Note from LeftEast Editors: This piece draws on the work that the members of the Working Group for Public Sociology “Helyzet” have done on a special issue of Fordulat (#26) “Crisis and Hegemony in Hungary 2008-2018” (Válság és hegemónia Magyarországon 2008–2018), summarized in piece published by media platform Merce.hu and by Merce’s editor Szilárd Pap here. On this basis, editorial work on the current article has been carried out by Ágnes Gagyi and Tamás Gerőcs from “Helyzet” and Mary N. Taylor from LeftEast. Translation work on parts of the text was done by Anna Azarova. An English language translation of the entire Fordulat #26 is forthcoming.
The foundation of the new accumulation regime
Seizing power in 2010, the Fidesz government adjusted internal conditions of capital accumulation to changing conditions of global economic integration, while constructing and strengthening the political foundations of its power. It constructed a new capital accumulation regime and a local, semi-peripheral hegemony that is able to temporarily manage social relations to its benefit.
In its economic policies, the regime protects and ensures the characteristically external capital accumulation of the export sectors important for external financial balance (primarily through FDI in the auto industry). Second, it protects and ensures the characteristically domestic capital accumulation of service sectors dependent on the internal market and infrastructures (e.g., telecommunications and the energy sector). Third, it protects and ensures the banking sector, which combines features from both. This sector has undergone significant changes of ownership in favour of national finance capital. It provides domestic services, yet, due to the dependence on external capital-inflow, it is also an important mediator of global economic integration.
In regard to serving big export companies relocating in Hungary, the regime offers even more generous protection to the (mostly German) automotive companies than the previous neoliberal state did in the fields of taxation, education, and labour market regulation. The formulation of these regulations is often conceded to foreign lobbying organisations, so that they can establish the legislation beneficial for themselves, evidence of the regime’s vulnerability and of strong international competition.
As a consequence of the interference of international capital in the Hungarian legislation, the country’s corporate tax rate is the lowest in the EU (while the VAT, paid largely by workers, is the highest), and the scale of benefits is conspicuous in the areas of education and the labour market, as well. Due to pressure from the Hungarian Chamber of Commerce and Industry, the regime introduced the dual vocational training system and lowered the age of compulsory education to age 16, in order to channel young apprentices as fast and smooth as possible to the understaffed companies. Meanwhile, the labour code amendments of 2018 (the infamous so-called “slave law”) were written in a fashion so obviously for the benefit of the industrial capital alone, that its first version (2017) was rejected even by the Fidesz-dominated Parliament before the elections. It was accepted with some minor revisions at the end of 2018.
Reproducing the labour force: who pays the costs of capital accumulation?
In order to rearrange the country’s integration into the global economy, the new capital accumulation regime thus subsidizes foreign capital, while also supporting the formation of national capital. To achieve this goal, as little of the corporate income produced by the workers as possible must be shared with the working classes. The regime transfers a larger share of the costs of reproducing the labour force onto households – not only by keeping wages low, but also by cutting the remaining sectors of welfare and social protections. Although the informal and unpaid self-sufficient labour of households has always served as a subsidy to global capitalist accumulation, such transfer of costs is especially typical during crises, when the decrease of capital’s profits is balanced by cutting back the cost of labour. Along with wages, benefits have also decreased, and working conditions have become more “flexible,” shifting risks onto the workers. At the same time, resources are withdrawn from social welfare institutions: the systems and institutions previously financed with higher taxes are underfinanced, dried out, and dismantled.
The transfer of reproductive costs onto society and households is visible, among others, in the regime’s gender and housing policies. While new demographic policies target women, the benefits supporting childrearing are increasingly only available to those who are already better off. While the regime has continuously decreased the value of universal benefits – those available to everyone regardless of social standing -, it has continuously increased the value of benefits targeted to the middle class (benefits related to the workplace, subsidies toward housing loans etc.). The government is also making the costs of the long-term reproduction of the lower classes ever cheaper. It increasingly withdraws support for the costs of childrearing and transfers them to households. In its symbolic campaigns, the regime idealises the woman who gives birth and does reproductive labour, and declares women’s interests in the labour market insignificant or even undesirable. However, considering the present average income of Hungarian households, the majority of women cannot afford to stay at home. For them, these expectations mean the triple burden of childrearing, reproductive labour, and waged work (often lower-income and done in worse conditions).
