The Consolidation of the Orbán Regime: Towards ‘Authoritarian-Ethnicist Neoliberalism’?
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This chapter analyses the seemingly contradictory fusion between authoritarian state practices and neoliberal economic policies in Hungary under the Orbán regime. Since returning to power in 2010 on a popular backlash against austerity, the hard-right Fidesz-Kereszténydemokrata Néppárt (Fidesz-KDNP) government, led by the charismatic and dexterous Viktor Orbán, has carried out a root-and-branch transformation of Hungarian society. While officially proposing a break with neoliberalism at home and abroad, the chapter argues that the Orbán regime has rather deepened it, producing a specific variety of neoliberalism, which skilfully combines some of the central tenets of neoliberalism (maintenance of a balanced budget, introduction of a flat tax system, and the pursuit of regressive social policies) with ‘authoritarian-ethnicist’ measures that seek to co-opt, coerce, or manufacture consensus among subaltern groups in society against alleged ‘enemies’ of the Hungarian nation. While Orbán’s ‘illiberal’ politics have been strongly criticised by international and regional institutions, such as the International Monetary Fund (IMF) and the European Union (EU), they have taken little concrete action against the Hungarian government. The reason for this is pragmatic: the Orbán regime has not only been a model for neoliberal austerity in Europe since the 2008 crisis, but also its authoritarian-ethnicist policies are not that different from those practised by other EU states.
KeywordsAuthoritarianism Ethnicism Fidesz Hungary Neoliberalism Viktor Orbán
Contrary to the predictions of many progressive scholars and political activists (Duménil & Lévy, 2010; Klein, 2008; Stiglitz, 2008), the 2008 global economic crisis did not result in the demise of neoliberalism as the hegemonic form of global politico-economic governance. Instead, the first years after the crisis saw a deepening of regressive austerity measures worldwide, the ascendancy of authoritarian regimes in Egypt, India, Philippines, Turkey, or, in the case of the US, the racialisation or ethnicisation of class inequalities. The new European Union (EU ) member states in Central and Eastern Europe (CEE ) have not been immune from these developments. Across the region, neo-conservative and far-right movements have made significant electoral gains by skilfully combining a toxic mix of chauvinistic sentiment (anti-gay, anti-women, anti-minorities, anti-Semitic, xenophobic, and, above all, anti-communist), militarism, and Euroscepticism (Dale, 2011; Dale & Fabry, 2018; Makovicky, 2013; Tamás, 2015). Hungary, an erstwhile poster boy of neoliberal transformation in the region, has recently transformed into a prototypical ‘illiberal regime’. Under Viktor Orbán’s hard-right regime, constitutional checks and balances have become non-existent, the independent media, trade unions, and civil society groups are constantly attacked by government authorities, minority groups and refugees suffer from institutionalised racism, and the ruling Fidesz party and its oligarchs control nearly all public institutions and increasingly large parts of the country’s economy. If we add to this that the far-right Jobbik party currently sits as the second largest party in the parliament, or that paramilitary organisations now patrol the Hungarian-Serbian border, the already alarming picture becomes even more disturbing.
it operates through a pre-emptive discipline which simultaneously insulates neoliberal policies through a set of administrative, legal, and coercive mechanisms and limits the spaces of popular resistance against neoliberalism (Bruff, 2014, p. 116);
it is marked by a significant escalation in the state’s propensity to employ coercion and legal/extra-legal intimidation, which is complemented by ‘intensified state control over every sphere of social life … (and) draconian and multiform curtailment of so-called “formal” liberties’ (Poulantzas, 1978, pp. 203–204).
While a detailed engagement with Bruff and Tansel’s concept of ‘authoritarian neoliberalism’ is beyond the scope of this chapter (see the contributions to the forthcoming special issue in Competition & Change), we briefly call attention to two points that appear problematic. First, the concept does not explore sufficiently the authoritarian origins of neoliberalism across the world, from the ‘vanguard states’ of Chile and the UK (Gallas, 2015; Gamble, 1988; Taylor, 2002) to the dirigiste economies in Asia, the Middle East, and the former Soviet bloc (Dale & Fabry, 2018; Klein, 2007; Rutland, 2013). This is a surprising omission, given the immense level of ‘violence, dispossession, and death’ (Banerjee, 2008, p. 1543) that this involved. Secondly, it runs the risk of downplaying authoritarian tendencies associated with the period of ‘roll-out neoliberalism’ (Peck & Tickell, 2002), between the early 1990s and the 2008 crisis, characterised by the consolidation of neoliberalism as an economic regime on a global scale and the hollowing out of substantial democracy (cf. the ‘locking in’ of neoliberal policies through fiscal policies and trade agreements, such as the Maastricht Treaty or the World Trade Organisation, WTO).1 In the case of Hungary, these developments produced a ‘variety of neoliberalism’ characterised by an open, export-dependent economy, but in which democracy was arguably on the decline already before the 2008 crisis.
Against this background, this chapter asks whether the Orbán regime in Hungary can be understood as a model of ‘authoritarian neoliberalism’ in contemporary CEE. The discussion is divided into three sections. In the first, we review different theorisations of the Orbán regime in the scholarly literature. In the second, we analyse the central ideas and politico-economic practices of the Orbán regime, highlighting the particular way in which it has attempted to overcome the crisis of Hungarian capitalism by combining some of the central tenets of neoliberalism (e.g. maintenance of a balanced budget, a flat tax system, and the pursuit of regressive social policies) with ‘authoritarian-ethnicist’ measures that seek to steer popular sentiments of dispossession and disenfranchisement against internal and external ‘enemies’ of the Hungarian nation. In the final section, we examine the successes/limitations of different forms of resistance against the Orbán regime, both inside Hungary and on an international level.
