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Articles

Riding the Covid waves: authoritarian socio-economic responses of east central Europe’s anti-liberal governments

ORCID Icon, ORCID Icon, ORCID Icon & ORCID Icon
Pages 662-686 | Received 01 Sep 2021, Accepted 03 Aug 2022, Published online: 13 Sep 2022

ABSTRACT

The extraordinary context of the COVID-19 crisis gave governments around the world a freer hand to reshape their socio-economic orders. Political economists studying East Central Europe have started a debate in how far democratic backsliding in the region has ushered in a more authoritarian form of capitalism. Our paper examines responses to COVID-19 of four anti-liberal governments in the region: Hungary, Poland, Serbia, and Slovenia. Incorporating multiple case studies, it assesses the degree to which growing centralisation of political power has entrenched different mechanisms of authoritarian capitalism, as well as the limits to their use in different national contexts.

1. Introduction

Political economists studying East Central Europe (ECE) have started a debate about whether democratic backsliding in the region has also ushered in a new, more authoritarian form of capitalism. The great financial crisis of 2008 (GFC) had shaken confidence in liberal capitalism, and sharply revealed the precariousness of economies that have staked their economic fortunes on deep integration with, and dependence on, the transnational economic order. It also gave space to the more daring governments in the region to intervene more radically in the economy in ways that have been variously described as “economic nationalism”, “authoritarian capitalism”, “authoritarian developmentalism”, “national neoliberalism” but also as predatory, “accumulative” or even “mafia state” (e.g. Ban, Scheiring, and Vasile Citation2021; Johnson and Barnes Citation2015; Bluhm and Varga Citation2020; Sallai and Schnyder Citation2021; Magyar and Vásárhelyi Citation2017; Scheiring Citation2020).

The COVID-19 crisis offered the perfect opportunity to take these transformations further. Politically, the crisis provided a plausible cover for authoritarian reforms as even fully-fledged democracies resorted to temporary restrictions on civil liberties, especially freedom of assembly and speech, and introduced states of emergency that allowed governments to govern by decree, sidestepping the democratic political process (e.g. Engler et al. Citation2021; Thomson and Ip Citation2020). Preoccupation with the virus also weakened international scrutiny, and some governments in the region were even applauded for very harsh restrictions that seemingly slowed down the spread of the pandemic (e.g. The Guardian Citation2020). Domestically too, the health crisis led the citizens to ‘rally around the flag’ (e.g. Schraff Citation2021), providing political opportunity windows to activist governments.

While it has by now been widely documented that authoritarian-leaning governments in ECE used the cover of COVID-19 to strengthen their grip on power (Grzymala-Busse Citation2020; Guasti Citation2020; Mészáros Citation2020), less attention has been paid to the question of whether and how the political power grab has also led to a further entrenchment of authoritarian tendencies in the economy. The crisis had certainly opened up many possibilities. Consolidation of political power also strengthens the ability of governments to influence the behaviour of economic actors, especially as the interruption of normal economic activities forces firms and households to depend on the state for their survival. Weakness of the East European healthcare systems, but also bitter disputes over vaccine supplies in the European Union (EU), also added to the fears among populations on Europe’s eastern edge, making them more accepting of government intervention. Internationally, too, the crisis weakened the constraints on authoritarian intervention in the economy. There was no consensus on the right way to respond to the pandemic or to protect the economy; governments were expected to intervene in an extraordinary way, and there was much more tolerance of discretionary decisions. Paradoxically, perhaps, the crisis also opened up an unprecedented fiscal space. Capital markets accepted that the governments had to run large deficits, and the borrowing costs remained very low. For those inside the EU, the rules of the Stability and Growth Pact were suspended. The European Commission also temporarily relaxed the state aid rules and allowed more flexibility in the use of European Structural Funds, leaving it up to the governments to decide how they support the economy.

Our paper asks to what extent anti-liberal governmentsFootnote1 in the region have exploited these opportunities provided by COVID-19 to steer their economies in a more authoritarian direction. We explore how far these opportunities have been used, but also identify factors that, even under the extreme circumstances of the crisis, present obstacles to the emergence of more authoritarian forms of capitalism in Europe. The article seeks to make two contributions. Theoretically, we advance existing literature by conceptualising both sides of authoritarian capitalism, that is by clarifying what is specifically authoritarian and what is capitalist about the reshaping of Eastern Europe’s economies. Empirically, we combine insights from multiple case studies to assess both the pervasiveness of different mechanisms of authoritarian capitalism, as well as the limits to their use in different national contexts.

The paper is structured as follows. We first clarify our concept of authoritarian capitalism (section 2) in order to lay benchmarks against which we evaluate policy interventions that could be observed in the course of the pandemic. Section 3 justifies our research question and cases. Sections 4– 6 map authoritarian interventions in three socio-economic domains – capital, labour, and care – and compare observed responses in four countries with anti-liberal governments: Hungary, Poland, Slovenia and Serbia. The final section concludes.

2. Conceptualising pathways towards authoritarian capitalism

There is by now widespread consensus in the literature that the erstwhile dominant (embedded) neoliberal, transnationally integrated economic systems of ECE are being challenged (e.g Appel and Orenstein Citation2018; Bluhm and Varga Citation2020; Eihmanis Citation2018; Toplišek Citation2020; Naczyk Citation2021; Ban, Scheiring, and Vasile Citation2021). This section provides a schematic overview of the forms of authoritarianism in the economic realm and constructs an analytical framework through which to analyse the direction of change.

2.1. Forms of authoritarianism in ECE economies

Eastern European capitalist economies emerged in the context of wholesale political liberalisation, and have been characterised by strong neoliberal and hyper integrationist credentials. Analysing Eastern Europe’s policies of economic liberalisation, privatisation and deregulation during the 1990s, economic historian Murell concluded that “taken as a whole, this is the most dramatic episode of economic liberalization in economic history” (Murrell Citation1996, 31). In Eastern Europe’s western rim, liberal capitalism and democracy have arguably further been locked in by EU accession conditionality.