In the case of housing, an essential condition for social reproduction, since the 1970’s we see a decrease of reproductive spending and the shift of the increasing burden onto society. During this process, housing as a basic need has been gradually pushed to the background, while it increasingly becomes a tool of creating profit. This is evident, for example, in the decline of the state social housing sector and the cuts in regular housing support for the poor and the support of mortgage loans.
Fidesz’ housing policies continue that trend, but also transform and radicalize it. Another important difference is that while credit allocation structures in the 2000’s were tied to international financial markets, the post-2010 regime built another capital accumulation regime around housing, which combines the nationalisation of the banking system and the strengthening of national capital, channelling the savings of the middle class into state-supported mortgage loans. This way, the regime has built a new, protected capital accumulation circuit for housing investments, where profit is concentrated in the hands of domestic financial capital and the construction industry. On the one hand, this type of marketization and commercial objectification of housing opened new accumulation opportunities that primarily benefit domestic capital, while attracting new investors. It also brought the explosive growth of entirely new service sectors (e.g., AirBnB). On the other hand, the consequences of the housing market upswing after 2015 is as visible in the increasing housing poverty resulting from housing price increases, as in the situation of poorer households forced to the peripheries (including peri-urban informal housing sites), and in the increasing number of commuters.
Class politics in operation: Four trends in public policy
In our research, we identified four trends in the regime’s public policies which aim to harmonise the conditions for the regime’s external integration and its internal stability. The first trend is represented by measures that serve macroeconomic stability – from state subsidies for FDI by export industries to the renationalization of banks or the attempts to transform external to domestic debt.
A second trend of policies aim at the capitalisation of national capital, and are connected to politics. They include channelling state redistribution funds and EU funds towards domestic oligarchy, as well as the construction and strengthening of protected circuits of capital accumulation in market segments where internal markets and state regulation play a dominant role. Examples of the latter are the re-regulation of domestic services, the increase of the number of domestically-owned banks in the banking system, the nationalisations and attempts at centralisation in the public utility infrastructure and energy sector, the reorganisation of the media market, the support of construction companies close to government circles, and, in the last few years, the rearrangement of domestic tourism relations. The stability of oligarchic capital accumulation is also supported by processes that strengthen master-servant or patron-client relations in the local workfare regimes; in other words, all regulatory measures which increase the authority of masters and patrons to decide upon the matters of their beneficiaries (clients and servants).
A third trend of the regime’s public policy is constituted by measures which economically benefit only the upper-middle class, yet symbolically claim to integrate the entire wider middle class. While the regime’s policies increase the polarisation of society, the strengthening of the “middle class” is treated as an official ideology. Contrary to what this ideology claims, the actual class policies of specific measures benefit only the much narrower upper-middle class. Family benefits, which have largely replaced social and housing policy benefits, are most often given to the upper-middle class, while the flat tax rate also benefits those already on top. The upper-middle class’s savings play an important role in strengthening national financial capital, in ensuring macroeconomic stability (by boosting domestic savings and channeling them towards financing domestic debt), as well as in the construction of protected circuits meant to recapitalise the national oligarchy (e.g. in housing). The redistribution of state aid to the upper-middle class also buttresses the important role of this group in both patron-client relations, and in the struggle for political hegemony. Meanwhile, symbolic campaigns aimed at the “middle class” in general serve to keep downwardly mobile segments of the middle class within the ideological camp. In recent years, such efforts have led to the radicalization of right-wing political competition for this group of voters.
The fourth trend of policies is connected to the management of labour. Besides the measures that aim to create the cheap and flexible workforce needed by export industries, this trend emphatically includes measures of control aimed at the poor. Unemployment is channelled into a workfare system highly dependent on the discretionary power of local governments. This system links the livelihood of the unemployed to local master-servant or patron-client relations. Such relations are also strengthened with the special conditions tied to various benefits, which increase the beneficiaries’ dependence on the authorities. Anti-homeless legislation is an outstanding example for policies aimed at disciplining the poor. In the case of gender policy, this trend also includes the lack of action against domestic violence. This results in the “handling” of the domestic tensions arising from increasing the amount of reproductive labour shifted onto women within the household.
