JANUARY 14, 2021
WHEN POLITICAL ECONOMIST Gábor Scheiring was elected to the Hungarian National Assembly in 2010 — serving until 2014 as a member of the “Dialogue for Hungary” opposition green party — his father, a retired worker at the United Electrical Machinery factory in Budapest’s industrial periphery, was happy and proud to see his son on television. But he always turned down the volume when Scheiring spoke. “[W]hat I said irritated him,” Scheiring writes of his late father. “When it came to politics, we had only one thing in common: he often declared that he would vote for a decent social democratic party if there were any.” Since there weren’t, Scheiring’s father was left with the center-right Hungarian Democratic Forum and then, later, Viktor Orbán’s far-right nationalist Hungarian Alliance party, Fidesz.
Scheiring, who later pursued a PhD in political science at Cambridge University, is pro-immigrant, pro-environment, and pro-Europe. Still, he sees a certain logic to his father’s political choices. After the fall of communism — which the Scheiring family had welcomed — his father and mother, who operated an industrial crane, were forced to work longer and longer hours to maintain the same quality of life. In 1995, Scheiring’s father suffered a stroke and was partially paralyzed. His mother went on sick leave to care for her husband and discovered she had cancer. “Both of my parents experienced the transition from socialism to capitalism as a perpetual downfall, eventually contributing to their premature deaths,” writes Scheiring, who is now a Marie Curie fellow at Bocconi University in Milan, Italy.
Their story was also frustratingly common, he discovered. That revelation ultimately led to The Retreat of Liberal Democracy: Authoritarian Capitalism and the Accumulative State in Hungary, the first empirical study of how deindustrialization, rising income inequality, and wealth redistributed from the bottom to the top all contributed to Orbán’s consolidation of political power in Hungary post-2010. The book is Orsolya Polyacskó’s 2020 translation of Scheiring’s 2019 Egy demokrácia halála: Az autoriter kapitalizmus és a felhalmozó állam felemelkedése Magyarországon. (Uncredited by Palgrave Macmillan, Polyacskó is acknowledged by Scheiring in the preface: “The first version of this book was published in Hungarian, and it would have been a nuisance to translate my own words.”)
In The Retreat of Liberal Democracy, Scheiring examines the social and economic underpinnings of democratic backsliding in Hungary, but the book’s findings resonate far beyond Hungary’s national borders, with many of the socioeconomic trends Scheiring identified present in other countries — including the United States. As Americans are left to make sense of a 2020 election in which Donald Trump was soundly defeated, but where his aggrieved brand of populist politics still garnered more than 70 million votes, Hungary offers key lessons for understanding and addressing the forces underlying authoritarian-leaning populism.
For two decades after the fall of the Soviet Union, Hungary was a poster child for democratic development in Central Europe. It was one of the first countries in the region to liberalize its economy, in the second half of the 1980s, and the ensuing flow of foreign investment led to significant technological modernization in the 1990s and 2000s.
These trends, however, began to reverse in the mid-2000s. In 2010, Orbán’s Fidesz party defeated the Hungarian Socialist Party in national elections and claimed a two-thirds majority in the National Assembly. Orbán quickly began building what he himself termed the “illiberal state” — adopting a new constitution, dismantling checks and balances (including the Constitutional Court and prosecutor’s office), rewriting the electoral law, using the state audit office as a political weapon to arbitrarily fine the opposition, and turning the state’s public broadcaster into a communications arm for Fidesz. The result is what democratic experts call a “hybrid authoritarian state,” where elections take place but where the ruling party has engineered a set of advantages to deprive the other side of a contest that is free, fair, and competitive. In 2020, the nonprofit Freedom House, which monitors the state of democracy worldwide, downgraded Hungary from a “semi-consolidated democracy” to a “hybrid regime.”
According to Scheiring’s book, researchers have advanced a number of theories to explain this democratic backsliding. Some, including famed American political scientist Francis Fukuyama, concluded that Hungary’s descent into illiberalism was the work of one rogue, “bad” actor — Orbán — who exploited “good” institutions that were too weak to withstand his authoritarian onslaught. Many Hungarian social scientists and intellectual elites have advanced a different argument: namely, that Hungary was never really all that culturally democratic, nor could it ever be. Hundreds of years of monarchy, empire, and socialism had produced a population with a “feudal mindset,” these scholars reasoned, while many Hungarians harbored latent prejudices that were ripe for exploitation by strongmen. After World War I, the Kingdom of Hungary was forced to cede 72 percent of its territory to neighboring states, planting a nationalist seed that Orbán needed only to cultivate.
Scheiring argues convincingly that this confluence of factors certainly exacerbated Hungary’s democratic backsliding, but that socioeconomic research is needed to provide a fuller picture. Before 2010, surveys found robust support for liberal values in Hungary — the highest in East-Central Europe. The overwhelming majority of voters lacked an appetite for authoritarianism just a few years before Orbán consolidated power.
In order to determine what changed, Scheiring conducted a full empirical study based on existing and new datasets, and his own qualitative research. He interviewed 82 workers to shed light on the subjective experiences unpinning his findings and discovered something simple but profound: even as Hungary’s economy has grown since the fall of communism, quality of life and financial security have plummeted among the working class. While the country’s export sector boomed in the 1990s, unemployment increased, income inequality increased, and a mortality crisis set in. From the late 1980s to 1995, manufacturing employment dropped by 40 percent overall, with some key regional industrial centers seeing employment fall by 50 percent. Deindustrialization correlated positively with higher mortality rates and loss of community, Scheiring found. “There were children playing here, kids used to play football or hide and seek,” one former steel worker told Scheiring. “You could hear the children playing. Now there is only silence.”
