We, Too, Knew Economics

I cannot begin without a quotation: “The EU sanctions lists form part of the annexes to United Nations Security Council resolutions and individual EU regulations, which require all financial institutions in the Member States to freeze immediately the financial and economic resources of sanctioned persons.” Readers can also find the EU’s so-called sanctions map online.

Economics deals with a state’s economic policy, which encompasses:

• Fiscal policy — public expenditure, taxes, transfers, deficits and public debt;

• Monetary policy — interest rates and quantitative easing;

• Exchange-rate policy — liquidity in the banking system;

• Trade policy — tariffs, quotas, anti-dumping measures and preferential agreements.

I find that the EU falls short in applying these fields rigorously. Slovak economists have written substantial works on all of them. I shall discuss four Slovak figures and one Czech economist, focusing on some of their fundamental ideas.

Professor Rudolf Briška

I should mention not only Professor Rudolf Briška’s major work, but also his wider output, including his articles, and the fact that he served as secretary of the Association of Slovak Banks. I knew Professor Briška well and was familiar with his message. I must therefore say that, partly thanks to him, Slovak economists were professionally prepared to address economic problems even after 1989. Why? Because they had a thorough command of fundamental economic ideas. Briška worked on national economic policy and statistics.

The essence of his thinking can be found in his 1943 book Národné hospodárstvo (The National Economy), where he writes:

“There is, therefore, no pure type of capitalist or socialist economy; nor is a socialist economy the final stage of economic development, for history also records movement in the opposite direction, from a socialist economy towards capitalism. It should be recalled that no economic form or economic system lasts forever. In time, it must be replaced by another system that, at least in the view of the people living under it — I shall discuss this in Chapter 8 — will enable them to obtain the means of satisfying their needs more effectively than the existing system. Every economic system in human history is merely an episode, an event that has taken place and passed into history.”

Professor Briška continued to write during the war. He also addressed the supply of essential goods to the population and the regulation of prices.

He studied theories explaining economic cycles, which our economy, among others, still experiences today. He chose the term economic fluctuations. An economy does not develop in a straight line.

Professor Imrich Karvaš

Professor Imrich Karvaš was both a theorist and a practitioner. He left us insights rarely found in the literature. When the Slovak State was proclaimed on 14 March 1939, Czechoslovak currency remained in circulation, although a customs border separated it from the same currency in the Czech lands. A government decree with the force of law, issued on 14 April 1939, introduced a separate currency in Slovakia. Its unit was the Slovak koruna, abbreviated Ks, with a gold content of 0.03121 grams of pure gold. The Slovak National Bank was established on 4 April 1939, on essentially the same principles as the National Bank of Czechoslovakia. Karvaš became its governor.

He left us profound insights in Základy hospodárskej vedy, volume 2 (Foundations of Economic Science, 1948). In its discussion of money, he addresses matters that we have, to a considerable extent, neglected and failed to safeguard. Today, leading figures in the real economy have forgotten the lessons of this great economist — and so have politicians and the government.

As early as 1948, Professor Karvaš wrote about developments in Europe:

“The most pressing example is the European continent itself. Efforts to create an economic community among certain European states, or perhaps throughout Europe, are nothing other than an expression of the desire to establish a large economic area. The organisation of a unified European economy, or a plan to create two or three economic areas in Europe, represents a search for forms of independent economic entities that would make it possible to arrange their mutual economic relations rationally. Such an arrangement would create the conditions for making optimal use of all the natural conditions of production for the economic well-being of the peoples who inhabit that area.”

Why did the EU fail to apply the conclusion expressed in Karvaš’s words?

Professor Jozef Sojka

In his book Ekonomická dynamika a rovnováha (Economic Dynamics and Equilibrium), Professor Jozef Sojka writes:

“Economic reform in our society is an evolutionary process that has passed through several stages. The first stage called for a management system, and a corresponding mechanism, that would combine elements of direct administrative control with elements of indirect, economic management. The second stage of reform was to rely chiefly on indirect management: management through instruments such as prices, dual prices, interest rates, credit and taxes, as well as through rules and the behaviour of individual participants in the economic system.”

