Taxation and the Polanyian forms of integration in socialist and postsocialist Hungary

Reciprocity, redistribution, and (market) exchange were the “forms of integration” put forward by Karl Polanyi as a “special tool box” to investigate relations between economy and society where the principle of price-forming markets is not (yet) dominant. Though intended as the basis for a comparative alternative to the universalist assumptions of mainstream (neoclassical) economics, Polanyi did not make significant use of these concepts to analyze the noncapitalist societies of his day. This article investigates his Hungarian homeland, which in four decades of socialism evolved from Stalinist central planning to a mixed economy in which (re)distribution was supplemented by the expansion of market exchange, with personal taxation playing a negligible role. The constellation of (re)distribution and market has changed significantly in the postsocialist (neoliberal) era, but Scandinavian-type societal reciprocity has remained elusive. Long after admission to the European Union, Hungarian fiscal and social policy regimes are distinctive as the market form of integration combines with low taxation and political interventions to (re)distribute resources (including transfer income from the EU) to support the formation of a national bourgeoisie. Theoretically, the perspective of the socialist Karl Polanyi is contrasted with that of the liberal institutionalist economist János Kornai.