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Orbanomics: A polarising answer to the crisis of liberal dependent capitalism

Abstract and Figures

Most analysts describe Orbanomics as anti-liberal anti-business policies only serving the interests of the political elite and loyal oligarchs. However, this is a misunderstanding. A wide segment of domestic and transnational elites benefit. Orban’s regime has a socio-economic logic that can only be understood in the context of economic globalisation. Orbanomics is a faulty and polarising answer to the crisis of Hungary’s post-1990 liberal dependent economic model. The long-term viability of Orbanomics and his regime requires authoritarian fixes. This analysis explains the political-economic logic of Orbanomics.
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A polarising answer to the crisis
of liberal dependent capitalism
Gabor Scheiring
June 2020
Orban’s regime has a socio-
economic logic that can only
be understood in the context
of economic globalisation.
Orbanomics is an answer
to the crisis of the post-1990
liberal dependent economic
model. It aims to boost the
creation of wealth and capital
accumulation targeting the up-
per middle class, national capi-
tal and transnational corpora-
tions in the export sectors.
However, Orbanomics failed
to improve the productivity of
domestic businesses and un-
dermined long-term develop-
ment potentials. It is a polaris-
ing socio-economic strategy,
requiring authoritarian fixes
to stabilise power.
Introduction 3
The rise and fall of liberal 3
dependent capitalism
Workers left behind and drifting right 5
Orbanomics and the business class 6
Social polarisation and precarity 8
The long-term potentials of Orbanomics 10
Conclusions 12
Endnotes 13
Bibliography 13
Table of Contents
Hungary, a country long heralded as a champion of politi-
cal and economic liberalisation, is today an avant-garde
case of illiberal, authoritarian populism in Europe. Author-
itative international institutions, such as the Varieties of
Democracy Institute or Freedom House, as well as political
scientists no longer consider Hungary a democracy but
acompetitive authoritarian hybrid regime.1
Some analysts explain the illiberal turn as a reflection of
a nationalist political culture or the whims of a corrupt
populist. They argue that Orban, the gifted and reckless
populist, stokes up fears, exploits new cultural divisions
between cosmopolitans and conservative nationalists to
gain power.2 His personalistic, centralised leadership ques-
tions liberal good governance and serves to enrich his
family and friends while using the state and loyal media to
hack democracy.3 Although this account has merits and
captures important aspects of reality, it misreads the social
and economic fundamentals of the regime and puts too
much emphasis on the dysfunctional character of
This paper argues that Orban’s illiberalism has a socio-eco-
nomic logic: there is a method to the madness.4 This logic
can only be understood in the context of the preceding 20
years. Orbanomics is an answer to the crisis of the post-
1990 liberal dependent economic model. Its economic
policies aim to boost the creation of wealth and capital
accumulation targeting the upper middle class, national
capital and transnational corporations. However, Orba-
nomics is a profoundly polarising socio-economic strategy,
requiring authoritarian fixes to stabilise power.5
To understand the rise of illiberalism, we have to go back
in time to the collapse of socialism. Hungary’s transition
from socialism to capitalism was successful in certain
respects: the foundations of export-led growth were laid
down, the looming debt crisis was averted, the demo-
cratic institutional system was established. Transnational
companies played a critical role in this success. However,
the problems of Hungary’s liberal dependent capitalism
proved to be graver than many expected.6
In the 1990–2010 period, Hungary spearheaded the com-
petition for foreign capital in the Visegrad region. The
share of foreign companies in the total turnover in the
computer industry, electronics and automotive sector grew
to over 80% by the end of the 2000s. The arrival of foreign
investors did not offset the mass collapse of integrated
socialist companies and the concomitant technological
downgrading in the 1990s. During the 2000s, this trend
changed, as transnational corporations started to relocate
technologically more intensive production to the country.7
However, these technological advances remained confined
mainly to the transnational sector of the economy without
a significant spillover effect on the domestic economy. For
instance, at the end of the 2000s, the share of Hungarian
suppliers in the added value of companies such as IBM,
Sony or Opel was below 5%. At the same time, the share
of Hungarian-owned companies in export remained below
15%. Hungarian companies are unable to specialise in pro-
duction that would allow them to break into international
markets with the potential of significant added value. Hun-
gary’s liberal dependent capitalist system means the coun-
try imports innovation through transnational corporations
and is not able to generate innovation domestically.
Dependency itself does not cause economic problems –
but the misgovernance of dependent development does.