The tensions caused by the regime are handled not only with tools of direct subjection but also with ideological tools. The latter include the reorganisation of sites of cultural production, as well as coordinated campaigns based on government communications and the regime’s takeover of the majority of the media market, which try to harmonise the system’s contradictions with ideological tools. An excellent example of this is the anti-migration campaign: since 2015, the official image of an external enemy has been created, functioning to turn the dissatisfaction of the social classes suffering from existential difficulties despite the regime’s promise of “national” prosperity, into support for the regime.
Contradictions within the regime: external dependence and reproductive crisis
The structural conditions and relations which maintain the regime ensuring the external and internal capital accumulation also create contradictions which endanger its stability. From the perspective of external conditions, the regime’s stability is greatly dependent on the development of external circumstances of capital accumulation. Such risk factors can include, for example, an explosion of tensions within the global financial system, which can lead to a disaster similar or even more severe than the crisis of 2008. The increase of the German automotive industry’s share within the national economy is a particularly sensitive issue for the national capital accumulation regime. This will especially be so if German corporations will face serious challenges as a result of context of the automotive industry’s global crisis of overproduction. Finally, a reduction in EU funds – a significant element of the system supporting domestic capital – can also hurt the regime’s foundations. If any of the external conditions trembles, the oligarchic order of internal accumulation might tremble as well and its deep-rooted internal tensions and contradictions could intensify.
From the perspective of internal conditions, there are multiple indications that the post-2010 regime’s transfer of reproductive costs onto households, and especially onto the lower-middle class, waged workers and the subjugated classes is turning into a severe internal contradiction. From a structural perspective, a prominent sign of the intensification of societal contradictions is the increasingly dire labour shortage – a consequence of the combination of reindustrialisation founded on cheap labour and of the devolution of reproductive costs onto society. For the majority of the labour force, Hungarian wages cannot cover reproductive costs anymore. In recent years, households have turned to working abroad more and more often. Another sign of this reproductive crisis is the proliferation of informal reproductive solutions – from informal housing, to undeclared work, and the provision of social functions within the households.
After the October 2019 Municipal elections
Against this background, our work has shown that the new accumulation regime that has emerged in Hungary since the 2008 world economic crisis is largely based on an authoritarian management of the contradiction between subsidizing capital and pushing the costs of social reproduction on the working masses. The management of the politically most active middle classes included an unstable mix of capitalizing the upper middle class (and using their savings for stabilizing oligarchic capital circuits), and the ideological targeting and selective subsidizing of downwardly mobile middle-class segments.
Beyond the use of administrative and redistributive tools, these efforts included repressive ideological and political means, which pulled the regime close to far right ideology, and political alliances with far right groups throughout Europe and beyond (most recently, engagement in Turkey’s war on the Kurds). Despite all coercive efforts, contradictions have grown so great even during economic upswings, that Orbán seems to be losing some control over the political-ideological base upon which his regime was built.
In the case of labour, the growing cracks in the regime’s hegemonic construct appear primarily in the shape of structural factors such as an extreme shortage of labour (due to out-migration) and the growth of informal reproductive practices – but also as a new wave of unionized struggle. The results of the recent municipal elections (October 13 2019) show another aspect of the regime’s growing contradictions. Not so different from a wave of recent oppositional electoral gains in other authoritarian post-crisis capitalist regimes such as Russia or Turkey, electoral coalitions of local elites and middle classes affected by the regime’s extreme accumulation measures managed to gain positions in a large number of cities, including the capital.
Beyond a wave of protest votes against the regime, the main factor making these victories technically possible was the coordination among oppositional parties – an aim pursued for several electoral cycles, but only achieved now. In the context of the Hungarian regime’s efforts to curb institutions of parliamentary democracy, this wave of municipal electoral victories is a significant step. Although the space of manoeuvre of the local governments has been reduced to minimal (including the centralization of local budgets), the high number of oppositional local governments today marks the first moment since 2010 where oppositional politicians are able to put in place regulations that go against the regime’s will.
