Bálint Magyar’s “systemic characteristics of the post-communist mafia state”

Earlier I published several reports on Bálint Magyar’s theory of the mafia state. In fact, I devoted three consecutive posts, the first of which appeared on June 18, 2013, to his description of Orbán’s system of government as a new kind of autocratic regime. Magyar’s analysis of the current Hungarian political system elicited widespread attention in Hungary as well as hundreds of comments on Hungarian Spectrum.

A few months later (November 2013) Bálint Magyar and Júlia Vásárhelyi published an edited volume of essays written by twenty-two scholars from different disciplines who embrace the theoretical framework Bálint Magyar worked out in the first decade of the century. Its title was Hungarian Octopus: The Post-Communist Mafia State. The book became an instant bestseller. More than 11,000 copies were sold within a few months. It had to be reprinted four times. I wrote a review of it on Hungarian Spectrum. Again the review prompted a lively discussion, some people finding Magyar’s argument compelling while others disagreed with him. In any case, since the appearance of Hungarian Octopus, the concept has been widely accepted by scholars as well as by the left-leaning Hungarian public. Those who are familiar with the workings of the Orbán regime find Magyar’s description of it a perfect fit.

Book Launch of Hungarian Octopus: The Post-Communist Mafia State Source: Népszava

Book launch of volume 2 of Hungarian Octopus: The Post-Communist Mafia State
Source: Népszava

The second volume of Hungarian Octopus has just been published, and it is fascinating. In his introduction Magyar takes into consideration some of the criticisms and additional observations he received during discussions of the contents of the first volume. This introductory essay is so full of information and novel observations that I will most likely have to devote another post to it. But let’s start.

First, Magyar describes the key actors of the mafia state. He begins with the economic-political actors whom Magyar calls “poligarchs” whose ranks include several subcategories: the oligarchs, the front men (in Hungarian stróman/ok), corruption brokers, the family guard/the secret service, and the family privatization of databases. Let me go into some of the details.

Who belong to the class of poligarchs? These are people who attained illegitimate wealth by being members of the political family. Their political power is known but their economic power, their wealth is hidden. They use front men; their money is often hidden in foundations. The chief poligarch is the Godfather–in our case, the prime minister.

Beneath the poligarchs comes the class of oligarchs who began their careers with legitimate business activities and who, as a result of their economic power, acquired political might. In ordinary post-communist states their economic activities are legal, but the way in which they acquire business opportunities often is not. They acquire advantages over their competitors by illegal means. They are, however, more or less autonomous actors. But in Hungary, Magyar argues, the mafia state makes these oligarchs’ autonomy impossible or very limited. As he puts it, “it domesticates” them. They are partly or wholly dependent on the good will of the state.

Magyar distinguishes several type of oligarchs. There are the inner circle oligarchs. They have been close to Fidesz from the early 1990s on, and in part they have accumulated their wealth through their political connections. Currently, they don’t have any political roles but they belong to the small circle of people who are able to formulate policy. A good example of this sub-type is Lajos Simicska. Of course, any of these oligarchs can lose their positions if the Godfather finds their activities objectionable. A couple of the original oligarchs actually ended up in jail when they got involved in illicit activities.

Another sub-category of the oligarchic class is the adopted oligarchs. These people made their wealth during the early murky days of mass privatization, and it was only later that they were adopted by the political family. Their connection to politics now enhances their financial position. Examples of this type are Gábor Széles, owner of the extreme right-wing Magyar Hírlap and Echo TV, and László Baldauf, owner of the CBA chain of supermarkets. These people only serve the policies of the Family;  they can’t influence them.

The next category is the capitulated oligarchs who earlier were quite independent; some were even associated with the other political side. Their capitulation is due to their dependence on state orders. Since they were not considered to be affiliated with the Family in any way, they fell on hard times after 2010. In addition to the lack of orders, the state has all sorts of instruments to make them surrender: the internal revenue service, prosecutor’s office, police. A typical representative of this group is Tamás Leisztinger, who suffered economic hardship already during the first Orbán administration and who by now is the willing or unwilling financier of the prime minister’s hobby, football.

Then there are the fellow traveler oligarchs. These men were the greatest economic beneficiaries of the first twenty-year period after the change of regime. They were sought after by both the left and the right, and they kept an equal distance or equal friendship with both groups. After 2006 the equilibrium between the two political sides shifted toward Fidesz, which forced them to be fellow travelers unless they wanted to lose their preeminent economic positions. Sándor Csányi of OTP and Sandor Demján of Trigánit are perfect examples of this category.

The last two sub-categories are the autonomous and the rival oligarchs. Their numbers are rapidly decreasing. Some of these people are so afraid of the chief poligarch that they dare not support liberal causes at all.

