DR GÁBOR SCHEIRING

The Political Economy of the Rise of Illiberalism in Post-Socialist Central Europe Market Reforms
POLITICAL ECONOMY RESEARCH FELLOWS | SEPTEMBER 2017 – AUGUST 2018

Abstract

The increasing prominence of anti-democratic politics in Europe strikes even the most optimistic observers. The recent illiberal turn of Hungary and Poland has puzzled researchers and pundits alike. Yet, the strength of illiberalism varies across the region with some countries like the Czech Republic retaining high democratic quality. What explains this divergence? What are the unique factors behind the rise of illiberalism in Hungary and Poland and the lack thereof in the Czech Republic? Existing research agendas, the actor oriented transition theory, the institutionalist scholarship and the varieties of capitalism approach failed to foresee and explain this phenomenon. I propose a new political economic framework for understanding the rise of illiberalism in CEE countries as a consequence of the exhaustion of the developmental model followed prior to the global financial crisis. My hypothesis is that the varying strength of illiberalism might be explained by the differences in the demobilization and rightward turn of the working middle classes and by the differences in the polarization of the economic elite. I propose a multidisciplinary methodological approach by a) developing a municipality level dataset to analyse how the vulnerability of the middle class lead to the collapse of the Left; b) creating a relational database to carry out a network analysis of the change in the connections among the members of the political and economic elite; and c) by providing qualitative case studies to underpin the causal narrative. Understanding de-democratization in the CEE region will help researchers in reformulating the dominant theories of transition in semi-periphery countries as well as provide lessons about socially and democratically sustainable transformations throughout the world. The project directly contributes to the goals of the ISRF by promoting a new political economic framework and by developing interdisciplinary expertise to solve the real world social problem of rising illiberalism.

The Research Idea

The recent illiberal turn of Hungary and Poland has puzzled researchers and pundits alike. It is perplexing how Hungary with earliest and deepest international integration, and least amount of nationalist mobilization during the nineties, ended up with the most illiberal regime. The rise of illiberalism is also remarkable in Poland, whereas in the Czech Republic illiberal forces did not achieve a breakthrough. What explains this divergence, what are the unique factors behind the rise of illiberalism in Hungary and Poland? In my research project I propose to establish a new political economic framework for understanding the rise of illiberalism in CEE countries as a consequence of the exhaustion of the developmental model followed prior to the global financial crisis. I propose to reorient the scholarship on democratization to focus on how the particular policies that facilitated the international integration of these countries and the resulting social and elite polarization affected their chances of reaching democratic consolidation. My hypothesis is that the varying strength of illiberalism might be explained by the differences in the demobilization and rightward turn of the working middle classes and by the differences in the polarization of the economic elite. If the hypothesis is correct we can assume a significant relationship between socioeconomic factors and the decrease in support of the parties of the Left, as well as a significant restructuring in the political networks of the dominant and the newly rising factions of the economic elite in illiberal countries in CEE.

Background

Dominant research agendas do not offer convincing explanations to democratic collapse in CEE countries. The actor oriented transition theory highlights the role of power hungry politicians and political parties in the process of de-democratization. Yet, a reference to corrupt and demagogue politicians does not explain why they were successful in this particular region and in two countries where liberal politics dominated throughout the nineties. Institutionalist scholars have consistently singled out Poland and Hungary as the most successful cases of democratic consolidation, yet the same liberal institutions failed to prevent the rise of illiberal politics. Students of the varieties of capitalism in the region have emphasized that foreign investment acts as a catalyst to economic upgrading. Yet, deep international economic integration seems to have been insufficient in locking in an economically sustainable development model in Hungary and Poland, two countries that were champions of foreign direct investment for two decades. In fact, low wages, increasing precariousness among middle classes, widening regional inequalities and low employment seem to be the unwanted corollaries of building dependent market economies. Culturalist explanations also cannot account for the recent surge in nationalism in Hungary considering the fact that Hungary was the least nationalist during the nineties. The empirical puzzle of democratic backsliding in the CEE region needs a new political economic explanation that will not only overcome significant gaps in the literature but also holds policy-relevant lessons.