Hungarian policymakers abandoned industrial policy alto-
gether, without any attempt to learn from success stories
of East Asian developmental states. The first government
introduced an extremely stringent bankruptcy law in 1992,
while international competition skyrocketed with the rapid
external opening of the economy. This effectively wiped
out tens of thousands of Hungarian companies, eliminat-
ing producers that could have become the backbone of the
domestic economy. Consecutive governments followed
suit, favouring transnational companies in privatisation and
tax policy. Domestic companies also faced shortness of
capital, as the most prominent foreign-owned banks pre-
ferred lending to big transnational corporations or
Figure 1
Foreign investment penetration, 1990–2018
Czech Republic
Sour ce: UNCTA D
Figure 2
The share of domestic- and foreign-owned companies in exports, 2012
Republic Slovenia Germany Poland Slovak
Republic Hungary
Companies in domestic ownership 59.0% 46.6% 40.4% 40.4% 18.3% 12.7%
Companies in foreign ownership 18.1% 30.0% 15.7% 45.7% 72.6% 66.6%
Source: OECD Ti VA database
The misgovernance of dependent development resulted in
a severe economic dualism: productive technology-inten-
sive transnational corporations generate the bulk of export
revenue, while labour-intensive domestic companies lack
access to high-value-added markets. This dualism is one of
Hungary’s liberal dependent economic model was also
unsuccessful in creating jobs. The country had one of
the lowest employment rates in Europe until recently,
with only 55% of the population employed in 2009, one
year before Orban took power. Deindustrialisation and
the massive collapse of employment during the 1990s
eroded working-class culture and decreased the bar-
gaining power of labour, which in turn retarded wage
growth. The average Hungarian net income was the
lowest in the Visegrad region until 2018, and it is among
the lowest in the OECD.9 In parallel to deindustrialisation
and the subsequent fifteen years of jobless growth, ine-
qualities also increased. The 1990s saw a jump in income
inequality that was twice as fast as the increase in ine-
quality in the United States or in the United Kingdom in
the 1980s. The chances of mitigating inequalities in
the long term – i.e. social mobility – also decreased
As a result of the liberal bank policy of the 2000s, an
increasing number of households turned to debt-driven
consumption to buy real estate and cars. In 2010, 24% of
the total population was in arrears with debt payments. In
the Visegrad region, Hungary had the highest level of
household indebtedness in the 2002–2010 period, while
two-thirds of Hungarians did not have sufficient cash
reserves to pay for unexpected expenses. At the same time,
the quality of life of workers was greatly affected by the
shrinking access to non-material services. Access to public
services dwindled, subsidised company and trade union hol-
idays were no longer available, social housing was destroyed,
workers’ hostels were abolished, and local cultural and
the most critical bottlenecks of the Hungarian economy,
undermining long-term development potentials. It also led
to a rising illiberal nationalism among Hungarian national
Figure 3
Employment to population ratio, 1989 –2017
Czech Rep.
Source: Author ’s calculations based on th e Penn World Table 9.1
sports facilities were closed down. People living in towns
experiencing rapid privatisation and deindustrialisation also
experienced worse health and higher mortality.10
It is thus no wonder that the overwhelming majority of
Hungarians experienced Hungary’s reintegration into the
global economy between 1989 and 2009 as social may-
hem.11 In 1993, support for capitalism was still higher in
Hungary than in Western Europe. However, by 2009 the
country showed the most significant decline in the level
of support for the market economy. In 2007, 70% of even
the highest-earning one-third felt that their situation was
worse than in 1989. This proportion was almost the same
in every age group, which means that this disillusionment
was not mere ‘nostalgia’; young people saw their situa-
tion just as hopeless as the elderly. Disappointment with
the market transition, however, did not mean that people
became disillusioned with democracy as well. In the sec-
ond half of the 2000s, the proportion of Hungarians
rejecting democracy was below the global average,
smaller than in Portugal, Poland or in the United States.
Most analysts describe Orbanomics as anti-liberal
anti-business policies serving the interests of the political
elite and loyal oligarchs. However, this is a misunder-
standing. By the 2000s, domestic capitalists were increas-
ingly alienated by the left-liberal governments and allied
themselves in increasing number with Fidesz well before
the 2010 election. They did so because they hoped that a
Fidesz government would better facilitate the capital
accumulation of national capitalists. Fidesz engineered a
new class compromise between the political class, the
national bourgeoisie and TNCs. Orban allied with trans-
national capitalists in the productive sector too, but his
really significant achievement is emancipating domestic
Orbanomics offers a political solution to the internal con-
tradictions of Hungary’s liberal dependent capitalism by
accelerating capital accumulation and promoting the
embourgeoisement of the upper-middle class.15 Public
procurement corruption is widely recognised as a critical
tool to serve crony capitalism. The state also nationalised
several companies and banks, restructured existing con-
cessions and management rights, most notably in the
tobacco, savings cooperatives, and agricultural sectors.
