Return of activist state in a former transition star: the curious case of Hungary

Abstract

ABSTRACT European governments have become more active in economic affairs since the great financial crisis of 2008; the Covid-19 epidemic and Russia’s war in Ukraine have triggered a variety of government interventions. What is less obvious is the increased non-customary state activism in the form of ‘patriotic economic policy’ in EU periphery, particularly in Hungary, in and out of crisis times. The successive Hungarian governments under PMV. Orbán have systematically eroded checks and balances in order to enlarge their room of manoeuvre while practicing a self-styled illiberal, pro-sovereignty policy. The paper revisits the earlier development phases of the Hungarian transformation, trying to identify antecedents to the later Hungarian backsliding in market competition and liberal democratic order. Aspects of state capacity, size and composition of the state sector, and key policy directions are investigated in order to make sense of the differing transformation paths in Europe’s eastern periphery with a focus on Hungary, a onetime space setter in the transition process. Populism seems to be a misnomer for Orbanism which might be better understood as “cronyism with a cause”: government budgetary measures are self-serving but they also attempt at rebuilding the state. The paper concludes with an overview of possibly outcomes.