Forum on „Facing the Humanitarian Crisis in Europe Breaking Austerity Policies and the Troika”

Orbán Viktor

The most important elements of the Hungarian unortodox economic policy and the authoritarian regime of PM Viktor Orbán

After 2010, the right wing Fidesz annihilated the system of liberal democracy and created an entirely new system. In his speech at Kötcse before the 2010 election, Orbán declared that he would not simply change the government but create a new model of governance, which would be completely different from „the messy period of the past two decades.” This new model was based on an ideology of „national war of independence” , which he called „The System of National Cooperation”, and, true to his promise, he established this system as a „central field”.

Despite the authoritarian turn in 2010 several representatives of the Hungarian liberalism still hold high the flag of the fight against „Communism”: Kádár and Horthy are mentioned together, as if the two systems  were genetically related with each other. This „methodology” has been changed in such a way that this genetic link is also extended for the Fidesz-system. The term „Communism” equal as „Wicked”  has been an „obvious” idea for the Fidesz since long time. The political essence behind this is to exclude from the public scene the posibilities of a system-critical, anti-capitalist left-wing mass movement. Even the thought of the possibility for a fairer, more egalitarian society should be forgotten.

In the wake of the criminalization of „Communism” there is no humanist resistance force that could have confronted with the consequances of the subjection to the global implications of the new forms of authoritarian rule. Instead, everywhere the local nationalist-racist, anti-democratic responses and political structures have solidified. The mainstream liberalism does not face this development. The foundations of the Fidesz system are not essentially explained from the Horthy regime, but derived from the Kádár regime. Accordingly, Viktor Orbán has also got all kinds of left attribution. For some authors it has long been a „left-wing trait”that Orbán protects the national capital from the international capital.

The international conditions play a particularly important role in the creation of the new authoritarian regime in Hungary. Although the EU and the USA regularly and paternastically criticize the Fidesz government’s anti-democratic political steps, the power concentration, the anti-Semitism and Gypsy hatred in Hungary, but they are not attacking the Orbán regime legitimacy, because the Hungarian government keeps the low level of budget deficit by severe austerity measures.

The new „Christian-National” power – which has got 80% together with the extreme right Jobbik in the Hungarian Parliament – found the „solution”. Those in power in Hungary and in other CEE countries has been aware that it is inevitable to introduce a new authoritarian system. In accordance with the historical „logic of necessity” the new concentration of power in Hungary has emptied the forms of parliamentary parties and the parties, too.

The authoritarianism of the state as established after 2010 has particular characteristics, and cannot be classified as being any form seen up to now. Although it may share a few characteristic similarities with other autocratic forms, its unique traits define a unique type. It is nothing else than a sub-type of autocratic regimes, and the conceptual framework into which it is cached describes not only the techniques of power concentration but the nature of the elite in power.

The specific features of the authoritarian Orban regime can be summarized as follows:

