National Conservatism

From the 1980s up to the 2008 crash, neoliberal economic policy concepts dominated on the nationalist right, including Fidesz and PiS. Those concepts aim to shield economic policymaking from popular pressures.

In this framework, parliaments are expected to play a limited role in economic policymaking, with trade unions and tripartite bodies sidelined while technocratic structures are empowered. Under neoliberalism, economic policies are to be based on rules that ensure permanent austerity and keep income and corporate taxes low.

One can incorporate nationalist elements into a neoliberal setup. In core economies, free trade policies might serve to strengthen the international position of domestic firms. In semi-peripheral economies, on the other hand, nationalist neoliberals seek to retain national policy spaces in order to lower social and ecological standards (as well as tax rates) with the aim of attracting foreign capital and enhancing international competitiveness.

The national-conservative approach takes its distance from this depoliticized form of economic policymaking. Its project of building a “party state,” in which the ruling nationalist party has established control over key branches of the state, re-politicizes the domain of economic policy. The party state aims to strengthen the role of domestic capital. Economists inclined toward national conservatism advocate what they call “intelligent protectionism,” with the state playing a more proactive, developmentalist role.

Despite the strategic differences between the neoliberal and national-conservative concepts of economic policymaking, the two approaches agree on one key issue: the national currency (Hungarian forint, Polish zloty) is to be preserved in preference to joining the eurozone. After 2008, Fidesz and PiS did not completely abandon neoliberal economic policies. They only modified their economic strategies in part, seeking to combine neoliberal and national-conservative elements.

After the Crash

The financial crisis brought a certain disillusionment with EU integration and its promises of prosperity in the states of Central and Eastern Europe. The crisis hit Hungary particularly hard because of its significant current account deficits and the high foreign exchange debts that households had accumulated.

The social-liberal Hungarian government was the first EU government to apply for an International Monetary Fund (IMF) loan after the crash. It adopted an orthodox austerity program that did not deal with the key problem that households owed debts that were denominated in foreign currencies. While the crisis in Poland was not as severe, the Polish liberal government also carried out unpopular measures.

The crisis also brought to the fore feelings of discontent that had already been simmering for much longer. Domestic capital resented its subordination to foreign capital, especially in Hungary. The Hungarian middle class faced a crisis of household debt, and members of the popular classes in both countries had become disillusioned with the broken welfare promises of the social democratic parties.

With their partial turn to national conservatism, Fidesz and PiS sought to exploit such discontents, which were socially heterogeneous in their basis. This proved to be electorally quite successful. Whereas the European Commission and key EU governments were able to strategically defeat incipient left-wing alternatives in the eurozone (in particular the challenge posed by Greece), the crisis provided an opening for right-wing governments outside the eurozone and its specific constraints to implement policies of selective economic nationalism.

Selective Nationalism

Fidesz enjoyed a comfortable two-thirds majority in parliament after its 2010 electoral victory and could pass a new constitution. However, it initially faced external constraints through the inherited IMF program and enhanced EU monitoring.

Through largely heterodox measures, such as sector-specific taxes and the phasing out of obligatory private pension schemes, the Fidesz government was able to improve the fiscal situation and loosen the external constraints. Step by step, it converted the foreign exchange loans to loans denominated in forints, which brought some relief to middle-class debtors and reduced the country’s external vulnerabilities.

Fidesz soon turned to its key economic undertaking: strengthening domestic capital. It has confined this endeavor to specific sectors: banking, energy, retail trade, agriculture, construction, and tourism. The sectors are either oriented toward the domestic market or linked to ground rent (like agriculture or tourism). Thus, Fidesz has pursued a strategy of “selective economic nationalism,” as the Hungarian social scientist András Tóth calls it.

It accorded particular strategic importance to two sectors: energy and banking. In the energy sector, Fidesz aimed to secure control over prices so that relatively cheap energy could fuel export industries and buy social consent. Banking was crucial for the ruling party to secure influence over credit allocation.

The policy instruments chosen for these tasks have been strategic share acquisition by the state (or public companies), selective reprivatization and restructuring of companies, licensing, selective credit provision, and public tenders. Public tenders have been particularly crucial for building up domestic firms, often through projects funded by the EU.

The selective economic nationalism is two-pronged. On the one hand, it aims to build a business sector close to the party; on the other hand, it encompasses a broader promotion of domestic business. Up until 2010, the links of Fidesz to particular business groups had been rather weak. It was the party’s prime strategic aim to change this state of affairs.

It has cultivated a “clientelist bourgeoisie,” as the Hungarian sociologist Erzsébet Szalai calls it. The emergence of this sector of the bourgeoisie has depended heavily on the ruling party, and its key figures have strong personal links to the prime minister, Viktor Orbán.

Welfare for the Wealthy

The best-known representative of the clientelist bourgeoisie is a former plumber from Orbán’s home village, Lőrinc Mészaŕos. His empire plays a key role in the Fidesz economic-political power complex. After a series of restructurings, the Orbán government succeeded in building a second major domestic banking group, Magyar Bank Holding (MBH), which falls into Mészáros’s “sphere of influence.”

This bank can also be used for party-political purposes. Recently, the Swiss media group Ringier wanted to sell the loss-making tabloid Blikk. MBH provided the financial arrangements, enabling a businessman close to the ruling party to take over this major newspaper ahead of the parliamentary elections in spring 2026.