Although I thought I would be able to describe the other key actors of the mafia state today, the story is so intriguing that I don’t want to shortchange you by not covering the details properly. We will continue tomorrow.

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20 comments

  1. I was at the book launch. All the left-wing MSZP and SZDSZ bigwigs were there, even Bokros. But no Gyurcsány or anyone from LMP/PM, or at least I didn’t see them. Wonder why….

  2. @Buddy, I don’t think that DK-Együtt absence means anything. In fact, I would venture to say that the crew around Magyar is very close to these two parties. Attila Ara-Kovács, one of the contributors to volume 2, is actually the head of the foreign affairs cabinet of DK.

  3. @Eva, yes, I suppose you’re right. Well, it was an interesting event for sure. Let’s hope this volume is at least as successful as the last one (I have my copy of the book).

  4. Which Hungarian is still sane or decent inside and outside of Hungary?

    Is it a ship full of poor, rich, ultra-rich fools?

    Is Hungary a victim of Hungarians or of foreigners?

    When will the abuse end?

  5. DK the Gyurcsanyist Party wants to dominate the Hungarian Left. There is no price too high, Gyurcsany will use any means necessary, destroying the other parties, MSZP and Egyutt if he must.

    The process has already started. Gyurcsany first agreed to the nomination of Ferenc Falus. Then he destroyed and Falus and organized his withdrawal.

    It is important to know that Falus was the common candidate and all parties agreed (with contract) to spend 10 million on his campaign. 10-10-10 million each for 30 million total.

    But the Gyurcsany Party during the 2 month Falus was campaigning only spent 0.1 million… 1% of the agreed amount, while the campaign was almost over. A normal amount to spend was 6 million or 60% which is exactly what Egyutt spent. Gyurcsany spends 1% vs 60% by Egyutt, the numbers speak.

    From this it is clear that Gyurcsany planned to destroy Falus from the start and he knew not to waste any money on him.

    Now the Gyurcsany Party will spend the money they promised to spend on Falus… they will spend it on Bokros posters and events. Bokros who already agreed to join DK (if you don’t believe it wait a little, see if Bokros joins DK or not…)

    But MSZP will not take all this lying down. They announced a brutal response to Gyurcsany’s machinations.

    They will not give a single cent to Bokros. Not a penny. The contract was to support Falus with 10-10-10 million. If Gyurcsany only gave 1% to fulfill that contract there must be a response MSZP says. MSZP will not give anything to the Bokros campaign.

    Gyurcsany will stop at nothing to make his party the dominant party and MSZP will stop at nothing to remain the dominant party on the left.

  6. Left/Right/Center…all political parties in Hungary today are worthless–pontificators, at best;
    liars and corrupt or ‘wanting-to-be-corrupted’, at worst.

    If people wanted real change they would create a party around two people:

    ANGYAN JOSEPH

    BOGDAN LAZLO

  7. noir, great game.

    The entire left wing is currently liked by about 25-30% of the Hungarian people, most of them from Budapest, outside Budapest it’s more like 15%, but in Western Hungary its below 10%.

    Now, given the current election system, the entire united left must win over the dominant party of the right wing by about 7-8% points.

    (Of course if this would look even remotely achievable then Fidesz would change the election system, probably choosing the proportionate party list system so as to minimize the possibility that other parties could reach 2/3s in any way, which would be needed to deconstruct the current Orban-system.)

    Obviously this currently belongs to the realm of science-fiction, especially now that Tarlós representing Fidesz will win by something like 70-75%, probably setting a post-communism record for any elected official.

    Thus while you guys are playing your childish games like clueless kids in a sandpit, Fidesz has gone so far that it really doesn’t matter what you do. These games of yours only perpetuate Orban’s power discourse, only you don’t even get it. You have been rendered completely irrelevant and your only role is for Fidesz to show to the world that there is still really an opposition when in fact for all practical purposes there isn’t – just like the importance of having weeklies like ÉS, read by some 7,000 intellectuals, is only to show the world that we still have media freedom…

  8. @noir, what a load of old rubbish. Why on earth would Bokros, who defines himself as “right wing” and who regards Gyurcsány with contempt, join DK which is trying to establish itself as the new left?

  9. Gollum: “These games of yours only perpetuate Orban’s power discourse, only you don’t even get it.”

    Very well said, Gollum. And then comes the “Magyar octopus”. Even if it were a good description of reality, what is such desciption worth if we are not told how it was possible during the years 1990-2010 for this octopus to develop, for this ideology to prevail and to convince many people of its appropriateness, and if such state of the affairs does not compel the broad majority of the people to revolt. Otherwise it will be equally possible for OV to exploit the publication of such book as proof that the opposition in Hungary can freely express their thoughts, without much effect of course because it is “smear campaign”.

