 1962–1982 (in %)
Groups by the character of
work done by the heads of
households
Percentage distribution of all
heads of households
Percentage distribution of active
heads of households
1962 1982 1962 1982
Leaders, intellectuals 6.7 9.0 8.0 13.0
Middle level professionals 5.4 8.1 6.4 11.6
Office employees 3.6 1.9 4.3 2.7
Skilled workers 19.1 26.3 22.9 37.7
Semi-skilled workers 15.3 11.6 18.4 16.6
Unskilled workers 12.1 5.6 14.5 8.1
Agricultural laborers 21.2 7.2 25.4 10.4
Pensioners 16.6 30.2
Total 100.0 100.0 100.0 100.0
Number of households
surveyed 15,077 5,438 12,579 3,796
Source: 1962: KSH 1967, 1982: Documents of a stratification model survey, and Györgyi Várnai’s
manuscript.
Table 2. Distribution of active heads of households
by educational level, 1962–1982 (in %)
Qualifications of heads of
households
Percentage distribution by educational level
1962 1982
Tertiary/higher education 5.0 10.4
Secondary school with graduation 8.1 19.5
8-11 years of schooling 21.0 50.8
7 years or less of schooling 64.2 19.0
No schooling 1.7 0.3
Total 100.0 100.0
Source: Cf. Table 1.
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SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 25
Table 3. Rate of households living in one-room flats, and of those having
a bathroom within the groups defined by the character of work, 1962-1982
Character of work done by
the heads of households
Rate of those living in one room
apartments, %
Rate of apartments provided with
bathrooms, %
1962 1982 1962 1982
Leaders, intellectuals 3196494
Middle level professionals 44 14 47 86
Office employees 55 15 46 80
Skilled workers 59 15 25 75
Semi-skilled workers 68 25 12 55
Unskilled workers 76 29 9 48
Agricultural laborers 67 25 3 44
Pensioners 75 33 15 49
Total 64 22 19 64
Source: Cf. Table 1.
Table 4. The average level of the quality of housing (scores), and its variation
around the average in % in groups by the character of work, 1962-1982
Character of work done by
the heads of households
Average level of quality of
housing, scores 0–95 National average = 100
1962 1982 1962 1982
Those in leading positions,
intellectuals 64 87 149 114
Middle level professionals 57 84 133 111
Office employees 55 82 128 108
Skilled workers 47 80 109 105
Semi-skilled workers 39 73 91 96
Unskilled workers 37 70 86 92
Agricultural laborers 34 67 79 88
Pensioners 45 71 105 93
Total 43 76 100 100
Factors considered: title of the usage of the apartment, 0–14 scores; level of amenities 0–28 scores; running
water-electricity, 0–15 scores; density of housing, 0–18 scores; provision with household machines
(washing-machine, vacuum cleaner, refrigerator) 0–20 scores; total 0–95 scores. The method of scoring is
debatable, but the trends are unambiguous.
Source: Cf. Table 1.
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26 ZSUZSA FERGE
Table 5. Percentage distribution of households by
the number of books owned, 1962-1982
Number of books Percentage distribution of households
1962 1982
034.9 16.3
1–10 21.7 5.1
11–50 25.8 26.6
50–200 12.4 30.8
More than 200 5.2 21.1
Total 100.0 100.0
Source: Cf. Table 1.
Table 6. Average of cultural levels (scores) and their variation around
the mean in the groups by the character of work, 1962–1982
Character of work done by the heads of
households
Average of cultural level,
scores 0–87 National average = 100
1962 1982 1962 1982
Leaders, intellectuals 58 69 207 164
Middle level professionals 46 57 164 136
Office employees 44 54 157 129
Skilled workers 33 46 118 110
Semi-skilled workers 26 39 93 93
Unskilled workers, office assistants, etc. 20 34 71 81
Agricultural laborers 18 33 64 79
Pensioners 22 31 79 74
Total 28 42 100 100
Factors considered: average level of education of all adult members in the household, 0–45 scores; number
of books owned, 0–20 scores; subscription to magazines, 0–12 scores; television, 0–10 scores; total 0–87
scores.
Source: Cf. Table 1.
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SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 27
Table 7. Average per capita income, 1962-1982
Character of work done by the heads of
households
Monthly average income per
capita, HUF National average = 100
1962 1982 1962 1982
Leaders, intellectuals 1265 3857 153 140
Middle level professionals 1050 3358 127 122
Office employees 983 3339 119 121
Skilled workers 899 2725 109 99
Semi-skilled workers 778 2688 94 97
Unskilled workers, office assistants, etc. 678 2555 82 92
Agricultural laborers 719 2206 87 80
Pensioners 689 2439 84 90
Total 823 3385 100 100
Source: Cf. Table 1.
Table 8. Changes in poverty rates in Hungary, 1987-2001
Concepts and thresholds of poverty
1987,
informed
guess
1992 1997 2001
Relative income poverty (under 50% of
the mean equivalent income) 6–7 10.2 17.8 14.4
Absolute income poverty: the rate of
those living under the subsistence
minimum
8 10.1 31.0 n.d
Source: 1987: my estimate based on the income distribution data of the Central Statistical office,
1992-1997: TÁRKI data.