The real wage of an average Hungarian increased by about 12 or 13 percent between the early 1980s and 2009, but during that same period, the cost of living skyrocketed. Public services — including subsidized housing and public utilities — were eliminated. Debt levels rose steadily until finally, at the end of the 2000s, the socialist government tried — and failed — to privatize the health care sector. “This was the time when especially working-class voters became disillusioned with the Socialist Party,” Scheiring said in an interview I conducted with him in early November 2020. “They either just stayed home and didn’t vote, or some supported Fidesz or the radical right-wing parties.”
These workers didn’t want to change the political system, Scheiring argues. They just wanted to change the economic system. Multinationals such as German automotive companies were thriving in Hungary’s newly opened economy, but the success of foreign firms had little bearing on local entrepreneurs. En route to his 2010 landslide victory, Orbán promised new nationalist economic policies; he later intervened to open up the banking, energy, and retail sectors to local firms.
But Orbán didn’t bring down international firms the way he had promised. Instead, technologically intensive manufacturing and the export sector have only grown under his tenure. In the past 10 years, Fidesz has reduced the rights of trade unions, heavily liberalized the labor code, introduced a flat income tax that benefits the upper 20 percent, and reduced the corporate tax rate to nine percent — the lowest in Europe. This resulted in a redistribution of wealth from the bottom up, transforming Hungary into what economists call an “accumulative state.” So, while Fidesz harnessed workers’ anger to get into power, Orbán has catered to business elites while in office.
Having abandoned the workers’ interests, though, Orbán needed to do something to stay in power. First, he became more and more authoritarian, restructuring institutions so he couldn’t be removed from office. Second, he ran populist campaigns scapegoating everyone from immigrants to the poor to the European Union for working-class economic anxiety. “It’s a very clever mixture to prop up his majority even in the face of highly unpopular measures,” Scheiring told me.
While every country has a unique history, cultural, and sociopolitical landscape, the parallels between Orbán’s Hungary and Trump’s United States are difficult to ignore. Like Orbán, Trump leveraged economic and social displacement to achieve a surprise victory in 2016, combining racist and sexist rhetoric with promises to “drain the swamp” and prioritize American workers. Once in office, however, Trump adopted policies that benefited financial elites, including a $1.5 trillion tax cut for the wealthy, and weakened institutions. He appointed cabinet members who lacked sector-specific experience, sowed distrust in government agencies, and packed the federal court system with unqualified partisan judges.
Although President-elect Joe Biden soundly defeated Trump in both the popular vote and the Electoral College, more than 70 million Americans cast votes in favor of Trump. That means that, while Trump’s days in office are numbered, Trumpism as a populist political ideology centered on nationalist aggrievement is here to stay. Many Americans are no doubt wondering where the country goes from here.
According to Scheiring, his research shows that both in the United States and Hungary, the key to defeating populism is to prevent right-wing, authoritarian-leaning parties from creating a monopoly on socioeconomic grievances. “You do that if you are able to present a more progressive framing of the same social problems,” he told me. “In Hungary, we had a centrist left that increasingly moved to the right. That opened up space for the right to mobilize on economic anger, and this can provide a really stable ground for populists to do all kinds of nasty things.”
In 2014, the opposition ran a conservative party candidate in the Budapest mayoral elections who was a former finance minister and economist for the World Bank, and who had engineered austerity measures in the 1990s. Although Fidesz was experiencing record-low support among the electorate, Orbán’s candidate soundly defeated his liberal, free-market opponent. Five years later, one of Scheiring’s green party colleagues, Gergely Karácsony, upset the incumbent after trailing in the polls. Already there is speculation that Karácsony will be a leading candidate to take on Orbán in the 2022 parliamentary elections, which many political observers think could be the last chance to salvage Hungary’s democratic institutions. In August 2020, the country’s six opposition parties agreed to unite around a single candidate, although Karácsony maintains the candidate should be chosen through a type of primary system. Like Gábor Scheiring, Gergely Karácsony believes, as he explained to me in an interview, that the key to fighting back against authoritarianism is to focus on the types of “everyday livelihood issues that are more important for most people.”
As Europe’s migrant crisis has largely subsided and the EU has taken a decisive role in fighting the coronavirus pandemic, Orbán is shifting away from his traditional scapegoats and intensifying a message based on “traditional values” and “protecting the family.” “Populists are only strong if they manage to build up a very strong enemy,” Karácsony told me. “It will be important not to get into all of the culture war issues that he’s trying to force on the opposition.”
That doesn’t mean ignoring polarization, though; it means reframing it. Populism is fundamentally an ideology about defending “normalcy” against supposedly extreme liberal aberrations, Karácsony explained. That’s why global populist movements feed off of one another; it’s important for their leaders to be able to show that there are fellow soldiers fighting the same battles and protecting the same normalcy. A competitive opposition will need to redraw the battle lines, Karácsony said.
Today there’s a new accumulative state that is geared toward creating a new upper class and redistributing money upwards. The opposition would need to be able to convince society that it’s basically a conflict between the one percent and the 99 percent, not a cultural conflict between social groups.
It’s a strategy that focuses far less on Orbán than on aggressively attacking the social and economic forces that allowed him to consolidate power in the first place. It’s also a strategy that could be replicated in the United States, where, unlike Hungary, a truly transformative economic policy would need to be grounded in a rethinking of the financial legacy of institutionalized racism.
Ultimately, whether taking on Trumpism or Orbánism, opposition coalitions must be united, Scheiring said. “There will have to be strong cooperation and very strong loyalty to new leaders.”
Janna Brancolini is an American journalist based in Milan, Italy, where she is a correspondent for the Los Angeles Times and Bloomberg Law. Her essays and photography have also appeared in the Columbia Journalism Review, Business Insider, and other publications.