Market Madness Hits Hungary

This article of mine appears in The Morning Star.

If voting changed anything they’d abolish it, the old maxim goes.

If anyone doubts the truth of it, just visit Hungary.

Earlier this year the Hungarian people heavily rejected, in a national referendum, three key elements of the neo-liberal government's "reform" programme: the imposition of hospital and doctor's visit fees and the imposition of higher education tuition fees.

Hungary’s ruling elite were furious.

Janos Koka, of the fanatically neoliberal ‘Free Democrats’(SZDSZ), a party whose embrace of unbridled capitalism makes Thatcher’s Tory party look like social democrats, reacted by asserting that he would “like to assure the international money and capital markets that the government upholds its commitment to reforms and a strict and tight budget,"- in other words that the people‘s democratic will, as expressed in the referendum, counted for nothing.

After leaving the government in early summer after a row over the budget, the decidedly anti-democratic ‘Free Democrats’ spent the next few months calling for a ‘government of experts’ to be appointed in Hungary. We know the sort of ‘experts’ they had in mind- ‘free market’ ideologues like the notorious Dr Lajos Bokros, from the George Soros-funded Central European University- a man who supports the introduction of compulsory private health insurance and who has questioned "the subjective right to receive a pension".

The SZDSZ has now dropped its call for a ‘government of experts’, because they have got something even better.

Last month, Hungary applied for- and received a $25bn ‘rescue package’ from the IMF, World Bank and European Union. The collapse of the Hungarian economy is of course a shocking indictment of the hardline neoliberal policies that the ruling MSZP/SZDSZ coalition have been following over the past six years, policies that have been lauded by foreign capital and their political emissaries. But while Hungary’s bail-out is undoubtedly a national embarrassment, for the country’s ruling elite it has served a definite anti-democratic purpose.

It is widely accepted that the size of the rescue package- which dwarfs that of neighbouring Ukraine- far exceeds the amount the country needs. But by signing up to the deal- and to the strings attached- the Hungarian government is effectively stymieing the opposition’s plans to plot a different economic path when it comes to power in the election of May 2010. It's clear that the government intends to use the ‘rescue package’ as a excuse to carry out the ‘reforms’ and the swingeing cuts in public spending it always wanted to implement- and to end any political debate as to whether the ‘reforms’ and cuts should be imposed or not.

A classic example is the abolition of the totemic 13th month salary for public sector workers, paid at Christmas each year. “We did not need to cut the payments to get the IMF’s help. We did it to send a clear message to investors that the government is ready to make cuts.“ admitted government spokesman David Daroczi.

The rescue package gives the government the excuse to rush through the privatisation of those assets which in remain in public ownership. Late last month the SZDSZ/MSZP faction on Budapest council voted to sell of the city’s gas company. The national grid is also to be flogged off; bus and postal privatisation is in the offing too.

The rescue package also gives the government the opportunity to hammer the final nail into the coffin of the country’s chronically underfunded state health service. In its new budget, the government has proposed cuts of HUF35bn for the Health Insurance Fund- cuts which have been described as ‘fatal’ by the opposition. The country’s long-suffering pensioners, already facing massive hikes in their fuel bills this winter, are also in the neoliberals’ firing line- with a freeze on their annual bonus and the elimination of the annual bonus for early retirees.

It matters little that all these extremist policies are opposed by the vast majority of the public.

The reforms are described as ‘apolitical’- measures that simply have to be passed.

Interestingly though there is one item of government expenditure that the Hungarian government- and their Free Democrat allies do not support cutting back. After NATO’s two day conference in Budapest last month, Defence Minister Imre Szekeres said that Hungary would increase spending by 7% next year and by 0.2% of GDP annually over the next five years. The country that can’t afford toilet paper for patients in state hospitals, does it seem, have money to send Hungarians to take part in imperial adventures at the behest of Uncle Sam in Afghanistan.

What recent events in Hungary demonstrate is that democracy is inconsistent with neo-liberalism. The only democracy modern turbo capitalism allows is of the ‘Henry Ford’ variety- namely that the people can vote for any polices they like- so long as they are the ‘approved’ neoliberal ones which put the needs of capital- before people.

So even if people vote in their millions, as they did in Hungary in March against extremist neoliberal solutions, the elite finds ways of subverting their wishes.