  1. The concentration of political power and the accumulation of personal/family wealth occur in unison.
  2. The alternation of the political elites’ systematic replacement takes place in parallel with that of the economic elite, driving such change not with the instruments of democracy and market economy. This elite replacement is centrally organised into a hierarchy dependent on the adopted political family. This cannot be called a traditional form of primitive accumulation of capital, because herein there is no flow of capital between the premodern and modern sectors or between the agrarian and industrial sectors, accompanied by a change of ownership. What happens is merely the implementation of the  change of owners of accumulated capital. Due to their socialization, however, the new body of owners do not become real entrepreneurs, but merely tax collectors in an entrepreneurial disguise, fortified by the head of the adopted political family with political monopolies.
  3. It is not incidental that public interest is subverted to private interest; it occurs systematically and relentlessly. Public policy objectives, such as the motives for policy decisions, remain in the background, unaccounted for. Decisions are tainted with power and wealth motivations. Every decision concerns power and wealth at the same time: “brainwash and money laundering”
  4. The organised underworld’s illegal physical coercion is replaced by legalized public authority/state sponsored coercion. The intention of this is to serve not only to maintain power, but also to further extend the wealth of the adopted political family.
  5. With the legalized instruments of state monopoly of coercion, the authoritarian state coercively extracts personal fortunes – sometimes indirectly through nationalization – to serve its own interests and redistributes this amongst the adopted political family members. In this respect, too, such corruption differs from “established” forms, in which merely the illegitimate diversion of revenues takes place.
  6. The personal wealth, resulting from the accumulation of political power of the adopted political family’s fortune, and public/state property inevitably overlap with each other.
  7. Key players in the authoritarian state:
    1. the poligarch is someone who uses legitimate political power to secure illegitimate economic wealth – their political power is visible, whilst the economic power remains hidden;
    2. the oligarch is someone who from legitimate economic wealth builds political power for themselves – their economic power is visible, whilst the political power, if any, remains hidden;
    3. the strawman is someone who has no real power – whether in politics, or in the economic sphere. In the gap between the legitimate and illegitimate spheres, they formally serve as go-between for the public. In fact, the majority of those in different posts of governance are strawmen, and so are those in the economic sphere, especially if they are dependent on the state.
  8. Decisions are taken outside the competence of formalized and legitimate organizations. It is not the model of the communist parties’ „politburo”, but the „polipburo” run by the adopted political family. (The phrase polip is the Hungarian equivalent of the phrase octopus.) However, the polipburo does not possess the legitimacy demanded by the nature of its operation. It is not Fidesz that has a transmission belt to enforce its decisions, but it is the party itself that has become the major transmission belt of the adopted political family.
  9. In place of the class structures, a patron-client chain of vassal relationships comes into being. The adopted political family is built around the patriarch, the head of the family. It is centralised and hierarchically made up of personal and family relationships structured in an authoritarian formation. Under the protection of institutional guarantees, a strong democratic society with a wide range of weak ties is replaced, alongside the abolition of institutional guarantees, by a weak society with limited but strong ties. There is no free entry into the adopted political family; one may enter only if  accepted, admitted and ready to give up one’s integrity. Nor is there a free exit – one may only be expelled.
  10. Formalized and legal procedures give way to material and arbitrary actions. The head of the government does not govern, but illegitimately disposes of   the country as if he owned it. State institutions, including the Parliament, the government, the tax offices and the Chief Prosecutor’s Office, do no more than rubberstamp and do the bookkeeping. The “law of rule” substitutes for the “the rule of law.” Proper jurisdiction is replaced by an arbitrary practice of justice.
  11. The topdown destruction of bureaucracy implies the takeover of the leading positions of administration by “party commissars,” who they are loyal not to the party, but to the head of the adopted political family directly or through personal links. These commissars play various roles in the legitimate spheres of bureaucracy: strawmen, governors, commissars, supervisors, cashiers – labels that give a more precise sociological definition of their actual functions than the official designations of management positions.
  12. This new form of vassal dependency should not be called feudal, because the sociological/material nature of power and its legal/formal legitimacy do not converge. The gap between them is bridged by state coercion and hypocrisy. The authoritarian state is compelled to bridge the gap between the sociological nature and legitimacy of autocratic rule with quasi-democratic procedures by restricting civil rights and electoral democracy. It is neither a liberal democracy, nor a dictatorship based purely on coercion.
  13. Orbán’s politics fit into this pattern from the rhetoric of a „polling booth revolution”, through the various legal proceedings and verbal onslaughts against former „traitorous” elites, and a propaganda campaign promising a new Hungary, to the attempted creation of a new middle class through a massive redistribution of power and resources.

Orbán’s most important message – one often aired in different contexts and most recently presented as advice to Western leaders – is that extraordinary times call for extraordinary measures, which primarily means a concentration of power in the hands of the government. Orbán often uses the Hungarian word ’erő’, power, force, strength or might. In this context, the Fundamental Law and its repeated use to thwart opposition, along with a firm grip over public media and the general centralisation of all branches of government are instruments to consolidate this power and make efficient government viable (at the expense of removing checks and balances).

In 2010 Viktor Orbán openly declared that Fidesz is not about seeking compromise. He also said in an informal  address to close allies (the so-called Kötcse speech) that he intended to build a political infrastructure for Fidesz – including media and economic structures – that would establish it as the ruling party for at least 15 years

The pragmatic – some might say cynical – nature of Fidesz’s notion of power and political rights is revealed by the fact that in the new Fundamental Law they abolished both the institution of referenda in matters that affect state finances in any way and curbed the authority of the Constitutional Court with regard to these issues (among several others).

