Philipp Fink, Hungary in:

Philipp Fink

Late Development in Hungary and Ireland, page 47 - 51

From Rags to Riches?

1. Edition 2009, ISBN print: 978-3-8329-4173-4, ISBN online: 978-3-8452-1720-8

Series: Nomos Universitätsschriften - Politik, vol. 168

Bibliographic information
47 production also prohibited the development of labour-intensive export niches. Accordingly, rising demand for agricultural exports did not prompt an expansion of production and investment in the remaining sectors of the economy. As a result, agricultural export specialisation displayed higher productivity than the other economic sectors. Increased agricultural investments led to increased unemployment and marginalisation. Owing to their lower productivity resulting from low internal demand and competition with superior imports, the remaining economic sectors were unable to absorb additional labour. Hence, both economies followed peripheral modes of growth, as they were dependent on the demand from the respective imperial core for their agricultural exports. 1.4 Socioeconomic Effects The described modernisation deficits had decisive effects on the socioeconomic structures for each country. Hungary’s and Ireland’s role as agricultural producers resulted in the predominance of agrarian interests in the political sphere and the weak development of political counter forces. The weak industrial base coupled with high levels of rural unemployment led to the evolution of not only a weak labour movement, but also to a small non-agricultural middleclass. 1.4.1 Hungary Beginning with the socioeconomic elites, the recentralisation of economic and political power, in form of re-feudalisation, resulted in the aristocracy to cement its powerbase vis-à-vis the other classes. Furthermore, they forged a state apparatus to meet their demands and to secure the continuation of their influence. Secondly, the evolution of the bourgeoisie was exceedingly hampered by ethnic and social divides and by the slow development of an industrial base, as market growth was constrained by low demand. Furthermore, uneven modernisation in the form of labour-extensive agricultural specialisation caused a distinct social divide with the subsequent marginalisation of a large proportion of the rural population. Finally, constrained industrialisation resulted in the evolution of a weak labour movement limited to the few industrial centres of the country. The subsequent weak development of counter classes allowed the aristocratic political elites to retain control over the economic and political power in the country. 48 Noble Ascendancy The process of re-feudalisation secured the predominance of aristocratic supremacy, despite the years of Austrian direct rule following the 1848 revolution. Although land reform had reduced the absolute feudal base of nobility and the incorporation of Hungary into the Habsburg Empire circumscribed the country’s sovereignty. Nevertheless, the Hungarian nobility still regarded itself as the country’s “historic ruling class”. However, the events of 1848 illustrated that the nobility was by no means homogenous. There was a distinct rift in the aristocratic class following the ill-fated 1848 uprising (Fischer/Gündisch 1999: 100). Three groups within the aristocratic class appeared. The first group comprised the so-called pragmatic modernizers, which came to establish the Liberal Party and was to dominate the politics of the later Dual Monarchy. The Liberals favoured economic modernisation and industrialisation within the boundaries of the Austrian-Hungarian Empire. However, the Hungarian liberal movement is not to be confused with western liberalism. Similar to other so-called “liberal” movements in the central and eastern regions of Europe, Hungarian liberalism was closely aligned to the role of a ubiquitous state in the modernisation process. Civil liberties were only secondary to the aim of modernisation and the preservation of nobility’s socioeconomic predominance (János 1982: 65-66). The nationalist movement comprised the second more complex political group. It contained radical reformers favouring independence and economic nationalism along both the right and the left of the political sphere. They strived for complete economic and political independence from Austria as a process of national Magyar awakening. Its members were mostly drawn from the lower nobility, the gentry and intellectuals, who experienced their increased marginalisation. Land reforms led to the loss of their feudal privileges and entailed that the majority of small estates were not able to compete with the large holdings. Falling agricultural prices made the gentry feel the brunt, fuelling their rising radicalisation (János 1982: 135-142). The third group comprised the landed aristocracy. The property owning class was represented by various conservative parties. Essentially, the Conservatives expressed the interests of the agrarian lobby. They staunchly defended their property rights, which guaranteed their social status. As advocates for the return to a pre-capitalist traditional society, the great estate holders avidly opposed any measures, which could possibly change the historic social order. Furthermore they supported political and economic links to Austria. The unequal division of economic tasks within the Habsburg Empire complimented the Hungarian landed