Hungary’s ‘Lex CEU’ and the State of the Open Society: Looking Beyond the Story of Democratic Revolutions

Demonstrators demanding that the Hungarian President veto “Lex CEU.” Source: HGV news.

This article appeared originally on the Cultures of History Forum at the Imre Kertész Kolleg, University of Jena.

The Cultures of History Forum’s invitation to discuss the ‘Lex CEU’ and the state of the open society focuses on threats against academic freedom and civil society in Central and Eastern Europe. It reads the Hungarian government’s attack on the Central European University (CEU) as a symptom of a more general shift away from fundamental principles of liberal democracy in the region. As a regional process, this backslide is seen as standing in contradiction to the hopes and efforts of democratic transitions after 1989. In this perspective, what needs to be investigated are the specific local and regional factors that have led to this move away from more progressive tendencies.

However, if we take a look at the state of things around the world, we see that authoritarian tendencies are on the rise everywhere. The most notorious examples are Modi’s India, Erdogan’s Turkey, Duterte’s Philippines, Maduro’s Venezuela and Putin’s Russia, but this global ‘backslide’ does not seem to have skipped over what are often referred to as bastions of Western democracy either. The US is currently undergoing a struggle to retain basic democratic guarantees on both the state and legal levels, which is being accompanied by massive social mobilization from both the left and the right. In Europe, the rise of the new right was viewed with great concern in 2017 elections, which saw their own struggles and protests. Outside the West, in countries with a global status similar to those of Central and Eastern Europe, the situation is characterized by growing social tensions, authoritarianism and militarized conflict.

Thus, if we view the new developments within Central and Eastern Europe – and particularly Hungary – within this context, the local specificities of post-socialist transitions do not seem to provide a full explanation of what we see today as a democratic backslide. Indeed, making sense of the present crisis may demand that we wholly revise the post-Cold War narrative of post-socialist democratization itself.

We might also have to re-think the post-Cold War democratization narrative if we want to account for what has in the last decade been criticized as the tendency of post-war Western welfare states to favour neoliberal authoritarianism. In contrast to the brand of authoritarianism in the aforementioned right-wing regimes, neoliberalism has not directly dispensed with principles of liberal democracy, but it has worked against the democratic inclusion of disenfranchised social groups and even entire global regions.[1]

In the case of the North America and Western and Southern Europe after 2008, the term ‘neoliberal authoritarianism’ was used to refer to the way in which free-market principles superseded democratic self-determination, which found its most pointed expression in the Eurozone’s rejection of demands made by Greece’s Syriza government in 2015. Outside North America and Europe, neoliberal policies have a long track record of supporting authoritarianism and are wrapped up in a long history of military rule, coups, forced evictions for extractive industries, and the process of militarization and securitization fuelled by the one and half decades of the ‘War on Terror’.

This short overview of the global situation helps us see that the post-socialist democratization in Central and Eastern European countries took place at the same time as financialization was becoming the dominant force in the world economy, the same financialization that was responsible for the 2008 crisis. Just as well, post-socialist democratization took place during the global diffusion of market liberalization, which was accompanied by a growth in the numbers of civil society organizations. For their part, these organizations were expected to fill in the gap left by cuts to the welfare state. Thus, the kind of ‘open society’ that took hold in Central and Eastern Europe was ushered after states were integrated into the global market, where they had to accept a subordinate position because of their high external debt. Market integration was accompanied by the destruction of former socialist welfare guarantees, the disintegration of COMECON markets, and the crumbling of socialist industries.

Democratization and the establishment of the NGO sector happened within that context. The need to contain social resistance to market reforms that brought levels of unemployment and social insecurity comparable to the Great Depression[2] and the ambition to build up a vibrant sphere of democratic participation butted heads, a contradiction that was experienced in a similar fashion by other examples of democratization-cum-liberalization across the globe. The states of Central and Eastern Europe used different models to contain this contradiction.[3] The 2008 crisis took a toll on all of them and was accompanied by waves of mass political mobilizations, changes of government, and shifts toward authoritarian tendencies.

Among the post-2008 global turmoil, the right-wing authoritarian critique of Western liberalism became a main element of official politics in Hungary. Viewed in the global context of the current year, 2017, it is clear that this tendency is not an exception. However, the specificities of the situation in Central and Eastern Europe are worth going into, as are the transnational connections between the individual countries.

