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Inaugural Conference of the Hungarian Cultural Association Keynote Address

On April 5th, 2014 Visiting Fulbright Professor Istvan Benczes gave the keynote address for the Inaugural Conference of the Hungarian Cultural Association.  His talk, "From goulash communism to goulash populism: Path-dependence in Hungarian economic transformation", focused on Hungarian economic history in the 20th and 21st centuries, arguing that the slow yet steady erosion of Hungary’s economic performance in the new millennium is a direct, though unintended consequence of Hungary’s previous successes (the “good old days” of goulash communism).  In the 1950s in the Soviet bloc was characterized by a rapid expansion of heavy industries and extensive use of natural resources, often at the detriment of light industry and agriculture and leading to a shortage of those resources.  After the 1956 Revolution in Hungary, Communist leaders needed to pacify the population and introduced a new economic mechanism of ‘market socialism’.  Kádár, the Hungarian leader after 1956, emphasized the present-day material welfare of the people, in a break from Stalinist policies, in order to consolidate political control. In the 1960s, Hungary was called “the happiest barrack” because its policies emphasized a better standard of living over increased economic efficiency and created better conditions for the people compared to other Eastern Bloc countries.

This expectation of a certain standard of living, however, created an unsustainable system that relied heavily on the accumulation of foreign debt to meet these guarantees and prevented any popular support for needed reforms, creating stop & go reform policy cycles in the 1970s and 1980s.  After the 1990 transition to democracy and capitalism, the population maintained an expectation that the government would form a welfare state without imposing substantial taxes and additionally compensating those families that were laid off in the restructuring of jobs.  Because of this system, Hungary fared well compared to other post-Soviet East European states in their levels of consumption, but there was a large drop in investment as political leaders prioritized taking immediate burdens off of citizens to ensure their power over of the future stability of the state. In the last decade, there have been no popular support for economic reforms that would raise taxes or provide cuts in social services, and with the 2012 constitution the government has the power to levy sectoral taxes through frequent and unpredictable policy changes.  The state needs to limit and pay off their foreign loans, but the ruling political leaders continue to focus on maintaining their power base through promising “goulash populism” to the people and instituting stop-gap taxes on industries that further weaken institutions.  Hungary now needs some sort of intervention to get them off this path, but it is uncertain what that intervention could be.

You can listen to the keynote address here.

This inaugural conference was organized by the Hungarian Cultural Association and co-hosted by the School for Global and International Studies, the Department of Central Eurasian Studies, the Inner Asian and Uralic National Resource Center, and the Russian and East European Institute, with additional thanks to the Romanian Studies Organization.

After the keynote on April 5th, on April 6th two panels were held on "Historical Legacies and Hungarian Identities" and "Contemporary Hungary: Cultural and Linguistic Issues", showcasing the work of graduate students and scholars from a number of universities.