Master, How Should We Call You? Theorising the Orbán Regime
How to explain the spectacular demise of (free) market capitalism and liberal democracy in a country that until recently was considered a model of neoliberal transformation in CEE ? For mainstream commentators, this question remains somewhat of a conundrum. (Indeed, the question appears all the more puzzling if we bear in mind that Orbán began his political career in the late 1980s, as an outspoken anti-communist and pro-market reformer (on the political evolution of Orbán and Fidesz, see Batory, 2016; Lendvai, 2018; Oltay, 2012; Wilkin, 2016, pp. 49–82).) Hence, it is no surprise that international commentators greeted Orbán’s landslide victory in the 2010 general elections with cautious optimism, hoping that Fidesz’ two-thirds supermajority would allow it to introduce ‘sweeping reforms in recession-hit Hungary, including tackling the country’s unwieldy bureaucracy’ (Bryant, 2010). However, less than three months later, moderate enthusiasm had given way to astonishment and stern criticism as the Financial Times scolded Orbán’s decision to walk out from negotiations with the International Monetary Fund (IMF ), labelling him a ‘maverick’ and ‘populist’ (‘Hungary Blunders’, 2010). Since then, there has been no holding back in the criticisms. One of the harshest condemnations was provided by none less than US Republican Senator John McCain, who in late 2014 labelled Orbán a ‘neo-Fascist dictator’ (Tóth, 2014). In mainstream accounts, the Orbán regime’s apparent volte-face with neoliberal ‘common sense’ has tended to be described as a sui generis process, either the outcome of domestic political struggles (between pro-democratic, market-friendly social-liberals and dirigiste, national-conservatives) or the (purported) personal characteristics/interests (e.g. ‘maverick’, ‘power-hungry’, ‘uncompromising’, etc.) of the country’s leader (Bozóki, 2015a; Kirchick, 2012; Lendvai, 2018; Otarashvili, 2014), rather than wider, structural trends in the capitalist world economy.
One of the most incisive examples of this narrative is Bálint Magyar’s The Post-Communist Mafia State (Magyar, 2016; Magyar & Vásárhelyi, 2017). According to Magyar, the Orbán regime represents a distinct variety of ‘post-communist mafia state’, in which the prime minister acts as a modern-day Padrino, who uses his personal authority to promote his own economic interests and those of his actual and ‘adopted’ family members (i.e. ‘oligarchs’ who use their connections with the regime to accumulate their own wealth). Although the regime allegedly lacks a coherent ideology, it has successfully defended itself from domestic and international criticism by drawing on ‘ideological templates’ historically appropriated by the Hungarian Right (e.g. ‘God’, ‘homeland’, ‘family’).2 Popular among liberal circles in Hungary and abroad, Magyar’s theoretical framework is nonetheless problematic. Firstly, it assumes (incorrectly) that there is a sharp, theoretical division between neoliberalism and authoritarian (and, indeed, even far-right) politics. However, this overlooks the authoritarian history of neoliberalisation in CEE and the former USSR (Dale & Fabry, 2018; Rutland, 2013), let alone elsewhere in the world (Davidson & Saull, 2017; Kiely, 2017; De Smet & Bogaert, 2017; Hanieh, 2013; Springer, 2017). Secondly, as we noted in the previous chapter, the Hungarian media was already awash with corruption scandals during the socialist-liberal coalition governments (of which Magyar himself was a member3), so it is not clear how the Orbán government represented a caesura with previous practices. Finally, in light of recent revelations in the Panama Papers (to mention only the latest corruption scandal involving heads of states, ‘respectable’ businessmen, and criminals), Magyar’s claim that ‘corruption’ and ‘state capture’ represent a distinct characteristic of the Orbán regime and/or ‘post-communist’ regimes elsewhere (and not an increasingly systemic feature of neoliberal capitalism tout court) seems, at best, questionable or, at worst, echoes Orientalist attitudes.4
To overcome these shortcomings, this chapter draws on the insights of Antonio Gramsci and Stuart Hall, both of whom wrote extensively on shifts towards authoritarian politics during previous crises in capitalism, in the 1930s and the 1970s, respectively. For Gramsci, the economic, political, and ideological crisis facing the West during the interwar years was the result of the pathologies of liberal capitalism tout court, and not, as argued by leading neoliberal thinkers, the rise of collectivism and state intervention, exemplified by Bolshevism and National Socialism (Hayek, 1944; Robbins, 1934; Rueff, 1934). As Gramsci noted in his Prison Notebooks, the ruling classes had two ways of responding to the ‘organic crisis’ or ‘crisis of hegemony’: the first was to turn to fascism, exemplified by Mussolini’s Italy and Nazi Germany, which combined an authoritarian system of government with dirigiste economic policies (including government control of prices, trade, and the creation of a public credit system), and expansionist nationalism. The second was ‘Americanism’, represented by the US model of capitalism, which attempted to overcome the crisis (rooted in the tendency of the rate of profit to fall) through the rationalisation and intensification of production (‘Fordism’). Both options represented what Gramsci termed as a ‘passive revolution’: an attempt by ruling classes to pre-empt, deflect, or absorb competitive pressures ‘from outside’ (more advanced capitalist states and/or revolutionary struggles inside their respective states) by reconfiguring the economy and the state ‘from above’ to their advantage (Gramsci, 1973; Thomas, 2009; on the notion of passive revolution in the former Soviet bloc, see Shields, 2006; Simon, 2010).
In the late 1970s and early 1980s, Gramsci’s insights were developed by Stuart Hall to describe what he defined as the ‘authoritarian populist’ methods employed by Margaret Thatcher’s Tory government to further neoliberalisation in Britain (Hall, 1979, 1980, 1985). According to Hall, the structural crisis of British capitalism in the 1970s had led to a breakdown of ‘the corporatist consensus’—represented in the UK by the reformist politics of successive Labour governments. As a result, the balance of forces within the ‘“unstable equilibrium” between coercion and consent which characterizes all democratic class politics’ shifted ‘decisively towards the “authoritarian” pole’. While this shift was organised ‘from above’, it was yoked to ‘and to some extent legitimated by a populist groundswell below’, one that took the shape, for example, of ‘moral panics’ around such issues as ‘race, law-and-order, permissiveness and social anarchy’ (Hall, 1985, p. 116; the relationship between class and racial and ethnic struggles is explored in Hall, 1986; Tamás, 2015)’ These served simultaneously to disrupt the communities of solidarity on which anti-neoliberal movements depend and to harness populist consent to displays of authoritarian governance that buttressed Thatcher’s market-fundamentalist crusade.