nobility’s interests (Berend/Ránki 1974: 65-66; János 1982: 142-147). Despite their differences following diverging degrees of nationalism, trajectories of economic policy and variances in the relationship to Austria, the three strands of political nobility were united on the role of state. The ongoing process of economic and social transformation created a distinct sense of vulnerability among the nobility. The noble elites were desperate to retain their traditional socioeconomic predominance, incapable to adjust to a rapidly changing environment and fearing noth- 49 ing more than the loss of its traditional status. Accordingly, the state was moulded to mirror their needs and calm their fears. The central position of the bureaucracy in the process of industrialisation in Hungary ensured the perseverance of aristocratic influence. The state bureaucracy explicitly fulfilled the role of stabilizing the status quo (János 1982: 96-105; Berend 2001b: 10-11; Berend 2001c: 29-30). The Ethnic Dimension The second consequence was the small size of the middleclass and the ethnic nature of entrepreneurship. The described lack of embourgeoisement of the nobility combined with the results of constrained industrialisation and specialisation on agricultural exports hampered the evolution of an entrepreneurial middleclass. Their size is estimated to have been only 600,000 during the 1860s – just over 4% of the population. The vast majority of which were small traders or artisans. In part, this obviously reflected the narrow possibilities of entrepreneurial activity in Hungary. Furthermore, the general level of education was low, resulting in a low supply level of required business skills (Berend 2001c: 27-30).17 Consequently capitalist skills had to be imported. Middleclass positions were filled with immigrants of Greek, German and Jewish origin, working in industry commerce, retail and services. Furthermore, the dormant entrepreneurial stratum was filled with emigrants, who eventually became prominent figures in Hungarian industry.18 The small size and foreign origin of the middle classes also illustrated the low level of social mobility in Hungarian society. Furthermore, foreign immigrants were a repeated source for additional tension in the multinational state of Hungary (Berend/Ránki 1974: 50).19 This was especially the case for the Jewish minority, which represented the backbone of Hungarian commerce and enterprise. Although they represented only 5% of the population by the turn of the century, the majority of the middleclass, entrepreneurs and financiers were Jewish. Their key role in the economy was recognised by the state in its quest for economic modernisation. As a result, a symbiotic relationship evolved, whereby the state explicitly granted Jews protection and tolerance in a 17 Educational reforms, leading to increased secondary and tertiary education were only introduced towards the end of the 19th Century. Around 70% of the population were illiterate upon the introduction of compulsory free education in 1868. Secondary and university education remained reserved only for a minority of the population. At the turn of the century, an estimated 3.8% of labour force had completed secondary education (Berend 2001c: 27) 18 An often cited example is that of the Swiss engineer Ábráham Gánz, who established the first machine tool works in Pest during the railway construction boom (Berend 2001c: 30). 19 According to Fischer/Gündisch (1999: 106) in 1850, the ca. 13.3 million population of Hungary-Croatia consisted of 4.9 million Magyars, 2.4 million Romanians, 1.6 million Slovaks, 1.5 million Germans, 1.2 million Croats, 900,000 Serbs, 400,000 Ruthenians, 240,000 Jews and 200,000 people belonging to other nationalities. The Magyars, therefore, only accounted for a relative majority of 37% of the population. 50 region known for its anti-Semitism. Towards the end of the 19th Century, Jews were increasingly accommodated for in state institutions. In return, the Jewish immigrants pledged loyalty to the state, which was expressed through a very high rate of assimilation and support for the Liberal Party. However this was a cause for resentment by the other Non-Magyar nationalities, who saw the Jewish minority as allies of the Magyar majority (János 1982: 115-116).20 In contrast, with the exception of the ethnic Germans, who resembled powerful urban groups, Non-Magyar minorities were increasingly repressed by the Magyardominated state. The political class was again united in their vision of not only a strong unitary state, but also in the idea of the cultural homogeneity of the country’s citizens. However, cultural unity meant Magyar domination. Despite general constitutional guarantees of minority rights, the state pursued an aggressive policy of “magyarisation”, culminating in the forced assimilation of non-Magyars into a Magyar nation state. The role of the ethnic minorities in suppressing the 1848 uprising was never forgotten. The most prominent measure was the use of the educational subsidies to increase the numbers of subjects taught in Hungarian. The result was the alienation of a considerable share of the population to the state and rising ethnical tensions (János 1982: 125-126, 163). The Social Dimension The classic conflict between labour and capital was overshadowed not only by the described ethnic dimension, but also