However, the policies of strengthening the domestic sector have not been confined to building a clientelist bourgeoise. For example, the government has also launched credit programs for small and medium enterprises. It has complemented selective economic national conservatism with selective social policies of the same bent, with pro-natalist family policies designed in a way that primarily benefits the upper layers of the middle class. This is the core of “welfare for the wealthy,” as Dorottya Szikra characterizes the social policies of Fidesz.

In the export sector, Fidesz has continued to rely on foreign capital. Its governments have lent an open ear to the bilateral Chambers of Commerce representing foreign capital while marginalizing tripartite bodies (in particular trade unions). Foreign manufacturing firms have received ample incentives, and corporate tax rates have been cut sharply.

In 2018, the government drastically “flexibilized” labor time with a piece of legislation that trade unions and the opposition parties dubbed the “slave law.” The shift to “workfare” in the field of social policies has had a disciplining effect on workers. The share of social expenditure in GDP declined from 23 percent in 2010 to 19.4 percent in 2019, before a small rebound during the pandemic.

Class Profiles

Fidesz has targeted its national-conservative and neo-liberal policy strands at different class forces. The national-conservative elements favor domestic capital and the upper middle class, while the neo-liberal elements address the demands of transnational capital.

The economic strategy has primarily aimed to modify property relations in favor of selected sections of domestic capital. It is devoid of any substantial developmental ambitions. Fidesz has sought to diversify economic dependency rather than to reduce it substantially.

In a dramatic revision of its previous position, the party has strengthened energy links with Russia in the fields of oil, gas, and atomic power to ensure access to cheap energy. More recently, its governments have also sought more actively to solicit foreign direct investment from East Asian states like China and South Korea, in particular when it comes to battery production.

There have also been infrastructure projects with Chinese support, such as the high-speed railway line between Budapest and Belgrade that is still under construction. Such projects enable tenders without some of the EU constraints.

After its electoral victory in 2015, PiS built a “party state” of its own that was generally in line with the Fidesz model. However, there were also some significant differences between the two projects. In contrast with the record of Fidesz, PiS governments did not marginalize tripartite consultative mechanisms. In Poland, the national-conservative political current has long-standing links with a trade union current of similar ideological dispositions, NSZZ Solidarność.

Its strategy to strengthen domestic capital was broader in terms of economic sectors, and the party did not aim to build a clientelist bourgeoisie along the same lines as Fidesz. Moreover, the economic national conservatism of PiS had an explicit developmental inflexion, although the policies of the party were not particularly successful in that regard. PiS national conservatism in the field of social policy did include elements that were beneficial for the popular classes.

The class profile of the national-conservative strategies that the two parties pursued in government was reflected in their electoral profiles. In 2018 and 2022, Fidesz increased its vote share among those with high incomes, while retaining voters from the popular classes due to the post-crisis economic recovery. For its part, PiS has built a particularly strong electoral base among the popular classes.

From Crisis to Crisis

These varieties of selective national conservatism emerged out of a major crisis, and they are now facing another crisis. The Hungarian and Polish manufacturing sectors strongly rely on outsourced production from the West European manufacturing core. The crisis of German manufacturing production, particularly in the car industry, thus has a strongly negative impact upon them.

Neither Fidesz nor PiS have changed the dependent and subordinate character of export industrialization in their respective countries. Hungary’s specialization in car manufacturing is particularly narrow. The turnover of most auto companies based in Hungary shows they are experiencing a strong contraction, while battery production is not achieving the results that Fidesz hoped for. Economic links with China are coming under geopolitical pressure, not least from the Trump government, which is otherwise ideologically close to Fidesz.

The war in Ukraine and Western sanctions policies have significantly affected the Hungarian economy. Energy sanctions contributed to high levels of inflation in late 2022 and early 2023, with the annual rate of inflation reaching a peak of 25 percent. Food price inflation was even higher at 50 percent.

Fidesz policies also contributed to the inflation hike. In advance of the 2022 election, the government strongly stimulated demand and the currency started to depreciate, leading to increased prices for import goods. Fidesz responded to this by imposing austerity policies, trying to conceal their impact behind the smoke screen of other campaigns, such as those against LGTBQ people. The geopolitically motivated freezing of many EU funds has also diminished the space for promoting domestic business.

Against a backdrop of crisis, austerity, and ostentatious enrichment, a major new opposition force, Tisza, has emerged after a scandal over the pardoning of a figure who covered up child sexual abuse. Its leader, Péter Magyar, originates from the ranks of Fidesz. Tisza criticizes the clientelist bent of the ruling party and draws attention to serious social problems, calling for a new generation of politicians to take the reins.

The alternatives that Magyar’s party has in mind are not clear. However, the political profile of Tisza seems to be much closer to that of Fidesz itself than to the fragmented opposition parties, predominantly with a strong neoliberal bent, that have previously challenged Orbán’s rule. While Fidesz may be losing ground, its ideological mixture of neoliberalism and national conservatism still seems to be hegemonic.

In Poland, PiS lost the 2023 parliamentary election, but the more liberal-oriented forces that took its place in government have not been able to consolidate their position. The new prime minister, Donald Tusk, has adopted the national-conservative call for “re-Polonization” of the economy. The national-conservative project has thus retained its influence even after the end of the PiS government.