Since the GFC, however, some countries in the region have loudly turned against the liberal order. While most of the literature focusses on the attack on political liberalism as manifested by the weakening of state institutions, the rule of law, and the concentration of power in the executive, there is an increasing awareness that ECE’s democratic “backsliders” have simultaneously started to move the socio-economic order away from its erstwhile liberal form. Scholars have identified three major directions of travel away from the original liberal capitalism. The first direction is towards deepening of neoliberalism, but in an increasingly authoritarian form (Fabry Citation2019; Rogers Citation2020; see also Ban, Scheiring, and Vasile Citation2021; Scheiring Citation2020). For these authors, the GFC has led to a crisis of legitimacy of the existing economic system, while the post-crisis recovery simultaneously required the deepening of neoliberal reforms. In this context, the rise of non-majoritarian institutions – such as debt brakes or budgetary rules – serve to shield unpopular economic measures from popular dissatisfaction. In addition, coercive mechanisms, such as workfare, have been deployed to integrate the “surplus population” into the economy, and authoritarian ideas have been used to “manufacture consensus among subaltern groups in society” (Fabry Citation2019, 1; see also Rogers Citation2020).

For the second strand of literature (Bluhm and Varga Citation2018, Citation2020; see also Buzogány and Varga Citation2018; Appel and Orenstein Citation2018), in contrast, authoritarian ideas are not just an instrument to appease the dissatisfied masses, but are at the core of the new relationship between public authority and markets. These authors identify a common ideational core, the combination of state developmentalism and illiberal conservativism, that has been systematically developed by think tanks and intellectuals close to the powerholders of Eastern Europe’s democratic backsliders. State developmentalism draws on East Asian and older European experiences to develop an alternative catch-up strategy to the neoliberal approach, and encompasses financial independence, industrial policies and a reconfiguration of the welfare state. This has merged with “conservativism into an illiberal project, casting the ideal economic policy not just as a matter of strengthening the nation, but also of combating the heritage of a socially unjust … state.” (Bluhm and Varga Citation2020, 644). Social justice is sought to be restored top down, in an authoritarian fashion, thereby weakening property, labour and social rights.

Finally, a third conceptualisations of the authoritarian shift in the ECE economies sees its hallmark in the self-serving interest of the political elites, rather than its developmental agenda or ideational commitment (e.g. Szelényi and Csillag Citation2015; Magyar and Vásárhelyi Citation2017; Sallai and Schnyder Citation2021). The most systematic conceptualisation of this understanding of authoritarian capitalism is provided by Sallai and Schnyder (Citation2021). These authors argue that liberal capitalism is defined by two boundaries between the public and private realm, which are set by the rule of law: that of self-limitation of government (which includes the principles of subsidiarity, and granting of private property rights), and state autonomy, i.e. the independence of state institutions from particularistic interests of governing elites. The shift towards authoritarian capitalism is characterised by a crossing of both boundaries. The first boundary is crossed when governments purposefully change the balance of power among different actors in the market, for instance through regulatory intervention or state subsidies, or push back the market altogether e.g. through nationalisations. Interventions that cross the first public-private boundary are however not exclusive to authoritarian capitalism, as they can be found to various degrees in state-developmental forms of capitalism too. What is particular to authoritarian capitalism, however, is the erosion of the second boundary, where the autonomy of state institutions, but also of (collective) market actors and individuals is undermined and subjugated to the particularistic interests of the ruling elites. Examples of such interventions include weakening of the formal authority of public institutions and replacing them by informal authority of internal party hierarchies, making firms and individuals dependent on the state for access to resources, and elimination of individual rights or collective rights.

In sum, the existing literature points to diverse forms of mechanisms of authoritarianism in the economy. Authoritarian neoliberalism (AN) stresses the economic imperative of authoritarianism, and identifies non-majoritarian institutions, technocracy and coercion as core principles of governing the economy. Conservative developmentalism (CD) sees a fusion of developmental policies and illiberal conservativism at the centre of socio-economic restructuring, whereas authoritarian capitalism (AC) focusses on a double boundary crossing between the public and the private and sees the self-serving interest of political elites in the driving seat of economic restructuring.

2.2. Analytical framework

The major question addressed in this paper is how far anti-liberal governments in the region have used the COVID-19 crisis to shift their economies towards a more authoritarian form of capitalism. In this section, we take a step back and provide a comprehensive framework for analysing these shifts. How do liberal forms of capitalism move towards authoritarian forms of capitalism? We see a crucial role in the agency of political leaders and state bureaucracies. Even in the most liberal economies, governments and states set the boundaries between public and private, and design the rules for the functioning of the economy. We therefore analyse how far state interventions in the economy comply with those of liberal or regulatory capitalism, or rather shift the economy towards more authoritarian forms. We understand state interventions broadly, ranging from public policies and rule-making, to direct state interventions and outright forms of nationalisation. We see it ultimately as an empirical question of whether authoritarian interventions in the economy lead towards AN, CD or AC, or a combination thereof, and therefore draw on all three approaches to analyse state interventions.

The starting point, and benchmark against which any state intervention is to be measured is that of liberal, or regulatory capitalism, which is governed by what Majone (Citation1997; see also Lodge Citation2008) calls the regulatory state, where the policy aim is to correct for market failure, the main policy instrument is rule making, and the policy style is rule-bound and legalistic (Majone Citation1997, 149). To determine in which direction a government takes an economy, three questions have to be answered. First, what is the purpose of state intervention? Is the intervention done primarily to deepen capitalist accumulation, that is provide better supply conditions for firms in order to enable them to be more competitive (AN)? Or does the intervention rather serve conservative-developmental purposes, i.e. the upgrading of existing production capacities and decreasing international dependency while reinforcing a conservative social order (CD)? Or is it primarily done to foster the power and interests of political elites (AC)?

A second, and closely related question is which spheres of the capitalist order the intervention targets. Here we distinguish between three spheres: the relations between labour and capital, the relations between the state and the owners of capital, and the relation between the state and social reproduction. In distinguishing between these three spheres, we draw on critical theories of capitalism which are the basis of the AN literature and argue that the relations between labour and capital are at the core of a capitalist economy (Bruff Citation2014; Bruff and Tansel Citation2019; Fabry and Sandbeck Citation2019); on developmental studies which see the relation between the state and capital owners as crucial for distinguishing forms of successful capitalist modernisation from those of predatory state intervention, and which indirectly inform the AC concept (e.g. Johnson Citation1982; Amsden Citation1989; Evans Citation1995), and on feminist political economy, which has shown how much the “front story” of capitalist production and exploitation relies on the “backstory” of social reproduction (Fraser Citation2016; Fraser and Jaeggi Citation2018; see also Bakker and Gill Citation2003; LeBaron and Roberts Citation2010; Briggs Citation2018). State interventions in the economy can thus be distinguished in respect to whether they mainly target the spheres of labour and social reproduction with the aim to provide owners of capital with easier to exploit labour (AN); whether they target simultaneously the relations between capital and the state and the sphere of social reproduction to pursue the double goal of developmentalism and conservative-authoritarianism (CD), and or whether they target all three spheres with the purpose of increasing the power of ruling elites on the economy and society (AC).