From liberalization to right-wing authoritarianism: Hungary’s journey through the transition

Like other post-war industrialization efforts across the globe, Hungary’s post-war development was characterized by attempts to overcome technological backwardness and the burden of foreign debt. As early as 1952, Soviet-style industrialization led Hungary to search for loans from the West. On the eve of the financialization of the post-war world economic cycle under US hegemony and the resulting zigzags of adjustment efforts in global financial flows, Hungary, like other East European countries (and Latin American countries, too), first took on a series of cheap loans in the 1970’s and then found itself in a debt trap by the 1980’s. With growing external debts, Hungary’s socialist system moved towards economic liberalization since the 1970’s. By 1990, Hungary was seen as a regional champion of liberalization. During the 1990’s, the depreciation and privatization of state companies and the country’s partial reintegration into global production chains fed into another mechanism of financialization: the depreciation and movement of productive assets from the core to the peripheries. Hungary’s main resource, its working population, was first pushed out of the full-employment positions of the socialist economy and was then reintegrated into global production as relatively skilled, cheap labour.

The privatization of the state socialist economy allowed productive assets to become concentrated in the hands of national and Western capitalists. At the same time, the population, fully proletarianized by state socialism, was deprived of the state’s previous guarantees of work and welfare. For them, the post-socialist transition to capitalism and democracy caused an economic crisis, the loss of social security, and the prospect of decades-long austerity measures. In the transition to political democracy, the economic interests of these populations were not represented in the political sphere.

In order to mitigate the power of the National Council of Trade Unions, new democratic initiatives established new unions after 1988, which then came under the control of new democratic parties. For example, the Democratic League of Independent Trade Unions, which is affiliated with the Alliance of Free Democrats – Hungarian Liberal Party (SZDSZ), stopped advocating for union matters for the duration of the National Roundtable Discussions and made supporting political democratization its primary task.[4] While the new conservative party Hungarian Democratic Forum (MDF) stepped up as the official political ally of the workers’ council movement struggling for property shares within the privatization process, the MDF and the SZDSZ agreed before the election that they would remove the principle of workers’ self-management and property ownership from the constitution that was to be drafted by the new government.

The tensions resulting from the social crisis were tackled by an extended system of benefits that Janos Kornai has called a “premature welfare state”,[5] rather than through political conflict. Pieter Vanhuysse has characterized the political dimension underlying the “premature welfare state” as being constituted by a strategy of “divide and pacify”.[6] As numerous experts have pointed out,[7] this system of benefits increased hierarchies of redistribution and control, fuelling state dependence, political immobilization, and the politicization of conflicts over redistribution, which came to be epitomized in right-wing campaigns against the Roma people after 2008.

Meanwhile, efforts to cultivate civil society activity resulted in a relatively small, largely foreign-funded NGO sector that was limited to a select group of highly educated people capable of handling complex funding and administration tasks. While these organizations’ efforts to tackle the environmental, social and political problems brought along by the transition should not be downplayed, the very structure of their setup made it impossible for them to resolve the transition’s major contradiction between democratization and socio-economic polarization.

New post-socialist elites soon stabilized into two competing blocs of political-economic networks, and both came to play the role of mediators in Hungary’s integration into the world market. But the ways in which they filled this role differed: while one bloc worked as the local technocratic mediator of the interests of international capital, the other focused on the interests of national capital. This resulted in two different dominant political ideologies: while the first bloc uncritically welcomed Euro-Atlantic integration, the second bloc embraced a nationalist critique of Euro-Atlantic power and viewed resisting international capital and opening up space for national capital’s interests as the key political aims of a strong state.

These two groups of post-socialist elites developed two mutually reinforcing discursive techniques to manage the contradiction between democratization and the exclusion of disenfranchised social groups. The post-socialist right wing claimed that it was defending “national” interests against the coalition of old socialist power and foreign capital and invoked sentiments of national identity to symbolically close the gap between the interests of national capital and those of proletarianized groups. The socialist-liberal coalition accepted the right-wing definition of “national interest”, but it sought to build its legitimacy on defending democracy from the right’s nationalist, populist (and often Anti-Semitic) claims. In doing so, they called themselves “the democratic side”. They identified democracy with the introduction of Western-type markets and democratic institutions, which they thought had to be implemented even if it meant fighting local resistance, often with the help of Western powers.

