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Democracy in Hungary

The Alliance of State Autocracy and Neoliberal Capitalism

By the time we political scientists started discussing the “in-between” nature of the Hungarian political regime, by the time we began niggling over whether it is still a democracy or whether it is already something else, a modern autocracy had been built up in the heart of the EU. It has been proposed by political scientists that the illiberalism of Hungary’s “illiberal democracy” was aimed against social liberalism – against free speech, individual rights, etc. But it is not. The unique aspect of Hungarian illiberalism lies in the alliance between autocracy and neoliberal capitalism it has produced. This is why it is a clear and present danger to democracy.

Looking at the last few years in Hungary – overflowing as it is with hate against refugees, migrants, liberals, George Soros, leftists, homeless people, NGOs, public intellectuals, and the political opposition – we can easily recognize that the political system is as far from a democracy as it was during the communist era or the interwar period. Although the nationalist autocratic regimes of our time do not signal a rebirth of the dictatorships of the past, we are seeing, as Adam Michnik has argued, a new form of autocracy: “We are dealing with a new phenomenon,” Michnik has written, “and we do not yet have a name for it. It contains elements of communism, fascism, and populism, but it is something new.” It is indeed something new, and it is our task to understand, analyze and oppose these modern, multi-faced autocracies. In this sense Hungary is an excellent test subject.

My own effort to show how Hungary’s current government contributes to our understanding of the new autocracies partly follows that of Jan-Werner Muller. Muller argues that accepting the concept of “illiberal democracy” is misleading because it undermines efforts to rein in would-be autocrats who endanger democracy. While I agree in part, at the same time I do not think that fetishizing liberal democracy can be a solution to Hungary’s current crisis. And this because the Orbán regime must be understood as a consequence of the untreated anger caused by over-institutionalized and under-socialized liberal democracy. For example, the Orbán regime was able to destroy Hungary’s Constitutional Court without any social resistance because many aspects of liberal democracies, including the Court, were established before the Hungarian people were socialized into democratic practices.

It is precisely within this gap between over-institutionalization and under-socialization that, I argue, a compromise is being made between these new autocracies and neoliberal capitalism. Globalized neoliberal capital recognizes that (liberal) democracy does not have a strong social foundation in these nations, and so it uses the resources of the authoritarian state to institutionalize an authoritarian form of neoliberalism. Taking this into account, I propose that we should reconsider the idea that the Orbán regime, or other nationalist autocratic regimes, are opposed to economic liberalism and to capitalism.

The Crisis of Liberal Democracy and the Politics of Anger in Hungary

The decline of democracy in Hungary was a long process, but it is one that must be tracked in order to understand how the gap between over-institutionalization and under-socialization of democracy helped to produce the current governmental form.

We begin by noting that what some have called the “premature welfare state” that was established in the late 1980s put a huge burden on Hungarian society. Although this system instituted the constitutional and intellectual pillars of liberal democracy, it lacked social acceptance.

Even more than these pillars, in the late-1980s and 1990s Hungary took the lead among post-communist countries in implementing the legal and economic requirements needed to sustain liberal democracy. For example, during the post-communist period not only the Constitutional Court but the office ombudsman and the institutional system for the protection of human rights were established. These changes were made in order to construct the legal instruments of a liberal democracy and to aid in the building of an economy capable of being fully integrated into the neoliberal world order. As Adam Fabry has noted, these changes were being implemented both before and during the years of transition: “As one of the frontrunners of the transition to the market in the region, Hungary embraced neoliberal policies of liberalization, privatization and macroeconomic stabilization in the late 1980s and early 1990s.”

While the procedural legitimacy of this new constitutional system was relatively strong, the Hungarian political elite were insufficiently critical of the global and local inequality that was being produced by Hungary’s entrance into the world market. This constitutional system proved unable, on its own, to compensate the economic losers of post-communism either in Hungary or elsewhere in Eastern Europe. The politics of austerity this inequality provoked has, over time, caused people in these countries to become overloaded with anger and resentment towards the democratic constitutional system constructed in the early 1990s.

This is not a new argument. In 1998, for example, Béla Greskovits argued that the neoliberalization of the economy would bring about “the end of patience” in Eastern Europe. In a more recent work, David Ost went further, stating that this situation created a “wrathful people” and strengthened the latent base of the subsequent populist turn – a turn that has played out on the Hungarian political stage since the 2000s.

In this sense, the Orbán regime was born out not out of the “revolution” in 2010 when the Fidesz gained super-majority in the Hungarian parliament, but out of the long agony of the experienced failure of an institutionalized, constitutionally-liberal democracy.

State and Neoliberal Autocracy in Hungary: The Cooperation of Neoliberalism and Nationalism

Even given this history, however, the Orbán regime is not just a product of a declining liberal democracy. Indeed, it shows a new tendency towards state autocracy. But this is an autocracy that is financed by the EU’s neoliberal policies, especially by German automobile companies. According to Peter Bloom, for example:

Germany has been charged with continuing a tradition of market driven political authoritarianism, updated for the 21st century, a classic and still tragic tale of a stronger country using its power to exploit a weaker nation at the behest of international finance.

In addition, Wolfgang Streeck has argued very sharply that:

The international relations embedded in the [European Economic and Monetary Union (EMU)] consolidation state are highly asymmetrical. Economically weak countries, while in the majority, face a small number of economically strong countries in a position effectively to dictate to them, by threatening to withhold financial support. Germany, on account of its regained economic power after 2008 and as the main beneficiary of EMU due to its export strength and to currently low European interest rates, de facto governs the EMU as a German economic empire.