However, Orbanomics not only targets loyal oligarchs –
there are a host of economic policies targeting a much
broader segment of the business class. The government
has also signed Strategic Partnership Agreements with the
largest transnational corporations, which helped to pacify
tech-intensive manufacturing corporations. In other, non-
technological sectors that play little role in generating
export revenue, such as banking, services, or energy, the
government actively tries to push out transnational capital
and make space for the national bourgeoisie. The govern-
ment also distributes direct financial subsidies both to
national and international capitalists; these subsidies vastly
exceed the pre-2010 level and are more targeted towards
national capitalists than before. The government opened
new revolving doors for national capitalists, inviting less
politicised capitalists to occupy government posts, such as
in the case of logistics and bus manufacturing. The expan-
sionary monetary policy introduced by Gyorgy Matolcsy as
the new governor of the Hungarian central bank is also
viewed favourably by businesses.
The government introduced a flat 9% corporate tax in
2016, effectively transforming the country into a tax
haven. One of the Orban’s most important measures to
boost the embourgeoisement of the upper middle class
was the introduction of a flat 16% personal income tax in
2011, further reduced to 15% in 2015. The new flat tax is
estimated to cost ca. 500 billion forints ($1.75 billion)
annually compared to the previous tax regime, which is
equivalent to a 40% decline in personal income tax reve-
nue. The winners of the new personal income tax system
The disillusionment with Hungary’s new capitalism
peaked when the left-wing coalition of the Hungarian
Socialist Party (MSZP) and the Alliance of Free Democrats
(SZDSZ) governed. Until recently, the majority of the
leaders of the Hungarian Socialist Party accepted the
Third Way approach to social democracy, which allowed
liberal-technocratic economists to dominate its
socio-economic strategy.12 The left-liberal coalitions pre-
sided over the most pronounced waves of neoliberalism,
which included the privatisation of pensions, as well as
energy and water utilities between 1994-1998. It also
made – an ultimately failed – effort to liberalise health
insurance between 2006-2010. The party organisation
was also transformed from a movement-based mass
organisation into technocratic media-focused apparatus.
During the second half of the 2000s, as Hungary’s liberal
dependent market economy finally exhausted, the sup-
port of the Hungarian Socialist Party among work-
ing-class voters collapsed, and Fidesz – and to a lesser
degree, Jobbik – came to be seen as the party of the
working class.13
from 5.4% in 2009 to 5.1% in 2018. Spending on social
protection was slashed from 18.1% of the GDP in 2009 to
13.3% in 2018. These cuts funded the massive redistribu-
tion to the top in the form of tax cuts, subsidised loans,
increased public investment and new pro-natalist policies
targeting high-income families. This socialism for the rich
and capitalism for the poor allowed the government to
keep the budget deficit below 3% after 2012, bringing
are the top 20% of income earners, whereas the majority
of the bottom 80% is worse off.
Austerity is a further crucial tool to redistribute wealth
towards the business class. Public health care spending
declined from 5.2% of GDP in 2009, a level already low in
international comparison, to 4.7% in 2018, the lowest in
the Visegrad region. Education spending was reduced
Figure 4
The rightward shift of the billionaire class, 2002–2018
”Right-leaning” billionaires ”Left-leaning” billionaires
Source: Author s’ calculations based o n the “100 richest Hunga rians” report ser ies, for more detai ls see Scheiring (2020c)
Figure 5
The value of government subsidies for companies by ownership, 2002–2018
Value of company subsidies
by onwership category in US dollars ($)
Domestic enterprises
Transnational corporations
Total value
Source: Author ’s calculations based on P rojects Funde d from the Discretionar y Fund of the Government
state debt down from 80.6% of the GDP to 70.2%
between 2009 –2019.