In the eyes of this “democratic side”, local discontent was viewed – in terms borrowed from the right – as an expression of national self-defence and thus as further proof of the regressive (nationalist) quality of local society, in itself a threat to the democratic progress. Right-wing politics, in its turn, could rely on the socialist-liberal coalition’s denial of the significance of economic grievances and the symbolic downgrading of the local population. In opposition to the “democratic side’s” formal and normative interpretation of “democracy”, it sought to recognize the Hungarian “people’s” values and cover over the lack of representation of popular interests by stirring up national sentiments and attacking the “democratic side” as agents of foreign powers.

Two decades after the regime change, an inflow of foreign direct investments (privatization in the 1990’s), credit, and European Union transfers (in the 2000s) helped the social-liberal coalition maintain a dominant position as a mediator of those flows. However, none of this could finance a budget burdened by mounting debt. By 2006, before the global financial crisis, Hungary’s inability to service its debt invited scrutiny by international credit agencies. Due to the constant pressure of debt on the state budget, consequent governments were forced to raise taxes. High taxes tended to push private consumption and investment into stagnation and threatened to turn politically active higher-income groups against the political leadership. To compensate higher-income groups for the tax hikes, fiscal policies were designed to channel wealth from the bottom up. Lower-income groups were compensated through private Keynesian tools, including monetary and fiscal support for household borrowing. After 2008, this resulted in one of the most spectacular forex mortgage crises in the region.

The financial crisis of 2008 hit Hungary at a time when private and public debt were mounting. Moreover, the country had been in a recession since 2006, and the Western-oriented social-liberal leadership had been completely de-legitimized as a result of decades of austerity and social polarization and the depletion of capital flows from the West that formed the basis of their economic strategy. This process of de-legitimization peaked in a scandal around a leaked speech of Prime Minister Ferenc Gyurcsány in which he admitted lying to the people about the budget and the violent repression of street protests that broke out in response to it. All of this led to Fidesz achieving a two-thirds majority in parliament in 2010.

A nationalist hegemony supported by liberal critiques

Fidesz announced that it would undertake a national “freedom fight” against dependence on Western capital and a “centralization of the power field”[8] in domestic politics in order to push aside its opponents. For both measures, the new government could rely on strong discontent with social-liberal governments and their decades-long devaluation of local society in face of ‘Western values’. In the years after 2010, the new government succeeded in centralizing political and administrative power by making multiple changes to the constitution, rewriting electoral law and bringing state media and the cultural infrastructure under its control. Actual economic policies were aimed at improving conditions for national capital by centralizing non-tradable markets, reducing state debt and substituting dependence on Western capital by inviting investment from countries like Russia, China, or Azerbaijan.

At the same time, these measures to benefit national capital restricted opportunities for working people. Consumption taxes were raised, which worsened living standards for lower-income people. Savings of higher-income groups were channelled into the financing of state debt. Steps to promote reindustrialization in lower positions of the value chain, and to conform to the demands of Western industries in search of cheap labour – also advertised as a policy to create new jobs –, included harsh reforms of labour laws and a reorganization of the education system to channel labour power into low skill jobs. These policies continued to generate more social polarization. Finally, Fidesz’s attempts to move away from dependence on Western capital by seeking contracts with and investments from emerging powers outside the Western core led to concessions that will have severe consequences for future generations; an example are the massive loans acquired to pay for two nuclear units bought from Rosatom.

In 2014, Fidesz was able to keep its two-thirds majority in the parliamentary elections and won a majority of local governments in local elections. Both results were partly due to the lack of a legitimate opposition and Fidesz’s new election rules, but they were also due to its popularity among significant chunks of the electorate. That legitimacy, however, is being increasingly threatened by the party’s own aggressive centralization of wealth and the spectacular impoverishment of the lower third of the population. To keep its political camp together in spite of these tensions, Orbán’s party has been pressing for further ideological battles against Western domination and has been trying to prop up its image of fighting for general national wealth through measures of symbolic redistribution, such as the reduction of the price of energy bills at election time and the nationalization and redistribution of licences for tobacco shops along lines of political loyalty.

