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Once you have used all the carrots, only the stick remains

The Hungarian Academy of Sciences. Source: Travel Out There.

In this interview, Hungarian sociologist Tamás Gerőcs discusses the Orban government’s plans for centralizing academic research and more tightly controlling its funding. As the Hungarian Academy of Sciences states, “The Government of Hungary has recently established a Ministry for Innovation and Technology responsible for the centralized management of national science policy.” In a statement approved unanimously by its members, the Praesidium of the Academy has found it necessary to “call upon the President of the Academy to convene an extraordinary General Assembly should Government actions or proposals threaten to undermine critical activities of the Academy.” 

An earlier version of this interview was published in Hungarian on Népszava, 2018.09.03. 

How do young scholars feel about the Hungarian government’s plans to centralize academic research and curtail funding? 

Let me start by stressing that I can speak only on behalf of myself and express my personal views, as I am not entitled to speak on behalf of any institutions. In my opinion, the most important aspect related to your question is that knowledge making is a global process with global relevance that means it cannot work successfully exclusively within national borders. Researchers are commuting across countries and continents. This is natural and this has always been the case in terms of exchanging ideas and creating new knowledge. All signs indicate that Hungarian policymakers are ignoring the fact that academic work is internationally embedded and also that there is a global competition which characterizes how science is made. One can connect to this global process if the state furthers people’s mobility, enabling them to get to as many places as possible and to utilize experiences at home but also exchange knowledge with other people. Now it looks as if the Hungarian government is erecting walls also in the sphere of science and academia (as it does in other areas). But in this way, it can prevent the best brains from leaving the country only by force. This aversive attitude only strengthens young researchers’ commitment to make their fortune abroad and makes it more difficult for them to come back home and bring back what they have learnt there.

What results can the negotiations between the government and the leadership of the Academy bring?

The library of the Hungarian Academy of Sciences (from its website).

For the time being, I do not see the threat of direct censorship, but it can actually happen if things get worse. The government’s attitude will rather preserve the feeling of insecurity, and in itself, this can cause serious damage, for example, that people cannot plan ahead: neither in terms of their everyday life and existence, nor in terms of their academic projects. In such areas, where a serious research project can last for 10-15 years, this atmosphere of insecurity can make the work impossible. Existential insecurities may generate self-censorship. Instead of enhancing cooperation or securing a calm environment, those in power stir internal conflicts among research groups, and easily ignite groups, institutions that work in the field of science against each other. This is extremely harmful, since the cornerstone of knowledge-making is the commitment to cooperation, joint thinking and trust. Furthermore, in my view one of the worst scenarios is if such a process of internal decay starts, which will end in the outcome that only loyal associates of the government – getting direct support by the state – and their institutions would have commissioned work. This would mean the death of independent and critical knowledge-production in Hungary, but unfortunately it seems to be well in line with the agenda of the current course of governance.

What kind of political or economic mechanisms do you see making this happen?

Irrespective of the rhetorical attacks from the state propaganda, the recent economic model in Hungary is not hostile to the international capitalist class interest; rather, it makes a truce with some of the capitalist class fractions and tries to benefit from the ruptures that are characteristic of the global capitalist class realignment. For example, it sells out Hungarian workers to the German industry for a pittance. Working conditions, on the other hand, are determined by the needs of international capital, worker representatives hardly have any influence over it, and in fact even the government gave up on social security for the majority of working-class people. In addition, those industrial sectors coming into our country are the most sensitive ones to business cycles and are usually prone to structural, so called “over-production” crises.

Good examples are automotive and other electronic manufacturers. As far as I know, even people in the government are trying to deal with the issue of this and how to loosen the unilinear economic dependency that they have strengthened until now. I think disciplining academics and putting science into an impasse might have self-destructive consequences. At my workplace we are also discussing those historical mechanisms which are reproducing what we call dependent development on the global semi-periphery. One of the conclusions I see is that, by no surprise, what this government is doing in the economy and with the society is exactly the same mechanism that is reproducing dependency.

What can be the answer to this?

I would highlight two things. On the one hand, one must strengthen critical knowledge-making at home, and here I don’t only mean the sophisticated and applied skills of engineers, but critical social science, which can start a debate and reflect on this current economic model. Moreover, it would be necessary to take working people’s interests more into account. In Hungary, working conditions have become so bad, that it is not accidental that there is a lack of workers in the industry; that even makes the functioning of this economic model difficult. Besides good quality education and training of skilled workers, it would also be extremely crucial to improve the living conditions of blue-collar workers, raise their remuneration, improve health conditions and, generally speaking, invest more in them. With the mutual development of all these forces, there would be a chance to decrease the immensely disadvantageous and dangerous economic dependencies, of which the risks one cannot see at the moment, since the years of plenty still last, but when the proverbial seven years of drought begin, then the very bases of this model will shake.

