Academic journal article Capital & Class

The Origins of Neoliberalism in Late 'Socialist' Hungary: The Case of the Financial Research Institute and 'Turnabout and Reform'

Academic journal article Capital & Class

The Origins of Neoliberalism in Late 'Socialist' Hungary: The Case of the Financial Research Institute and 'Turnabout and Reform'

Article excerpt

Introduction

The last three decades have seen the ascendancy of neoliberal ideology and policy across the world. While the geographical spread of neoliberalism--here conceived as an economic doctrine, a political project of the ruling classes around the world and the new modus operandi of the capitalist mode of production (Dardot and Laval, 2013; 'What was Neoliberalism?' in Davidson et al, 2010: 1-92; Ferguson, 2010; Harvey, 2007; 'Postface' in Mirowski and Plehwe, 2009: 417-455; Mudge, 2008; Peck et al., 2012, 2012; Saad-Filho and Johnston, 2005; Turner, 2008)--has been highly variegated, nowhere did it sweep aside competing paradigms so quickly and radically as in the former 'socialist' economies of Central and Eastern Europe (CEE). As one of the frontrunners of the transition to the market in the region, Hungary embraced neoliberal policies of liberalisation, privatisation and macroeconomic stabilisation in the late 1980s and early 1990s. Other countries in the region soon followed suit, and no matter whether their economic policies were located on the more 'radical' or more 'gradual' end of the reform spectrum, altogether the CEE transformations constituted what Murrell (1996) has described as 'the most dramatic episode of liberalization in economic history' (p. 31).

Yet, arguably one of the most puzzling questions of Hungary's 'double transformation' (1) for critical scholars and political activists is why policymakers in Budapest decided to abandon any experiments with 'market socialism' or a 'Third Way', favouring neoliberal restructuring instead? After all, they could have built on a strong tradition of reformist thinking, which was almost unique to the region (apart from Poland and Yugoslavia) and had inspired previous market reforms, contributing to Hungary's infamous epithet among Cold War commentators of being 'the happiest barrack in the East'. Moreover, neoliberal economic policies did not necessarily fit easily with the social bases and intellectual traditions of the political parties that were vying for power during the transition, meaning that, once in office, any government would have to have been willing to implement neoliberal reforms against the interests of its own electorate.

In order to address this question, this article argues that the development of reform economics needs to be understood in relation to Hungary's position in the capitalist world economy and the international state system between 1945 and 1989. To provide this context, the article draws on a broad literature, from a variety of theoretical approaches. The development of capitalism in the 20th century and the epistemic community in which dominant ideas about how to best operate it, the ascendancy of neoliberalism in international policymaking circles the 1970s and their influence on processes of globalisation, economic crises and restructuring, including the 'post-communist' transitions in the former Soviet bloc have been widely discussed (Aligica and Evans, 2009; Babb, 2004; Bockman, 2011; Bockman and Eyal, 2002; Drahokoupil, 2009; Fourcade-Gourinchas and Babb, 2002; Gagyi, 2015; Gowan, 1999; Mirowski and Plehwe, 2009; Seleny, 2006; Shields, 2012; Wagener, 1998). As for the economic, political and social history of actually existing socialism' in Hungary, excellent studies have been provided by Berend and Ranki (1985), Pittaway (2014) and Swain (1992). In addition to this literature, this article also draws on key reform proposals of the Hungarian transition, (2) as well as published and self-made interviews with Hungarian reformers. (3)

Against this background, the article sets out to show that the origins of Hungary's neoliberal transformation preceded the formal transition to a market economy and parliamentary democracy in 1989-1990 and need to be understood as part of a wider restructuring of the capitalist world economy from the early 1970s onwards. As such, neoliberal ideas and practices were not simply imported 'from the West' after the 'regime change' but emerged 'organically' in Hungarian society in the 1980s, as a response by domestic political and economic elites to the deepening crisis of the Kadar regime. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.