After the 2014 election victory, a new, more extreme austerity package was implemented. Mass demonstrations that broke out in response to the idea of a tax on internet traffic in autumn 2014 made the government withdraw that particular plan, but other policies that would further the increasingly polarized redistribution of wealth continued. Today, absolute social mobility in Hungary is the lowest in the EU.[9] The percentage of those living in material deprivation reached one-third of the population in 2015 and continues to grow.[10]

Unemployment and poverty, which for decades have been being pushed towards rural areas, are presently contained by a system of economic and political control that is based on public work as a politically dependent system of benefits. Funding for most types of benefits have been severely reduced, leaving public work as the main source of benefits for the unemployed. In order to do public work, one has to be “invited” by the local mayor. Centralized under the economic and political control of the party, this discretionary power of local governments greatly reduces the potential for political expression of social tensions born from poverty. The public work program is supervised by the Ministry of Interior rather than by the ministries typically responsible for social and labour policy.

After the 2014 protests, the effect that social polarization had in de-legitimizing the Fidesz government was temporarily curbed by the political exploitation of the migration crisis that reached Hungary in 2015. Migration would become the number one issue in the official press for the years to follow, a symbol of the party’s long-standing argument that foreign powers were trying to destabilize and threaten the survival of the Hungarian nation. In preparation for the 2018 elections, Fidesz is weighing in on the narrative of migration and foreign infiltration. ‘Lex CEU’, the issue of migration and the new NGO law, which forces civil society groups that receive foreign funding to register separately and be labelled as “foreign-funded” in all public events, are bound together in a political narrative on Western capital that is symbolized by its financial representative, George Soros. This narrative says that Western capitalists are funding internal agents to work towards the disintegration of national powers and ultimately the annihilation of Hungarian Christian culture by mass migration, which is symbolized by migration quotas enforced by Brussels.

During the political struggles of the last few years, Fidesz’s efforts to frame itself as the champion of the nation fighting for its freedom against Western liberalism found its mirror image in the liberal opposition’s interpretation of Fidesz politics as having its source in some irrational drive towards authoritarianism and nationalism, which is supposedly hindering Hungary from becoming a Western liberal democracy. In this bifurcated ideological space, which is supported by the parallel infrastructures of the still existing yet increasingly struggling liberal media and the new right-wing media under Fidesz control, it has been nearly impossible to formulate any message against Fidesz locally that would not be integrated into the liberal narrative and then weakened by its local lack of popular legitimacy.

Throughout the 2010–2014 electoral cycle, movements that spoke against the government were appropriated by the coalition of old opposition parties, with the predictable effect that they had little success due to the general disillusionment with the old liberal opposition. The opposition coalition joined by the leadership of the demonstrations between 2010 and 2014 had a very weak performance in the 2014 elections. With that additional blow, it became more difficult to further integrate oppositional forces which left the post-2014 democratic opposition initiatives small and fractured. While one of the successful new campaigners, the Hungarian movement Momentum, speaks the language of apolitical technical expertise similar to that of Emmanuel Macron, political approaches to the inequality and social suffering aggravated by Orbán’s regime have tended to lose their voice in the ideological space where any criticism against Orbán is represented as support for Western liberalism.

This ideological bind makes it difficult to say anything of substance about the social suffering that was caused by post-socialist liberalization and then politically exploited but materially aggravated by Orbán’s national capitalist authoritarianism. The silence about these political tensions works to the favour of right-wing political discourses, and the largest opposition party, the extreme-right Jobbik, is now on the heels of Fidesz with a version of the national freedom fight narrative that is addressed at middle and low income groups.

New tensions between Russia and the West and their significance in the domestic politics of the Western core seem to have a stabilizing function for Orbán’s local hegemony. Fidesz’s political narrative feeds off external criticism and pressure that pits (Western) liberalism against (Eastern) illiberalism, all of which enables Orbán to portray himself as the saviour of the nation from Western interests. The way in which recent demonstrations against Lex CEU were interpreted in the post-Cold War terms of liberal democracy and open society fit with this framework rather than challenging it. Orbán uses people’s disillusionment with the promises of these ideas to support his image. In the end, the emphasis on these ideas and values only serves to reinforce his ideological screen, which he uses to cover over the most urgent problems of Hungarian society.

