Crises and Responses: Government Policies and the Machine-Building Cartels in Hungary, 1919–1949

What impact have government policies had on the private sector’s response to economic crises, in particular on its decisions for restructuring and adaptation? The Hungarian machine-building industry from 1919 to 1949 provides an interesting case study for these interrelations between business and politics. The study focuses on the role of cartels in organizing responses to crises. The case study is based on a survey of the cartel agreements and investigates why cartels provided solutions only to short-term crises, if they provided solutions at all. The hypothesis is that government policies played a substantial part in the story, as they did not provide enough incentives for coordinated responses to structural change. The years 1919 to 1949 encompass the crises caused by the territorial and political change in East Central Europe after World War I, the Great Depression, and World War II and its aftermath. Depicting the responses of the machine-building industry through the experience of one of its key companies and its cartels—Ganz & Co.—this article analyzes the influence of the institutional framework on short- and long-term adaptation to crises.