These insights are arguably helpful for making sense of developments in CEE and elsewhere since the 2008 crisis. In the wake of what has been the greatest crisis of capitalism since the 1930s, neoliberalism has confronted its own legitimation problems, leaving ruling classes worldwide struggling to find solutions. While pragmatic Keynesian adaptions were, as we noted in the previous chapter, initially the order of the day, ‘authoritarian neoliberal’ solutions, based on ‘the explicit exclusion and marginalization of subordinate social groups through the constitutionally and legally engineered self-disempowerment of nominally democratic institutions, governments, and parliaments’ in the name of economic ‘necessity’, have become the preferred solution of capitalist states worldwide (Bruff, 2014, pp. 115–116). However, as the insights of Gramsci and Hall suggest, these are not necessarily novel developments, but rather represent a deepening of authoritarian tendencies inherent in capitalism. It is against this background that we seek to make sense of recent developments in Hungary.
Restoring Law and Order, Economic Competitiveness, and National Pride: Authoritarian-Ethnicist Neoliberalism in Discourse and Practice
When Orbán was catapulted back into power in 2010, the Hungarian economy was in a dire state. Having been hit hard by the contraction in global lending that followed after the collapse of Lehman Brothers in September 2008 and the Great Recession that followed in its wake, economic output contracted by 6.6 percent in 2009, while industrial production fell by 17.7 percent. As a result, the unemployment rate soared to its highest level for 16 years (11.4 percent), leaving many middle class families with the risk of defaulting on their mortgages and bank loans. Moreover, as we demonstrated in the previous chapter, public support for liberal democratic institutions and the EU was at record low levels (and significantly lower than in other CEE countries), indicating that Hungary’s malaise went beyond the economic sphere.
Faced with this bleak picture, the Orbán government began introducing economic and political measures that combined an uncompromising, ‘ethnicist-populist’ rhetoric with policies that nominally went against the country’s previous neoliberal and pro-Western course. For example, in a much-debated move, the government walked out from negotiations with the IMF in July 2010, over the renewal of a standby loan. Although the move initially led to the depreciation of the forint and Hungarian bonds being downgraded to ‘junk’ status, Orbán stood firm, proclaiming that Hungary ‘would not accept diktats’ from the IMF and the EU in the future, claiming that they are ‘not our bosses’ (Than, 2010). While apologists of neoliberal common sense at home and abroad were flabbergasted by the decision, its critics were enthralled. Mark Weisbrot, economist and co-director of the progressive Centre for Economic and Policy Research, even went so far as to argue that Orbán was ‘pioneering an alternative to austerity’ in Europe (Weisbrot, 2010). The government received further criticism for its decision to reduce the government debt and fiscal deficit below 3 percent (as stipulated by the EU) by introducing special ‘crisis taxes’ on banks, telecommunications, and large retail companies (all of which were foreign-owned), the renationalisation of the country’s private pension system (worth more than $14 billion) and parts of the energy sector, and its attempts to reorient the Hungarian economy from Western Europe and the US to ‘emerging economies’ like China, Russia, India, and the Middle East. According to Simeon Djankov, former Bulgarian Finance Minister (2009–13) and visiting fellow at the Peterson Institute for International Economics, Orbán’s economic policies were moving Hungary ‘towards centrally planned capitalism, [like] the economic development model pursued in Russia and Turkey’. He went on to warn, ‘[t]he apparent success and popularity of Hungary’s economic policy, in contrast to a lack of growth models in Europe, is moving some leaders in other former communist bloc countries to emulate Orbán, with the possible consequence of undermining the European Union’s structural reform efforts’ (Djankov, 2015, p. 1; see also Kornai, 2015).
You ought to identify eight to ten businessmen, who would go on to become Hungary’s big capitalists. And then you should have supported them—not directly through the government, but simply, through banking relationships. A personal relationship ought to have been developed with them, which they then would be able to use on the market in order to gain a competitive advantage. That relationship would then connect them to the Prime Minister of Hungary, or his personal circle. True, certain spheres of the economy would have been handed over to the interest of eight to ten big capitalists. However, this could safely have been allowed, since it has happened anyway. It is inevitable that, sooner or later, the economic map of the country will look like this anyway …
This is what ought to have been done. Make it clear to the bankers that these eight to ten people are our people. And then leave it to the logic of the market to handle the rest. These people could perhaps have been provided further assistance in the development of investment funds and calls for tenders, but it should be done modestly, without exceeding the boundaries of “good taste”.
Since 2010, there has been an eerie resemblance between Orbán’s contemplations from 1994 and the economic policies pursued by his regime. For example, in mid-2010, the regime introduced a highly regressive, 16 percent ‘flat tax’6 on personal income; state subsidies for small- and medium-sized Hungarian firms (in agriculture, car manufacturing, construction, food processing, and the tourism industry); and tax benefits to families of well-earning working parents with children. Two years later, it raised VAT to 27 percent—the highest level in the EU, and one of the highest in the world. Following recommendations from the Hungarian Chamber of Commerce and Industry (MKIK), with whom Fidesz has openly collaborated since the early 2000s (Naczyk, 2014), the regime also introduced a sweeping new Labour Law that promotes further flexibilisation of labour relations while restricting workers’ rights to strike action. Also, the regime has expanded a highly punitive and super-exploitative workfare programme originally introduced by the Bajnai government in 2009. According to the programme, unemployed people are forced to carry out hard labour for local authorities (often under the supervision of the police), or, in the case that no work is available, to try to survive on a replacement allowance that only amounts to 70 percent of the minimum salary (Bozóki, 2015b; Myant, Drahokoupil, & Lesay, 2013; Szabó, 2013; Szikra, 2014). Many of these policies fit within a broader tendency of deepening neoliberal reforms in the wake of the 2008 crisis. For example, regressive workfare reforms have recently been passed in Denmark, the Netherlands, and the UK (Mayes & Michalski, 2013). However, the Orbán regime has arguably been a frontrunner when it comes to squeezing the unemployed and the poor. In recent years, it has not only reduced unemployment benefits, disability pensions, and sick pay (Pogátsa, 2016, pp. 187–202; Szurovecz, 2017), but also made homelessness a criminal offence—the first country in the world where this is explicitly stated in the constitution (Udvarhelyi, 2014).
