The first three years after World War II saw an attempt to operate a multi-party democracy in militarily occupied Hungary. Winners of the 1945 elections the Independent Smallholders Party, a collective party of the middle class and peasants, at the behest of the great powers entered into a coalition with the social democrats, the National Peasant Party, and the communists. The latter under the leadership of Mátyás Rákosi displayed no inhibitions in exploiting the protection provided by the occupying Soviet troops. In a spirit of national cohesion the coalition achieved some remarkable results in reconstruction, and by implementing land reforms made the centuries-old dreams of the Hungarian peasantry a reality, but even then the nationalization of private enterprises and introduction of certain elements of a Stalinist-type command economy began. By the time the country had recovered from the shocks of the war the communists, by dividing their coalition partners, engaging in political blackmail, and benefiting from the political police they had control over, instigated an election fraud, annihilated their rivals and rose to become the only political force in the country by 1947-1948. Their status was further strengthened by the "eternal friendship treaty" concluded with the Soviet Union and the "Stalinist" constitution of 1949.

The Stalinist dictatorship introduced by Rákosi between 1948 and 1953 concluded nationalization and launched a rush programs for the development of heavy industry, obliging peasants to turn in their crops and join kolhoz-type cooperatives which expropriated their lands. "Enemies" of the regime and numbering tens of thousands of people were deported to the countryside or sent to do forced labour, and innocent people were convicted in show trials built on trumped up charges. In the period following the death of Stalin /1953/ the terror was eased under the rule of the government of reformer Imre Nagy, and a process to reveal abuses began. The population of Hungary heaved a sigh of relief before general bitterness set in once again following the Rákosi cliques return to political power.

The 9th Congress staged by the Communist Party of the Soviet Union in February 1956, suggested the end of the harsh Stalinist times. As a result of the development that opened the possibility of democratization, resistance to the totalitarian regime broke out with elementary force in Hungary, and led to the revolution of October 23, 1956. Imre Nagy, popular throughout the country because of the 1953 reform he had initiated, took over as head of the revolutionary government. The multi-party system was restored and Hungary quit the Warsaw Treaty, the east bloc military alliance. However, after some vacillation the Soviet government opted in favor of intervention, and on November 4 it brutally crushed the revolution. Some 200,000 refugees left a country shocked to its very core, while the era hallmarked by János Kádár who was appointed to head the reorganized communist party as the puppet of the Soviets, entrenched itself with an unprecedented wave of reprisals.

However, the experience of the 1956 revolution made clear for the communist power that there was no return to the methods of governing and state of the "fifties". Thus the new regime, having restored "law and order", consolidated its position by granting an amnesty and launching reforms in the 1960s, obtaining for Hungary the dubious title of "happiest barracks" among the countries of the Soviet bloc. In addition, as industrialization and collectivization were carried out peacefully and gradually more attention was paid to the manufacture of consumer items, which was only encouraged by the so-called "new economic mechanism", that is reforms introduced from 1968 granting greater scope of operation to private enterprises. However, there was a political price to pay for the rise in living standards: the power monopoly of the Hungarian Socialist Workers Party and its relationship with the Soviet Union - that is the country's limited sovereignty - remained taboo. The increasingly flexible censorship narrowed the sphere of banned, and expanded that of supported and tolerated intellectual works, and the "soft dictatorship" while continuing to impose strict checks opened the western gates of the country to incoming foreigners as well as to Hungarians seeking to travel abroad.

Although these concessions - particularly when comparing Hungary's fate to that of neighboring countries - afforded a certain legitimacy to the Kádár regime which had taken power through brutal force, by the 1980s their limitations were apparent. The reforms proved insufficient to ensure economic growth, and so the semblance of prosperity was maintained from foreign loans and at the cost of pilling up massive debts for the country, and even then only with great difficulty. The unstated deal appeared ever more unjustified: surrender political rights in exchange for material welfare. Finally, on Mikhail Gorbachev taking control of the communist party in Moscow, the external pressure also eased.

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