EU Corporatism corrupts Hungary
Dr. Magdolna Csath
Dateline 9th July 2005
Few people in the "West" care about the
present truth: which is that there has been no real change in Hungary.
Mostly the same communist dictators, their friends and business partners
have stayed in power. They are the "new rich" and their previous
"network" continues to rule the country today. The only change
is that instead of serving Moscow, they now serve Brussels.
The former Hungarian prime minister Medgyessy had
to step down, among other reasons because it became public that he had
been a secret agent before the fall of Communism! But this man twice
received the decoration of the French "Legion of Honour":
very probably because of his services to French business interests when
privatising Hungarian state properties. Is this what we can call "European
values"?
INTRODUCTION
This article by a Hungarian academic reveals the kind of "capitalism"
and "democracy" we have exported, thanks to the European Union,
to Eastern Europe. The EU has of course exported Corporatism not enterprise
capitalism. Networks matter, not enterprise. This has allowed former
communists to carry on as "capitalists". Privatisation in
the East has meant not competitive Hungarian ownership but foreign ownership
and the flow of corporate income abroad. Academics are also flowing
abroad (like post war European scientists in 1945 or Africa today as
it loses its best to the "rich incompetence" of the British
NHS!) Dr Csath finds Hungarian EU corporatism as stifling as Hungarian
pre 1989 socialism - no wonder the previous masters flourish in the
new system. The corrupting EU budget and the byzantine complexity of
its subsidies is debilitating in the rich West - it is catastrophic
in the weak East.
Once upon a time, when Hungary was still a "socialist country"
we Hungarian professionals had easy access to "Western knowledge".
We were welcome to participate in conferences at reduced rates, provided
we had an interesting topic to present. We were offered generous discounts
on publications. Often we were invited to be on the editorial board
of professional journals, and therefore could receive free copies of
the particular journal. I was on the editorial board of three British
journals. It was a very good opportunity for me to be involved in the
professional life of the West. After the changes in 1990 two of those
journals immediately left me out of the editorial board. (1)
Nowadays our professional life is very different. The rise in our salaries
has not kept pace with the drastic price increases, which have happened
mostly because of corrupt privatisations. Among them worth mentioning
that of the energy sector, which was not even really privatised, as
it was sold to foreign (German, Austrian and Italian) state-owned companies,
which since the very first minute of acquiring those assets, increased
prices and lowered the quality of their services. Therefore, salaries
for many people in Hungary, including professionals, like doctors and
teachers have a lower real value now than before the changes. However
we are now considered to be citizens of a "free, democratic, market
economy", so we do not deserve any special "treatment"
any longer. So we are free to subscribe to professional journals which
cost around £500 a year, which amount roughly equals the average
monthly salary of a professor!
So, how will the knowledge-based society in Europe be built? With whom?
Obviously we, the majority of "Eastern European professionals"
are excluded from becoming active participants and builders of this
dream.
But are we really not needed? Is Europe so well equipped with the necessary
skills and knowledge? If it is, then why is Europe stagnating economically?
Why is Europe lagging behind the USA and also some Asian countries in
competitiveness, knowledge-creation and innovation?
Europe now has a great opportunity to collect, consolidate, rearrange
and utilise all the additional skills and knowledge it has gained by
enlargement. The strategic task would be to manage the old and new knowledge
and skills efficiently and effectively and build synergies for the benefit
of all citizens. Apparently Europe does not know how to do it. Unfortunately
however, knowledge not used for a long time will disappear. It is like
the muscles in a body: if not properly used they become weaker and weaker.
Now, because of the bad financial situation, knowledge in Eastern and
Central Europe is deteriorating: it is getting weaker. Is this what
Europe really wants?
A good friend of mine with a good University degree who speaks three
languages has not been able to find a proper job for quite a while,
so he decided to leave Hungary for the USA where he was offered an excellent
job. He wanted not only a better salary and quality of life, but also
the chance to further develop and utilise his knowledge and skills.
Is it good for Hungary and the EU to lose talented people because of
the lack of opportunities? No, I do not think so. But what are the options
open to us here at the peripheries? If we only have poorly paid jobs,
which are even professionally not demanding, then we can either accept
what is offered and stay at the lowest level of the "Maslow hierarchy"
(2): ie. try to earn enough to satisfy our "basic needs" and
forget about "self-fulfillment", "creativity", "new-idea
searching" and quality of life: all those things which would make
us happier and, probably, also healthier, and the economy more innovative
and successful. Or the only other chance we have is: not to give up
our ideas, dreams and find better working and human conditions elsewhere.
Honestly, if I were younger I would choose again the second option.
I am saying "again", as once, in the 80s I already had to
do so. Then I wanted to develop an MBA programme together with an American
colleague for Hungarian managers, to give them an opportunity to learn
real management. But I lost my job - I worked then in a management education
centre - because of this "too creative idea" of "importing
capitalist methods to the socialist Hungary". Now, today, we are
not immediately kicked out of our job if we have good ideas. Our ideas
are just simply not needed, or we have no chance to further elaborate
on them because of the lack of resources. But what about all those moneys
available from the EU funds? - one may ask. They are supposed to offer
some alternative opportunities, right? In theory yes, but not in practice.
