TAnother politico-literary masterpiece out of Eastern Europe, "The Loser" is a cluster bomb, hitting both the communist regime and its foes, conformists and dissidents. George Konrad's third novel is an onslaught on a society he depicts as lurching from one type of dictatorship to another, foundering in its relative freedom (relative to Russia, that is) and controlled by a ubiquitous state-security apparatus.

He measures progress by the refinement of secret-police techniques. Mass deportations, summary executions, torture -- kicking testicles so they swell to the size of melons is a specialty -- and indefinite jail sentences have given way to the threat of such punishments. In recent years, Konrad tells us, the Hungarian state-security squad that comes to arrest an intellectual shows an arrest warrant and during an apartment search (for manuscripts expressing anti-state thoughts) the presiding officer asks for permission to use the telephone to call his wife. Jail cells have sheets, and the warden, to be addressed as "Supervisor," is almost civil. "I've already had ministers here, and professors," a warden tells Konrad's protagonist Mr. T., "they got out and became big shots again. Let's not be mad at each other; but as long as you are my guest, I am the boss and what I say goes."

Informers are everywhere; one of them is Mr. T.'s younger brother Dani who claims to have thus saved his brother from the gallows. "His movements are soft but controlled like those of a cat who knows exactly where to jump when a slipper comes flying," the narrator-protagonist describes Dani. "He could be a bank robber, a magician, a secret-service agent, but anyone observing him for long would surely turn down his request for a loan." Dani tells his brother that in his reports to state security, he made his brother's remarks sound wittier. "In 50 years the police records will be made public and you will become immortal," he says to his brother.

Konrad's protagonist Mr. T. is a generation ahead of the heroes of Boris Pasternak and Aleksandr Solzhenitsyn -- to mention only Konrad's two best-known confreres, comrades, cosufferers. Nonconformist writers of the 1950s, '60s and '70s focused on the victories and defeats of anticommunists or at least noncommunists when pitted against a system that recognized only the absolutes of obeisance and opposition.

Mr. T. is an ex-communist and an ex-anticommunist, a scion of the bourgeoisie before World War II who crossed over to the Russians during World War II and then fought them during the revolution of 1956. Released from jail, he is now a scholar living in a country that takes pride in having cast off the passions of both communism and anticommunism, as well as of nationalism and humanism. His confessions are a superbly modulated cri de coeur against a despised regime; but he has nothing left to cry for.

Based in postrevolutionary Hungary, Konrad may emerge as the premier East European writer in the 1980s. His narrative, brilliantly translated by Ivan Sanders, has the ease of Saul Bellows' colloquial soul-searching; as a storyteller he recalls Norman Mailer. Konrad's work is a mocking, sardonic counterpoint both to Pasternak's lyrical tolerance and Solzhenitsyn's soaring moralizing. Konrad's characters shed their ideals, loyalties, hopes. His Hungary is an archeological site of collapsed faiths, and his literary exploration pitilessly picks layers of betrayal and dishonor.

But Konrad's is not another desperate message in a bottle. Like his protagonist, Konrad travels to the West, even stays there for several months at a time and has thus far always returned home. Hungarian officials have not permitted publication of his last two novels, but he has not been prosecuted for having them smuggled out and published in the West. His articles criticizing both the communist East and the capitalist West appear in Le Monde and The New York Review of Books. One imagines that his emigration is a consummation the Hungarian government devoutly wishes. On the other hand he seems to know how far to go without burning his bridges.

In Hungary at least, gulag has become an internal landscape. The regime need no longer keep its enemies, real or imagined, behind bars and barbed wire, in unheated cells and forced labor camps. The enemies, co-opted or not, find their own solitary cells; their opposition is largely a matter of their own imagination. "The combined strength of the state is sustained by the combined weight of public inertia," Konrad's Mr. T. tells us, "the mere perception of this fact is considered a guerrilla operation. An honor guard made up of camouflaged police cars, the excited bustle of several hundred detectives whose only task is to prevent a single study from seeing the light of day, is the state's tribute to independent thought."

Konrad, 49, is a special case of towering talent in his native Hungary, and Hungary is a special case in the communist bloc. The regime's evolution to liberalism was authorized by Yuri V. Andropov, whose first notable achievement was stage-managing the Soviet intervention in 1956 as ambassador and then approving the policies that followed. To a large extent, it is to the credit of the man who is now the secretary general of the Soviet Communist Party that the dictatorship in Hungary is no longer absolute.

Nor is opposition a heroic act. Sins of deviation--political, literary, moral--are routinely forgiven. There is freedom of speech as long as it is confined to the privacy of consenting adults. Budapest is the Paris of the communist East; its intellectuals are brilliant, outspoken, fascinating, and Konrad is perhaps the best of them. Anecdotes about the ironies of history and theories of its hidden motives flow incessantly, compulsively -- the more disheartening the better received.

The state, Konrad tells us, is controlled by idiots and opposed by lunatics. "You don't ask your friend where he got his information, or the book or the manuscript he is showing you," Konrad writes. "If you want to tell him something, and only him, you invite him for a walk in the woods or take a stroll on a busy city street. If somebody comes to see you and asks unusual questions or makes proposals that seem too daring, you throw him out unceremoniously . . . You can get used to daily discipline, though you can also get tired of it. When walking your guests downstairs, you notice the red glow of cigarettes in a parked car across the street."