He saw the first phase of economic reform as having three tasks:

1. Ensure that the market mechanism functions.

2. Ensure that the goals set by socialist society are fulfilled.

3. Allow the pressures of the world market to operate.

These points show how deeply Professor Sojka engaged with the problem of making the Czechoslovak economic system function as efficiently as possible. I shall quote again from Economic Dynamics and Equilibrium (1970), this time on equilibrium:

“Federalisation introduces new elements into our economic system. The existence of equilibrium must be considered in light of these new conditions. In this work, we have explained the theory of decomposition as a basis for considering the division of an economic system into two subsystems and the consequences when one subsystem is more economically developed than the other. Under certain conditions, based on partly simplified assumptions, it appears that, unless the results achieved are redistributed, the economically stronger system draws resources away from the economy of the weaker subsystem. We call a system that is unwilling to undertake such redistribution an aggressive system. A system willing to allow it we call a tolerant system.”

He left behind ideas that advanced both the economy and economic literacy in Slovakia. This contribution is being forgotten. Did those who led the changes and transformation in Slovakia in 1989 know about it?

Did EU economists write about a tolerant economic system?

Professor Viktor Pavlenda

Professor Viktor Pavlenda graduated from the University of Economics in 1951. He undertook postgraduate study in the Soviet Union and, after his return, began teaching the political economy of socialism. He became the youngest university rector in Czechoslovakia.

In 1965, a textbook titled Politická ekonómia socializmu (The Political Economy of Socialism) was published in Bratislava under his leadership. Given the period and the circumstances in the countries of the Council for Mutual Economic Assistance, it was original in its own way. Its team of authors was itself unusual: unlike earlier textbooks, it was written by more than the faculty of a political economy department. Alongside the political economists L. Klinka, J. Košnár and J. Přívara of the University of Economics, and Z. Hába of Comenius University, respected economists including J. Ferianc, H. Kočtúch and J. Rosa made substantial contributions.

Because Professor Pavlenda brought more than specialist political economists into the project, the textbook gained a broader conceptual foundation and moved beyond the formulaic approach then prevalent in Soviet textbooks. Its authors sought to shift the discussion from “Why is the political economy of socialism stagnating?” to “What must we do to prevent it from stagnating?”

Nothing comparable was published here after 1990.

His most significant work is Ekonomické základy socialistického riešenia národnostnej otázky v ČSSR (The Economic Foundations of a Socialist Solution to the Nationalities Question in Czechoslovakia, 1968). I wish to draw attention particularly to its second chapter, “A Theoretical and Methodological Examination of the Problem of Interregional Economic Convergence”, which comprises:

1. The principal attributes of interregional economic convergence;

2. Measurement — measures and indicators — of interregional economic convergence;

3. Measurement — measures and indicators — of the national economic efficiency of interregional economic convergence.

The European Commission offered us nothing of this kind during the transition. We were told that we were lagging behind. The 29 chapters took precedence. Privatisation and transformation overshadowed economic science.

Professor Karel Engliš

The great Czech economist Professor Karel Engliš wrote Soustava národního hospodářství (A System of National Economy), subtitled Věda o pořádku, v kterém jednotlivci a národové pečují o udržení a zlepšení života (The Science of the Order in Which Individuals and Nations Strive to Sustain and Improve Life). He regarded the satisfaction of human needs as the ideal of economic activity. He advocated a teleological interpretation of economic phenomena.

Today we have forgotten this, and we have chaos.

The EU failed to recognise the strength of economic thought in Slovakia and the Czech Republic. Our transition began, to say the least, in a strange way. Günter Verheugen, the former European Commissioner for Enlargement, was interested in the 29 chapters, rather than in how Slovakia’s economy functioned or performed. He did not meet Slovak economists.

Why was the transition supposed to consist of these steps?

• Price liberalisation;

• Restrictive fiscal and monetary policy;

• Foreign-trade liberalisation, that is, ending the state monopoly on foreign trade;

• Rapid and extensive privatisation.

Why these steps?

There were many problems, as we experienced in everyday life after 1989. Globalisation, too, had begun to affect the way the economy functioned.

Which economist among our Members of the European Parliament is widely trusted as an economist? Which of them has produced thoughtful work borne out by results?

We really did know economics. Sanctions are not the answer.

Professor J. Husár
Rohovce, 26 September 2026