According to Orbán and his supporters, these measures will ‘boost the competitiveness’ of the Hungarian economy, strengthen the national bourgeoisie, and promote a ‘work-based society’ that is supposed to create 1 million new jobs by 2020 (‘A Nemzeti Együttműködés Programja’, 2010, p. 17). However, as detailed by numerous studies, the Orbán regime’s economic policies have been characterised by systemic ‘cronyism’ and benefitted the wealthiest sections of society (increasingly a synonym for loyal Fidesz politicians and oligarchs),7 while failing to improve life conditions for ordinary Hungarians (Krémer, 2014; Magyar, 2016; Pogátsa, 2016, pp. 187–202; Tóth & Virovácz, 2013). According to Eurostat figures, 33.5 percent of the Hungarian population (i.e. 3.3 million people) lived in poverty in 2013—an increase of 500,000 people (from 28.2 percent) since 2008—including 1.5 million living in deep poverty (Ádám, 2014). Furthermore, 70 percent of the country’s approximately 700,000 Roma, who were guaranteed work under ‘real socialism’, were excluded from the labour market in 2012—a figure that is ten times higher than the national average (‘Hungary: Situation of Roma’, 2012). However, the Roma are not the only section of the Hungarian population suffering from growing precarisation and poverty. According to data by Hungarian trade unions, roughly 1 million workers (25 percent of the employed population) earned below the official subsistence minimum of 87,510 forint (roughly € 288) per month for an individual in 2013—an increase from 18 percent of the population prior to the 2008 global economic crisis (Kiss, 2015). Figures like these have led to demands for wage rises (including bringing the minimum wage in line with the subsistence minimum), but they do not appear to raise much interest amongst government representatives. As János Lázár, an influential Fidesz politician who until recently served as Minister of the Prime Minister’s Office, bluntly summarised the Orbán government’s view on poverty: ‘he who has nothing, is only worth as much’ (Lázár, cited in MTI, 2011).
The above figures challenge the Orbán regime’s bombastic propaganda of economic growth and ‘national rejuvenation’. However, the regime has successfully silenced critical voices (in particular those focusing on the intersection of class, gender, and race) by combining methods of co-optation, coercion, or stoking xenophobic sentiment among subaltern groups in Hungary. On the one hand, the Orbán regime has been able to use its control over the Hungarian state to strengthen the position of loyal members of the bourgeoisie, or co-opt subaltern social forces, for example, by cutting household energy prices with 20 percent in the run-up to the 2014 general elections.8 Meanwhile, public sector workers have been fired en masse in order to make the state more ‘efficient’ (Komiljovics, 2012), while non-conformist non-governmental organisations (NGOs), trade unions, or independent media outlets have been openly persecuted or meticulously silenced (Balogh, 2015; Lendvai, 2018). When these methods have been insufficient, Orbán and his domestic allies have shrewdly invoked ethnicist and racist ideas (Hall, 1986; Tamás, 2015) to defend the regime’s policies from external ‘enemies’ (i.e. anyone and everything from ‘profiteering’ banks and MNCs, through ‘imperial bureaucrats’ in Brussels, ‘corrupt’ communists and liberals, ‘illegal’ Middle Eastern and North African refugees, or, most recently, Hungarian-born multi-billionaire George Soros, who allegedly seeks to destroy not only the Hungarian nation, but the whole of ‘White, Christian Europe’) (Fabry, 2015; Fekete, 2016; Tamás, 2013, 2014). For example, addressing an MKIK meeting in February 2017, Orbán claimed that ‘preserving [Hungary’s] ethnic homogeneity’ was a key to economic success, and that ‘too much mixing causes trouble’ (‘Orbán Calls “Ethnic Homogeneity” a Key to Success’, 2017). To show that it means business with its ethnicist rhetoric, the Orbán regime recently introduced a controversial set of laws, simply known as ‘Stop Soros’, which imposes jail terms on people or organisations considered to be aiding ‘illegal immigration’ (Walker, 2018).9
While authoritarian-ethnicist ideas are on the rise throughout Europe and in other parts of the world (Leplat, 2015; Panitch & Albo, 2015; Saull, Anievas, Davidson, & Fabry, 2014), the Orbán regime is arguably qualitatively different in that its drift towards the far-right has not merely been rhetorical, but also included a highly conscientious reconfiguring of state power and the ideological apparatuses of the state along the lines envisaged by Nicos Poulantzas four decades ago (Poulantzas, 1978, pp. 203–250, 2008, pp. 294–322). In the case of Orbán, this shift is justified by the claim that Western-style liberal democracies are unable to face the challenges of a globalised economy in the twenty-first century. Hence, in order to remain globally competitive, Orbán has spoken of the need to consolidate ‘a centralised political force, capable of ruling for the next 15–20 years’ (‘Orbán: a következő 15–20 évben egy nagy kormányzó párt lehet’, 2010), listing state capitalist China, Putin’s Russia, and Erdogan’s Turkey as examples of ‘successful’ nations, ‘none of which [are] liberal and some of which aren’t even democracies’ (Orbán, 2014). In order to consolidate what he defines as an ‘illiberal state’ (Orbán, 2014), Orbán has moved with a swiftness and assertiveness akin to Louis Bonaparte himself.
