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The Mutation of Neoliberalism

Updated: Sep 4, 2021

In this contribution to ISRF Bulletin 24, I inquire into the nature of the specific form of national-populist neoliberalism that has emerged in Hungary under Viktor Orbán's leadership.

Populism and neoliberalism are among the most fiercely debated topics in the social sciences—however, the two concepts have produced two disjoined discourses. The conventional approach to populism followed by most economists and political scientists has characterized it as a threat to the neoliberal order, a cultural backlash[1] against cosmopolitan globalization, describing populist leaders as opposed to business elites and liberal economic principles.[2] Businesses are, in turn, frequently hypothesized to oppose populism. When populists get elected, they are described as reckless political entrepreneurs openly breaking with liberal norms and erecting populist regimes imbued with state capitalism. In short, the conventional approach to populism hypothesizes that populist regimes lead to a clash with most businesses and a divergence from liberal capitalism.

In contrast to the conventional approach to populism, neoliberalism scholars, mostly sociologists, historians, and social anthropologists, have been more skeptical about the supposed clash between right-wing, nationalist populism and neoliberalism. In a path-breaking piece of research on Peru’s Fujimori, Kurt Weyland has shown that populism and neoliberalism can cohabit comfortably.[3] In another crucial paper, Adam Harmes has made a distinction between internationalism and neoliberalism.[4] While internationalists embrace all forms of global political cooperation, neoliberals oppose forms of political globalization that would entail a new set of international institutions curtailing capital accumulation. Thus, as Harmes concludes, neoliberalism can depend on certain nationalist policies if they enhance capital accumulation.

Right-wing populism has emerged within neoliberalism in Germany and Austria, not in opposition to it.[5] Several key supporters of Brexit have also argued for a return to the British state not to challenge neoliberalism but to shield it from European regulation and embark on a new export-oriented neoliberal trajectory.[6] According to this emerging consensus amongst neoliberalism scholars, in many cases, right-wing populism is not a wholesale rejection of neoliberalism but only a variety of it. This new version remains within the neoliberal framework, amounting to a “mutation of neoliberalism.”[7] In contrast to the conventional approach to populism, this emerging neoliberalism literature also implies that some businesses support right-wing populists.[8] Thus, the two views, two academic discourses separated by disciplinary walls, could be hardly more different. In this essay, I enter this debate by presenting a framework to analyze the national populist mutation of neoliberalism in dependent economies and briefly fleshing out how this framework can enlighten the controversial politics of Viktor Orbán.

Neoliberalism meets national-populism

Neoliberalism has three faces: an intellectual-professional project, a repertoire of policies, and a form of politics.[9] As a form of politics, neoliberalism is against the types of capitalism that put temporary shackles on capital accumulation in the name of popular pressures or national developmental goals. In response to these models, neoliberalism does not dismantle the state but builds new state institutions to improve accumulation conditions. Market-fundamentalism should not be confused with the “proto-neoliberalism” of Hayek, who was critical of laissez-faire and saw much room for an interventionist state or the “roll out” phase of neoliberalism in the 1990s and 2000s. Neoliberalism has included active state-building and regulatory reform to constitute markets and protect them from democratic intervention.[10]

Close to neoliberalism as a form of politics, I regard neoliberalism as an accumulation strategy. As suggested by Bob Jessop, “an ‘accumulation strategy’ defines a specific economic ‘growth model’ complete with its various extra-economic preconditions.”[11] Such accumulation strategies represent temporarily stable formations of the capitalist circuit, where various fractions of the business class are conjoined, usually under the leadership of a dominant fraction. In core capitalist countries, the Keynesian social-democratic configuration was the accumulation strategy of the post-war era, while import-substitution developmentalism—including state socialism—was the accumulation strategy in semi-peripheral countries. Neoliberalism emerged as the key alternative to these strategies.

Following Aldo Madariaga[12] and Cornel Ban,[13] I differentiate the core tenets of neoliberalism from its peripheral aspects. Peripheral institutions can change without jeopardizing core institutions. This distinction is crucial for “neoliberal resilience,” a process whereby neoliberalism dynamically adapts to external perturbances to ensure its survival. The resilience of neoliberalism depends on the ability of dominant social groups to “defend those aspects of a neoliberal policy regime that—in their view—better serve their interests while allowing degrees of freedom in those aspects that they view as less relevant.”[14]

According to Cornel Ban, at the core of neoliberalism are a set of institutions designed to serve three primary goals: 1) credibility with financial markets, 2) trade and financial openness, and 3) competitiveness.[15] Neoliberalism is constantly evolving, always negotiated by local actors filtered through domestic power struggles and ideational frameworks, leading to different hybrids. However, as long as politics adheres to these core institutions, neoliberalism remains neoliberalism.