All in all, Orban’s illiberal state has a lot to offer to the
business class. It is thus no surprise that so far neither
national nor international capitalists have risen up to chal-
lenge the illiberal attacks on liberal institutions. Elites are
a significant pillar of Hungary’s illiberalism. A nationally
Orban would not have been able to conquer the parlia-
ment with a two-thirds majority without the support of
the working class. The social dislocations that character-
ised the 1990–2010 period created favourable conditions
for the mobilisation of workers against ‘uncaring’ neolib-
eral cosmopolitans. Fidesz promised to reintegrate the
national community by returning the state to its rightful
owners: hard-working people.17
After 2010, indebted workers and middle-class families,
and people left behind in deprived areas indeed received
some help. The 2009–2019 period witnessed a 15-per-
centage point increase in the employment rate. The public
works programme played a significant role in this expan-
sion in the first few years, employing more than 200
representative survey16 found that the number of Hungar-
ians supporting authoritarianism has slightly increased –
but the number increased by far the most among upper-
class respondents, among whom the share of those
supporting authoritarianism grew from 6% to 23% from
2015 to 2018. According to the editor of Budapester Zei-
tung, 90% of German investors in Hungary would vote
for Orban.
thousand Hungarians in 2016. As market jobs started to
significantly increase, the public works programme was
scaled back. Nevertheless, for people left behind in dein-
dustrialised areas and deagrarianised villages, the public
works was a significant step ahead compared to the pre-
2010 neoliberal era.
Aggressive reforms to the system of social protection also
contributed to the growth in employment, though a large
part of this is precarious jobs. The retirement age gradu-
ally increased while the government eliminated early
retirement and significantly cut back on invalidity pension.
The number of young people aged 15–24 studying full
time also declined significantly as the government reduced
the school-leaving age and reduced tertiary school
Figure 6
Income inequality, 2009–2018
Source: Eurostat
reserves were unable to make use of the government’s
The price of these achievements was an extreme rise in
inequality and precarity. The Gini coefficient of income
inequality jumped from 24.1 in 2010 to 28.7 in 2018. Hun-
gary is now the most unequal country by this measure in
the Visegrad region. The restructuring of social benefits
actively contributed to the increase in income inequality.
Between 2009-2017, the social component of individual
incomes – e.g. benefits, pensions, allowances – declined
dramatically for the bottom income deciles, and increased
considerably for the top income deciles. The country also
saw a highly unequal creation of new wealth. While the
value of cash and bank deposits – the only assets that the
lower 90% of the population owns – increased by 14%
between 2010 and 2015, the value of securities – owned
by the top few per cent of income earners – increased by
Orban’s labour policy also increased precarity. The govern-
ment reduced the duration of the unemployment benefit
to 3 months, which is the lowest in Europe. In 2012, the
government introduced a new liberal labour code, and dis-
banded the standing tripartite body and restricted the
opportunity to strike. In 2018, the government increased
overtime and allowed companies to postpone payment
for overtime to three years. This amendment, labelled as
the slave law by the opposition, led to significant protests
throughout the country but the government did not
waver.20 In 2020, in the wake of the coronavirus crisis, the
government simply suspended the labour code, exploiting
the corona-crisis to push further ahead with its polarising
socio-economic strategy.21
enrolment also. In line with the ideology of the ‘workfare
state’,18 which penalises ‘idleness’ to an unprecedented
degree, these reforms pushed several hundred thousands
of vulnerable people onto the labour market.
The world economy has also been on a growth trajectory
in the second half of the 2010s, and Europe’s Eastern
semi-periphery has benefited from this upswing. Hunga-
ry’s economy grew by 2.5% annually on average between
2010 and 2018, which is not as high as Poland’s (3.6%) or
Slovakia’s growth rate (3.1%) but higher than that of most
Western countries. Working classes everywhere in the
region finally began to profit from the post-1989 global
integration – Orban has little do with this, except for
cementing Hungary’s role as local assembly platform in
technological value chains.19
Increasing labour shortage improved workers’ bargaining
position, which led to a significant wage growth after
2016. However, between 2010 and 2016, the real wage
declined or stagnated, it only started to grow after 2016,
so the real wage in 2018 was only 13.1%, higher than in
2010. This increase is still significant, but it is not out-
standing compared to other countries in the region, all
other Visegrad countries experienced a higher gross real
wage growth in the same period.