Both nationally and internationally, the struggle around the CEU was framed as a struggle for academic freedom by liberals and as a struggle against foreign intervention by nationalists. But this opposition too only serves to conceal the most burning local tensions. This framework failed to account for the fact that academic and press freedom has already been destroyed in most Hungarian institutions. It did not take account of the actual political and material risks that Hungarian academics took when supporting the CEU in a desperate move to invoke international support for their own cause. It did not explain the situation of the middle-class youth: these leaders of the majority of the spin-off protests are facing a lack of perspectives at home and are migrating to Western Europe in increasing numbers.

While news on the CEU was covered in terms of the university facing an “existential threat”[11], the potential need to move a prestigious institution to another country did not give a precise picture of the actual existential pressures experienced by one-third of Hungary’s population living under the poverty line. Moreover, it failed to say anything about those policed and incarcerated for their poverty in a country where anti-homeless legislation has been inscribed into the constitution, and it failed to say anything about the dire conditions faced by migrants in Hungary’s detention camps.

Today, in the midst of demonstrations triggered by ‘Lex CEU’ and the new NGO law, the popularity of Fidesz is shrinking. In this situation, the way in which discussions around the CEU reinforce ideological oppositions between open society/liberal democracy and Orbán’s national project is not only detrimental because it might ultimately help Fidesz’s 2018 campaign. It is also significant because it reinforces a split between the anti-establishment struggles of those who feel themselves a part of the open society-narrative (academics, NGO workers and middle-class segments speaking the language of liberal democracy), and those who, through their experience of the past 25 years, feel excluded from it and turn to right-wing politics in order to express their discontent with the present regime.

Since 2010, a series of right-wing nationalist grassroots initiatives have been growing outside of Fidesz and its right-wing competitor Jobbik, initiatives that reject both parties’ claims to represent the needs of constituents. In the present situation, it seems that as long as liberal democracy remains the dominant discursive framework for challenging Orbán’s authoritarian regime while failing to address the underlying tensions of social polarization, these very tensions will continue to fuel right-wing radicalization.

Conclusion: post-socialist authoritarianism within a global crisis

When viewing Hungary’s recent ‘Lex CEU’ as a symptom of a democratic backslide, it is worthwhile to look beyond post-socialist democratization narratives. What is it, in fact, that the region is backsliding from? Certainly not from a state characterized by full democratic and social rights like the models of welfare liberal democracies in the Western core of the post-war global economy. Instead, political democratization in Central and Eastern Europe has gone hand-in-hand with a dependent market integration that brought with it massive unemployment, the rollback of social security and increasing social polarization. It happened in a global environment where corporate and financial capital were escaping the limits of national democracies and the global processes of market liberalization and financialization were paving the way for the economic and political crises of our era. Today, at the same time as the rise of Viktor Orbán’s infamous illiberal regime, polities around the world are experiencing waves of protest, increasing military conflict, and the rise of right-wing authoritarianism.

Within this context, Hungary’s present right-wing government is often interpreted internationally within the ideological frameworks of new political and geopolitical conflicts. More than two decades after the end of the Cold War, “Western liberalism” is still being contrasted with “Eastern illiberalism” and authoritarianism. Hungary’s ‘Lex CEU’, targeted at a university founded as part of George Soros’ efforts to aid the establishment of an open society after the fall of state socialism, is in a perfect position to become a key symbol of that re-actualized ideological contradiction. However, to read the ideological opposition between liberalism and illiberalism as a transparent description of the situation would be a mistake.

First, the seemingly air-tight contradiction conceals the pitfalls of the post-socialist democratization narrative, including the contradiction between democratization and social polarization. In the case of Hungary, it makes it difficult to see the ways in which the slogans of Western liberalism became associated with decades of austerity and the failed political messages of socialist-liberal coalitions that promised development funded by Western investments. The ideological hegemony of Viktor Orbán’s regime was built on the de-legitimization of the social-liberal project and the promise of a “national freedom fight” against Western domination. The Orbán regime works to loosen restrictions on national capital at the price of deepening social polarization and disciplining the poor.

