The “New Economic Mechanism” Is Implemented

The Hungarian economy, which enjoyed some consolidation in the early 1960s, soon reached the limits of its potential. The Kádár system was compelled to introduce economic reforms that encouraged productivity. The Prague Spring and the idea of “socialism with a human face” created favourable circumstances for the reforms. However, after Hungary took part in the intervention against the Prague Spring, the reforms ground to a halt, and measures were even taken to restore the earlier system.