Orbanomics was also able to mitigate the financial vulner-
ability of upper- and middle-class households. The gov-
ernment effectively wiped out foreign currency debts and
helped high-income citizens to repay their outstanding
debts. Like the government’s other measures, debt for-
giveness and restructuring focused on high-income citi-
zens. Families with lower income and without adequate
Figure 7
Redistribution to the top (2010–2018)
–22,5% 24,8%
–2,8% 6,2%
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Source: Author ’s calculations based on da ta from the Hungaria n Central Statis tical Office
productivity of foreign- and domestic-owned companies
has also increased slightly since 2010. In parallel, the export
structure of transnational corporations has also changed
adversely, leading to a decline in the knowledge-intensity
of the Hungarian economy after 2010.
In order for Hungarian-owned companies to increase their
productivity and export capacity, they would need to
exploit the potential inherent in higher value added seg-
ments of the value chains. Such technological develop-
ment is knowledge- and resource-intensive and requires
long-term planning and commitment to upgrading.
Although the government has improved access to capital
since 2010, aspects of the knowledge component and
long-term planning have been pushed into the back-
ground. The declining quality of education, falling tertiary
education financing and enrolment, aggressive interven-
tion into the operation of research institutes and universi-
ties have undermined the possibility to build a knowl-
edge-intensive economy.
Hungary’s growth model is less and less connected to the
inflow of transnational capital. Foreign investment has
been stagnating throughout the region, but Hungary
shows a marked decline. Public investment and domestic
private investment took over much of the role of foreign
investment. At the same time, the dependence of the
Hungarian economy did not decrease. EU funds make up
50% of public investments. The foreign capital stock
remains outstanding in international comparison. The
export performance of the Hungarian economy also
remains dependent on transnational corporations.
Balancing economic dualism by gradually decreasing the
role of transnational corporations and increasing domestic
value added would indeed be necessary to make economic
development future-proof. However, the capacity of Hun-
garian-owned companies to take advantage of global
value chains remains exceptionally low. Domestic produc-
ers’ capacity to innovate declined further after 2010 from
an already deficient level. The difference between the
Figure 8
The knowledge-intensity of the economy, 2000–2017
Czech Rep.
Source: The Ob servatory of Economi c Complexity
fewer votes than in 2006, when they lost the election. The
2019 local government elections again showed that
Orban’s illiberal hegemony is vulnerable, as the opposition
was able to take hold of critical large cities throughout the
country, including the capital.22
The stability of the regime increasingly depends on the
institutional authoritarianism and authoritarian populism
it employs. To pre-empt a possible political backlash ema-
nating from the losers of the government’s socio-eco-
nomic strategy and to hinder the politicisation of diffuse
social unrest, Fidesz curtailed the institutions of liberal
democracy. Institutional authoritarianism is aimed at
pre-empting organised dissent by political parties, trade
unions, and NGOs, while authoritarian populism reframes
distributive grievances into cultural hierarchies to hinder
the emergence of a broad social coalition among the
material losers of illiberalism.
The primary economic objective of the government is to
facilitate the embourgeoisement of the upper-middle class
and accelerate the capital accumulation of the national
bourgeoisie and the transnational capitalists in the
export-oriented tech sectors – without pushing the econ-
omy towards long-term upgrading. While the dominance
of transnational corporations remains in tech-intensive
export sectors, their overall role in the economy declines,
and the vacuum is filled by the state and national capital.
Supporting the labour-intensive low-tech production of
the largest national capitalists can generate new wealth in
the short term in agriculture, construction, or banking;
however, it diminishes the possibility of advancing upwards
in the international division of labour.
Orbanomics is also socially costly, hurting large segments
of society. Orban lost a large share of his working-class
supporters between 2010-2014. In 2014, Fidesz received
economic cooperation that globalises social and environ-
mental rights instead of giving more power to footloose
capital. However, the need for progressive international
cooperation must not overshadow the fact that in the
foreseeable future, the nation state is the most potent
democratic institution available for progressive purposes.
Therefore, progressives have to learn to trust and use the
state again, in the framework of a democratic left-wing
economic patriotism.
Politically, the way out is a new progressive political iden-
tity that offers security against market imbalances and
psychological insecurities. Progressives have to regain the
trust of workers left behind in deindustrialised areas. This
is not possible without political organisations that are
deeply embedded socially. Progressives, therefore, need
to refocus on community organising. Reinventing progres-
sive policies, identity and political organising are crucial
weapons against authoritarianism, not just in Hungary,
but in an increasing number of countries experiencing
challenges to democracy.
The long-term viability of Orbanomics and his illiberal
regime, in part depends on its continued ability to main-
tain support across broad sections of the business class. A
tightening of the EU budget and a worsening of the global
economic climate could potentially destabilise this alliance.
