There is one unmistakable signal that there is chaos and panic in the Government related to the economy. One only needs to notice when the top executives of large business systems are ‘brought in’ to the Government or one of the ministries. Prime ministers are very wary of this, fearing a possible drop in their ratings in monthly surveys. They resort to this measure only in extreme necessity. Therefore, the recent media-highlighted and closely followed meetings with representatives of the largest retail chains (price freezing) and somewhat more discreet discussions with bankers (raising interest rates on savings) signal a pronounced nervousness from Prime Minister Andrej Plenković and his team.
The superficial and confused general public, frustrated by persistent inflation, silently gives up on the liberal teaching of non-interference between the state and entrepreneurs and accepts interventionist attempts at joint action between the state and big business. Hoping for some results in stopping the decline in living standards caused by rising prices that threaten to completely spiral out of control and cross, as they say, the psychological barrier of ten percent.
Freezing as a Performance
Unfortunately, all of this is completely wrong! Contrary to the belief that the state and business should communicate and negotiate only when inflation, recession, shortages, or something else threatens, quality dialogue should take place in good times. For example, now that inflation has spiraled out of control, agreements to freeze the prices of thirty products in one retail chain are pure political folklore. As firefighters would say, thirty glasses of water do not extinguish a large forest fire. It is merely a performance after the tourist season, when there would anyway be a temporary price reduction. One should wait for the pre-holiday frenzy in December and see what remains of the frozen prices.
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In Hungary, individuals have received state-owned enterprises, but it is clear that they must also perform some state tasks because of this. For example, acquiring agricultural land in Croatia. In Croatia, ‘Tuđman’s 200 families’ had the privilege of taking over social enterprises. However, in return, nothing strategically was asked of them. Except for something for party and private pockets.
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The publicly announced conversation between the Prime Minister and ministers, on one side, and, say, about thirty representatives of the largest business systems in Croatia, on the other side, should be held at planned regular intervals in prosperous years. Then the synergy between the state and big business can yield results. Accelerated development in good years justifiably raises wages and pensions to higher levels. So when a ‘correction’ occurs in the downward phase of the cycle, it is easier to bear. Again, in firefighters’ terms: prevention is more effective than extinguishing a fire when it flares up.
For such peacetime cooperation between the state and private entrepreneurship to be beneficial, the first prerequisite is that the political leadership has a vision for the long-term development of the country and knows what it offers to locomotive companies and what it seeks in return. A friend of mine, a manager, explained this very well recently.
Two-Dimensional Prime Ministers
In Hungary, individuals have received state-owned enterprises, but it is clear that they must also perform some state tasks because of this. For example, acquiring agricultural land in Croatia in areas that a large part of the Hungarian public believes have always been theirs but were unjustly taken from them after World War I. In regaining influence, one group of entrepreneurs was tasked with mastering oil, another was assigned to establish a foothold in the banking market, and a third in the food market. In Croatia, at the beginning of the transition, ‘Tuđman’s 200 families’ had the privilege of favorably taking over former social enterprises. However, nothing meaningful was asked of them in terms of state economic interests in return. Just something for party and private pockets.
After thirty years, it would be extremely challenging to create a platform for a quality and productive relationship between the state and large entrepreneurs for the community. First, it would be necessary to convince a sufficient part of the general public that they should not immediately condemn the dialogue between the Government and big, primarily remaining, domestic entrepreneurship. Distrust is understandable, both towards politicians and generally towards entrepreneurs. Therefore, it should be clearly explained what the goal of cooperation is, how it will be achieved, how it will be controlled, and what results are expected. Two or three quick victories would also be needed (defending some economic national interest or a foothold in the regional market, for example). Of course, local entrepreneurs should also qualify for entry into the first league of development locomotives through their previous actions.
Unfortunately, the prospects for such a thing happening in the near future are very slim. Following the candidacies for future prime ministers (Plenković, Sandra Benčić, Peđa Grbin, Božo Petrov…), it becomes clear that this is a team that lives in a two-dimensional political world. And that is not at all aware of this third dimension of the relationship between business and politics.
