Economic Revolutionaries Dedicated to Making Deals : Eastern Europe: In Hungary and Poland, free marketeers are dismantling their old economic and financial systems.

I tem : The U.S. Chamber of Commerce is helping pay for a new course on private enterprise at Karl Marx University in Budapest.

Item : A young Warsaw resident who recently left the government’s trade ministry to start his own business wants to import turkeys from the United States. He spends his mornings reading directories at the U.S. Trade Development Center in search of a poultry-marketing group.

Item : In a country where light bulbs are sparse and too dim for nighttime reading, the Marriott Corp. recently opened a new hotel in Warsaw with 11 restaurants and bars, illuminated by 52,000 light bulbs. Why? To better serve what the corporation believes will be a steady influx of Western business executives.

These developments highlight an oversight in Western response to the dramatic changes across Eastern Europe. In our haste to chronicle and applaud the dismantling of the political systems of Hungary and Poland, we are giving short shrift to a second, parallel revolution unfolding in the two countries: the dismantling--and eventual reconstruction--of their economic and financial systems.

The significance of the emergence of basic political freedom in Eastern Europe cannot be underestimated. Yet the true test of these countries’ viability will be the capacity to create economies that can perform well enough in the global marketplace to earn the hard currency needed to improve their standards of living.

The transformation of the Hungarian and Polish economies into free-market systems is well under way. While Congress struggled to come up with an appropriate aid package for Poland and Hungary this year, hundreds of Americans were arriving in Warsaw and Budapest in search of the perfect joint venture or investment. In many cases, this means buying up all or part of state-owned businesses and industries. Whether their goal is to market products to other Eastern Bloc nations or to manufacture goods cheaply for sale to the upcoming “unified” European market, American businessmen are generally bullish about receiving a good return on their investments in Hungary and Poland.

They are also discovering that patience may be as important a prerequisite for success as timing. Transplanting Western standards of efficiency and profitability to Poland and Hungary will be a time-consuming task.

In Hungary, where structural economic reforms are being implemented faster than in Poland, there’s a new banking system but there are no basic regulations that specify how much capital a bank should hold in reserve or how much cash it should have on hand. There’s a fledgling stock exchange but publicly traded companies are not required to issue a prospectus until 1990. This year is also the first in more than four decades that businesses will be required to audit themselves.

Daily, Hungarian and Polish reformers and business executives, as well as foreign businessmen, contend with a daunting array of impediments to conducting Western-style business. Neither the Hungarian forint nor the Polish zloty is convertible. Currency transactions in Poland are particularly disorienting. The government authorizes two different exchange rates--one about three times higher than the other--in an attempt to dampen the appeal of the black market and to encourage foreigners to leave their hard currency behind.

The Hungarian and Polish governments have made concessions to attract foreign capital. For example, investors can convert some of their profit to hard currency and take it out of the country. But reformers have yet to devise the formula that yields a convertible currency without unduly inflicting the pain of inflation on their citizens.

Telephone problems plague everyone. One major Budapest auditing and management consulting company has only two phone lines for its 90 employees. In Krakow’s top business hotel, fax and phone service to Warsaw were inexplicably out of order for about half a day recently, but no one in the hotel thought it a departure from business-as-usual.

There are computer systems, though many of them are outdated. When American or West European consultants try to design a more up-to-date system, they invariably collide with the Coordinating Committee for Multilateral Export Controls. This mouthful NATO agency regulates the levels of technology (with potential military applications) that can be exported to Soviet Bloc nations.

Whether free-market economics take root in Hungary and Poland, say American businessmen, also depends on winning the “hearts and minds” of workers and managers for whom secrecy, lax discipline and lack of accountability to shareholders and the public are habits of a lifetime. A government official said it took Hungarian reformers a year to persuade some financial institutions that you can’t have a stock exchange unless the public knows something about the companies to be traded.

Poles and Hungarians desperately want to junk an economic system that has given them a standard of living far below that of their European neighbors. As they enjoy their newly won political freedoms, they hope that a free-market system will rejuvenate their economies. Indeed, not a few Hungarian and Polish reformers and businessmen want to get on with it.

In the best tradition of Western “type A” personalities, they are pushing the limits of their evolving economic systems as far as they can. They work long hours, search for Western expertise and business partners and go to school to learn such subjects as modern management, banking and accounting. These embryonic free marketeers are saying that the euphoria of political freedom is strong enough to make the pain--inflation and unemployment--of economic change tolerable.

The question is whether American businessmen can stomach postponed gratification. Are they willing to invest not only their money but also their management and technical expertise to create the infrastructure of modern economic systems in Hungary and Poland?

According to news reports, the Japanese offered Americans some unsolicited advice during recent trade negotiations. If the United States truly wants to close its trade gap with Japan, they said, American businessmen must “abandon the ‘short-termist’ mentality of showing more interest in quarterly profits than long-term investment.”

What better place to heed this advice than in the receptive, fertile ground of Eastern Europe’s eager but needy economies?