After the founding of the People's Republic of Hungary on 20 August 1949, he participated in communist governance from 1952 to 1954 as Minister for Steel Industry.

In 1957 he became secretary of the Central Committee of the Hungarian Socialist Workers' Party (MSZMP) and in 1961, he served as Deputy Prime Minister.

Formerly the Central Committee of the MSZMP announced János Kádár’s plans for the reform of the economy, known as the New Economic Mechanism (NEM).

The NEM represented a move away from the Joseph Stalin economic system of compulsory plan indicators in favor of a policy that states profits as the enterprises main goal.

The new economic policy was a "comprehensive reform of the economic system", creating market relationships among companies, using prices as allocative functions and companies responding to prices to maximize profits, and using profits to budget new investments.