The third question to ask is how the particular aim is achieved. Here we borrow the insight of Sallai and Schnyder (Citation2021) that the move away from regulatory capitalism is characterised by a crossing of the boundaries between the public and the private set by the rule of law. As reviewed above, Sallai and Schnyder (Citation2021) identify two boundaries between state and markets characteristic for regulatory capitalism: that of self-limitation of government and state autonomy. However, as Sallai and Schnyder’s concept of authoritarian capitalism focusses exclusively on the relations between state and owners of capital, the concept needs to be enlarged to allow the analysis of boundary crossings or violations in all three spheres. More precisely, while state autonomy is a principle that holds across all three spheres in regulatory capitalism, the rules that govern the rights of corporations and functioning of product markets, labour markets and social reproduction in regulatory capitalism need to be detailed further.

Thus, the boundaries between the state and corporate activities are ruled by individual rights – especially property rights, and the subsidiarity principle, where decisions are taken as closely as possible to market actors. Substantively, a regulatory state is concerned with addressing market failure. The state therefore also governs market relations, for instance through the provision of public goods, or the control of monopoly, but these interventions are strictly limited. Taken together, these principles guarantee a balanced relation between states and firms, and among firms (Sallai and Schnyder Citation2021; Majone Citation1997).

In order to guarantee the smooth functioning of labour markets, however, individual rights and the freedom of contracts are not enough. Given the vast disparity in power between capital and labour, and the market failures that this might entail, the regulatory state guarantees in addition a modicum of collective rights, especially the right to join trade unions and to negotiate collective agreements. It also issues protective legislation against over-exploitation, discrimination in the workplace and unfair dismissal, and mandates access to social security that guarantees labour a modicum of income in cases of sickness, old age and unemployment.

Finally, capitalist production crucially relies on social reproduction – the work of birthing and raising children, housework, care for the ill and the elderly – which traditionally takes place in households. This work is deeply gendered and not financially remunerated, which makes it effectively invisible in the capitalist system of wage labour (Bakker and Gill Citation2003; Fraser Citation2016). For this very reason, however, capitalism is prone to running into “crises of care”, when the conditions of “official” wage work no longer provide enough resources to ensure adequate care work. In liberal capitalism, the crisis of care was temporarily solved by simultaneously commercialising care services and drawing women into the labour market (Bakker Citation2007; Fraser Citation2016). In the sphere of social reproduction, the regulatory state thus guarantees gender equality and non-discrimination on the labour market, equal access to social protection, and relatively widespread access to care services and infrastructure, even if such access has become increasingly restricted by commercialisation of services, pushing them back into the private sphere for those unable to afford commodified care (Fraser Citation2016; Hochschild Citation2015).

To analyse the direction in which a government takes the economy, the third question to be answered is which rules and boundaries in which spheres are being violated. Does a state only violate rules and boundaries in the spheres of labour and social reproduction, while keeping the principles of state self-limitation and state autonomy in place? This points to a shift towards AN. Does a government in addition also violate the principle of state self-limitation, but keeps the principle of state autonomy in place? This implies a shift towards CD. If a government violates all principles in all spheres, this points to a shift towards AC. For “pure forms” of diverse authoritarian capitalisms to emerge, purpose and spheres of state intervention as well as violations of rules and boundaries do not align randomly, but are patterned. depicts such ideal typical constellations. It is however an open question to which degree the state intervention leads to any of these pure forms, or rather combines different authoritarian interventions in different spheres.

Table 1. Pathways towards authoritarian capitalism.

3. Research questions, expectations and cases

Our paper asks in how far anti-liberal governments in the region have used state power during the pandemic to shift the economies in a more authoritarian direction. Our outcome of interest is therefore an increase in the degree of authoritarianism in the economy compared to the pre-pandemic status quo, as well as the form it takes. We understand the economy holistically as comprising all three spheres discussed above: that of capital, labour and social reproduction.

We expect that COVID-19 is conducive to an increase of authoritarianism in the economy, and indeed the findings of Guasti and Bustikova (this volume) that the health crisis has been conducive to “pandemic heist” confirms our hunch. We expect an increase for the following reasons. First, the disruptions that the pandemic caused in the economy have constituted an opportunity for an authoritarian power grab. The pandemic unleashed a massive economic crisis, and created a strong incentive for interfering in the economy to uphold essential production and services and the need for care. Firms, workers and households became almost entirely dependent on governmental hand-outs, and governments had it in their hands to dictate the conditions under which essential and care work was being performed. This weakened the resistance and strengthened opportunities for anti-liberal governments to push their influence across public-private boundaries in all three spheres.

Second, international constraints on domestic politics decreased significantly during the pandemic, especially for those countries inside the EU. Most importantly, the EU suspended two sets of constraints stemming from its regulatory capitalist model, namely its competition policies and the stability and growth pact. Antitrust, state aid and merger rules were temporarily relaxed, and from March 2020, member states were allowed to temporarily depart from normal budgetary requirements (Meunier and Mickus Citation2020). These measures significantly increased the space for anti-liberal governments to, for example, award lucrative contracts for pandemic-related procurement to their preferred firms.

Third, international resources have substantively increased during the pandemics, especially for countries within the EU. The Commission directed resources from the structural funds to finance the member states’ crisis responses more flexibly; launched the Support mitigating Unemployment Risks in Emergency (SURE) initiative to facilitate financing of short-time work schemes and similar measures to protect jobs, employees and self-employed; and the European Investment Bank also established a guarantee fund to provide additional financing. As part of the historic agreement on the Next Generation EU programme, the EU will provide EUR 672.5 billion in loans and grants to member states to support reforms and investments. Countries inside the Eurozone further benefited from the European Central Bank’s EUR 1,850 billion pandemic emergency purchase programme (PEPP) (Bachtler, Mendez, and Wishlade Citation2020; Bohle, Eihmannis, and Toplišek Citation2022, 31; Tooze Citation2021).