First of all to get inside the circles of those "lucky people"
who have access to the European "purse" is very difficult
- in Hungary it is now more important to be properly "networked"
than to be knowledgeable and have good ideas.
For the sake of those who do not know what I am talking about, let
me refer to the Transparency International yearly Reports that publish
the fact that Hungary in three consecutive years has been slipping lower
and lower down on the corruption list of nations (ie becoming more corrupt).
The practice how some circles get access to European money is obviously
not exempt from corruption either. But is it serving the interests of
development by getting support to those who could use it in the most
innovative and efficient ways? Definitely not! But who cares? The EU
officials, in my opinion, have no idea about how things really are in
Hungary or in the other new member countries! I am not sure either,
whether they are interested in it at all! Just think about how the EU
operates! They collect a lot of money from the member states including
the very poor new ones, and then use it to support a huge bureaucracy.
Even if some money gets back to a country, it happens very late, as
the EU finances the different projects only after they have been finalised.
In the meantime the money is used by the EU. By the way, this practice
of financing projects after they have been completed combined with the
rule that project initiators can only apply for money if they have enough
own money to add, is a sure method of excluding small businesses which
lack the necessary resources. In this way the EU makes the rich even
richer and the poor poorer (and corporatism stronger and enterprise
capitalism which is the basis of democracy, weaker - ed)
On top of it all, a global or transnational company having a low-cost
offshore operation in Hungary can also apply for money from the EU,
and if it gets it, it will be registered in the EU as "funds allocated
to Hungary", when obviously Hungarians have not received it. And
corruption can be found in the process of applying for and receiving
EU funds everywhere: it penetrates the entire system.
Two examples of EU/Hungarian corruption can explain the cynicism of
Hungarians: A Hungarian EU commissioner was first offered the energy
portfolio. At the Parliament hearings though he proved to be so poorly
prepared that he had to give up this job. But after this he was not
sent home to find a job which would have better fitted his capabilities,
but rather he received a second chance: a second offer to be in charge
of taxes and customs, and also two weeks to prepare for the task. If
this is how leaders are selected into crucial positions in the EU hierarchy,
then what type of professionalism and leadership can we expect from
the EU?
Or another event: the former Hungarian prime minister Medgyessy had
to step down, among other reasons because it became public that he had
been a secret agent before the fall of Communism! But this man twice
received the decoration of the French "Legion of Honour":
very probably because of his services to French business interests when
privatising Hungarian state properties. Is this what we can call "European
values"? So before people could have ever built up a positive image
of the EU, they had to face the realities of how the EU really operates:
on the basis of the cruel rules of the stronger and the more powerful.
Therefore it is no wonder why they have become alienated from it before
they could appreciate it.
But putting everything together, if in some parts of the EU, knowledge
is not being built but rather wasted, corruption is thriving, and social
capital is weak, how can Europe at all dream about becoming a stable,
knowledge-based, competitive and dynamically developing region? Or will
it be satisfied if only one part - the "core countries" -
will have a chance to get closer to this vision and the rest stay behind
on the periphery? But if this happens, then what will be the relationship
of the two "segments": are they be playing the role of the
"colonisers and the colonies"? If we just observe every day
events we will have no doubts how to answer this question.
Just a few examples: the 15 countries had a chance to decide
whether they wanted to introduce - and if yes, when - the Euro. The
10 new countries are ordered to do it. France and Germany can
break the rules of the Maastricht Treaty by running huge state deficits,
but Hungary, which is not even the member of the "Euro-zone"
is continuously threatened, disciplined and checked for the same thing.
Hungarian workers and service businesses do not have the same rights
in the EU as those of the original 15 member countries. Are we already
a colony? Which means in a knowledge management context, that we are
doomed to be only "knowledge-users" and not "knowledge-creators"?
Are we to be the "useful idiots" of a new European hegemony?
Dr. Magdolna Csath
Professor of Economics and International Business
Budapest
(1) I was on the "international editorial board" of the "Change
Management" and "The Long Range Planning" journals. My
explanation for being left out after the changes is simple: it was interesting
to have a critical professional person on the board from a country "behind
the Iron Curtain". But after the changes in 1990 Hungary and Hungarians
were not interesting any longer. Few people in the "West"
care about the present truth: which is that there has been no real change
in Hungary. Mostly the same communist dictators, their friends and business
partners have stayed in power. They are the "new rich" and
their previous "network" continues to rule the country today.
The only change is that instead of serving Moscow, now they serve Brussels.
Therefore they are "OK" for the "West".
2. Maslow was an American psychologist, who developed the "hierarchy
of needs" model. The model argues that people have to satisfy their
basic needs - for food, clothing and shelter - then they can move to
the next level, which is the need for community, good human relationships,
and when this need has already been satisfied, people will try to move
up to the highest need-level, which is self-fulfillment - having creative,
challenging jobs.
