How Hungarian Eugen Varga became the USSR’s main economist

In Russia, he is known as Eugeny Samuilovich Varga, but his real name was Jenő Varga. Born in 1879 in Hungary, this Jewish boy from a poor family managed to forge a great career path to become the chief expert on the world economy in the USSR.

Jenő Varga later known as Eugeny Samuilovich Varga

A convinced Marxist, Varga graduated from the University of Budapest and, in the short-lived Hungarian Soviet Republic in 1919, became Minister of Economy. However, after its fall, he was forced to flee to Russia.

A Hungarian in the USSR

Varga was a specialist in the economics of socialism and communism. His works were devoted to economic policy under the dictatorship of the proletariat. Therefore, Vladimir Lenin warmly welcomed such a specialist in the young country of the Soviets. 

The Communist regime in Budapest, May 1, 1919

For several years, Varga participated in meetings of the Komintern (Communist International), managed its Statistical and Information Institute and worked at the Soviet Embassy in Berlin. 

From 1927, Varga headed the Institute of World Economy and World Politics of the USSR Academy of Sciences for the next 20 years. He accurately predicted the world economic crisis and the Great Depression and then their end. Joseph Stalin himself listened and trusted his opinion and forecasts. 

The leader not only ordered Varga produce articles and analytics, but also took him to the Yalta and Potsdam conferences during World War II as an expert.

Winston Churchill, Franklin Delano Roosevelt and Joseph Stalin in Yalta at the Three Powers Conference, 1945

In particular, Varga analyzed the idea of the ‘Marshall Plan’ and wrote a note to Stalin that the Americans could use it to economically subjugate European countries. Stalin took Varga's report very seriously and sent it to the members of the Party Politburo.

Correspondence with Stalin

Taking advantage of his position, the academician repeatedly wrote to Stalin, advocating for the release of arrested foreigners. The economist himself happily avoided repression in the 1930s, although he expressed his fears and had anticipated the coming great purge. 

However, Varga fell into Stalin's disfavor after World War II. In 1946, he wrote a book about the postwar economy in capitalist countries, in which, according to party leaders, he did not criticize those countries and capitalism itself “strongly enough”. Varga was accused of a “pro-German” position and had to write to Stalin again, but was already trying to defend himself. 

"Dear comrade Stalin, you have always treated me well, appreciated my work. I strongly ask you to pay attention to this case. We are talking about the life of an old revolutionary! I have been in the labor movement for 36 years, a member of the All-Union Communist Party of Bolsheviks for 23 years, I have never had any deviation or hesitation. My only son died at the front of the patriotic war [as World War II is referred to in Russia - GW2Ru]. <…> Upon what ground would I, in my old age, become ‘pro-German’?" 

Varga in 1950

But, Stalin did not pay heed. Varga was not only fired from the Institute of World Economy and World Politics of the Academy of Sciences, but dispersed from the Institute itself. However, the scientist continued to work as an adviser at the Academy and, after Stalin's death, he was put in charge of the new Institute of World Economy. In fact, it was the same one that had been closed earlier, but now was under a different name.

Criticism of the Soviet system 

Over time, Varga reconsidered the Soviet system and what had become of it. And he started to criticize the Stalinist regime (but not Stalin himself, whom he treated quite well) and especially Khrushchev. In Varga's opinion, after Lenin's death, the Soviet Union went in the wrong direction and “turned into a state completely ruled by the dominant bureaucracy”.

In 1991, some of the academician's notes appeared in the press under the title ‘Reveal in 25 Years’, which he had written in the 1960s. In them, he particularly lamented the gap in the incomes of ordinary people and officials. He wrote about unthinkable “Kremlin rations” in the 1930s, about special canteens in besieged Leningrad, where there was an abundance of different food, while the city was dying of hunger. 

Academician and Lenin Prize winner Varga in the 1960s

In the postwar era, the gap, in his view, became even greater. "Khrushchev built himself 13 new luxurious mansions in ten years," the academician once complained. 

Varga died in Moscow, a month before turning 85. He had two children. His son Andrew was born back in Hungary and became an engineer and chemical technologist, who went missing in action during World War II, fighting for the Red Army. While daughter Maria, born in 1923, graduated from the Faculty of Biology of Moscow University and devoted her life to science. Granddaughter Anna Varga is now a well-known teacher and family psychotherapist, with a PhD in Psychology.