In semi-peripheral, dependent economies, such as Hungary, or most countries in Latin America and Europe’s Eastern periphery, the business class is polarised based on access to international markets and technology. Compared to transnational capitalists, national capitalists have less access to the most successful sectors of the global economy. Therefore, the national bourgeoisie of peripheral states is structurally prone to rely directly on its political connections to compete with transnational companies. However, transnational capital must also compromise with domestic political and economic elites to secure the conditions of accumulation.

Economic crises act as historical contingencies that throw the class compromise between the segments of the power bloc into question, thus jeopardizing the hegemony of neoliberalism. In these situations, elites need to reach a new consensus and reconstitute the power bloc. The balance of power determines whether the response to these crises leads to a new accumulation strategy or a modification of peripheral aspects of the prevailing accumulation strategy. If the national capitalist class is strong enough to mobilize but weak to dominate transnational capital, and if populists can mobilize popular disillusionment with neoliberalism, then the resolution of the crisis of the neoliberal accumulation strategy will be the national-populist mutation of neoliberalism.

Combining Weyland’s notion of “neoliberal populism” and Harmes’s notion of “neoliberal nationalism,” I regard national-populism as a “legitimation strategy” that can contribute to the political sustainability of neoliberalism. Populism as a legitimation strategy appeals to a mass public using a Manichean logic that opposes the virtuous people to corrupt elites and affiliated out-groups.[16] National-populist neoliberalism is thus a compromise between the core of neoliberalism and the political imperatives of advancing national interests, relying on populism as a legitimation strategy.

Viktor Orbán, the nationalist champion of business elites

In Hungary, national-populist neoliberalism emerged as an alternative to globalist neoliberalism. However, globalist neoliberalism is not unique to Hungary. It corresponds to what Nancy Fraser called ‘progressive neoliberalism’[17] in core countries and what Dorothee Bohle and Béla Greskovits labeled ‘embedded neoliberalism’[18] in the foreign-investment-dependent economies of Central Europe. Globalist neoliberalism also differs from the radical neoliberalism exemplified by Chile or the Baltic states in dependent semi-peripheral countries,[19] or the early “rollback” phase of neoliberalism in core countries, which relied on an authoritarian-conservative populist legitimation strategy as opposed to later progressive globalism.[20]

In Hungary specifically, globalist neoliberalism was an accumulation strategy maintained by the class compromise of transnational corporations (TNCs), technocrats, and politicians. It institutionalized industrial policy based on economic openness and a strict preference for transnational capital. Taxation became increasingly less progressive, with a race to the bottom on corporate taxation. It also incorporated redistributionist strategies to pacify the victims of neoliberalism, which led to a combination of austerity to maintain fiscal balance and recurring deficits and cycles of indebtedness. Discursively, globalist neoliberalism offered economic modernization, a cosmopolitan ideology of human rights, democratization, and European integration as a source of mass legitimation, and attempted to depoliticize economic questions to prevent the political mobilization of economic anger.

The exhaustion of this globalist neoliberal accumulation strategy in the 2000s led to the polarisation of the business class and the growing influence of nationalist technocrats. Facilitated by national-populist politicians, national capitalists reached a new compromise with transnational capital, retaining the core aspects of neoliberalism. Figure 1 presents a summary of this process.

Figure 1. The national-populist mutation of neoliberalism in dependent economies

A large segment of businesses supports Orbán’s populist regime. The severe dependence on foreign investment galvanized national capitalists and nationalist technocrats to support populists in amending globalist neoliberalism. However, they were too weak to challenge the dominance of transnational capitalists occupying the commanding posts of the economy. Therefore, manufacturing TNCs remained central to the power bloc and are among the biggest winners of Orbán’s populist regime. In other cases, such as Poland or Argentina, national capitalists were stronger and could push for more thorough developmentalist interventions that amounted to a genuine break with neoliberalism. In short, the balance of power within the business class matters for how the crisis of neoliberalism is resolved. Followers of the conventional approach to populism need to relax their politics-centered focus and pay more attention to business elite support for populists.

Orbán’s regime is a continuation of neoliberalism, not a switch to developmentalism. Economic nationalism led to significant changes in the ownership structure of the info-communications, mining, finance, and some other service sectors. However, foreign investors retained their dominant position in manufacturing and continue to dominate Hungary’s export and accumulation strategy. Embracing economic nationalism in industrial policy did not challenge the core of neoliberalism. Fiscal policy and social and labor market policy became even more neoliberal. The sphere of finance experienced the most momentous change. However, these moves either only remedied radical excesses of “avant-garde” neoliberalism,[21] such as pension privatization or foreign currency loans, or did not significantly diverge from the global shift towards more heterodox monetary policy after the 2008 crisis. Overall, macro-policy remained conservative, and international financial credibility has improved since 2012. Despite noisy nationalism, these policy changes have not reached a threshold to be considered developmentalism in practice. Research needs to pay more attention to the co-optation of economic nationalist goals into neoliberal strategies.