The Focus

Putin, Erdogan, Orbán and Kaczyński: the increasing prominence of antidemocratic politics in Europe strikes even the most optimistic observers. Outright authoritarian turns are rare but the loss of democratic quality as measured by a decline in civil and political freedoms is a more common phenomenon in countries at various stages of democratization. Illiberalism is not an Asian or a post-socialist peculiarity any longer. Consolidated democracies might tumble, previously successful transformations such as those in Central and Eastern Europe (CEE) might be reversed. Having won a landslide victory in 2010 Viktor Orbán systematically demolished the system of checks and balances and reshaped political and economic institutions in Hungary. As a new economic class of winners emerges a large part of the population faces unseen precariousness. A few years later Orbán was followed by Kaczyński to embark on a similar political path in Poland. The social consequences in terms of rising inequalities and increasing out-migration are as severe as the potential dangers this tendency poses for the stability of the region. Yet, the strength of illiberalism varies across the region with some countries like the Czech Republic retaining high democratic quality. In my research I will compare the strength of illiberalism and analyse the roots of democratic reversal in Poland, Hungary and the Czech Republic. Understanding de-democratization in the CEE region will help researchers in reformulating the dominant theories of transition in semi-periphery countries as well as provide lessons about socially and democratically sustainable transformations throughout the world.

Theoretical Novelty

The research offers a political economic approach to the rise of illiberalism and proposes to focus on two neglected dimensions of the developmental model followed prior to the 2008 financial crisis. The first is the increasing precariousness and the following demobilization and rightward turn of the working middle classes as a structural precondition for illiberal elite groups to gain a foothold in the political arena. The second dimension is the increasing polarization of the economic elite and the push emanating from a group of the rising native capitalist class to ensure access to state protection and increased resources for capital accumulation in competition with the dominant internationalized segment of the local economic elite. By comparing the three countries varying degrees of illiberalism in CEE the research will not only allow us to establish the similar structural pre-conditions for the anti-democratic turn but also to analyse the divergent trends in the three countries that could explain the differences in their varieties of illiberalism. The central hypothesis of the research project is portrayed in Table 1: the differences in the vulnerability of the working middle classes as well as the differences in the polarization of the economic elite might explain the divergent strength of illiberalism in CEE countries.

Methodology

I will uncover both similarities and differences in the roots of illiberalism by testing the hypothesis in the two countries with an illiberal response and compare them to the contrast case of the Czech Republic in three steps. I will first construct a municipality level dataset and analyse how the vulnerability of the middle class, measured by changes in socioeconomic factors such as unemployment, indebtedness and income, interacted with the loss of support of the parties of the Left (source of data: national statistical agencies and election registries). Second, I will create a relational database on the members of the political and economic elite and carry out a network analysis of the change in the connections among factions of the elite through time measured by the publicly reported political ties of entrepreneurs and the business involvement of politicians (source of data: annual reports on the wealthiest entrepreneurs and publicly available biographies and wealth reports of politicians). Third, I will provide qualitative case studies to underpin the causal narrative (source of data: reports and semi-structured interviews), showing how structural conditions interacted with individual preferences in key policy episodes. The relational elite database combined with the case studies will provide a sound empirical base to analyse the rise of the new national capitalist class and how they use their political connections against the dominant internationalized segment of the economic elite by lobbying politicians to change the rules of the game and the property structure that solidified by the end of the 1990s.

Work Plan

In my previous research on democratic backsliding in Hungary I have pointed out the lacunae of the existing literature. Based on this I will provide an up to date review of democratic backsliding in post-socialist CEE in first two months. In the second month I will also collect publicly available settlement data through the national statistical agencies. Next I will collect data on the economic and political elites. I have already carried out a pilot research on Hungary, I will replicate this methodology fine-tuned to collect data on Poland and the Czech Republic. In the fifth and sixth months I will prepare thee short sectoral case studies. As a former MP I can rely on a broad network of decision makers and experts in the region. I will also use my experience with the archives of the Hungarian National Assembly to facilitate the case studies. A large part of the information needed from Poland and the Czech Republic is available in English but I will also be able to rely on occasional help from experts to translate material. The last six months of the project will be dedicated to analysing the data and preparing at least one article for submission in a high impact journal. The project will run from 1 September 2017 to 31 August 2018. See timing in Table 2 attached to the budget.

Outcome

The approach has the potential to be applied in other countries and in other regions as well. I plan to use the PERF to build a network of like-minded researchers at the University of Cambridge, University College London, Central European University the European University Institute (see for example the related application submitted to the call for flexible grants at the ISRF). I am invited to present my research at a panel of the Annual Convention of the Association for Slavic, East European and Eurasian studies in November in Washington, an opportunity I will also use to broaden this network of political economy scholars devoted to understanding the rise of illiberalism. I am also involved in a theoretical research project on democratization at the Institute for Political History in Hungary which provides further opportunities for synergies. Over a three year time span depending on further funding I plan to write a book as well as to propose a special edition for a political economy journal on the topic. I also plan to publish several opinion articles throughout the project. Based on this network and research I plan to apply for larger grants in cooperation with other researchers to carry out a more systematic analysis of the rise of illiberalism. The one year Political Economy Fellowship represents an excellent opportunity to lay the foundations of a long term project and would serve as seed money for the next steps towards the development of the political economy of illiberalism.