Immediately after the 2010 general elections, Orbán handed personal friends and loyal party apparatchiks long-term posts in the corridors of power, including the President of the Republic, the State Audit Office, and the Constitutional Court, as well as top positions in cultural institutions (the state media, the film industry, and state universities).10 In order to further cement the regime’s power, Fidesz-Kereszténydemokrata Néppárt (Fidesz-KDNP) MPs passed an incredible 363 new laws between May 2010 and December 2011—about one new law for every two working days(!)—including comprehensive reforms to the electoral law, the judicial system, and the functioning of the central bank (these laws can only be reverted in the future by a two-thirds majority) (Bozóki, 2015b; Kornai, 2015; Zhong, 2012). The government also passed a new media law, establishing the National Media and Info-communications Authority (NMHH), whose five-member council is elected by a two-thirds supermajority by the Fidesz-dominated parliament with the responsibility to regulate the media industry and media content. The organisation, which has received widespread criticism for jeopardising the freedom of the press, has the right to deny media outlets of their licences and impose heavy fines of up to 200 million forints (around US$ 860,000) on journalists and media outlets for publishing articles with ‘improper content’ (and it alone has the right to decide what qualifies as ‘improper’).11 Furthermore, the Orbán regime has also strengthened the repressive functions of the state by establishing a new counter-terrorism force (Terrorelháritási Központ, TEK) with its own command structure, a vast budget of 10 billion forints (around US$ 44 million), and unlimited powers of surveillance in order to prevent ‘terrorist threats’ and protect the Prime Minister and the President. Although officially under the oversight of the Ministry of Interior, the TEK is headed by Orbán’s former bodyguard and director of security for Fidesz, and essentially functions as a private army of the Prime Minister (Magyar, 2016, pp. 102–105; Scheppele, 2012). At the same time, the Orbán regime has gradually embraced the rhetoric and political practices of the Hungarian far-right,12 as evidenced by its collusion with racist football ultras and far-right paramilitaries along the Hungarian-Serbian border, ethnicist discourse and state policies against ethnic minorities and refugees, or recent crackdowns against NGOs and anti-government protesters (Fabry, 2015; Fekete, 2016; Rowlands, 2013; Varró, 2009; Verseck, 2012).
The central elements of Orbán’s authoritarian-ethnicist regime were hardwired into the backbone of the Hungarian state on Easter Monday, 25 April 2011, when the Fidesz-dominated parliament approved a new constitution. Officially known as ‘The Fundamental Law of Hungary’ (Magyarország Alaptörvénye), the document was drawn up in less than a year and with little regard for non-conformist opinions. According to Orbán, a new constitution was necessary in order to complete Hungary’s democratic transition (more than two decades after the regime change of 1989–90) and ensure an era of ‘sound finances’ and ‘clean government’ after years of ‘corruption’ and ‘mismanagement’ by socialist-liberal coalitions (Gorondi, 2011). However, the new constitution has come under widespread criticism by sceptics in Hungary and abroad who have argued that it stands out as a model for a twenty-first century authoritarian regime (Draft Opinion on the Fourth Amendment to the Fundamental Law of Hungary, 2013; Fleck et al., 2011; Korkut, 2012; Kornai, 2015; Tamás, 2012). Three points stand out in particular: first, the Fundamental Law de facto legitimises the Horthy regime by claiming that Hungary lost its ‘self-determination’ between 19 March 1944 (the beginning of the Nazi occupation of Hungary) and 2 May 1990 (officially the end of ‘communism’ and the formation of the first democratically elected parliament since 1945).13 Amongst its many wrongdoings, the Horthy regime was openly anti-socialist and anti-Semitic,14 and fought on the side of Nazi Germany in World War II (where it was responsible for serious war crimes in the USSR and Yugoslavia, as well as the deportation of hundreds of thousands of Hungarian Jews to Nazi concentration camps). Second, in line with the Orbán regime’s strong support for Christian-national ideas, the Fundamental Law is overloaded with references to ‘God’, the ‘Holy Crown of St. Stephen’, the ‘fatherland’, and ‘traditional’ family values, raising fears about the future rights of Hungarian atheists, members of the LGBTQ community, and single-parent families. Third, and most interestingly from the perspective of this book, it constitutionalises some of the central tenets of neoliberalism, including the enforcement of a balanced budget and the introduction of a ‘debt brake’ (limiting the maximum level of public debt to 50 percent of the gross domestic product (GDP), down from above 80 percent in 2011), while at the same time linking the provision of social rights to the fulfilment of obligations which contribute to the economic performance of the Hungarian state.15 Thus, in our view, the Fundamental Law can be considered as the final step in the hardwiring an authoritarian-ethnicist neoliberal regime in Hungary.
Resisting the Orbán Regime: The Limits of Appeasement
The rapid consolidation of the Orbán regime has left mainstream intellectuals and politicians bewildered. Initially, the dominant view in Hungary and abroad alike was that Orbán’s unorthodox economic policies and provocative ‘freedom fight’ against traditional allies would lead to political isolation and push the economy into recession, or, even worse, lead to state bankruptcy (Békesi, 2012; ‘Budging Budapest’, 2012; ‘Planet Orban’, 2011). While these expectations seemed realistic in late 2011 and early 2012, when, partly due to a deepening of the Eurozone crisis and partly due to fears about the growth prospects of the Hungarian economy, the forint depreciated significantly and Hungarian bonds downgraded to ‘junk’ status, they have proven completely naïve over time.