by the small size of the working class in comparison to the peasantry. The peasantry remained the largest class in Hungarian society. Although land reform in 1848 had liberated the serfs, of the 40% who received plots of land 75% lived in marginality. They were only able to practice subsistence farming, due to the small size of their land holdings, additionally crippling internal demand (Berend 2001c: 30-31; Berend/Ránki 1974: 50). Furthermore, the majority of previous serfs (60%) had been liberated without any land, contributing to the rise of a large agricultural proletariat. An estimated 45% of agricultural labour, representing roughly a third of the total work force was mobile, seeking seasonal employment or working in railway or road construction. As a result, industrial labour, representing almost 10% of the labour force, was outnumbered several times (Berend/Ránki 1974: 78). The vast numbers of unskilled labourers had explicit consequences for the development of wages as well as the formation of the Hungarian working class in general. Increasing investment in the agricultural sector displaced many farm labourers. However, the small size of the industrial sector and its retarded development meant that the rural unemployed were not absorbed in sufficient quantities by Hungarian industry. Furthermore, the low level of their skills allowed only unskilled employ- 20 Anti-Semitism was a prominent feature under the ethnic Germans, who felt exposed to Jewish competition in commerce, enterprise and crafts (János 1982: 112). 51 ment. Agricultural wages were correspondingly low and were kept low, due to the high levels of rural unemployment and the continuation of semi-feudal employment practices (János 1982: 129).21 Subsequent Hungarian industrialisation was mainly linked to the development of the railway network and thus was characterised by skill-intensive heavy industry. However, the introduction of modern transport technologies exceeded the general level of industrial and social modernisation present in the country. The resulting lack of skilled labour led to high pay differences according to skill levels and with the majority of skilled labour in Hungary being foreign immigrants.22 Skilled foremen und specialists originating mainly from Germany and the Hereditary Provinces were attracted by high wages to work in the manufacturing sector. The long duration of feudalism had impeded the evolution of rural indigenous proto-industrialisation in light industry and hence the development of corresponding skills in the rural population (Berend/Ránki 1974: 80-84). The structure of Hungarian industry and the workforce had therefore profound effects on the formation of the Hungarian labour movement. The evolving labour movement was small and elitist, as it was mainly based on the organisation of foreign skilled workers. Consequently, trade unions remained alienated due to their inability to organise the interests of the vast majority of unskilled labourers. Furthermore, the union movement was only based in the few industrial centres of the country, such as Budapest. The limitations of the labour movement also influenced the subsequent evolution of Social Democracy in Hungary, which failed to act as a social movement pursuing reforms (Berend/Ránki 1974: 87-89). Hence, the externally induced process of economic modernisation met upon a pre-modern Hungarian society, causing various overlapping social, ethnic and political conflicts. The multidimensionality of conflicts resulted in weak opposition to the political classes, thus affirming the status quo and upholding the socioeconomic ascendancy of the Hungarian nobility. 1.4.2 Ireland Process of de-industrialisation and continued emigration had implicit effects on the socioeconomic set-up of the country. Increased pastoralisation and depopulation prompted a process of social transformation in rural society. The concentration process of farmland led to the rise of an influential farming class, which had a piv- 21 Feudal employment practices still prevailed, for instance, in the Farm Servants Act (1898, 1907). Farm servants were forbidden to leave the estate and to strike. There were no restrictions on working hours. Remuneration was very low even for rural standards in Hungary and for the most part in-kind (Berend/Ránki 1974: 82). The Act was also commonly referred to as the slave law (János 1982: 130). 22 Accordingly, in 1875, 25% of skilled labour in Budapest was foreign. In the higher skilled iron industry and machinery branches, the rate of foreign skilled labour was 35% (Berend/Ránki 1974: 79).

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Irland und Ungarn verfolgen eine Entwicklungsstrategie, die in bewusster Abhängigkeit von Globalisierungsprozessen in Form von ausländischen Direktinvestitionen steht und sich als Paradigma in der Peripherie durchgesetzt hat. Doch dieser Entwicklungspfad hat zu einer ungleichen und abhängigen Entwicklung geführt. Dies ist laut dem Autor das Resultat des mangelnden Gestaltungswillens beider Staaten, für einen gleichgewichtigen Wachstumsprozess zu sorgen. Die historische Analyse zeigt, dass eine auf ausländische Firmen fußende Entwicklungsstrategie nicht ausreicht, um traditionelle Peripheralität zu überwinden. Der Autor fordert eine Reform des Entwicklungsparadigmas, um eine gleichgewichtige Entwicklung zu ermöglichen.