Another challenge could possibly come from an opposi-
tional movement that organises the working-class casual-
ties of Orbanomics. However, the authoritarian measures
employed by the state to suppress dissent has so far suc-
cessfully hindered the emergence of a capable opposition.
Thus, so far, illiberal Orbanomics appears to be a polaris-
ing, contradictory, but solid strategy to manage depend-
ent capitalism.
The collapse of liberal democracy and the rise of illiberal-
ism in Hungary offers clear policy lessons. Curtailing down-
ward tax competition, combating tax havens, introducing
new taxes on financial transactions and on big wealth
would allow states to implement social and industrial poli-
cies that are needed to stabilise democracy. Such policies
need a new progressive European and international
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1 See for example Freedom House (2020) or (Bozóki and Hegedűs 2018).
2 Such as the accounts focusing on populist polarisation (Enyedi 2016).
3 Most paradigmatically exemplified by the idea of the ‘Mafia state’
(Ma gya r 2016).
4 ‘Method to the madness’ is an expression derived from Shakespeare’s
Hamlet. According to the Cambridge Dictionary, it describes a situa-
tion, where one has a good reason for what one is doing, although it
might seem strange. The expression does not imply actual ‘madness’
but ‘strangeness’ and the logic behind.
5 This policy paper is based on the author’s book, The retreat of liberal
democracy (Scheiring 2020c). For brevity, the paper only lists some
selected references and provides a simplified citation for the sources
of the data. Detailed data sources, a description of the methodology
and further bibliographic references are presented in the book.
6 For a prescient discussion see Szalai (2005).
7 Bohle and Greskovits (2012)
8 For more details see Scheiring (2018).
9 For more details on the lack of income convergence see Pogátsa (2015).
10 See Scheiring et al. (2018).
11 See Hann (2019).
12 Fabry (2019) presents a comprehensive overview about the historical
roots of technocratic liberalism in Hungary.
13 See Antal (2019); Kalb and Halmai (2011); Scheiring (2020b).
14 For more details see Scheiring (2019a).
15 Gagyi (2016) presents an overview of the embeddedness
of Hun garian politics in the global economy.
16 Szabó and Gerő (2019), pp. 47–55.
17 Szombati (2018) presents an in-depth overview of the micro-founda-
tions of Orbán’s illiberal hegemonic strategy.
18 See Szikra (2018).
19 Csaba (2019).
20 See Scheiring and Szombati (2019).
21 See Scheiring (2020a).
22 Scheiring (2019b).
The views expressed in this publication are not necessarily those of the
Gabor Scheiring (PhD, University of Cambridge) is a
Marie Curie Fellow at Bocconi University, Milan, research-
ing the political economy of health and populism, and the
social consequences of economic policies. His book, The
Retreat of Liberal Democracy (Palgrave, 2020) analyses the
rise and stability of illiberal hegemony in Hungary in the
context of economic globalisation. He served as a member
of the Hungarian Parliament between 2010–2014.
Office Budapest Friedrich-Ebert-Stiftung
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consent of the FES.
A polarising answer to the crisis of liberal dependent capitalism
Most analysts describe Orbanomics as
anti-liberal anti-business policies only
serving the interests of the political
elite and loyal oligarchs. However, this
is a misunderstanding. Orban’s re-
gime has a socio-economic logic that
can only be understood in the context
of economic globalisation. Building
on the author’s research, this paper
presents a political-economic per-
spective on illiberalism in Hungary.
For more information visit:
Orbanomics is an answer to the crisis
of Hungary’s post-1990 liberal de-
pendent economic model. The mis-
governance of dependent develop-
ment resulted in a severe economic
dualism: productive technology-inten-
sive transnational corporations gener-
ate the bulk of export revenue, while
labour-intensive domestic companies
lack access to high-value-added mar-
kets. This led to the rise of nationalism
among domestic capitalists. The over-
whelming majority of Hungarians ex-
perienced Hungary’s reintegration in-
to the global economy between 1989
and 2009 as social mayhem. This led
to a disillusionment with liberal capi-
talism. In the lack of a progressive left-
wing alternative, workers drifted
rightward in search of social protec-
Orbanomics aims to boost the creation
of wealth and capital accumulation tar-
geting the upper middle class, national
capital and transnational corporations
in the tech-intensive export sectors.