The belief that the Orbán regime’s economic policies would damage Hungary’s credibility among foreign investors, potentially leading to massive capital flight and economic Armageddon, has not materialised. Although credit rating agencies, IFIs, and representatives of MNCs have frequently expressed their disapproval of Orbánomics in public, there is surprisingly little evidence that they have sought to punish the regime for its mistakes. As Johnson and Barnes (2015, p. 556) explain, ‘[t]he Orbán government has held dozens of successful bond auctions. While auctions were occasionally cancelled or raised less money than planned, predictions that Hungary would simply be unable to attract funds have been wrong repeatedly. Furthermore, international support for Hungarian bonds has not waned and instead seems to have risen’. In fact, the Orbán regime has even cynically used its EU membership in order to raise money from wealthy non-EU citizens by issuing so-called permanent residency bonds that, in exchange for a ‘modest’ fee of 360,000 euros [sic!], provide lifetime Hungarian residency—that is, the ability to travel freely within the Schengen area—to non-EU residents and their family members.16 Finally, it does not seem like the regime’s ‘unorthodox’ economic policies and ethnicist rhetoric are much of a worry to MNCs either. Since 2010, the government has signed a number of high-profile ‘strategic co-operation agreements’ with MNCs, such as Audi, Coca-Cola, General Electric, Microsoft, Samsung, and Suzuki, and as late as July 2016, German car giant Mercedes announced its intention to invest € 1 billion to build a new manufacturing factory in the south-eastern city of Kecskemét (Magyar, 2016, p. 172; ‘Mercedes Building New Car Plant in Hungary, to Employ 2,500’, 2016; Naczyk, 2014). As Eric Stewart, head of the American-Hungarian Business Council, recently affirmed in an interview with the pro-government daily Magyar Hírlap, ‘Hungary is a good place to invest (Topolay, 2016)’.17
Similarly, while the EU has criticised the Orbán regime for dismantling democratic institutions and cronyism on numerous occasions,18 it continues to provide much-needed financial assistance to Budapest in the form of EU Cohesion Funds.19 Brussels has also looked on haplessly as the Orbán regime has developed close ties to authoritarian regimes, such as Erdogan’s Turkey20 and Putin’s Russia,21 its increasingly explicit overtures to the far-right in Hungary and abroad, including the Polish Law and Justice Party (Buckley & Foy, 2016) or the Austrian Freedom Party (Ultsch, 2018), or its unilateral decision to erect a massive, razor-wire fence along its borders with Croatia and Serbia, in order to keep out ‘illegal’ refugees (Lyman, 2015; ‘Migrant Crisis: UN Criticises Hungary Over Border Controls’, 2016). Likewise, there has been unending speculation about German chancellor Angela Merkel losing patience with Orbán’s authoritarian policies or his reiterated criticisms against the German government’s ‘open-door’ refugee policy (Werkhäuser, 2015), but until now she has continued to support his party in the European Parliament (where Fidesz continues to sit with Merkel’s CDU-CSU coalition in the European People’s Party, EPP).
According to some commentators, the reason why the EU has proven to be unable to impose heavier sanctions on the Orbán regime is due to a lack of ‘effective tools’ with which to ‘discipline’ rebellious member states, or fear of the ‘geopolitical consequences’ in doing so (Magyar, 2016, pp. 283–290; see also Batory, 2016). In contrast, we argue that the reasons why EU leaders have remained so tolerant with the Orbán regime are probably more pragmatic. As Liz Fekete notes, ‘[l]eaving aside the question of organized corruption, there are aspects of his [Orbán’s] policies towards refugees and the Roma, as well as his workfare scheme, that are replicated in other European countries’ (Fekete, 2016). While a detailed comparison with other EU states is beyond the scope of this chapter, we only need to remember the overcrowded refugee camps in Greece or the massive border fence on the Spanish-Moroccan border, in order to recognise that Hungary’s rightly criticised razor-wire fence fits well within the EU’s attempt of preventing ‘surplus populations’, predominantly from impoverished and war-torn African and Middle Eastern countries, accessing the labour market (Manunza, 2017; Merrill, 2011). Another reason why the EU has remained so silent over the Orbán regime’s authoritarian-ethnicist politics is that under Orbán’s rule Hungary has become a ‘model state’ of neoliberal austerity. The regime has reduced the government debt (from 80.5 percent of GDP in 2011 to 73.6 percent in 2017), cut inflation to 0 percent, and, perhaps most importantly, from the viewpoint of the Troika and credit rating agencies, maintained the budget deficit below 3 percent of GDP (as stipulated by the Maastricht criteria). Hence, for capitalists at home and abroad, the Orbán regime’s slogan, ‘the Hungarian reforms are working’, is not that misleading.22
This chapter asked whether the consolidation of the Orbán regime in Hungary since 2010 represents a case study of a wider shift towards ‘authoritarian neoliberalism’ in the wake of the 2008 global economic crisis. As we argued, the limitations of Hungary’s particular variety of neoliberalism were brutally revealed following the 2008 global economic crisis, as its highly transnationalised economy suffered a liquidity crisis, which subsequently led to a protracted slump that left many ordinary Hungarians unemployed and heavily indebted. But the crisis was not limited to the economy. Instead, it extended beyond the boundaries of a ‘cyclical crisis’ (i.e. a normal crisis of capital accumulation), to what Gramsci defined as an ‘organic crisis’, in which the rationale behind neoliberal common sense (and its domestic advocators in the governing socialist-liberal coalition) was increasingly questioned.
It is within this context that we situated the consolidation of the Orbán regime. After having won a two-thirds supermajority in the 2010 general elections, the hard-right Fidesz-KDNP government has pursued policies that have raised eyebrows among experts, journalists, and politicians associated with what Tariq Ali calls ‘The Extreme Centre’ (Ali, 2015), including the abolition of constitutional checks and balances, growing state intervention in the economy (in order to strengthen loyal members of the national bourgeoisie), and whipping up ethnicist-racist rhetoric against ‘foreigners’. While these measures have pushed the ruling Fidesz-KDNP coalition further to the right than the once fascist, now ‘national-conservative’ Jobbik party in the eyes of their own voters (Enyedi & Benoit, 2011), and reversed and rescinded certain policies widely associated with neoliberalism, this chapter has argued that, overall, they do not represent a rupture, but rather a deepening of authoritarian tendencies inherent in neoliberalism. Hence, while the Orbán regime might be perceived as an emblematic case of what Bruff and Tansel have described as ‘authoritarian neoliberalism’, this chapter has attempted to emphasise the deeper historical roots of this particular politico-economic regime in Hungary.