The COVID-19 crisis thus brought together the motive (anti-liberals in government), means (international resources) and opportunities (decrease of international surveillance and domestic resistance) to push the economy into authoritarian territory. As per our analytical framework, however, we are not only interested in whether authoritarianism in the economy per se increases, but also which form it takes. As democratic backsliding in Eastern Europe is – at its core – a conservative nationalist backlash against the post-1989 liberal order, which occasionally combines with attempts of escaping the “middle income trap”, our most general expectation is that anti-liberal governments shift the economy either in the direction of CD or AC. This is even more the case as COVID-19 has not manifested in a debt crisis yet, nor a supply side crisis, and hence, contrary to the GFC, the question is not how to implement austerity and coerce more people into work. This means that we expect that independently of whether they started closer to the regulatory, AN, CD or AC pole of our classification, authoritarian state interventions during COVID-19 should only shift countries towards CD or AC. Furthermore, we expect that countries which have already moved in the CD or AC direction prior to COVID-19, deepen their respective directions. That is, overall, we expect only limited path dependency.

Whether governments are however successful in shifting their economies towards CD or AC depends on the outcome of “boundary struggles”. As no European state is yet a full-fledged autocracy, there is likely to be some resistance against the authoritarian boundary crossing in the economy. Resistance can stem from several sources: from opposition parties in parliament, civil society – especially trade unions in the sphere of labour and women movements in the sphere of social reproduction, businesses and regulatory agencies evading state capture, and international organisations. Hence, we expect that anti-liberal governments in countries where elections are still free and fair, and which have mobilised civil societies will be less able to shift their economies into authoritarian territory than governments in more authoritarian polities. Additionally, we expect anti-liberal governments outside of the EU that seek EU membership and cannot yet rely on its resources to expand fiscal space to be more constrained in their authoritarian shift than countries inside the EU.

To test our expectations, we chose four countries in the region where a significant degree of authoritarian boundary crossing has occurred in the recent past, and where anti-liberal governments have ruled during the pandemic: Hungary, Poland, Serbia and Slovenia. According to V-DEM, these are the four countries where democracy scores have declined most significantly over the last 10 years (V-Dem Institute Citation2021, 18). While these countries converge on the anti-liberal orientation of their governments, they differ with respect to all our variables of interest. More specifically, according to existing literature, prior to COVID-19 Hungary’s capitalism already fell closest to the AC pole of our classification, albeit with important AN elements both in the spheres of labour and social reproduction (Sallai and Schnyder Citation2021; Fodor Citation2021; Scheiring Citation2020; Lendvai-Bainton and Szelewa Citation2021). Poland’s economy before the COVID-19 crisis comes closest to the ideal CD type, with strong developmental interventions in the sphere of production, and social conservative policies in the sphere of social reproduction (Naczyk Citation2021; Lendvai-Bainton and Szelewa Citation2021; Meardi and Guardiancich Citation2022; Medve-Bálint and Šćepanović Citation2020). Slovenia’s starting point pre-COVID was that of regulatory capitalism (Piroska and Podvršič Citation2020; Toplišek Citation2021), while Serbia had moved from AC towards AN under the Vučić regime (Piletić Citation2021). The four countries also differ in respect to how strongly authoritarianism has been entrenched before the COVID-19 crisis. According to V-DEM’s liberal democracy index, in 2019 Serbia was considered the most authoritarian, closely followed by Hungary. The political regimes of the two countries are characterised as electoral autocracies. In contrast, Poland and Slovenia are characterised as electoral democracies, with Slovenia’s liberal democracy index being significantly stronger than that of Poland. We take these classifications by V-DEM as proxying possible points of domestic resistance. In terms of international constraints on the authoritarian boundary crossing in the economy, Serbia is the most constrained country with EU membership pending and its reliance on the IMF for additional resources.

summarises cases and expectations.

Table 2. Cases, variables and expectations.

For the empirical analysis below, we rely upon an original database that covers the key measures adopted during the first two waves of the COVID-19 pandemic in economic and social policy in Hungary, Poland and Slovenia (see Bohle, Eihmannis, and Toplišek Citation2022). Data for Serbia was collected separately according to the same methodology. Additionally, we draw upon the relevant news sources, government websites and reports by international organisations between the start of the COVID-19 crisis in March 2020 to the end of December 2021. In analysing the data, we compare the empirical patterns observed in our country cases with the theoretical patterns of types of capitalism outlined in to identify potential shifts in the corresponding pre-pandemic models (see ). The following section will empirically map our outcome of interest, namely how far the pandemics have led to an increase of authoritarianism in the economy under COVID-19, and in which direction.

4. Mapping the authoritarian shift: capital … 

This section maps the main authoritarian shifts in the sphere of capital that have occurred during the pandemic. Starting with the most dramatic shifts, in Hungary, the government made use of the pandemic to drastically expand both its intervention in the economy and its AC nature. In March 2020, the Fidesz parliamentary supermajority adopted the Coronavirus Defense Act, which enabled rule by decree for an unlimited period until the end of emergency. The Act was revoked in June 2020, but not before the parliament transposed some of the extraordinary powers to ordinary law (Ádám Citation2020).

Using this extraordinary mandate, the government adopted a decree on special economic zones, which allowed arbitrary changes in the legal environment of selected companies (Government of Hungary Citation2020). The decree, which the parliament subsequently turned into a law (Act 2020/LIX of 19 June 2020), has become one of the most striking examples of abusing extraordinary power in the context of the pandemic. Through this law, in the special economic zones created by the central government, local governments lose ownership of the real estate and taxation rights, which are transferred to the county-level administrations, all of them controlled by Fidesz.

Besides undermining their property rights, the Orbán government compromised local government finances by depriving them of crucial local tax revenues, thereby making them even more dependent on central transfers. These measures primarily affected the more populous, opposition-led municipalities that also received proportionally less compensation from the government than the ones led by Fidesz (Portfolio Citation2020).

Another authoritarian measure in the economy was the introduction of military task forces at businesses of national significance, which extended state dependence to the private sector. By April 2020, more than 180 domestic and foreign-owned companies in various economic sectors came under the monitoring of military personnel, whose mandate only expires when the government declares that the state of medical emergency is over (Napi.hu Citation2020).

