Hungary's Prime Minister Viktor Orban delivers a speech after his ruling Fidesz-KDNP coalition won the general elections in Budapest, Hungary, on April 8, 2018. He thanked Hungarians for having "saved the country." Attila Volgyi/Press Association. All rights reserved.Viktor Orbán secured his third
definitive victory on April 8 in
Hungary’s parliamentary elections. Although Hungary was praised a decade ago
for being a prime case of successful democratisation and free market reform, now
it is another example of liberal institutions sliding towards autocracy.
The fierce anti-migrant hate
campaign was the most visible sign of the length to which Orbán was prepared to
go to ensure his majority. Since 2010 Orbán has been using the momentum created by popular anger at the
failures of liberal policies to build up his own
system: authoritarian capitalism. A system that is deeply
illiberal but capitalist: private property and the profit logic still dominate,
but the state bureaucracy and its institutions are subdued to the enrichment of
the preferred national economic elite.
Borrowing from Bourdieu, it abolishes
the left hand of the state and uses its right hand to repress dissent and
discipline citizens. Understanding the success of the authoritarian turn in
Hungary offers lessons for the future of democracy and liberal, tolerant, open
politics worldwide.
The rise of economic anger
We can start by traveling back
to the 1990s and 2000s to witness the social and economic impact of liberal
economic reforms. Chronically low employment and substantial deindustrialisation were the defining
characteristics of the Hungarian economy after the fall of socialism. A large
segment of society, the early victims of the transition – the elderly, the
young with little education and those living outside the biggest towns of the
country – could not take part in the new growth centres of the economy
dominated by technology-intensive transnational companies. Those outside the
local hubs of the global economy felt increasingly left behind.
Hungary has also
been characterised by painfully low wage levels that lagged behind Central and
Eastern European wages throughout the last thirty years. Low wages, lost jobs, and high indebtedness made the Hungarian working middle
class extremely fragile. As a
result, social tensions grew and the approval rates for post-socialist liberal capitalism dropped dramatically in the first twenty years. These
tensions and disillusionment swept the working middle class to the Right.
The revolt of the national capitalist class
Blaming citizens for their
alleged populist or anti-democratic turn, however, is misleading. Without the
consent and even active involvement of the economic elite, authoritarian
capitalism could not have emerged in Hungary. Throughout
the 1990s, post-socialist governments attracted high foreign investment into
the country, luring transnational companies with low
corporate tax and generous tax allowances. As a
result, the economy became
divided into
two parts: an effective, export-oriented and capital-intensive transnational
sector creating only a handful of jobs, and a stagnant national business
sector, with little connection between the two.
This highly
dualistic economy created a polarisation within the economic elite leading to
divergent political interests and preferences. Orbán’s authoritarian
capitalism was built on securing the support of the national capitalist class
by positioning the state against the coalition of transnational companies and
their centrist-liberal political allies.
These national capitalists
consider Orbán’s state as a new opportunity to redefine the terms of the game
set during the 1990s. The state directly enriches the national capitalist class
by intruding into the existing property rights of international capitalists, creating
new lucrative opportunities from the top and securing the supply of cheap and
flexible labour. However, Orbán also knows
that he cannot fundamentally challenge major international investors, so he
attempts to pacify them through strategic partnerships and a record-low 9 per
cent corporate tax. As a result, Orbán’s authoritarian capitalism enjoys the
support of the majority of the economic elite, both foreign and domestic.
Authoritarian capitalism as a new political economic
model
To satisfy the needs of the
economic elite, Orbán not only dismantled crucial democratic institutions, but
also silenced those who could get in the way, such as trade unions and NGOs, as
enriching this new elite necessarily creates losers. Although Orbán won in 2010
with the support of the working middle class, his neoconservative authoritarian
policies favour the upper middle class and the economic elite.
Between 2014 and 2018, real
incomes and the employment rate have risen somewhat, but the bottom forty per cent
has remained on the losing side of Orbán’s economic policies. To prevent a backlash from those who have
lost out, Orbán uses the authoritarian state as a disciplining tool. He controls
the economically vulnerable population from above, by using their fears of losing
access to public works and other public services and benefits.
Another way the authoritarian
state secures the consent of the economically vulnerable is redirecting distributional
conflicts along cultural lines. He attacks the unworthy, undeserving poor and immigrants
with hate campaigns to pose as the saviour of the nation. Targeting George Soros in the most recent parliamentary election was a strategic move to connect
the enemy images of the reckless global investor and the fearful migrant, portraying
both as threats to the vulnerable working class.
Orbán’s authoritarianism cannot be separated from the model of capitalism he
builds.
Tips to make democracy great again
The authoritarian counter-reaction to the failures of post-socialist
liberal reform shows that there is nothing
inherently democratic in capitalist arrangements. Fidesz is able to use voters’
economic anger and exploit the divisions in the capitalist elite to ensure the
stability of the regime. Yet, Hungary is not an outlier, but
a frontrunner of a global tendency that Mark Blyth describes as “global Trumpism”, which utilises the anger and psychological insecurity of the rural
working class to revolt against the liberal status quo. Orbán’s regime is at
the endpoint of this revolt, showing that authoritarian capitalism can be
installed even in a formerly democratic state.
The only way out is
a new progressive political identity that offers security against market
imbalances and psychological insecurities. This identity will not gain a foothold without
political organisations that are deeply embedded socially. Progressives
therefore need to refocus on community organising as opposed to the technocratic
management of society. Implementing new policies that will lead to a democratic
developmental state is certainly part of the solution. But reinventing progressive analysis and political
organising is the most important first step against the spread of authoritarian
capitalism throughout the world.
A much fuller
version of this article is published on TNI’s website.