This said, until now (June 2018), Orbán’s ‘illiberal’ politics seem to have functioned rather well: the serving Fidesz-KDNP coalition regained its two-thirds supermajority in the 2018 general elections (in part thanks to its almost complete control of both private and state media, and a new, disproportional electoral law that it approved in 2012). And although there have been sporadic outbursts of popular resistance against the Orbán regime (Koltai, 2014, 2017; Petőcz, 2015; Wilkin, 2016, pp. 131–150), the social-liberal opposition—discredited by its support for neoliberalism and internally divided—has largely been unable to take advantage of this.23 Instead, the main beneficiary has been Jobbik. Having allegedly ‘toned down’ its anti-Semitic and xenophobic rhetoric, the party has emerged as the main political contender to Fidesz. Against this background, the prospects for progressive politics in Hungary look bleak indeed.
This said, there are potential obstacles facing the Orbán regime. First, economic growth remains highly dependent on EU funds (European Commission, 2018; Pogátsa, 2016, pp. 200–202), and with continuing tensions between core and periphery member states, it remains an open question what the next EU budget will look like. Second, there are mounting uncertainties about the Hungary’s internal growth potential. In the last decade between 3 and 5 percent of the country’s population (mostly young graduates and skilled workers—the key groups for the basis of sustainable growth) has emigrated to Western Europe in search for a better future.24 As a result, many companies are facing increasing labour shortages, which probably explains the jump in wages in 2016 and 2017 (Koltai, 2018). While the Orbán regime has prioritised fiscal discipline and the enrichment of a loyal capitalist class, it has deliberately defunded the main systems of provision (i.e. education, health care, and social policy). Between 2010 and 2014 government spending on health care and education as percentage of GDP fell substantially, and was still lagging behind their pre-crisis level in 2015, whereas spending on social protection (already below the EU average prior to the return to power of Orbán) has been dwindling ever since 2010 (Pogátsa, 2016, pp. 187–202; Szurovecz, 2017). Public spending on the most vulnerable groups in society, such as disability and unemployment benefits, was slashed almost 50 percent during the Orbán regime’s first term, and total pension spending has also been falling since 2012 with early retirement schemes being attacked in particular. Despite official propaganda of ‘economic revival’, the main achievements of Orbán’s ‘work-based society’ have been large-scale emigration (in particular young, highly skilled workers that are probably the most important for the country’s growth), while public investment into the abilities, health, and welfare of those who stayed has been badly neglected.
Economic prospects are therefore not as bright as state propaganda asserts. However, this does not mean that the Orbán regime will unravel in the near future. Rather, in the absence of any progressive political alternative, it seems unfortunately highly probable that class inequalities, xenophobia, and chauvinistic sentiments (inflamed by cheap conspiracy theories and hysteric, state-sponsored media campaigns) will deepen in the coming years.
Although the authoritarian roots of neoliberalism are explored by Bruff in his contribution to The Handbook of Neoliberalism (Bruff, 2016) and in some of the contributions to Tansel’s States of Discipline (De Smet & Bogaert, 2017; Özden, Akça, & Bekmen, 2017; Sotiris, 2017), the question arguably needs further attention in order to elucidate how the current conjuncture differs from previous phases of neoliberalism.
The Hungarian-born sociologist Iván Szelényi has recently provided an account of the Orbán regime that in many ways resembles Magyar’s, although Szelényi argues that property relations in contemporary Hungary are ‘neo-patrimonial’ or ‘neo-prebendal’ (i.e. property is allocated by political bosses, not by personal masters) and that the Orbán regime does follow a coherent ideology, which is similar to US-style neo-conservatism/traditionalism (Szelényi, 2015; Szelényi & Csillag, 2015).
Magyar was a founding member of Szabad Demokraták Szövetsége (SZDSZ ) and served as Minister of Education between 1996–98 and 2006–08.
For example, already in the early 1940s, the likes of Theodor Adorno, Max Horkheimer, and Friedrich Pollock suggested that capitalism was evolving into an era dominated by mafia-like networks of organized ‘rackets’ (Adorno & Horkheimer, 2016; Pollock, 1941; see also Granter, 2017; Schulte-Bockholt, 2006; Wilson, 2009).
Paradoxically, such views echo official government propaganda in Budapest. The idea that the Orbán government’s economic policies were ‘unorthodox’ was first introduced by György Matolcsy, then Minister of National Economy in the Orbán cabinet.
As Pogátsa (2016, p. 185) notes, this is a flagship policy for ‘market fundamentalists’ in the US. In the EU, similar flat tax systems currently exist in the Baltic States, Bulgaria, and Romania, while the Czech Republic and Slovakia recently abolished theirs.
Of course, corruption existed in Hungary before 2010. However, under the Orbán regime the scale of the phenomenon seems to have changed. The most emblematic example of the growing collusion between the state and local business interests is that of Lőrinc Mészáros, originally a gas fitter and small-scale businessman from Orbán’s native village Felcsút, whose wealth increased from approximately € 20 to 350 million euros in 2017. His vast network of companies (including 82 created in 2017) won public tenders worth almost € 1 billion in total, and gained significant (or even dominant) positions in the national and regional media industry, as well as bought up the biggest tourism company around lake Balaton (Koltai, 2018). The similarly rapid enrichment of Orbán’s son-in-law (István Tiborcz) and a host of other new oligarchs has made headlines in international media (Buckley & Byrne, 2017; Fletcher, 2017; Verseck, 2014). As Mihály Koltai explains, ‘We are seeing the birth of a new state-dependent bourgeoisie that cannot afford a change of government, as they owe their wealth to the current leadership through myriads of shady deals. There is a noticeable change from Lajos Simicska [an old personal friend and former economically of Orbán, recently turned deadly enemy] to new oligarchs such as Lörincz Mészáros.’
According to the government, the reductions were necessary because household energy prices in Hungary were significantly higher than the EU average and besides it was right to ‘give back the profit to the people’ (‘Hungary: Energy Prices Cut Again’, 2014). The move was highly popular and allegedly contributed to Fidesz’ election victory in 2014.
Many of the ideas and practices advocated by the Orbán regime show a strong continuity with the proto-fascist Horthy regime that ruled Hungary during the interwar years (i.e. rabid anti-communism and anti-liberalism, suspicion of the West, promotion of Magyar irredentism, the veneration of law and order and ‘natural’ social hierarchies, the restoration of a genteel, property-owning middle class, etc.). However, the social forces supporting the Orbán regime arguably differ from those of the Horthy regime (Krausz, Mitrovits, & Szarka, 2013; Wiener, 2014).