The social tensions caused by Fidesz’s policies are politically contained by propaganda about Western interests threatening the nation. In preparation for the 2018 election, the three targets of that propaganda are the CEU, foreign-funded NGOs (both symbolized by George Soros’ activity) and foreign-aided migration (symbolized by EU migration quotas). Framed in terms of a defence of Western liberal values, external attacks on Orbán’s policies on these three issues work locally as reinforcements for his campaign. Meanwhile, the dominance of arguments focusing on formal democratic guarantees in the criticism of the Orbán regime (and in the representation of anti-government protests) helps sustain the post-socialist split between the issues of democracy and social polarization. For the larger part of Hungary’s population, post-socialist democratization went hand in hand with impoverishment and the impossibility of expressing social discontent in the political sphere. To address that gap between democratization and social polarization is an urgent task for any progressive critique of the regime, but new initiatives in that direction can barely make their voice heard in a public sphere dominated by the liberal-illiberal debate.

Second, the ideological battle focused on the opposition between Western liberalism and “illiberalism” and authoritarianism builds on previous vocabularies of Cold War ideological polarization, and in doing so obscures the new geopolitical conflicts and alliances that it reflects. Treated as a problem of post-socialist democratization in Central and Eastern Europe, it hides from view the interconnections between post-socialist democratization and market integration and the other democratic and social struggles across the globe in the age of financialization. It fails to reflect the role of Western democracies in those conflicts, including the role of international financial organizations, free trade agreements, military conflicts and internal securitization.

Finally, it substitutes an understanding of the complex interest alliances involved in present geopolitical conflicts, including the war in the Middle East, arms trade and the policing of migration, with a neat ideological separation between Western liberal and Eastern authoritarian forces. To understand Hungary’s present authoritarianism as part of the world in which we live today, we need to open our interpretative frameworks away from post-Cold War narratives on post-socialist democratization and towards an analysis of the interconnected processes of global economic crisis, political turmoil, militarization and the rise of authoritarianism globally, and place Hungary’s specific constellation within that broader picture.

Agnes Gagyi is a social movements researcher focusing on Eastern European politics and social movements in long-term global historical perspective. She is member of the Working Group for Public Sociology “Helyzet” and a Contributing Editor at LeftEast.

Footnotes

  1. Loïc Wacquant, Punishing the Poor: The Neoliberal Government of Social Insecurity, Durham, NC: Duke University Press, 2009; Ian Bruff, The Rise of Authoritarian Neoliberalism, Rethinking Marxism 26, no. 1 (2014): 113–129.
  2. Gareth Dale, ed., First the Transition, then the Crash: Eastern Europe in the 2000s, London: Pluto, 2011.
  3. As explained in comparative works like Dorothee Bohle and Béla Greskovits, Capitalist Diversity on Europe’s Periphery, Ithaca, NY: Cornell University Press, 2012; see also Mark R. Beissinger and Gwendolyn Sasse, An End to ‘Patience’? The Great Recession and Economic Protest in Eastern Europe, in Mass Politics in Tough Times: Opinions, Votes and Protest in the Great Recession, edited by Nancy Bermeo and Larry M. Bartels, Oxford: Oxford University Press, 2014, pp. 334–370.
  4. László Thoma, Védtelen társadalom. A rendszerváltásés a szakszervezetek (1988–1992), in Rendszerváltás éstársadalomkritika. Tanulmányok a kelet-európai átalakulás történetéből, edited by Tamás Krausz, Budapest: Napvilág, 1998, p. 248.
  5. János Kornai and Stephan Haggard, Reforming the State: Fiscal and Welfare Reform in Post-Socialist Countries, Cambridge: Cambridge University Press, 2001.
  6. Pieter Vanhuysse, Divide and Pacify: Strategic Social Policies and Political Protests in Post-Communist Democracies, Budapest: Central European University Press, 2006.
  7. See Ferge Zsuzsa, Magyar társadalom és szociálpolitika (1990–2015), Budapest: Osiris, 2017.
  8. See Orbán: a következő 15-20 évben egy nagy kormányzó párt lehet, Heti Világgazdaság (16 February 2010), retrieved 10 August 2017.
  9. European Foundation for the Improvement of Living and Working Conditions (Eurofound), Social Mobility in the EU, Luxembourg: Publications Office of the European Union, 2017.
  10. Eurostat, “Can you afford to pay your bills?” (21 April 2017), retrieved 14 June 2017.
  11. Justin Spike, CEU Faces Existential Threat under Proposed Legislation, The Budapest Beacon (27 March 2017), retrieved 14 June 2017.