Hungary also used the state of emergency to adopt a range of measures that do not amount to explicit intervention in the economy, but prepare the ground for future measures to be taken in a more discretionary and less transparent way. For example, the 9th constitutional amendment adopted in December 2020 restricts the concept of public money to revenue, expenditure and due of the state, which allows state-owned companies and state-financed foundations to escape public scrutiny because, in legal terms, they are no longer considered to manage public money (Hungary Today Citation2020a). Next, the government began transferring state-owned assets worth over EUR 2.75 billion to newly established foundations of trusts in public interests (Hungary Today Citation2021a). Universities and cultural organisations were the first to be outsourced to these foundations, whose boards are populated by Fidesz loyalists. In a radio interview, PM Orbán confirmed their politically motivated selection (Hungary Today Citation2021b).

Political motivation also guided the distribution of funds to alleviate the impact of COVID-19 (for an overview see Medve-Bálint and Bohle Citation2022). The government offered wage support to the most affected sectors, but Fidesz-allied companies benefited the most. The tourism sector offers the most extreme example of this where the state-owned Hungarian Tourist Agency provided generous grants to businesses owned by former Fidesz ministers, oligarchs and local governments run by Fidesz. As a result, Fidesz-led municipalities gained 470 times greater support through the agency than local governments led by the opposition (G7 Citation2021). Similarly, the Central Bank’s corporate bond purchase programme, benefited the most from those large firms that nurture close ties with the government (MNB Citation2021). Rent-seeking characterised the purchase of medical supplies, too. In a non-public procurement, the government contracted companies with close political ties to PM Orbán’s circles, to ensure an excessive purchase of highly overpriced respirators (HVG Citation2020). Meanwhile, a special crisis tax was levied on the banking and retail sectors, which disproportionately affected foreign-owned firms. At the same time, the government launched a state aid scheme called the Competitiveness Enhancing Support Programme, which purportedly funded new investments undertaken by medium- and large companies, though the details of the support remain unavailable. The scheme’s greatest beneficiaries were foreign multinationals active in the manufacturing sector. The sectoral crisis tax on services punishing foreign firms and the state aid scheme promoting primarily the foreign-dominated manufacturing sector are consistent with the government’s distinction between “good” and “bad” FDI (Bohle and Greskovits Citation2019).

Although characterised by political authoritarianism, which is reflected in the ruling coalition’s undermining of the independence of public media and the courts, the Polish government has been more restrained with regard to its interventions into the economy during the pandemic (for an overview see Toplišek Citation2022a). The government implemented generous financial assistance packages for businesses that comprised grants, loans and capital injections for both SMEs and large companies. State aid was channelled through existing state-developmental institutions and the government used the relaxed EU conditionality on the use of public finances for beefing up investment into local government services (Prawo.pl Citation2021), infrastructure and green energy transition without outright political favouritism. In this sense, the pandemic was used by the Polish government to deepen CD in the economy.

This does not mean, however, that some government ministers did not try to use the state to extract rents for private gain during the pandemic. Health Minister Łukasz Szumowski influenced the public procurement of protective equipment to benefit his friends and family, and Deputy Minister of Health Janusz Cieszyński made sure that the special coronavirus law (Act of 2 March 2020 on Special Solutions Related to Preventing, Counteracting, and Combating COVID-19) that was adopted at the start of the pandemic also included provisions on impunity for public officials who abuse their powers and undue spending of excessive amounts for supplies (Wyborcza.pl Citation2021). In August 2020, the Law and Justice party went a step further and proposed an amendment to the special coronavirus law that would absolve officials from breaking the law as part of efforts to deal with the pandemic (Politico.eu Citation2020).

The Polish government, similarly to the Hungarian, also used the pandemic as a cover to attack foreign companies in the service sector. In February 2021, it announced a new advertising tax on the media sector, which the government argued would help raise funds for the National Health Fund, but which was clearly aimed at the US Discovery Group, Poland’s largest independent broadcaster (Reuters Citation2021). The proposal encountered strong opposition, and was shelved, only to later be replaced by a bill that directly targeted the US Discovery Group by restricting foreign investors from outside the European Economic Area to hold no more than 49% ownership in Polish media companies (Euractiv Citation2021). In December 2021, the PiS-supported president Andrzej Duda vetoed the bill after strong opposition from the US and the EU.

In Slovenia, the Janša government adopted a liberal approach to dispersing financial assistance to affected businesses during the pandemic, mostly relying on state-guaranteed loans to SMEs. However, the distribution of sectoral aid was politically selective as the biggest beneficiaries were those sectors (tourism, construction and agriculture) that have close ties with the government (Toplišek Citation2022b). Similar to the Hungarian case, the purchase of respirators was affected by corruption (RTVSLO.si Citation2020) but, unlike in Hungary, after the case had been revealed in the media, the government terminated the contract. The respirators were at the end bought by the Hungarian government (Svet24 Citation2020).

Marking a shift towards AC, the Janša government used the heights of the pandemic waves to take control of key state-owned companies in the energy, tourism and infrastructure sectors. Instead of appointing expert cadre, it staffed their executive and supervisory boards with political picks to strengthen the governing Slovenian Democratic Party’s (Slovenska demokratska stranka – SDS) grip over corporate governance of the largest Slovenian companies (Delo Citation2021; 24ur.com Citation2022). From the strategically important port of Koper to Slovenian Railways and the energy company Petrol, the Janša government used state assets to open doors to Hungarian and other regional capital interests that are close to the Orbán regime through concession bids and asset sales (Cirman and Vuković Citation2020; Svet24 Citation2022). This way, despite losing the April 2022 parliamentary election, SDS continues to maintain its grip over the key strategic sectors.Footnote2 Similar to Orbán’s regime, the Janša government also changed the eligibility rules for public concessions during the pandemic to benefit private universities that are close to the SDS interests, using “urgent circumstances” as the pretext (Mladina Citation2012).