According to Tamás Sárközy (2014), nowhere in the world (except for the dictatorships in Africa and Latin America) is there a democratic country in which a small group of 10–20 people, who have known each since university or their time in the military, control to such an extent the key positions of power. The highest positions in the country (President, Prime Minister, and Speaker of the National Assembly) are held by three old friends: János Áder, Viktor Orbán, and László Kövér. The core of the Hungarian state is thus composed of a close-knit group of friends, who are united by their unreserved personal loyalty to Orbán.
In response to the criticisms, the Hungarian parliament has approved a number of modifications to the law, but according to Freedom House the amendments were ‘relatively minor’ and did not do enough to stop the decline in press freedom since 2010 (Hungary: Country Report, 2015).
At times, these attempts border on being farcical. For example, in 2012 the Orbán regime attempted to rebury József Nyirő, an anti-Semitic writer and member of the fascist Arrow Cross parliament in 1944–45, in his hometown of Odorheiu Secuiesc, Transylvania, Romania. Although the Romanian government banned the move, arguing that it refused ‘to pay tribute on its soil to people known for anti-Semitic, anti-Romanian, and pro-fascist conduct’, the Orbán regime ignored the decision and smuggled Nyirő’s ashes into Romania where a small, ecumenical service was eventually held for the writer. The ceremony was attended by the leadership of the Jobbik party, state secretary for culture Géza Szőcs, and speaker of the Hungarian Parliament and founding Fidesz member László Kövér (‘Orbán Snubbed by Romanian PM as Nyirő Affair Escalates’, 2012; Verseck, 2012).
Since returning to power in 2010, the Orbán regime has gradually sought to restore the Horthy regime. At a speech in June 2017, Orbán described Horthy as ‘an exceptional statesman’, along with István Bethlen and Kuno Klebelsberg. Thanks to them, he noted, ‘history did not bury us under the weight of the lost war, the 133 days of red terror, and the Diktat of Trianon. Without the governor there is no prime minister, and without the prime minister there is no minister. Even Hungary’s dismal role in World War II cannot call into question this fact. (‘In Orbán’s Opinion Miklós Horthy was an Exceptional Statesman’, 2017; see also Berend & Clark, 2014; Verseck, 2012.)
In 1920, the Horthy regime introduced the numerus clausus law, limiting the access of Jewish students to higher education. The law was the first anti-Jewish law introduced in twentieth-century Europe.
The ‘constitutionalisation of austerity’ is, of course, not a phenomenon limited to Hungary. As Bruff (2014, p. 124) notes, Spain passed a constitutional amendment in 2011 that strongly limited the scope of budget deficits and a similar law was passed by Italy and Austria in 2012. However, the real shift has come with initiatives such as the Euro Plus Pact (adopted in March 2011) and the Fiscal Compact (signed into law on 1 March 2012). These moves have effectively ‘locked in’ EU members into a path of ‘permanent austerity’ by introducing mechanisms that automatically impose sanctions on states that do not comply with highly restrictive fiscal benchmarks (see also Schneider and Sandbeck in the forthcoming special issue on ‘authoritarian neoliberalism’ in Competition & Change).
Out of the € 360,000 required up front, € 300,000 are refunded after five years. According to data from the Hungarian Debt Management Authority (Államadósság Kezelő Központ, ÁKK), 3515 residency bonds were sold between 2013 and 2016 (‘Hungarian Residency Bond Program’, n.d.).
A recent report by German business weekly Handelsblatt showed that German investors held a similarly positive view of the Orbán regime, with 95 percent of German businesses expressing their happiness with the economic situation in Hungary (Book, 2018).
In 2013, the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs carried out a detailed study on the erosion of liberal democratic rights in Hungary under the Orbán government. Authored by Portuguese radical left-wing MEP, Rui Tavares, the so-called ‘Tavares Report’ provided a systematic critique of the Orbán regime, calling on the European Commission to ‘focus not only on specific infringements of EU law … but to respond appropriately to a systematic change in the constitutional and legal system of a Member State where multiple and recurrent infringements unfortunately result in a state of legal uncertainty’ (Tavares, 2013). Following a heated debate in the European Parliament, the Orbán government escaped sanctions from the EU.
According to figures from KPMG, Hungary received 24.9 billion euros in EU funding (25.4 percent of GDP) in the EU’s 2007–13 budget cycle (KPMG, 2014, p. 10). However, there have been broad-ranged symptoms of corruption during the Orbán regime and in March 2016, the European Commission (EC) finally decided to suspend 121 million euros earmarked for development projects in Hungary, after having found severe irregularities related to the financing of projects during the 2007–13 budget cycle (MTI Econews, 2016).
The Orbán regime has expressed its disapproval of political sanctions against Russia over the Ukrainian conflict. Moreover, the government has also signed a strategic agreement with the Russian state company Rosatom for the construction of a new nuclear plant in Paks (Paks II Nuclear Plant). According to the agreement, the expansion will commence in 2018 and 80 percent of its costs will be financed with a € 10 billion credit line from Russia. On 6 March 2017, the EC gave its green light to the project (Posaner & Ariès, 2016).
In the run-up to the 2014 general elections, the government spent nearly 800 million forint (ca US$ 3.6 million) of Hungarian taxpayers’ money on advertisements in newspapers, radio and television channels, online platforms, and public spaces, in order to transmit this message to ordinary Hungarians (‘800 millióért tudtuk meg, hogy Magyarország jobban teljesít’, 2014).
A recent exception to this were the mayoral elections in Hódmezővásárhely (a traditional Fidesz stronghold), where Fidesz suffered a heavy defeat against a locally well-known ‘independent’ candidate supported by all opposition parties (including Jobbik).
Income earned and sent home by Hungarians abroad reached 3.4 percent of the country’s total output in 2014, according to the World Bank—one of the highest remittance levels in the EU.
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