This strategy allowed precarious em-
ployment to rise and reduced the finan-
cial vulnerability of families and the
economy. However, Orbanomics failed
to improve the productivity of domestic
businesses and undermined long-term
development potentials. It is a polaris-
ing socio-economic strategy exacerbat-
ing income and wealth inequality as
well as precarity. The long-term viability
of Orbanomics and his regime requires
authoritarian fixes. The collapse of lib-
eral democracy and the rise of illiberal-
ism in Hungary offers clear policy les-
sons. Reinventing progressive policies,
identity and political organising are
crucial weapons against authoritarian-
ism, not just in Hungary, but in an in-
creasing number of countries experi-
encing similar autocratisation.
... Brexit's top supporters include die-hard neoliberals, who have built an ideology and political strategy on Thatcher's infamous anti-EU remark (Thatcher 1988): 'We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level.' In my home country, Hungary, Viktor Orbán's illiberal 'Orbanomics' is also remarkably creative in combining neoliberalism with populism, promoting foreign and domestic capital, while pacifying the regime's economic victims with nationalpopulist chest-beating (Scheiring 2020a). ...
Full-text available
Class analysis is back. Skyrocketing inequalities, the stagnation and marginalisation of the traditional working class, and the right-wing nationalist revolt have pushed issues of class into the limelight. The 2010s saw the publication of numerous books on the working class, causing quite a stir both in academia and public discourse (see the review by Bergfeld 2019). These phenomena challenged the view of 'classless' societies, dominant from the 1980s to the 2000s, that suggested individual success was determined solely by individual abilities or ethnic/gender hierarchies. Fitting into this class renaissance is Michael Lind's provocative, incisive, yet structurally flawed book on class war. Lind is both an academic and a journalist, whose writings always draw public attention across the political spectrum in the US. He is an excellent writer. His sentences are short and punchy, his argument is clear, and his message is dear to the heart of a reader who is sensitive to the problems of our times: 'Demagogic populism is a symptom. Technocratic neoliberalism is the disease. Democratic pluralism is the cure' (p. xv).
The authors take a novel look at recent Hungarian economic policy achievements of Orban governments. Compared to the Hungarian economic policies of the 2000s and the decades after 1989 up to 2010, Orbanomics is a successful macroeconomic and social development strategy. Its measures are not simply improvisatory elements, but constitute a new framework of policymaking, what we call culturally embedded economic policymaking. Its political pedigree and context is briefly outlined. The past 10 years of Orbanomics provides an underresearched policy laboratory, in which the application of a wide-scale job guarantee program or a growth-friendly, inclusive stabilization building on the balanced budget multiplier can be studied.
Full-text available
In this article we seek to shed light on the decline of labour politics in Hungary,, which has been laid bare in a particularly stark manner by the failure of the ‘slave law’ protests and the Left’s dismal electoral performance at the last European parliamentary elections. We focus on political-economic processes that played out over a longer period of time: the generation of working-class discontents under the auspices of a neoliberal Left, the gradual fragmentation of labour in a dualised dependent economy, the rearticulation of working-class solidarities in the idiom of the nation and the subsequent incorporation of some popular demands into ‘illiberal’ politics. Our endeavour to theorise the demise of labour – and more broadly: class politics – we rely on the work of Karl Polanyi and more particularly his conceptualisation of the ‘double movement’ through which he sought to grasp the process whereby society reacts to the vicissitudes of marketisation. Elsewhere, we have demonstrated that Polanyi’s theory can be adapted to the context of contemporary financialised capitalism on Europe’s Eastern periphery and its usefulness for highlighting the tensions of postsocialist capitalist democracies. We combine Polanyi’s framework with neo-Gramscian political economy and power structure theory to describe the power blocs that compete to take control of the state and their strategies vis-à-vis capital and labour. To substantiate our theoretical narrative, we rely on empirical research we carried out over the last five years, as well as the existing literature. First, we outline the process whereby labour relations became disembedded during Hungary’s re-integration into the global capitalist economy under neoliberal governments. We then describe Fidesz’s strategy of authoritarian re-embedding, which combines pre-emptive repression with authoritarian populism, allowing the hegemonic ruling party to incorporate workers while neutralising discontents. We end by arguing that these processes have created a structural trap for labour politics.
