Governing the economy under populist rule : the cases of Hungary and Poland

The present publication is the outcome of the project entitled POPREBEL - Populist Rebellion Against Modernity in 21st-century Eastern Europe: Neo-traditionalism and Neo-feudalism.

Abstract

Populism is principally a political phenomenon; yet, the economic implications of populist rule can be substantial, as underlined by the Polish and Hungarian cases. By operationalizing the ideational definition of populism, the article sheds light on the economic consequences of populist governance in three major domains: (1) macroeconomic management, (2) welfare policies, and (3) market regulation. The article demonstrates that while - at least until the outbreak of the COVID-19 pandemic - Hungary and Poland refrained from engaging in irresponsible macroeconomic policies such as the accumulation of public debt or external debt (typical signs of classical “economic populism”), the governments of the two countries embarked on widescale income and wealth redistribution in their respective economies. Nevertheless, these populist governments targeted different groups of people in their redistributive policies: Hungary adopted a largely selective and exclusive social policy targeting the middle class and the well off, while Poland endorsed a more inclusive strategy that benefited the poor as well. Furthermore, the two countries deliberately tilted the playing field toward their protégés: Hungary preferred the preservation of private property; whereas, Poland explicitly increased the share and role of state-owned enterprises in the economy.