Credit: Leonhard Foeger/Reuters.

Is there a visible governmental intention to tackle this?

I see an attempt to prepare for the coming years of dearth. What the concern is that the amount of EU subsidies after 2020 will be much less, i.e. less funding is expected to be allocated to Hungary. It is important to see that one of the sources of this dependent model originates in the use of EU funds, without which the economy would at best stagnate. For example, the government finances big state investments from these funds, but the creation of a clientelistic oligarchic network is also financed using this money: something characteristic of this model. Viktor Orban’s anti-EU rhetoric comes from the uncomfortable experience of one-sided dependency. But this is not only rhetoric. Government officials in Hungary have been working on making at least a diversification in this dependent model, i.e. trying to find alternative sources of capital and political alliances, both outside as well as inside the EU. The selection criteria is twofold. First, it shall be politically friendly, and shall have enough power and capital to support the agenda of the Hungarian government. On this basis, Hungarian state bureaucrats and their business allies are trying to do business with Russian and Chinese political and business elites. As we know very well, these are not simple business interactions but are embedded in broader geopolitical contexts. The Hungarian government makes every effort to attract Chinese investors and Orban himself also tries to make a deal with Putin. This is also a very asymmetrical “alliance” but what we can see is that they are able and willing to use each other for their own political or economic purposes. Hungary wants Russian investments in technologically sensitive key industries, such as nuclear energy and transportation. In exchange, the Hungarian government offers Russian geopolitical interests entrance into the EU, which is a very dangerous game. What Orban has been trying to do is to exchange one form of dependency for another or make a combination of them in the hope of gaining more space for his government’s political agenda. This is similar to what Nasserism was in Egypt during the Cold War, and if Orban plays the game well, he might gain some space in the international arena, which is crucial for his model’s political survival.

The Hungarian government’s economic and political model is in many respects not peculiar to Hungary, but fits very well into global and historical processes on the semi-periphery. It does not contradict development in the EU, but represents one of the clearest forms of dependent development in the European periphery. In many respects it is the result of the asymmetric integration into the world economy and into the EU. To state it very plainly, Orban’s regime is the product of our European integration. Exactly because of this, Orban probably wants to stay in the EU but wants to benefit from changes in the political superstructure. He is looking for new allies: both political ones but also amongst the dominant capitalist classes not only in Europe, but elsewhere as well in the broader geopolitical sphere. What is important is that the fate of his government depends highly on the emerging global trends.

The government was talking about supporting small and medium-sized enterprises, while filling the pockets of multinationals and oligarchs close to Fidesz from public funds. Is this due to private interest or objective necessity?

In those economic areas which cannot be influenced by a small, so called “open”’ and dependent country, Orbán acts as a puppet. He promises everything to big capital and he is good at delivering on his promises. It is no surprise that German industrialists support him also in his politics. One need only open up the Hungarian Labour Code and it is clear that in essence it was written by German industrial lobbyists and their Hungarian associates. Another important political condition for this system to thrive is that the Hungarian business and intellectual elite should depend personally from on clientelistic bureaucratic network around Orbán. This is why Orbán needs to reshuffle and constantly recreate his clientelistic network, and this is why he continuously attacks independent intellectual groups and institutions. It is not only the Central European University that has been challenged by the government; civilian organizations, the Hungarian Academy of Sciences etc.. are all under enormous political pressure. Ever since Orban has been in power, he has needed to confront someone or something, because the way he is able to consolidate his power inside the state requires a conflict with a battle to win.

What he wants from these conflicts is to arrange things such that these elite groups are able to reproduce themselves only within the confines of the state or in interaction with the state. In the media there is prevalent misreading of this reality. People think that this regime is only about personal enrichment. In my opinion, the primary aim is not glamour, although among some people this is certainly also part of the motivation, but the basis of Orban’s regime is that the elite, including the business people or local petit-bourgeois groups are politically loyal to the regime and therefore their existential and mental capacity must depend on state resources. Ironically it is mirrored in the regime’s own dependence on international capital. This is a systemic thing, so characteristic of the global semi-periphery. External global forces shape internal developments in this way but there is also a backward linkage.

Credit: Leonhard Foeger/Reuters.

Some people speculate that Orban is not a simple power-broker, but rather believes in a vision of an Eastern European version of the developmental state. I cannot say if whether is true or not and from a systemic point of view, I think the question is irrelevant. What we know from his sporadic speeches about it and from his reading list is that he does refer to the success stories of the authoritarian developmental state model of the Newly Industrialized Countries (NICs) in East Asia, particularly South Korea and Singapore. Others say that this is just an unfounded rhetoric and that Orban is a power broker, a political manager who can adapt with his skills to changing situations and has the capacity to consolidate his power among dire circumstances, in fact he needs extreme situations for this power consolidation, and that is why he is constantly stimulating war and battle, both in his rhetoric and in real action.