Full-text available
The commitment of the Hungarian state to protect citizens from the hardships caused by the economic crisis already weakened prior to 2010. Since 2010, the Hungarian government of Viktor Orbán started to negate the values of the welfare state and the European Social Model explicitly, and proposed to build a “work-based society” instead. During the welfare reform processes, consultation with relevantactors has stopped, and the ruling party bypassed normal parliamentary procedures and eliminated veto-players regularly. Between 2010 and 2012, the Orbán-government nationalized private pension assets and eliminated the second, private pillar. Disability and early pensions were eliminated. The most vulnerable groups were excluded from the social insurance system, while the pension prospects of those in well paid jobs and long periods of contributions were made more stable. Family policy reforms increased inequalities between families as employed parents with high incomes received formerly unseen resources through the new family tax allowance system and the reform of the child care leave payment. At the same time, families with meagre labour market opportunities or low income lost out due to the lack of upgrading the most important, universally available benefits and due to harsh cuts in the social assistance system.
Full-text available
This is the first in-depth ethnographic monograph on the New Right in Central and Eastern Europe. It explores the making of right-wing hegemony in Hungary over the last decade by highlighting the spread of racist sensibilities in depressed rural areas, and showing how activists, intellectuals and politicians took advantage of popular racism to empower right-wing agendas and examines the new ruling party's success in stabilizing an illiberal regime. To illuminate these dynamics, I propose an innovative multi-scalar and relational framework, focusing on interaction between social antagonisms emerging on the local level and struggles waged within the political public sphere.
Full-text available
Background: Research on the health outcomes of globalisation and economic transition has yielded conflicting results, partly due to methodological and data limitations. Specifically, the outcomes of changes in foreign investment and state ownership need to be examined using multilevel data, linking macro-effects and micro-effects. We exploited the natural experiment offered by the Hungarian economic transition by means of a multilevel study designed to address these gaps in the scientific literature. Methods: For this indirect demographic, retrospective cohort study, we collected multilevel data related to Hungary between 1995 and 2004 from the PrivMort database and other sources at the town, company, and individual level to assess the relation between the dominant company ownership of a town and mortality. We grouped towns into three ownership categories: dominant state, domestic private, and foreign ownership. We did population surveys in these towns to collect data on vital status and other characteristics of survey respondents' relatives. We assessed the relation between dominant ownership and mortality at the individual level. We used discrete-time survival modelling, adjusting for town-level and individual-level confounders, with clustered SEs. Findings: Of 83 eligible towns identified, we randomly selected 52 for inclusion in the analysis and analysed ownership data from 262 companies within these towns. Additionally, between June 16, 2014, and Dec 22, 2014, we collected data on 78 622 individuals from the 52 towns, of whom 27 694 were considered eligible. After multivariable adjustment, we found that women living in towns with prolonged state ownership had significantly lower odds of dying than women living in towns dominated by domestic private ownership (odds ratio [OR] 0·74, 95% CI 0·61-0·90) or by foreign investment (OR 0·80, 0·69-0·92). Interpretation: Prolonged state ownership was associated with protection of life chances during the post-socialist transformation for women. The indirect economic benefits of foreign investment do not translate automatically into better health without appropriate industrial and social policies. Funding: The European Research Council.
Dependent Development and Authoritarian State Capitalism: Democratic Backsliding and the Rise of the Accumulative State in Hungary
-. 2019a. "Dependent Development and Authoritarian State Capitalism: Democratic Backsliding and the Rise of the Accumulative State in Hungary." Geoforum (Published online: 5 September 2019).
Hungarian Society and Politics 2019: Political Attitudes, Integration and Participation
  • Andrea Szabó
  • Márton Gerő
Szabó, Andrea and Márton Gerő. 2019. Hungarian Society and Politics 2019: Political Attitudes, Integration and Participation [in Hungarian: 'A Magyar Társadalom És a Politika, 2019. A Magyar Társadalom Politikai Gondolkodásmódja, Politikai Integráltsága és Részvétele']. Budapest: Centre for Social Sciences, Hungarian Academy of Sciences.
Socialism: An Analysis of Its Past and Future
  • Erzsébet Szalai
Szalai, Erzsébet. 2005. Socialism: An Analysis of Its Past and Future. Budapest: Central European University Press.
) presents a comprehensive overview about the historical roots of technocratic liberalism in Hungary
  • Fabry
Fabry (2019) presents a comprehensive overview about the historical roots of technocratic liberalism in Hungary.
presents an overview of the embeddedness of Hun garian politics in the global economy
  • Gagyi
Gagyi (2016) presents an overview of the embeddedness of Hun garian politics in the global economy.
presents an in-depth overview of the micro-foundations of Orbán's illiberal hegemonic strategy
  • Szombati
Szombati (2018) presents an in-depth overview of the micro-foundations of Orbán's illiberal hegemonic strategy.