How the Rule of Law Killed Hungarian Welfare Reform
![handle is hein.journals/eeurcr5 and id is 31 raw text is: WINTER 1996
Special Reports
Welfare rights + constitutional court = state socialism redivivus
How the Rule of Law Killed Hungarian Welfare Reform
Andras Sajo
Recent decisions of the Hungarian Constitutional
Court have slowed the restructuring of the
Hungarian welfare system and dramatically raised
fundamental questions concerning society's post-
communist welfare dependence. In order to under-
stand what is at stake in these decisions, one must
look at the role of welfare rights before and after
1989. Only in this framework can we explain the
constitutional significance of the Court's decisions
for the whole region. Indeed, a broader view
reveals some perverse effects of the rule of law in a
poorly designed separation of powers system.
Against this background, moreover, the tension
between constitutional rights protection and eco-
nomic modernization, under the specific circum-
stances of postcommunism, becomes visible.
Contrary to the pattern commonly observed in less
developed countries making the transition to mar-
ket economies, in a number of East European coun-
tries legal institutions introduce a new dimension
to the process. The rule of law, generally associated
with both democratization and support for emerg-
ing markets, produces unexpected outcomes.
Welfare rights and welfare service provisions,
as used in this article, refer to all social services and
monetary support provided by the government to
individuals according to their social status. It
includes pensions for the retired and the handi-
capped, sickness benefits (including the universal
and free health care system), child, maternity and
family support (both monetary supplements and
special care), unemployment benefits, and free or
subsidized housing-including low-interest loans.
(Free education, subsidized cultural activities, and
even communications are or were provided as free
or heavily subsidized [social] government ser-
vices; but they are not included here, although
they too were intended to promote the general
welfare.) All of this is generally referred to as the
social insurance scheme. The scheme is adminis-
tered with government-underwritten, non-volun-
tary social insurance funds, governed by the
1975 Social Security Act which is used as a refer-
ence law in special benefits schemes (e.g., unem-
ployment benefits).
The indiscriminate use of the expression wel-
fare rights in postcommunist Hungary reflects
the indiscriminate provision of welfare during
state socialism.
Recent decisions of the Constitutional Court,
which reflect its social welfare theories, represent
the most elaborate effort so far to protect welfare
rights and institutional services inherited from state
socialism. The social and political consequences of
its 1995 social welfare decisions indicate that the
rule of law and constitutional arrangements indeed
play an obstructionist role, preventing changes to
the inherited welfare system. In the current stage of
the transition process, the constitutional social-
rights provisions help to perpetuate the inherited](ViewImageLocal?handle=hein.journals/eeurcr5&div=5&collection=&method=preview&ext=.png&size=3)
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How the Rule of Law Killed Hungarian Welfare Reform
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