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Dávid Jancsics From Local Cliques to Mafia State: The Evolution of Network Corruption Post-communist Informality Network culture and related informal institutions are widespread phenomena in Central and Eastern Europe (CEE). The network character suggests that not only two but many interconnected actors participate in informal exchanges and circulate different forms of resources through this widespread social infrastructure. Under the communist shortage economy, informal networks were important survival tools for everyday citizens to “get things done.” The relationship structure of family members, friends, acquaintances, ex-classmates, colleagues, and neighbors provided effective channels to obtain different forms of resources, from travel vouchers through home phones and cars to university admissions. Of course, these types of informal networks existed and still exist all around the world but in communist CEE countries they were more widespread compared to their Western counterparts.1 The network culture survived the collapse of communist system in many countries in the region, although new patterns of informality also emerged. For example, the system of mutual favors, once widespread under communism, has been partially replaced by economic-type bribes, when the counter transfer is an immediate and strictly cash payment.2 Another new element of postcommunist informality is that networks have become embedded into state administrations and informal interest groups captured formal institutions.3 Various forms of informal institutions enmesh the Hungarian society, too. Most of them fall into the category of corruption since actors exchange i6 Maffia II 00 book.indb 129 2016.12.07. 15:47 130 TWENTY-FIVE SIDES OF A POST-COMMUNIST MAFIA STATE organizational resources that do not belong to them. In many cases, ordinary citizens use their social networks occasionally when they try to obtain particular goods. In contrast to this, systemic grand corruption at the top of the state administration is different. Here, governing elites intentionally build networks in order to continuously siphon off huge amount of public resources from the system. Using an organizational sociology approach, this chapter discusses the main types and governing mechanisms of corrupt elite networks in contemporary Hungary. I will show the differences between the corruption structures of the current Fidesz–KDNP (Christian Democratic People’s Party) government—in power since 2010— from grand corruption patterns under the previous governments. In this chapter I use some elements of Bálint Magyar’s “post-communist Hungarian mafia state” concept.4 Professionally designed networks Although the emerging mafia-style state established by members of the current Fidesz–KDNP government has unique features, there are also several elements of network corruption common under all postsocialist Hungarian governments. In contrast to informal social networks, which may provide effective infrastructure for occasional and spontaneous corrupt transactions at different levels of society, corrupt networks at the top are more consciously designed and managed. Here, corrupt actors build such networks to extract huge amount of resources from a formal organizational system over a long term. For this, the “network organizers” or “dominant coalitions”5 need to create and maintain steady and complex hybrid arrangements with the combination of informal and formal elements. These professionally managed structures are similar to formal legal organizations for several reasons.6 As any other companies or bureaucracies , corrupt networks have to coordinate repeated activities of many actors in order to achieve the organization’s goal. Corrupt elite structures also have a division of labor. They need to specialize the cooperation of their subunits to fulfill functions such as search for resources among state institutions , design the less risky way of illegal extraction, deactivate internal and external control mechanisms, and link different elements of the network. Corrupt networks always need legally operating formal organizations , that is, “cash cows” that produce and/or allocate public resources to milk.7 This feature of corrupt networks significantly differs from organized i6 Maffia II 00 book.indb 130 2016.12.07. 15:47 131 From Local Cliques to Mafia State crime arrangements that realize profit from originally illegal activities such as prostitution, drug and gun trafficking, gambling, or protection rackets. Organized crime groups create and use formal organizations only for secondary reasons, such as for laundering dirty money or covering illegal profit making. Since every corrupt activity includes an informal allocation of formally assigned resources, corruption always violates the official rules of the focal organization. However, in most cases, it also means the violation of society’s codified norms, the criminal code, or other laws. Corrupt actors must hide this permanent rule breaking. They therefore need to conspire together and to achieve this...


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