In Serbia too the COVID-19 emergency served as an excuse to suspend the regular rules of public procurement. Indeed, such transgressions were loudly touted as evidence of President Vučić’s efforts to single-handedly save the nation. As soon as the conflicts between the EU, the UK and vaccine producers made it clear that the international Covax programme will not deliver the vaccines quickly enough, Serbia moved to secure supplies from China’s Sinopharm and Russia’s Sputnik V. Vučić was shown on TV personally negotiating vaccine deliveries and openly boasted of bypassing public procurement rules in order to secure respirators (Voice Citation2020; see also Bilek and Guasti, Citation2022).

These demonstrations of discretionary power concentrated in the hands of one leading politician contrast sharply with official economic policies which continued in a formally liberal direction. In 2020 Serbia pressed forward with the reforms it pledged under the IMF’s Policy Coordination Instrument and the EU Economic Reform Programme for accession countries. It continued with restructuring and divestment in the financial sector, sold the third-largest bank to a foreign owner, and adopted a range of measures to counter repeated criticism over inefficiency and corruption in state-related businesses and procurement. A new strategy for the governance of state-owned enterprises was adopted together with a new Law on Public Procurement with a fully digital and transparent tendering platform, and a Commission for Capital Investments that will coordinate implementation of large infrastructural projects (IMF Citation2021; European Commission Citation2021). At the same time, however, the government declared all COVID-19 related procurement to be a state secret (Aljazeera Citation2020), and thus exempt from the law, demonstrating the size of the loophole in the new public procurement law which allows such exemptions for all projects declared to be “of special importance” for the country (European Commission Citation2021). The exemption also applies to agreements with foreign investors, especially when they involve public entities from third countries and are based on inter-state contracts. In other words, even while formally complying with the requirements of liberal governments, the Serbian state has been carving out space for AC-type interventions.

5.  … Labour … 

The pandemic also saw multiple attacks on the labour’s right to collective bargaining. In Hungary, the parliament revised the Labour Code to grant employers greater freedom to deviate from the customary working time arrangements, which trade unions heavily criticised (Hungary Today Citation2020b). Furthermore, after unsuccessful wage negotiations with the air traffic controllers, the government prohibited their planned strike, citing the emergency situation (Hungary Today Citation2021c). However, the major battlefield concerned medical workers, whom the Hungarian government offered the choice of either leaving their jobs in the public sector or signing new contracts with the state which stripped them of their civil servant status and abolished the right to collective bargaining (Act 2020/C on medical service relations). Those who remained in public employment were also banned from taking second jobs in private health care – a major source of income in a chronically underfunded sector – unless permitted by the newly established National Healthcare Service Center. The government went as far as to install military commanders to monitor the supply of medical equipment in hospitals (Hungary Today Citation2020c). This gave it direct control over the hospitals’ management, undermining their professional autonomy, and also secured full control over information flows, virtually eliminating freedom of expression of medical workers in public health care. These moves, which stripped medical workers of their collective rights and increased their dependence on the state, were sweetened by a major one-off pay rise in the whole sector.

Attempts to weaken labour bargaining power were also in evidence in Poland. First, a regulation authorised the prime minister to dismiss the members of the Social Dialogue Council during the epidemic at will (Euractiv Citation2020). Next, the government tried to ban trade unions from representing workers in situations where employers introduced special measures that amended contractual terms and conditions. However, following trade union protests, this regulation was removed from the government’s draft of the first anti-corona crisis bill (Rogalewski Citation2020). Protests also accompanied the decision in the energy sector to start plans to phase out coal mines in preparation for the green transition. The government used its position as a major shareholder in energy companies to set the plans in motion without social dialogue and public consultation (Solidarity Citation2021). While both of these measures undermined the labour’s right to bargain, thus violating the principle of equality, the government did introduce a tax reform that favours workers on lower incomes as part of the new “Polish Deal” reform programme (Wilczek Citation2022). We see this measure as a way for the Polish government to shore up support amongst its key constituents for its CD programme ahead of 2023 parliamentary elections.

Serbia experienced few such direct attacks on collective bargaining and the public sector, but this is mostly because the workers’ power had already been diluted in previous years. Collective bargaining in the public sector formally exists, but the employees are not allowed to negotiate wages, which are set instead by government decrees, differently in each branch of the public sector. A law that would regulate pay across public sector and introduce a degree of legal certainty in the way wages are set has been in the making for over 10 years and formally adopted in 2014, but its implementation has been continuously postponed. In December 2020, the parliamentary majority postponed it once more, citing the ‘complexity of the pandemic’ (N1 Citation2020). This deprives public sector workers of the right to negotiate pay, but also leaves their wages dependent on the good will of the parties in power, and the workers malleable to political pressure. The government did raise the wages of healthcare workers by 10% in 2020, and of other public sector employees by 5–6%, but did not consult them about any of its measures. In the private sector, the government implemented three rounds of “flat” furlough supports that together paid each company about 50% of the minimum wage per employee over a period of eight months. Unlike most such measures internationally that either targeted the most affected businesses or were conditional on actual threat of unemployment, in Serbia all companies could receive support as long as they did not lay off more than 10% of employees. As a result, the overall costs of the measure topped EUR 8 billion, around 12.5% of Serbia’s GDP (European Commission Citation2021). The government took decisions unilaterally, without input from the social partners, except for some early consultations in March 2020 with the employers’ organisation (Unija poslodavaca Srbije Citation2021; Sekulović Citation2020).

Whereas the failure of the Serbian government to consult social partners is a continuation of earlier practice, in Slovenia the same behaviour signals a more intentional attempt to undermine political influence of organised labour and turn the governance of the economy in a more authoritarian direction. The Slovenian government ignored the unions entirely during the first two anti-crisis packages, and only reconvened the Economic and Social Council during the drafting of the third anti-corona package in May 2020 (Toplišek et al. Citation2022). Coordination between social partners became heated in October 2020, in relation to the fifth anti-corona package, when the Association of the Free Trade Unions of Slovenia (ZSSS) opposed the government proposal to include private health providers amongst the beneficiaries of financial assistance (ZSSS Citation2020). Whereas the ZSSS’ threat of a general strike forced the government to ditch its plans to freeze the planned minimum wage increases for 2021, trade unions took to the courts to reverse the government’s measure that enables employers to unilaterally retire workers once they reach the age of 60. The lack of social dialogue during the third wave of the pandemic led the trade unions to renounce their participation in the Economic and Social Council in May 2021 (ZSSS Citation2021).

