Tag Archives: restructuring

Energy will liberate Hungary from Neoliberal and Western Shackles

The energy sector in Eastern Europe benefited from the central planning efforts of the communist era. The oil, gas and electricity networks built during this time were robust and based on a high level of security of supply. While the oil and gas transit networks may have resulted in dependence on Russian sources, they were nonetheless robust and served to drive national economic activity. In 2004 when many countries in the region joined the EU their interconnected electricity network were more robust than most systems in Western Europe.

The days of central planning, when state owned energy companies were strong

The privatization efforts that begin in the mid-1990s and carried through the mid-2000s (see my Energy Policy article) were marked by selling electricity and gas distribution companies. This corresponded to the establishment of energy regulatory authorities to oversee the activities of these private companies, ensure the public good is fulfilled and keep prices in check while increasing reliability. This regulatory system, when allowed to function, can serve the interests of consumers and ensure private companies make investments while receiving a fair rate of return for their efforts.

Some would mark this last period as neoliberalism with the introduction of private capital and withdrawal of the state from the direct provisioning of public services in energy. A more accurate term would be the rise of ‘sectoral governance’ (Bulmer et al 2005), that is occurring globally. (But that is for another post and the basis of my next journal article). ‘Some’ (bad term to use, but I’ll do it here), consider private ownership in the energy sector, which is the driver of economic activity and has a direct impact on household budget and inflation as an essential state function. State ownership, it could be argued, is important to provide stability, long-term planning and investment to serve the national economy.

In Hungary, ‘the state’ is now in a process of reclaiming ownership rights lost during the ‘neoliberal era’. The need to reclaim ownership in the energy sector is about building up a strong industrial base for the country nation, as pointed out by Peter Szijjarto, the Hungarian Prime Minister’s Spokesman.

“We do not have a serious national industry so in order to reanimate the national industry we need to take such tough steps as for example reclaiming MOL…. In order to make Hungary strong again, we need to eliminate energy dependence, and we need to restore the national character of our strategic companies in parallel with their international operation,” Szijjarto said (Reuters, and my take on it).

Hungary enters a new era with reclaiming ownership in energy companies. The sweeping election of Fidesz, according to Prime Minister Orban allows them to finally end the communist era in the country, thus the need for a new constitution and to reshape the country according to their ‘post-communist vision. The introduction of high taxes on sectors of the economy that are privately held, like banking, energy and retail that were done to save Hungary from economic ruin, as it was explained at the time, now begin to appear as part of a broader reworking of the economic order in Hungary. Orban is leading the Fidesz-KDNP coalition in the process of not just transforming the country from a communist-socialist-private capital haven, which is represented in its own local form, but slaying the broader global order of neoliberalism. Hungary is now, according to Orban, leading the world into a post-neoliberal order.

“While we have put an end to the basic principles of a neoliberal era, we have yet to build up the non-liberal economic policy of the 21st century, in terms of planning, coordination and practices,” he said, adding that because there had been no planning in the real economy, financial planning was askew.

“The old world order is on the verge of collapsing; we have no reason to wait for the advice and opinions of opinion-shapers stuck under the rubble,” Orban said.“We say, however, calmly, politely and unflinchingly: this is none of your business; this is the business of Hungarians,” the prime minister said (MTI, my take on it).

The end of Neoliberalism and American post-war capitalism

It is this new “non-liberal economic policy”  that Hungary will be leading the region and the world in. While Romania and Poland pursue privatization of part of their energy sector, under the old way of thinking that private capital can modernize the sectors and lift some of the economic burden from the state, Hungary views the energy sector not as a burden, but as the fundamental building block of a state owned industrial complex (haven’t we seen this before?).

But what is the post-neoliberal era that Orban describes he is putting in place? Well, this is a huge question that only quoting Gramsci, Polanyi and the like can answer fully – or only partly. But essentially, don’t expect the worker or the tax payer to be better off. The 2 billion euro price tag of MOL demonstrates that it is the taxpayer/worker/citizen that will be paying for this new order, through higher taxes and services (i.e. feed through of ‘crisis’ taxes in inflation) while also having their working rights eliminated, as demonstrated by the total elimination of worker rights in Hungary over the past year. In fact, the post-neoliberal era looks like it is described in this excellent article by Elmar Altavar as presented at a conference in Venezuala in 2008.

The crisis of neo-liberal ideology does not necessarily result in a post-neoliberal order which aims at social forms beyond capitalism. In the contrary, post-neoliberalism in finance can result in new forms of capitalist hegemony which again include a stronger role of the state. Contrary to ‘old Keynesian’ state interventionism, the new interventionism – including austerity with regard to the social wage – will not be designed in favour of workers’ interest and the environment, but in an undisguised political support of financial interests.

Understanding Capitalism takes Marxism

National solutions become the way out of the current neoliberal crisis of capitalism. According to Altavar the state comes back into the economy to provide support to the faltering capitalist system. But while Altavar describes a heavy burden being placed on the taxpayer to finance capitalism to save it from drowning, Orban uses the public monies, not to save the banks and the capitalists which traditionally drive growth, but uses the cash, along with the capitalist’s money, to finance state acquisition of companies for the purpose of reintroducing the state into the market based economy. This occurs in strategic sectors to benefit the Hungarian nation – and state. In this case, the energy sector.

Under Hungary’s new post-neoliberal energy order, energy companies will be used to extend the Hungarian nation-state into domestic and foreign economies. Under this nationalist guise, this may include active participation in former Hungarian lands (Romania and Croatia). The Hungarian territorial state is only a core vessel for the economic activities of the Hungarian nation. If growth and economic prosperity, under this line of thinking, is to occur then the whole Hungarian nation throughout the Carpathian Basin needs to benefit.

The re-industrialization  of the Hungarian nation will be led and financed by the Hungarian people and companies. The logic continues, that MOL, with the help of state owned electricity provider MVM, will lead this economic revival. Along the way, Hungary will boost its energy security through diversification of energy sources (although this remains dubious if  100% of oil is from Russia). The Hungarian nation will become strong by energy, industrial and financial diversification. Those leaders and financiers in America and Europe that Orban scorns, will hold little sway over how Hungary carries out its economic and social post-neoliberal revolution.