However, neoliberalism is not the same as it was in the 1990s and 2000s. Certain peripheral institutions could be abandoned; avant-garde excesses could be corrected without jeopardizing the core of the neoliberal project. This national-populist neoliberalism is a compromise between the core of neoliberalism and the political imperatives of advancing national interests, relying on populism as a legitimation strategy. While economic nationalism serves to pacify and incorporate national capitalists, populism works as a legitimation strategy that systematically draws a large segment of the population into the orbit of the governing party. Populist campaigns against migrants and cosmopolitanism are designed to pacify even those segments of society that are relative victims of Orbán’s polarising policies by reframing distributive conflicts as issues of identity politics.


Neoliberalism is mutating, not just in Hungary but in several key dependent economies such as the Philippines (Duterte), or Brazil (Bolsonaro), as well as in the “core of core” countries, in the UK (Brexit, Johnson), and the US under Trump’s presidency. Local idiosyncrasies shape the various mutations of neoliberalism, but there are common underlying factors in contemporary capitalism pushing countries in the direction of national-populist neoliberalism. Neglecting the embeddedness of populism in the business class and its compatibility with neoliberalism leads to a misunderstanding concerning the roots of the current populist wave. To combat populism, it is not enough to “educate the masses” to become more liberal. It is equally important to tackle the sources of the backlash against globalist neoliberalism within business elites.


[1] Pippa Norris and Ronald Inglehart, Cultural Backlash: Trump, Brexit, and Authoritarian Populism (Cambridge 2019: Cambridge University Press).

[2] Rudiger Dornbusch and Sebastian Edwards, “Macroeconomic Populism,” Journal of Development Economics 32, no. 2 (1990).

[3] Kurt Weyland, “Neoliberal Populism in Latin America and Eastern Europe,” Comparative Politics 31, no. 4 (1999).

[4] Adam Harmes, “The Rise of Neoliberal Nationalism,” Review of International Political Economy 19, no. 1 (2012), 59.

[5] Quinn Slobodian, Globalists: The End of Empire and the Birth of Neoliberalism (Cambridge, MA 2018: Harvard University Press).

[6] James D. G. Wood and Valentina Ausserladscheider, “Populism, Brexit, and the Manufactured Crisis of British Neoliberalism,” Review of International Political Economy Published online, no. 03 (2020).

[7] William Callison and Zachary Manfredi (eds.), Mutant Neoliberalism: Market Rule and Political Rupture (New York 2020: Fordham University Press).

[8] Quinn Slobodian, “The Backlash Against Neoliberal Globalization from Above: Elite Origins of the Crisis of the New Constitutionalism,” Theory, Culture & Society Published online (2021).

[9] Stephanie L Mudge, “What is Neo-liberalism?,” Socio-Economic Review 6, no. 4 (2008), 704.

[10] Jamie Peck and Adam Tickell, “Neoliberalizing Space,” Antipode 34, no. 3 (2002), 384.

[11] Bob Jessop, “Accumulation Strategies, State Forms, and Hegemonic Projects,” in The State Debate, ed. Simon Clarke (Houndmills, Basingstoke 1991: Palgrave), 161.

[12] Aldo Madariaga, Neoliberal Resilience: Lessons in Democracy and Development from Latin America and Eastern Europe (Princeton 2020: Princeton University Press).

[13] Cornel Ban, Ruling Ideas: How Global Neoliberalism Goes Local (Oxford 2016: Oxford University Press).

[14] Bruno Amable and Stefano Palombarini, “A Neorealist Approach to Institutional Change and the Diversity of Capitalism,” Socio-Economic Review 7, no. 1 (2009), 640.

[15] Ban, Ruling Ideas, 10.

[16] Noam Gidron and Bart Bonikowski, Varieties of Populism: Literature Review and Research Agenda, 2013, Working Paper Series, Weatherhead Center for International Affairs, Harvard University, No.13-0004., Cambridge, M.A.

[17] Nancy Fraser, “From Progressive Neoliberalism to Trump—and Beyond,” American Affairs 1, no. 4 (2017).

[18] Dorothee Bohle and Béla Greskovits, Capitalist Diversity on Europe’s Periphery (New York 2012: Cornell University Press).

[19] Madariaga, Neoliberal Resilience.

[20] Stuart Hall, “Authoritarian Populism: A Reply,” New Left Review, no. 151 (1985).

[21] Hilary Appel and Mitchell Orenstein, From Triumph to Crisis: Neoliberal Economic Reform in Post-Communist Countries (Cambridge 2018: Cambridge University Press).

Originally published on August 11, 2021, as part of the ISRF Bulletin Issue 24.

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