6.  … and social reproduction

The pandemic revealed acutely the crisis of care (Fraser Citation2016) that has been mounting across Eastern Europe and has several roots. On the one hand, decades of restructuring and austerity have weakened the public healthcare systems and encouraged privatisation and re-familiarisation of care. On the other hand, increased labour mobility and the long-term trend of population aging have increased demand for care, as well as stoked nationalist obsessions with natality rates.

This broader crisis of care and social reproduction has been used for some time in various countries to justify authoritarian intrusions into private lives of citizens and the work of the institutions, and to reshape public services to the benefit of nation as family. With COVID-19 overwhelming both the hospitals and the families which now had to cope with the closures of schools, premature releases of non-COVID-19 patients from hospitals, and closure of daycare centres for children, elderly and individuals with disabilities, some governments took the opportunity to push these reforms further.

In Hungary, the government’s policies have been “care-blind” (Kováts Citation2020) and followed a neoliberal gender regime where the stressing of family values serve as replacements for social welfare safety net (Gregor and Kováts Citation2019). The closure of schools and childcare facilities in March 2020 without any governmental compensation or other form of support left hundreds of thousands of families facing a huge challenge of balancing work-related duties, home-schooling and elderly care. In anticipation of COVID-19 patients, the Minister for Human Resources ordered 60% of hospital beds to be emptied before Easter, which led to the release of thousands of terminally ill patients from hospitals. This in turn exacerbated the crisis of care further and placed disproportionally greater burden on women (Kováts Citation2020). Ideologically motivated moves, such as the rejection of the ratification of the Istanbul Convention and the ending of the legal recognition of transgender people (Aidukaite et al. Citation2021, 364), also followed the government’s polarising anti-gender equality discourse. Meanwhile, the government adopted specific “family protection” measures in line with its previous “carefare” policies (Fodor Citation2021), including the extension of deadlines for entitlements of existing family support schemes, and the launching of a preferential loan for home renovation available to families with one or more children (Hungary Today Citation2020d). While these measures lean in the CD direction in the realm of social reproduction, they are only confined to the homeowner middle-class families with credit capacity and leave poor households out.

If in Hungary the authoritarian shift on the care-related front concentrated on healthcare institutions, in Poland the most severe violation of public-private boundary involved an attack on individual rights of women. In October 2020, the Polish Constitutional Tribunal, which is staffed with pro-PiS judges, invalidated the constitutionality of women’s right to abortion when a severe and irreversible defect or illness threatens the foetus life (Amnesty International Citation2020a). In response to the nationwide protests, the government mobilised excessive force, citing public order concerns in the context of the pandemic (Amnesty International Citation2020b).

Like in Hungary, the Polish government broadened its pro-natalist policy, announcing additional “care capital” for families with more than one new child as part of the “Polish Deal” reform programme. Unlike in Hungary, however, the Polish benefits remained universal and not linked to parents’ employment status, and thus firmly on the CD path. Poland also introduced additional remuneration for care work during the pandemic (Aidukaite et al. Citation2021), which was not the case in Hungary, despite long spells of school closures.

Slovenia’s government professes the same conservative pro-natalist familial agenda as Hungary and Poland, but the measures in place actually lean somewhat in favour of less affluent families. During the pandemic the government disbursed crisis allowances up to 200 EUR for families with at least three children, and increased the monthly care allowance by 100 EUR. Smaller top-up child benefits of 30 EUR per child were also provided for low-income families. Workers who could not work due to their care duties were eligible for compensation of up to 80% of their wages under the job support scheme (Government of Slovenia Citation2020). Unlike Hungary, Slovenia’s government additionally compensated private health and care providers during the pandemic and committed EUR 1.9 billion towards improving public health infrastructure in the next 10 years. In line with its pro-natalist agenda, one-off EUR 500 solidarity payment to parents of new-borns were also introduced (Government of Slovenia Citation2021).

In Serbia, whose government adheres to the same pro-natalist rhetoric as in other cases, the response to COVID-19 demonstrated similarly ‘care-blind’ neglect of the skyrocketing burden of familial care as in Hungary. No measures were put in place to compensate private care work or even ensure that individuals with care duties can stay at home during the pandemic (OSCE Citation2021). Uniquely in the region, there were also no measures to extend social welfare payments to protect the most vulnerable, except for a one-off flat EUR 100 payment to all adult citizens ahead of the elections (Matković Citation2020). This is a continuation of longer-term withdrawal of the Serbian state from its social function, which has led to a marked decline in the number of citizens at risk of poverty who receive any support (IMF Citation2021), reduction of access to public care institutions, especially early childcare, and privatisation of healthcare. The state withdrawal and re-familiarisation of care have a predictably gendered pattern, which pushes women out of the labour market and renders them dependent on their families. Serbia’s rate of female labour market participation is one of the lowest in Europe, and during the pandemic 7% of women left employment or lost their jobs, compared to 4% of men (UNFPA Citation2020).

The pandemic did force a number of changes in the healthcare sector, which has been under a strict hiring freeze since 2013. Combined with accelerated emigration of mostly younger staff, this policy had pushed up the average age among doctors and contributed to their high mortality during the pandemic (BBC in Serbian Citation2021). The government, however, seized the opportunity provided by the increased demand for COVID 19-related care, combined with generous donations from the EU and blanket suspension of public procurement laws to step up investment by initiating construction of three new hospitals and one vaccine manufacturing facility, all of them without regular procurement procedures (Nova ekonomija Citation2021).

7. Discussion and conclusion

A number of factors linked to the pandemic led us to expect the strengthening of authoritarianism in the economies of those countries with anti-liberal governments at the helm. In line with our analytical framework, however, we have found that such shifts have been neither uniform across our cases nor have they always gone in the same directions.

We analysed the policy choices of four governments in three spheres – relations to capital, labour and social reproduction – and examined whether measures put in place during the pandemic reflect a shift in an authoritarian neoliberal, conservative developmentalist, or authoritarian capitalist direction. Given the professed anti-liberal ideology of these governments and the opportunity structure of the pandemic, we expected the direction of change to be rather in the AC and CD than AN direction. We also expected countries that have already gone further down the authoritarian paths prior to the pandemic to advance further in these directions, having already weakened the constraints of civil society, opposition parties, and autonomous institutions and business sectors.

