The Post-Communist Way: Negotiating a New National Identity in Hungary

The riots of 2006 were the most violent clash between civilians and the state that Hungary witnessed since the 1956 Revolution. Why is Hungary still struggling with political legitimacy and economic structural problems twenty years after the 1989 democratic transition to democracy and free-market economy? Building on the model of partial reform equilibrium proposed by Joel Hellman, I argue that Hungary’s “negotiated revolution,” ironically failed to negotiate a new national identity and complete the transition, as vested interest groups were successful in blocking needed political, economic and social reforms. The former Communist elite who were still in key government posts and economic sectors were able to reap significant short-term gains from the initial stages of reform. Therefore, they supported policies that prolonged the maintenance of only partial reforms and the related market distortions. The continued dominance of former Communist rulers in the post-Communist era Hungary translated into the exclusion of the majority of society from the transition process, thereby establishing institutional continuity and an unresolved Communist legacy that further derailed reform and prolonged development of democracy. To illustrate just how powerful the former elite was in blocking reform, I focus on the lack of personnel turnover in government and the subsequent absence of fundamental legal reform through the preservation of an out-dated constitution, and questionable economic re-structuring as seen in rent-seeking privatization programs as well as the maintenance of an extensive welfare program. The lack of social justice afforded to the public through impunity against human rights abuses committed under the The Socialist regime also played into this delay of democratic transformation. These findings based on a case study of Hungary provide far-reaching implications for other nations seeking to transition to a democratically-run society that comprehensive reform, as well as restraining the previously privileged elite, could yield a more robust democracy at a quicker pace