Hungary has become a “good province” of this neoliberal empire, particularly because there are several geographic, historical, and economic ties between Hungary and the German sphere of interest. At first, it seems embarrassing that, on the one hand, the Orbán regime is criticized by Chancellor Merkel and EU bureaucrats while on the other it has been financed by the EU and German industrial interests. But this reveals the deep tensions that lie inside the current efforts to bind together liberal democracy and neoliberal capitalism.

The Hungarian example is an anti-Greek story. While the Greek government tried unsuccessfully to get rid of neoliberal austerity, the Orbán regime built up their autocracy within a neoliberal framework. The cooperation of authoritarian neoliberalism and populism is not a new phenomenon, but the Hungarian example is unprecedented because it is the first authoritarian state integrated into the EU. How did this happen?

To understand how these tensions are held in balance requires placing special emphasis on the logic of how the Hungarian “nationalist” government created an economic and legal foundation that meets neoliberal requirements. The bedrock of this foundation can be found in the fact that, since 2003, it is legal for the Hungarian government to give non-refundable grants to companies that commit to creating a certain number of jobs. While these grants do not constitute direct financial support, it has allowed strategic allies of the government to receive enormous, non-refundable, grants. In comparison to the EU average, the Hungarian government has consistently supported huge industrial projects since 2004. The vast majority of these subsidies went to German multinationals – especially to the German automobile sector. [1]

It seems that the Hungarian government tends to support these neoliberal actors, but there are significant changes in this pattern. Before 2010 the social-liberal governments spent HUF 133 billion on non-refundable state aids (of this German companies were awarded HUF 40 billion). Between 2010 and 2018 the nationalist Orbán government expended HUF 288 billion for the same purpose (the German interest is more than HUF 100 billion). This means that Hungary, in last 14 years, has awarded more than HUF 140 billion to German enterprises.

Favoring the neoliberal agenda requires even more shocking elements. It is unremarkable that the Orbán regime seems to be more generous in financing authoritarian neoliberalism than its predecessor governments, but the way Orbán started to exploit workers is totally unprecedented. After 2010, the regime incorporated the worst of Thatcherism into Hungarian labour laws. This process began not with the so-called “slave law” of December 2018 (a law that caused several protests at the end of 2018 and early 2019), but with new work law of 2011. This law significantly weakened both trade unions and worker protection while at the same time restricting the capacity to strike. In the public sector this has made legal strikes nearly impossible. The more recent slave law, which forces overtime on workers, has only exacerbated this previously existing problem by allowing companies to demand that their staff work up to 400 hours of overtime each year. When these laws restricting worker’s rights are read in combination with the capacity of the government to dole out billions of dollars in grants to already-massive corporations we can see how neoliberal autocracy is being reinforced by a multi-faceted autocratic state in the Hungarian context.

The Social Acceptance and Internationalization of Multi-Faceted Autocracy

Democracy in Hungary is being undermined not just by the authoritarian state, but by authoritarian neoliberal capitalism. In my view, the most important challenge of our time is that of preserving democracy under the pressure of this multi-faceted (state and market) autocracy.

It is very dangerous that the social legitimization of non-democratic structures is an ongoing phenomenon in Hungary. Indeed, there is an increasing social acceptance of autocracy combined with a marked lack of support for democracy in Hungarian society today. In this sense, it is crucial that the conspiracy theories being raised about George Soros have become influential, and that public debate is being overwhelmed by anti-Semitic hate campaigns.

What is, perhaps, most frightening is that Hungarian youth seem to prefer non-democratic or authoritarian systems of government to democracy. According to research done in 2008 and 2012, only 40% of those between the ages of 15-29 think that democracy is better than any other political system. Nearly a third of those polled were unable to decide whether democracy or dictatorship is better for them. A further 14% expressed the view that, in some circumstances, a dictatorship is in fact better than democracy.

It is true that some kind of disillusionment about democracy has always existed in Hungary. But the fact that the youngest Hungarians, those born and socialized within the framework of an autocratic system and its effects, exhibit such high levels of distrust of democracy is unthinkably dangerous. This is why so necessary to study the cultural dimensions of authoritarian regimes.

After all, the new authoritarian network is on the rise, with the representatives of right-wing populist nationalism (Orbán, Putin, Netanyahu, Trump, Bolsonaro, Erdoğan, Salvini) seeking to create both European and international authoritarian networks. As organic intellectuals, we should put an emphasis on doing the deep investigations that need to be done to understand and critique the political and economic theories that lie behind such regimes – particularly those theories elaborated by figures such as Carl Schmitt, Stephen Bannon, Aleksandr Dugin, and Olavo de Carvalho.

The cooperation of market and state autocracy is very dangerous because authoritarian populist parties establish their system on the “rule by law,” dramatically undermining democratic institutions also based on the “rule of law.” If we want to do something about it, it is time to recognize that it is not enough to act only against state autocracy. We must also work towards breaking down market autocracy.

Attila Antal is Senior lecturer at Eötvös Loránd University Faculty of Law Institute of Political Science; coordinator at Institute of Political History Social Theory Research Group.


[1] According to the public information delivered by the Hungarian government since 2012 there have been 77 such strategic agreements, 15 of which went to German companies’ Hungarian subsidiaries.

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