In many respects, this semi-peripheral model more closely resembles the Latin American setups, and also Putin’s state, but there are also significant differences. For instance, oligarchs who made fortunes from raw-material extraction and export in Russia, and who also tried to enter the state, are much more independent actors than their Hungarian counterparts. Due to the export of raw materials to the world market, they could gain profits from global economic changes. That is part of the reason why Putin needed to interfere in a violent way to regulate them. The Hungarian oligarchy has never been such an autonomous group with high aspirations, neither has it been independent from state redistribution. Moreover, it is the Hungarian state that creates them using EU money because the domestic capitalist classes barely survived the political change after 1990 (during the privatization period).

For this reason, Orban’s maneuvering space is rather narrow. He lacks a stable foundation since in the most important economic spheres he does not have a secure base, plus his regime is also vulnerable to international economic forces. It is no coincidence that the build-up of clientelistic oligarchic networks concentrates only on a narrow field in the Hungarian economy, in areas where there is regulatory space for intervention. These typically belong to the domestic infrastructure, to domestic suppliers, but does not affect companies that produce for the world market, the exporters. The latter are those giant manufacturing companies for whom this regime has sold out Hungarian workers for a pittance and allowed them to do whatever they please. On the other hand, in sectors that produce for the domestic market, for example in retail, media, communication, construction, tourism, banking, or public utility companies, the state policies insist on ownership-conversion and the change of owners. The Hungarian capitalist class is very fragile, usually active in domestic construction. This is important because, e.g. the housing policy of this government consists of a package of class policies – subsidizing upper class people – and channeling resources into Hungarian construction capitalists.

Because of its political relevance, the media oligarchy also has a special role. It is no surprise that Orban strengthened the line here and prevented one of his closest allies – a long-time friend to him – from gaining independence. One of the first oligarchs fed by Orban’s support was openly confronted when he gained too much power in the media and during this confrontation the oligarch, called Lajos Simicska, even allowed oppositional voices in his media, which was a very strange experience from the viewers’ point of view. This was a dangerous moment for Orban, but he managed to ostracize Simicska from the most inner circles.

The banking sector is another interesting case as well since there was no real conflict here with international capital. In fact, on the contrary, after the financial crisis, the Hungarian state bailed out those banks which had enormous losses and were happy to return their debt-ridden assets to state authorities. It was more like a loss-absorption at the expense of Hungarian taxpayers. This was a win-win situation for international financial capital and for the rising Hungarian financial bourgeoisie, which could get access to these assets and could start building up its post-crisis operation. So rather this was an especially advantageous situation for both the international financial capital and Orban’s clientelistic network, as well as the state, as it is much more able to control financing and credit channels, which is so fundamental in any economy. It could have been a good thing if this were for the sake of the majority of the people but Orban has a very distinctive class vision, he divides and ignites social classes and his allies are the upper classes. So all his policies, including social, financial, housing etc. provide consumer or corporate credits to political allies. The state systematically subsidizes the upper classes in exchange for their political loyalty. The lower and middle classes are more or less excluded and politically marginalized. Especially the lower classes, the workers are simple assets for the state upon which the Hungarian bourgeois classes and political oligarchs can capitalize. Either using them in their own businesses or making a dear deal with international capital when selling them out. The social antagonism that has been so rampant in Hungary is actually not so easily pacified. And one of the jobs Orban is doing – for his own interest but also for the sake of capital – is that he deploys all kinds of means, mostly rhetorical ones to divide and pacify the dissatisfied masses. This explains how he is shifting more to the far right. It is caused by this growing social antagonism for which his state is partly responsible and which makes him struggle to keep the social tension under control. But this is also why in principle Orban wants a compromise with international capital, he is far less hostile to them than he pretends to be. One of his promises is that the state will be in charge of keeping the social situation under control.

The government tries more and more desperately at least to slow down the emigration of skilled, mostly young workers. Could the continuous wage increases begun recently be a solution?