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28 ZSUZSA FERGE
Table 9. Some indicators of well-being according to the character of the work,
and employment status of the head of household, 2001
Equivalent income per
month, Forint
% of those who situate
the family under the
midpoint
on an income ladder
% of households having
good housing amenities*
% of those who were
unemployed in last 12
months
n (sample size)
Total 37,9 50 72 16 806
Out of it:
According to the character of work
Manager, employed 54,2 27 86 4 34
Professional, employed 52,5 31 82 10 88
Entrepreneur (mostly
self-employed, small ventures) 42,2 30 86 4 48
Other non-manual, employed 43,9 49 74 15 113
Skilled worker 35,3 52 49 19 293
Semi-and unskilled worker 28,8 71 32 22 182
According to employment status
Active earner 41,0 44 76 12 626
On transfer benefit 33,4 56 57 13 75
Unemployed 17,3 90 50 82 46
Source: Ferge, Darvas and Tausz 2002. A random sample of 1000, under 60 years, ILO-PSS survey.
* toilette, bath hot running water, central heating
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SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 29
Table 10. Distribution of households within employment status groups, and in households
with or without Roma members according to levels of multiple deprivation (nine items,
number of problems compressed), only the poorest third of the population
none one
problem
2to4
problems
five and
more
problems
Total n
Total 14 19 45 22 100 1035
Out of it:
Groups by employment status of all members
Only active members 28 34 36 3 100 237
Both active and benefit
recipients 19 23 50 8 100 434
Only welfare benefit
recipients 0 4 45 51 100 364
Groups according to whether there are Roma members in the household
There are no Roma in the
household 17 23 47 13 100 832
There are Roma in
household 1 4 36 59 100 213
Source: Ferge, Darvas and Tausz 2001. A random sample of the poorest third of the population under 60.
ILO-POV survey.
Problems: no active earner in hh; household head max. primary; income below median;
live in Roma or poor area; 3 and more problems with flat; constant med care needed in family;
not enough money for food; not enough money for drugs; not enough money or heating; not enough money
to celebrate Christmas.
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30 ZSUZSA FERGE
POWER HOLDERS, POLITICAL RULING GROUP
(Nomenclature, with an internal hierarchy)
A SIMPLIFIED SCHEME OF THE SOCIAL DIVISION OF LABOR:
GROUPS BY THE CHARACTER OF WORK DONE
LEVEL OF
LEADERSHIP
LEVEL OF KNOWLEDGE
High level Medium level Low level or none
High, large number of
subordinates
Administration,
Business, cultural, etc.,
top leaders
Theoretically none,
Possible in reality Theoretically none
Medium range, few
subordinates Middle level managers Middle level manager,
leader of production
Maybe: untrained
supervisor
No subordinates Intellectuals
Office employees,
skilled workers.
Skilled service
employees
Unskilled or
semi-skilled workers
Figure 1. The pattern of the state socialist structure
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SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 31
POSSESSES CAPITAL POSSESSES NO CAPITAL
Size of capital, number
of employees*,**
Position in the (class)
structure and examples
of the character of
work done
Place in the labor
market
Position in the (class)
structure and examples
of the character of
work done
High
Financier, large
entrepreneur; (upper
class)
Strong, stable, legal –
in regular employment
Top: top political,
business, etc.
managers (upper class)
Medium Medium-small
entrepreneur
(middle class)
In the middle:
professionals, middle
managers (middle
class)
At the bottom:
Unskilled laborers,
employees (lower
class?)
Low
Self-employed in
various groups
according to the
character of the work
(middle class, ‘lower
middle class’)
Self employed without
capital, working on
assignments,
‘invoicing’
In almost any group
according to the
character of the work
Irregular, grey-black
labor market
At the bottom: odd
jobs or black work
(lower class?)
Very low (probably
temporary category as
a mass solution)
Small, uncertain forced
entrepreneurs in
various groups
according to the
character of the work
(lower class?)
Earlier in their career
had a stable position,
earned entitlement for
allowance
Depending on earlier
position
No stable position, no
title for labor market
distribution
At the bottom,
excluded (Lower
class? Underclass?)
Figure 2. Pattern of the capitalist structure after the collapse of state socialism: two
interdependent hierarchies on the capital market and on the labor market
* Those with assets can live from their yields without employing anybody. A category “capitalist without
employees” could be fitted in there by enlarging the table.
** The correlation between the size of capital and the number of employees is not complete. The figure is
simplified.
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32 ZSUZSA FERGE
LEVEL OF POWER
AND AUTHORITY
LEVEL OF MARKETABLE KNOWLEDGE
High level Medium level Low level or none
High, many
subordinates
Political and business
leaders, top level
managers, financiers
Theoretically none,
Might exist in reality –
Medium, few
subordinates Middle level managers
Medium level
manager, leader of
production
Possibly: untrained
supervisor
No subordinates Professionals, experts
Office employees,
skilled workers.
Skilled service
providers
Unskilled, semi-skilled
workers
Figure 3. Groups defined according to the character of the work done of the active
participants in the capital and labor markets at the cross-section of two dimensions of work,
marketable knowledge and power-managerial positions*
* Those possessing assets and the self-employed with no capital can be found in almost all boxes.
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SOCIAL STRUCTURE AND INEQUALITIES IN OLD SOCIALISM... 33
