Constitution for a Disunited Nation: On Hungary's 2011 Fundamental Law

Governance, Accountability, and the Market

Governance, Accountability, and the Market MáRton vaRJu This chapter investigates the provisions of the new Hungarian Fundamental Law on governance, accountability and the market. Its main contention is that the Fundamental Law largely failed to reflect on the changes experienced by European states, including Hungary, in the past decades affecting the relationship between the state and individuals , the modes and mechanisms of accountability, and the relationship between the state and the market. These changes emanated from processes , such as the emergence of the regulatory state following periods of deregulation, privatization and marketization,1 the decline of government by control in delivering public policy and the parallel emergence of the managerial post-regulatory state,2 and the contraction of the state following the economic and fiscal crisis after 2008.3 The challenges of European market integration4 and the demands of European and global governance5 led to further significant changes in the functioning of the state in Europe. The Fundamental Law, by choice, takes only a limited account of several contemporary developments and practices in organizing the 1 Majone, G. “The Rise of the Regulatory State in Europe,” West European Politics 17 (1994): 77. 2 Scott, C. “Regulation in the Age of Governance: the Rise of the Post-Regulatory State” in The Politics of Regulation, Jordana, J. et al, eds. (Cheltenham: Edward Elgar, 2004), 145. 3 The Fiscal Implications of the Global Economic and Financial Crisis, IMF Staff Position Note (2009) SPN/09/13. 4 Armstrong, K. Regulation, Deregulation, Re-regulation (London: Kogan Page, 2000). 5 Lee, S. and S. McBride, “Introduction: Neo-Liberalism, State Power and Global Governance” in Neo-Liberalism, State Power and Global Governance, Lee and McBride, eds. (Dordrecht: Springer, 2007), 1. 302 Constitution for a Disunited Nation state, most of which are already present in Hungary. The dispersal of public powers among public and private actors, the availability of more responsive modes of governance other than law, the state functioning as mediator or facilitator in the policy process, the benefits of horizontal and cooperative, even network-like, relationships of governance between public and private actors, the increasing role of the market in the public sphere, or the accountability dilemmas of the regulatory and the post-regulatory state should warrant a reaction from a 21st century constitutional text. By no means do I intend to resolve the “fundamental mismatch”6 between constitutions and newer paradigms of governance and accountability. Instead, I will engage in a criticism of the narrow understanding of governance, the narrow construction of public power and accountability, and the gaps in the constitutional regulation of the market in the Fundamental Law. The necessity for a broader constitutional understanding of governance and accountability is clearly indicated by the legal excesses and the accountability problems generated in the regulation of fiscal policy discretion and instituting a constitutional debt ceiling, one of our central issues. In the following, I will attempt to provide a comprehensive account of the Fundamental Law’s provisions on governance and accountability with specific regard to the implementation of contemporary ideas of governance and of new designs for accountability. The fiscal constitution, the rules and institutions introduced to control fiscal policy discretion, will be scrutinised extensively as an example in the Fundamental Law of experimenting with new governance and accountability. The chapter will close with a discussion on a related topic, the incomplete recognition and regulation in the Fundamental Law of the relationship between the state and the market. A Constitution for Government or for Governance? The Fundamental Law discharges its task of establishing a constitutional government in a series of core provisions. It incorporates the basic constitutional tenets of government and prescribes a system of 6 De Búrca, G. and J. Scott, New Governance, Law and Constitutionalism, 5, http://www.ucl.ac.uk/laws/clge/docs/govlawconst.pdf. 303 Governance, Accountability, and the Market government. Its principles include popular sovereignty, democratic legitimacy and the rule of law (Article B), and the separation of powers and the state’s monopoly of coercion (Article C). Its primary method of governance includes generating legislation and legislative instruments and their subsequent enforcement by state institutions. The basic framework for law as the primary means of government is provided in Articles R-T on the legal system which establishes the hierarchy of the Fundamental Law over legislation and legislative instruments , determines the legal nature of the Fundamental Law and legislative tools, and regulates the fundamental...