I think the post-2010 economic policy is largely responsible for the increasing volume of emigration. The Orban government made a mistaken calculus; it was too submissive to German industry, and pushed too far with its anti-labour industrial policy against the interests of the majority of workers. This is why working conditions in Hungary are so poor now. Today both the skilled and unskilled workers would rather go abroad, even to neighboring countries to look for better job opportunities, because wages in Hungary have become the lowest in the region. Wages here have been kept so low that even with the significant wage increases in the last two years, wages in Hungary are still the lowest in the region. This also has an effect on demographic processes. In the 1990s the net balance of immigration and emigration was positive due to the influx of Hungarian-speaking people from the neighboring countries. These people prefer to go to the West today. This is the reason why there is no more substitution of migration, which could balance-out the growing outflow of people. This is the reason why the net balance has turned negative. One solution for reversing this process would be to improve working conditions, or the strengthening of labour representation. Only in collaboration with the social partners is there a chance to stop these disadvantageous processes. For political reasons this is of course impossible in this regime, since political autonomy is not tolerated, let alone a voice from independent institutions on matters of governance. What Hungarian state bureaucrats and their industrialist allies did in the last few years to end the representation of workers’ interests in industrial policy is now coming back to haunt Hungary in the form of an acute lack of a workforce. They were shooting a bit at their feet, when they sold Hungarian workers out for nothing, and these workers have now voted with their feet.

When and how do you think this model will run out of steam?

In times of plenty, this regime distributes funds not only to loyal oligarchs, but the state also tries to control social dissatisfaction, and that costs some money. One way of doing that, to give an example, is family-allowances, tax credits after kids and a specific housing program that is designed to please the upper-middle classes. One can clearly see that these programs are supporting families with a relatively wealthy background, the more well-off classes. They barely reach the lower middle-classes, let alone poor people. In some fields, we even witness the channeling away of funds from the lower to the upper classes. The tax system for instance is very regressive in Hungary.

One of the cornerstones of the regime’s economic agenda was the public work initiative, which was born out of earlier social services. The state annulled these services but provided public work for unemployed people in great numbers. Orban received enormous criticism from liberals but this was a very popular reform, supported by those who used to be unemployed and by rural middle classes who felt frustrated about social services. But even more, public workfare programs created a very special condition in rural Hungary. Public workers became personally dependent on their employers, the mayors of their respective municipalities. The initiative was the cornerstone in Orban’s consolidation of power, as it pacified large segments of the rural population, in that they have personally become dependent on local government. Supplemented by the total control of the media in those places, the regime created a political monopoly which helped the ruling party to regain super-power in the elections. By using the state, the regime could control people’s possibilities through media and employment monopolies.

It should be no surprise that there is a widespread disillusionment in many people even in the middle classes about the promises of this government. Unfortunately it was more or less only the far-right Jobbik that tried to capitalize on this dissatisfaction and tried to use this situation for its own political purposes, using very harsh nationalistic language. Despite the aggressive counter-rhetoric that the ruling Fidesz party and Orban himself applied, he is also on the defensive side and can silence them only by means that are less and less compatible with the standards of democratic rules of the game (e.g monopolizing media).

Fidesz and Jobbik changed positions in the political arena before the previous election. Jobbik was pushed into a process of what we call “political gentrification”, while Fidesz occupied the far-right position. This strategy helped to divide and co-opt Jobbik, which seems to be the biggest loser after the election. But it has become absolutely clear now that Orban is building up his international alliance on the far right and he is ready, in fact maybe even willing to split from his earlier allies on the center-right. I suspect that German industrialists and big capital is in favor of this, and probably they support Orban in their struggle with other capitalist fractions.

My suspicion is that at least since the global economic crises in 2008 there has been a very confrontational realignment amongst various fractions of capitalist classes in the Transatlantic region. This has been partly due to the consequences of the crises. One must think about how markets in Southern Europe lost their appeal for German industrialists, who are now pursuing their global aspirations more in China. One split which I see emerging is that fractions in the old capitalist classes still try to preserve their dominance by using their post-crises neoliberal political agenda but with much harsher repressive tools to protect their privileges. A good of this is Emmanuel Macron. Certain other capitalist fractions, e.g. the aforementioned industrial and even financial classes are now befriending the far right. Orban seems to be one of their potential candidates.

Especially German industrialists, but also some Anglo-Saxon financiers support him in his power consolidation, not only in Hungary but also in the international arena. Orban’s international reputation is that he is one of the first far right leaders who has managed to consolidate his power in the state, unlike most of his ideological partners who have been still struggling with power consolidation (like in the US, or even in Poland).

I expect Orban’s shift to the far right to accelerate in the future, because both the external driving forces (ruptures and realignment in the international capitalist class structure) and internal forces (the rising inequalities and social dissatisfaction caused by his anti-social policies) might lead to an escalation of his confrontational politics in Europe. The consequences we face in Hungary is that when the seven lean years begin, there will be far fewer carrots left at his disposal, and only the sticks will remain. I anticipate that in this period that there will be an escalating political crisis that might easily turn into some forms of violence. For those who feel that today’s situation is hell, my bad news is that currently we are only at the consolidated or “paradise” stage of this model.

This interview was translated from the Hungarian by Tibor T. Meszmann.

Tamás Gerőcs is a member of the Budapest-based Working Group for Public Sociology ‘Helyzet,’ and a visiting scholar at Indiana University, Bloomington.