Our findings suggest that despite the four governments sharing similar ideologies, and sometimes direct policy and business connections, the measures taken by them do not converge on a uniform outcome of authoritarianism in the economy (). In the sphere of capital, Hungary and Slovenia made the largest strides in crossing the boundary between public and private and expanding the scope for discretionary intervention of political elites in the allocation of resources and business opportunities. In other cases, such shifts were more limited, with the most prominent transgressions linked to public procurement for pandemic-related health equipment and, in some cases, the media. In Poland, the broader gist of public intervention remained anchored in the CD path, whereas in Serbia the formal changes showed tendency towards liberalisation and withdrawal of state from the economy, albeit with important caveats in cases of ‘special interest’ for the state.

In the sphere of labour, social dialogue and collective bargaining rights were disregarded in all cases and actively attacked in some. All four governments ignored social partners in the design of pandemic measures and in Slovenia and Poland they took steps to weaken national socio-economic councils. Hungary used the pretext of the pandemic to severely undercut the rights of workers, especially in the public sector, with a clear intention to render them more dependent on the state. In Serbia, where similar conditions already prevail, long-promised reforms to restore autonomy to workers in the public sector were again postponed ‘due to the pandemic’. Poland took a more CD direction, pairing government attempts to undermine independent labour representation with state paternalism through increased minimum wage. In Slovenia, where the government has more conflictual relations to the unions, the reforms took a more AN-style direction through legislative attempts to reduce labour rights in the private sector.

In the sphere of social reproduction, we found very similar conservative and pro-natalist rhetoric accompanied by a surprising variety of measures. In Serbia and Hungary the response to the pandemic was dominated by politics of non-action, leaving the burden of skyrocketing care work entirely to families, and disproportionately to women. In Hungary, this was only marginally compensated by some expansion of support to the middle-class families, in a “carefare” version of CD. In Poland, the response followed a pronouncedly CD line, combining generous financial support to the families with a radical attack on women’s reproductive rights. Finally, in Slovenia, the response remained largely within the bounds of liberal regulatory capitalism.

Overall, we find that Hungary comes closest to an AC ideal type, whereas Poland exhibits most clearly the features of a CD, more or less in line with their pre-pandemic trajectories. In Slovenia, the pandemic provided an opportunity to the anti-liberal Janša government to make some strides in the direction of AC, but in a much more limited form. In Serbia, the official policy direction tends rather towards an AN, but informally the state retains many of the AC traits, especially in relation to capital.

While our findings help to map developments of authoritarianism in the economy in the CEE region, the paper stops short of providing an explanation for these divergences. Path dependence certainly plays a role, with both Poland and Hungary becoming more entrenched in their pre-pandemic trajectories. The differences could possibly partly be explained by ideological variation among the East European anti-liberals, but they are also undoubtedly the reflection of the nature of social coalitions underpinning these regimes, and of the varying patterns of strengths and weaknesses among the opposing forces, including different fractions of capital, labour, opposition parties and the civil society. The social coalitions on which authoritarian governments are being built sets apart the Polish capitalism from that of other capitalisms that we have looked at, as it relies on a developmental coalition (Naczyk Citation2021) – contrary to that of Hungary, whose authoritarian capitalism is built on an anti-developmental coalition (Scheiring Citation2020). In Slovenia, anti-liberal takeover is encountering the most domestic opposition, which limits, for the time being, its ability to transform the economy. In Serbia, meanwhile, domestic opposition is very weak, but the combination of the need to reassure international financial institution and the limited administrative capacity often results in preference for formally “flat” neoliberal reforms rather than complex discriminatory interventions.

By documenting the variety of economic policy responses of anti-liberal governments in ECE to the COVID-19 pandemic, we hope to have contributed to the debate on the return of the state in the economy and the relationship of authoritarian governments with the liberal capitalist order. The discussion about authoritarian capitalism in ECE is still very much grounded in the Hungarian example, and by describing the substantial divergence of policies under – for an authoritarian regime – best case scenario that the pandemic offered, we highlight the need to think of these new authoritarianisms in more systematic ways. We also offer some pointers for doing so, by exploring different ideal types of authoritarianism in ECE capitalism and elaborating an analytical framework that incorporate the spheres of capital, as well as labour and care, and to conceptualise more clearly the ways in which different regimes cross – or do not cross – the boundaries between public and private in each of these spheres.

Going forward, we see a number of areas where comparative research can contribute to a better understanding of authoritarian capitalisms. Our paper identified path dependence, state capacity, diversity of underlying social coalitions and the strength of veto points as essential to explaining variation in the choices of these governments. It is, however, the nature of authoritarianisms that they seek to erode both state capacity and democratic veto points. This leaves social coalitions as potentially the most interesting factor. By understanding mechanisms of social coalition-building, we may understand better under what conditions the Slovenian domestic capital might either decide that an activist state could work in their favour, and support a move in the direction similar to the Polish or the Hungarian one. By understanding the agency and choices of foreign investors better, we may understand why they are still the reasons for the Serbian government to keep up a modicum of economic pluralism, while in Hungary they become part of a closed extractive coalition – and under what condition the former is likely to become more like the latter.

Acknowledgements

An earlier version of this paper was presented at the Political Economy Working Group at the Central European University, Vienna. We would like to thank all participants for their thoughtful comments. We also thank two anonymous reviewers for forcing us to clarify our concepts, arguments and empirics. Dorothee Bohle gratefully acknowledges the financial support of the European University Institute’s Research Fund and Gergő Medve-Bálint’s research has been supported by the Bolyai Research Scholarship of the Hungarian Academy of Sciences.

Disclosure statement

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

Notes

1 There is no consensus in the literature how to conceptualise the right-wing, anti-democratic, authoritarian-leaning governments that have emerged in Eastern Europe and beyond. Most commonly, they are denoted as populist or populist radical right wing (e.g. Enyedi Citation2016; Müller Citation20Citation0Citation6; Busemeyer and Rathgeb Citation2022). We see as the ideological core of these forces a stark rejection against the liberal political and economic order that has characterised East European transformation, and therefore call them anti-liberal political forces (see also Fodor Citation2021; Coman, Behr, and Beyer Citation2021).

2 At the time of writing of this paper, it is still unclear to what extent the new centre-left government led by Robert Golob will rescind the political appointments in state companies and revise the deals that have already been struck under Janša’s rule.

References