Does a ‘reform’ socialist legacy serve as an asset or a liability for democratic transformation? Considering some roots of ‘Orbanism’

ABSTRACT

A commonly held assumption in the transition literature suggests that earlier successes with reforms in Central and East European countries would serve as an asset when the regime changed. Taking Hungary as a case in point, the author revisits the legacies from pre-transition period, calling for differentiating between short and long-term effects of the reform legacy. Emphasised is that Western stakeholders tended to misjudge the starting position of transition nations, generally. This inquiry exposes the role of institutions of democracy, market order, and rule of law in socio-economic transformation, highlighting the contradiction between formal institutional conformity with EU rules and the diverging tendencies in some countries concerning substance of market (e.g. competition) and liberal democracy (checks and balances, separation of constitutional branches). The Hungarian case assists in explaining the emergence of symptoms of a crony state, and the seemingly high-level of tolerance for organised corruption and favouritism.

KEYWORDS:

• Transition
• Hungary
• Orbanism
• managerial motivations
• rule of law

Acknowledgments

I would like to thank István Benczes, Ottó Hieronymi, and John B. Hall for their friendly suggestions and advice.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Interviews with key players revealed, right after the democratic changes, that starting positions of the countries in the region and the political antecedents were rather diverse, even in the more advanced sub-region of transition countries, see Blejer and Coricelli (1995), highlighting interesting insiders’ views.

2. Balassa (1970), Granick (1973), and Csikós-Nagy (1978), Das Gupta (1980).

3. Some Western analysts took reform Communist claims on face value, others noted the limitation of the Hungarian reforms but still saw the contrast with rigid, militantly anti-Western orthodox Communist countries, the Soviet Union, to start with. A generation of economist were raised in Hungary in the understanding that NEM amounted to intellectual achievement and had made economy more efficient than elsewhere in the ‘bloc’.

4. For Hungary’s entry to IMF, see (Boughton James, 2001).

5. Hungary in the last decade of the Socialist regime was dubbed in foreign media as Gulash communism, a reference to the heavy local dish, with beef, a symbol of the adequate material standards in Hungary at a time when Soviet, Rumanian or Polish citizens were on a very poor diet.

6. Report of the Hungarian Planning Office to Parliament, 1989 (in Hungarian).

7. Sovereign rating of People’s Republic of Hungary in 1989 was BBB- by Fitch and Moody’s and BBB by the Japanese Rating Agency.

8. (Boughton James, 2001, p. 985).

9. Financial Times, Hungary applies for BIS credit. May 121,990.

10. (Lieberman & Olmer, 1990).

11. At a COCOM meeting in June 1990, the United Stated and its COCOM partners decided to eliminate thirty of the 116 categories of controlled articles from the COCOM Control List and to review others; make substantial reduction in the scope of controls in many other categories, in order to decontrol export up to the level of the China ’Greenline ‘as it appears in Atlantic Council report (op. cit. p. 27). Though one can understand the slowness of a multilateral institution such as the COCOM, and also the time requirement of changing laws in the USA, it was still seen as unpleasant and unfair to classify modern democratic Hungary as a ‘technically communist country’. Source: author’s archive.

12. János (1990) saw clearly the difference between real market agents as different from the ‘pseudo-credit system, pseudo-bank system, and pseudo-capital market’ of the market-Socialist era.

13. As an analyst summarised: “Since its landslide victory in 2010, Fidesz has gradually dismantled checks on government power and tilted the political playing field in its favour. Hungary’s prime minister made it no secret that he wanted to part with Western European ‘dogmas’, especially with the liberal notion that people ‘have the right to do anything that does not infringe on the freedom of the other party’. He singled out China, Russia, India, Turkey, and Singapore as the ‘stars of international analysts’. Rohac (2020, p. 2).