During the short-lived Hungarian Soviet Republic of 1919, led by Béla Kun, he was People's Commissar for Finance (March 21-April 3), and then Chairman of the Supreme Council of National Economy.

In 1922, Alexander Barmine, a Soviet diplomat who later defected to the west, travelled by train to Moscow with delegates to the Fourth Congress of Comintern, including Varga, who "showed the most revolting lack of consideration" by demanding a private railway compartment.

"[5] Another Soviet defector Abdurakhman Avtorkhanov, writing under the pseudonym Alexander Uralov, left a humorous description of Varga, whom he described as having "the pedantry of a German official, the obstinacy of a Russian accountant, and the suppleness of an Oriental fakir", and of his institute, where "share fluctuations were followed more attentively than in any London or New York bank.

He was praised by Kremlin watchers in the west as a 'person with a Western orientation' and a 'defender' of the Marshall Plan, but "these implications were highly distasteful to Soviet conservatives" who believed that capitalism was heading for an extreme and possibly terminal crisis.

[7] During a closed meeting of economists called by USSR Academy of Sciences and Moscow University, in May 1947, "Varga was attacked for his writings by most, if not all, of the participants.

"[8] He was also attacked by Nikolai Voznesensky, then a powerful figure as Chairman of Gosplan and a member of the Politburo, who wrote a book in which he accused 'certain theoreticians' of having 'empty opinions which deserve no consideration'.

The new leaders in the Kremlin, believing in the virtues of peaceful co-existence, were not interested in Varga's predictions of the outbreak of a "necessary" economic crisis in the United States.

After the fall of Rákosi caused by the Hungarian Revolution of 1956 and the take-over by the Kádár team, Varga's advisory work was no longer fashionable.