Ota Sik

Reforming Czech economist and politician

Ota Sik was best known during his career as the father of Czechoslovakia's economic reforms before and during Alexander Dubcek's short-lived experiment in "socialism with a human face" in 1968. But beyond his significance as a leading proponent of "the third way" between Western free markets and the Soviet-style command economy, Sik also played a wider, political role without which the Prague Spring might not have taken place.

Ota Sik, economist and politician: born Plzen, Czechoslovakia 11 September 1919; member, Central Committee, Czechoslovak Communist Party 1962-69; Deputy Prime Minister 1968; married (two sons); died St Gallen, Switzerland 22 August 2004.

Ota Sik was best known during his career as the father of Czechoslovakia's economic reforms before and during Alexander Dubcek's short-lived experiment in "socialism with a human face" in 1968. But beyond his significance as a leading proponent of "the third way" between Western free markets and the Soviet-style command economy, Sik also played a wider, political role without which the Prague Spring might not have taken place.

Sik was the most politically aware of Czech economists; and the best economist among politicians. It was these qualities that made him the chief spokesman for the economic reform lobby; and which helped him form a successful alliance with political reformers in the leadership of the Czechoslovak Communist Party (CPCz) as well as with the disgruntled Slovak political establishment.

The result of that alliance was the ousting from power of the old-style CPCz leader, Antonin Novotny, and his replacement by the reformist Dubcek. But only eight months later, in August 1968, the Soviet-led invasion of Czechoslovakia crushed the Prague Spring. Sik's economic reforms were swept away, and their author was forced into exile in Switzerland where he was to live for over three decades.

Sik, who studied art in the 1930s, joined the resistance after the occupation of the Czech lands by Nazi Germany in 1939. Within months he was arrested and was sent to Mauthausen concentration camp in Austria where he remained until the end of the Second World War. One of his fellow- inmates was Novotny; and that connection was to help Sik persuade the CPCz leadership in the 1960s to accept his blueprint for economic change.

During much of the 1950s Sik, who had studied politics and social science after the war, showed little interest in the cause of reform. It was only towards the end of that decade and at the beginning of the 1960s that Sik and other officials began to worry about their country's economic decline. Pre-war Czechoslovakia (in practice primarily the Czech lands) had been one of Europe's leading industrial nations. Twenty years later - and after barely more than a decade of CPCz rule - the country was falling seriously behind West Germany and Austria, its capitalist neighbours, in all key areas ranging from productivity to the standard of living.

As director of the economics institute at the Academy of Science, Sik was appointed to lead a group of experts who were entrusted in 1963 with drafting a blueprint for reform. Sik made far-reaching recommendations. The micro-management of the economy by the bureaucratised state was to be replaced by a minimum of planning for overall targets. Although enterprises were to remain state-owned, their managers were to be given extensive autonomy to plan their own production. Allowing greater scope for the laws of supply and demand was to make the economy more efficient. And productivity was to be boosted by pay incentives for workers who had got used to guaranteed, uniform wages.

Although Novotny, a living relic of the Stalin era, was still in power, many ideas in Sik's reform package were approved by the leadership, mainly because the alternative appeared to be continued economic decline. But when the "New System of Planning and Economic Management" was introduced in 1967, it was sabotaged by many local CPCz officials. They feared that their power would ebb away if economic decision-making was taken out of their hands.

Sik was deeply disappointed by the half-hearted implementation of his proposals. He became convinced that the economy could not be turned round without the introduction of root-and-branch political reforms - a principle that was to be embraced by Mikhail Gorbachev, the reformist Soviet leader, two decades later. It was that realisation that prompted Sik to call for Novotny's resignation at a crucial CPCz meeting in December 1967.

After Dubcek assumed the leadership, Sik was given free rein to get the economy going through radical measures. Sik moved quickly to set in motion further changes: relaxing the state's monopoly on foreign trade and then, to give the workforce a greater stake in reform, introducing elements of the Yugoslav model of self- management by elected enterprise councils.

As deputy prime minister in charge of the economy, Sik was an eloquent publicist for the cause of reform, arguing clearly and coherently in favour of change. He was also one of the most radical advocates within the CPCz leadership of political freedoms, such as the abolition of censorship.

It was this commitment to breaking with the age-old Soviet traditions of authoritarianism that turned him into one of the Kremlin's main hate figures. When the entire membership of the Soviet Communist Party's ruling Politburo met its Czechoslovak counterparts at the end of July 1968, one of the Soviet leader Leonid Brezhnev's recurrent questions was: "Why don't you rebuke Ota Sik? He gives us a headache."

Three weeks later the Soviet-led invasion of Czechoslovakia put an end to the Prague Spring. Sik, who was on holiday in Yugoslavia at the time, was among the first ministers to be forced out of the government. He left for Switzerland, returning home briefly in January 1969 to take the oath as a newly elected member of parliament in the Czech component of Czechoslovakia.

Early on in his in exile in Switzerland in 1970, Sik was deprived of his Czechoslovak citizenship for his political activities in support of the ideals of the Prague Spring. Soviet hostility to him remained so strong that two years later - well after his fall from government - a book, entitled From Revisionism to Betrayal: a critique of Ota Sik's economic views, was published in Moscow.

Sik spent the next two decades teaching and researching at the University of St Gallen. Among his major publications was his detailed exposition of the case for market socialism, Die Dritte Weg, 1972 (published as The Third Way: Marxist-Leninist theory and modern industrial society in 1976).

After the Velvet Revolution of 1989, Sik once again became engaged in Czechoslovakia's public life for a short while. He appealed to Dubcek not to run against Vaclav Havel, the dissident playwright and hero of the revolution, in the contest for the presidency. He was subsequently appointed to Havel's panel of economic advisers. But Sik's "third way" economics were out of place in the new Czechoslovakia at a time when Prime Minister Vaclav Klaus (now the Czech President) was pursuing full-bodied free market policies. Sik's warnings against the dangers of neo-liberalism went largely unheeded.

Ironically, Klaus's own career might not have taken off if he had not worked under Sik in the reform-oriented, tolerant intellectual environment of the Academy's economics institute in the 1960s. Even if Sik's ideas now appear to belong to a bygone age, his work as an educator in the broadest sense of the term is having a continuing, if indirect, impact.

Gabriel Partos