How can this situation be evaluated in terms of the growing structural contradiction between capital accumulation and the reproduction of labour? The current constitution of opposition parties includes a colourful range of political orientations, ranging from extreme right, through neoliberal, to green, to liberal with social sensitivity. In their programs, the overwhelming majority of elected representatives promote agendas aiming at a more successful capitalist integration, with foci ranging from the promotion of small local entrepreneurs to a more successful European integration.
The new mayor of Budapest, Gergely Karácsony, comes from the oppositional party Párbeszéd (PM), established after green party LMP split in 2013 over the issue of whether to join the opposition coalition led by previous neoliberal prime minister Gordon Bajnai. PM was created by LMP members who supported the coalition. Far from an anticapitalist himself, Karácsony has connections with more left-leaning segments in the oppositional and civic spheres, and has already made gestures in support of some of these groups’ agendas (for example, he banned evictions in Budapest on his first day in office – a gesture with more symbolic than practical weight, as the bulk of municipal apartments that remained after decades of privatization are not in the jurisdiction of the capital, but in that of the districts).
In some cases, new local governments have bases in civic networks pushing issues related to social and/or ecological reproduction. The most significant case is the 8th district of Budapest, where independent candidate András Pikó was supported by a community campaign carried out by a network of local NGOs – a model introducing the idea of community participation and control into oppositional politics largely lacking practical institutions of control from below. Other cases include new mayors coming from community organizing backgrounds related to issues of ecological transformation and climate activism. Even though such cases are in the minority, and the overwhelming majority of new oppositional governments can be plotted on the liberal-extreme right spectrum, the new situation may open some windows for social claims.
At the same time, efforts invested in collaborations with new local governments may have serious limitations. Expectations in face of the oppositional gains are primarily voiced today as hopes towards the parliamentary elections in 2021. Coupled with the minimal space of local governments for practical manoeuvring, these expectations – and the political clashes they will attract in the next two years – will most probably result in a situation where the local programmes of oppositional governments will be met with strong practical barriers, yet carry highly politicized stakes within a long campaign aimed at the 2021 elections.
Whether left segments of middle-class activism in contact with this level of political organization will be able to use the situation to the favour of their agenda, rather than to its detriment, is an open question of tactics and coordination. In an optimal case, the space opened by municipal elections might be used to forge stronger coalitions among middle-class left politics, organized labour and other forms of workers’ organization. This would require challenging middle-class political organizations’ entitlement to represent social issues on their own, and building institutionalized relations between labour constituencies and political representatives that enable labour to influence and control political representation from below. Building these kinds of ties would be as important with regard to the practical and (larger) symbolic space opening up for green politics: it could decide the choice between directions favoring green capitalist or reproductive directions.
On the regime’s side, it remains a question whether Orbán will change his political tactics to compromise and co-opt figures behind the new initiatives of local elites and middle classes. The latter case would mean a shift in the political class alliance amongst the various middle-class groups inside the state, promoting a new deal between them, largely at the expense of the working population. This is no small risk. The political elite in Hungary has a well-articulated history of navigating and negotiating with different middle-class groups, using the political tactic of ideological compromises while selling out earlier promises made to working people. Looking at recent dynamics of semi-peripheral authoritarian regimes of capital accumulation across the globe, another possible reaction by the regime to the challenge raised by the political organization of local elites and middle classes might be a strengthening of the authoritarian arm of control. This scenario might be amplified in case of a potential change in the external conditions of the regime’s accumulation capacity. In this context, building coalitions that promote the power of social reproduction in the face of capital extraction is as important as ever.
The opposition’s success in the municipal elections offers new opportunities primarily for elite and middle-class actors working in institutional politics on various political goals. In this context, our analysis offers perspectives for a left-wing political inquiry, which considers the current state of labour and social reproduction within the local conditions of the global crisis. These perspectives can inform the social-economic organising work – essential for left-wing politics – which strives to reorganise everyday forms of work and reproduction away from capital accumulation and into ecologically and communally sustainable, communally controlled and directed forms. This analysis, examining the connections between the Hungarian economy as a capitalist economy and the crisis of global capitalism, may also be helpful in contextualising political programs as elements of the globally integrated daily economic mechanism.