Is a neutral economic policy possible in Hungary?
Hungary has outlined a new direction for its economic policy and is promoting the implementation of a “neutral economic policy”.
This article does not delve into the details of this new direction, but examines the possibility of neutrality in Hungary on a theoretical level.
Economic policy, as the sum of the state’s intervention in economic life, always reflects some kind of value system. The question, therefore, is whether an economic policy can exist in Hungary that is free from all ideological or political influence, i.e., truly neutral.
The idea of a neutral economic policy may seem attractive, as it suggests that the state makes its decisions on an objective, professional basis, taking into account the interests of all members of society. In reality, however, economic policy can never be completely neutral. Every decision – be it about taxation, the budget, or even the determination of the minimum wage – affects different groups in society and inevitably favors some over others.
In Hungary, economic policy has historically always been closely intertwined with politics. In the period since the change of regime, different governments have followed different economic philosophies that reflected their ideological convictions and political goals. In the process, centralized economic policy was further strengthened, which in many areas – such as energy policy or the media market – led to an increase in state intervention.
One of the main obstacles to the implementation of a neutral economic policy is the power asymmetry between economic actors. Large companies, banks, and lobby groups have significant influence on economic policy decisions, while the ability of small and medium-sized enterprises, employees, and civil society organizations to assert their interests is limited. This situation distorts economic policy decision-making and leads to the interests of powerful groups prevailing.
Another obstacle to neutral economic policy is the complexity of economic processes. The economy is a complex system in which many factors – such as technological development, globalization, and demographic changes – influence economic performance. Accurately predicting the effects of these factors and determining the appropriate economic policy responses is an extremely difficult task, which often requires subjective judgment.
Despite all this, the idea of a neutral economic policy is not entirely unfeasible. Decision-makers can strive to make their decisions based on the most objective information possible, taking into account the widest possible range of social interests. It is also important to strengthen the transparency of economic policy decision-making and social control. The involvement of civil society organizations, professional communities, and individual citizens in decision-making can contribute to increasing the neutrality of economic policy.
Overall, neutral economic policy in Hungary is more of an ideal than a reality. Economic policy decisions always reflect some kind of value system and political goals. However, decision-makers can strive to make their decisions as objectively as possible, taking into account the widest possible range of social interests. Strengthening social control and increasing the transparency of decision-making can contribute to approaching the neutrality of economic policy.
Based on 2019 data, the share of domestically owned enterprises in exports in Hungary was around 26%. This means that 74% of Hungarian exports were handled by foreign-owned companies.
The Hungarian economy is also struggling with a shortage of capital and labor, and the level of domestic investment is low. In addition, in international relations, the Hungarian economy typically has to negotiate with much stronger partners, which does not ensure that exclusively Hungarian interests are asserted.
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