They also introduced a far more punitive tuition scheme – although without using the word tuition – later backing down however when the students took to the streets in protest.

Behind the so-called unorthodox policies, there is a clear social-economic priority to establish a new middle class. Orbán has referred to this – as „original capital accumulation”. The flat income tax is only part of this broad political project. „Original capital accumulation” implies more than cutting taxes: the highly centralized nature of the government together with its ties with certain economic actors have created opportunities for some to acquire immense wealth often via lucrative government contracts. In Orbán’s view, the corrupt old guard of the socialist state, many of whom benefited from the privatisations during the first elected centre-right government, must be broken and replaced by a new economic elite. To some extent, the same applies to the cultural elite, although this is more of a side-effect, as allies of the government push for secure positions – a good example being the insertion of a publicly funded private body, the National Art Academy into the Fundamental Law. In symbolic terms, dividing Hungarians into ‘good deserving Hungarians’ and ‘enemies of Hungarian sovereignty’ – one implication of emphasising the continuity between the current Socialist party and the illegitimate Soviet-era in the National Avowal – justifies this reallocation of national resources.

Orbán has undoubtedly been successful in moving forward with this primary  agenda whilst at the same time making concessions, when necessary, to international bodies, the markets (such as using the so-called Turkish card with the IMF) and Hungarian voters who would not necessarily prioritise the project of creating a new middle class. ’The war on utility costs’ – a law reducing the price of household gas, electricity and garbage disposal – is very popular with voters and has become one of the main themes of the election campaign, completely outflanking the opposition. As Deputy PM Tibor Navracsics said recently, winning elections is always a priority and good government and good policies are not necessarily enough to remain in the good books with the electorate.

Orbán has been far more successful than many economic analysts predicted when he launched his „unorthodox” economic policies. Hungary is stable, there have been no hunger riots, and although most indicators (sovereign debt, growth rate, long term unemployment, the national currency) have not improved since 2009, the government has managed to reduce the deficit. It is still a matter of debate how much the nationalisation of second-tier pension funds helped the government keep the deficit down or what the long-term consequences of „special” levies on the banking, retail and utility sectors among others will be. His main achievement, however, is not so much responsible public finances, he is after all about to enter into a long-term committment on the Paks nuclear plant expansion with Russia involving a 10 billion euros loan that may require him to raise the limit on sovereign debt written into the Fundamental Law, or at least find a way around it. His main achievement rather is the consolidation and centralisation of power both in the hands of his government and in its economic powerbase while still being able to contain dissatisfaction.

Whether his new middle class can survive in the international markets remains to be seen but his emphasis on lowering interest rates and weakening the currency to help exports so far appears to have paid off.

While Orbán’s strategy is to amass power and control at the expense of consensus-seeking or even respecting the constraints of the law, his main objective is not to abolish democracy or the rule of law. His goal conforms to create a new elite that would support Fidesz and its allies behind the scenes. Yet, despite all the revolutionary rhetoric and fighting words, he seeks legitimacy in election victory. Pro-market and pro-democracy critics often fail to understand that he has no intention of transforming Hungary into a post-Soviet dictatorship with himself at the helm. Orbán prefers capitalism – especially in manufacturing and agriculture – to a state-run economy, and prefers democratic legitimacy to dictatorship backed by raw force. On the other hand, he is impatient with open debate and the democratic process, or too much independence on the part of economic actors. Hence he has created an environment that gives him maximum control and a way to efficiently and swiftly push forward with his own agenda.

This being the case, it boggles the mind that the main dilemma of the opposition still is whether to regard Viktor Orbán’s reign as a legitimate government or an illegitimate system. Although the manipulative and one-sided transformation of the election law urged the coalition of the democratic opposition to unite, but this unity is very fragile and exists only in a technical sense. They are still between the devil and the deep blue sea: should they be the opposition of only the government or rather of the whole system?


Budapest, 17th August 2014.

Matyas Benyik, Chairman

ATTAC Hungary Association

P.S. This text above was delivered on 20th August 2014 to the participants of Forum entitled „Facing the Humanitarian Crisis in Europe Breaking Austerity Policies and the Troika” during  the European Summer University in Paris .

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