  10. Hungary’s ranking in the various categories, out of 28 in 2014:

    Poverty prevention: 24th
    Risk of poverty or social exclusion: 24th
    Severe material deprivation: 26th
    Population living in quasi-jobless households: 22nd

    Children at risk of poverty or social exclusion: 26th
    Children in severe material deprivation: 27th
    Equitable education: 18th
    PISA, impact of socioeconomic factors on educational performance: 25th
    Early school leavers: 21st
    Pre-primary education expenditure: 2nd [kudos for Hungarian kindergartens and creches !!]

    Seniors at risk of poverty or social exclusion: 14th
    Seniors in severe material deprivation: 24th

    Access to labor markets: 21st
    Unemployment rate 15th [but we know that the official data is fraudulent]
    Employment rate: 24th

    Social cohesion and non-discrimation: 24th

    Health : 23rd
    Infant mortality rate: 23rd

    General government gross debt: 19th

  11. There have been numerous reviews of both the second and first volumes of Bálint Magyar and Juliet Vasarhelyi’s edited work primarily in Hungarian, but some in English including Eva’s and Jean-Paul Herman & Lisa Herman’s review, there was also a reference in Newsweek to the work back in June. I would also suggest that the volumes have been digested and absorbed by analysts at the U.S. Embassy in Budapest and Central European specialists in both the State Department and CIA. As far as I can tell as yet there has been no discussion of the volumes among military science specialists as it relates to a re-convergence of some type of Russian- Hungarian alliance based on the evolution of comparable economic systems based on state capitalism.

    Right now I have to say in the US we are obsessively trying to digest the rise of IS in Syria and Iraq. We are thinking primarily about that picture, in terms of security planning we are like a nation with attention deficit disorder. Failure to digest, or to put the evolution of Putin’s Russia and other Central European states that are moving in that direction like Hungary within a world context can lead to additional surprises for US foreign and security policy.

    A state based on what is described in great detail in the volumes edited by Bálint Magyar and Juliet Vasarhelyi is probably not compatible with NATO membership and poses an internal threat to the alliance. Can it be argued that the best way to prevent a full scale break of Hungary and possibly Buligaria into a Eurasian alliance with Russia is to keep these nations within the common frameworks of western capitalism, yes it can and currently it is the predominate thinking in both Brussels and Washington. This could evolve with a new administration in the US, one that takes a much harder line against Russia and all nations that support any Russian projects.

  12. State of the state:

    Undersecretary of Economy Tallai is knighted by the Order of Palinka (alcohol content 40%):

  13. Tappanch, our neighbours’ pálinka has at least 53% – they wouldn’t touch that weak stuff …

    Though both the knighter and the knighted here look as if they already had too much of this …

  14. Kristen, as I see it in order to revolt one need a moral ground to stand on.
    In the case of present days Hungary there’s hardly any moral left, when the majority only concentrate on survival. On different levels, mind you, because those who desperately scraping together the next millions also driven by the same instinct – you never know how long you have to endure, so better to grab more.

    In this rat-race isn’t much ground left for any ideology to develop, even to stand up with a clear conscience, since the whole system based on corruption, lies, thievery, and the likes.

    Then comes in the factor of the political/ideological identity: just to whom would you join to, anyway? The so called “left” or “democratic” side confused and powerless, the “would have been” middle is rather mediocre and colourless, and anyway, for a survival you probably voted for the present rulers too, so it won’t make it any easier…

    Revolt never happens when people feel accessory to some extent, believe me.
    Such blessed moments as it was in ’56 are extremely rear, not to mention the great unifying power, the common enemy.
    Now we ourselves are our greatest enemies and everyone is loosing – just look around.
    Today you’ll hardly find a few dozen people who thinking along the same lines, hold the same principles and will do something to make a change.
    Sorry, but I have no better news

  15. spectator, I am not at odds with what you wrote. My point of criticism is the magyar polip. It is interesting to learn who exactly belongs to the inner and wider circle of OV beneficiaries, and yet even from what Eva wrote, it is clear that the basis was laid before 2010 (as the oligarchs referred to were apparently around also before 2010), at a time when e.g. Balint Magyar was in the government, if I remember that correctly. It s perhaps intellectually interesting or brave to describe some “mafia state”, something that has never been seen before (well…), but what is missing is something more practical, something that could bring about change, even if only over time. It is unlikely that the description of the mafia state will change anything, because as you write, people would not know what to do as they feel to have had similar experiences with the people in the governments before. Also, it would be more practical to think about e.g. the “magyar cancer” of a society that is deeply split, has great difficulties in political cooperation, trust and mutual respect, and which abounds with people attracted to politics through their extra-large egos, and how this could be overcome. But for that you need not a description of some polip but a description of viable strategies in a society so deeply disillusioned, suspicious and politically educated only in cynicism (considered the highest stage of wisdom) as the Hungarian one.

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