IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v187y2021i1d10.1007_s11127-020-00851-0.html
   My bibliography  Save this article

János Kornai, the Austrians, and the political and economic analysis of socialism

Author

Listed:
  • Peter J. Boettke

    (George Mason University)

  • Rosolino A. Candela

    (George Mason University)

Abstract

What is the relationship between central planning, pervasive shortages, and soft budget constraints under socialism? In this paper, we address this question by exploring the evolution of János Kornai’s work on the operation of real-world socialism. In doing so, our goal is to reframe Kornai’s contributions to the political economy of socialism by focusing on the epistemic conditions under non-market decision making. From this perspective, we argue that the dysfunction facing socialist economies is not one based fundamentally on a misalignment of incentives in enforcing hard budget constraints and eliminating shortages. Rather, soft budget constraints are a consequence of competition between firms in a non-profit setting, utilized as a means to monetize the control over state-owned resources through the creation of pervasive shortages.

Suggested Citation

  • Peter J. Boettke & Rosolino A. Candela, 2021. "János Kornai, the Austrians, and the political and economic analysis of socialism," Public Choice, Springer, vol. 187(1), pages 85-97, April.
    • Handle: RePEc:kap:pubcho:v:187:y:2021:i:1:d:10.1007_s11127-020-00851-0
    DOI: 10.1007/s11127-020-00851-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11127-020-00851-0
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11127-020-00851-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    3. Perényi, Áron & Esposto, Alexis & Bamforth, Jill, 2020. "Institutional transformation and development from an economic transition perspective: the case of Argentina," Journal of Institutional Economics, Cambridge University Press, vol. 16(1), pages 83-104, February.
    4. Peter Boettke & Christopher Coyne & Peter Leeson, 2011. "Quasimarket failure," Public Choice, Springer, vol. 149(1), pages 209-224, October.
    5. Richard E. Wagner, 2016. "Politics as a Peculiar Business," Books, Edward Elgar Publishing, number 16989.
    6. Russell Sobel & Peter Leeson, 2006. "Government's response to Hurricane Katrina: A public choice analysis," Public Choice, Springer, vol. 127(1), pages 55-73, April.
    7. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    8. Mehrdad Vahabi, 2014. "Soft Budget Constraint Reconsidered," Bulletin of Economic Research, Wiley Blackwell, vol. 66(1), pages 1-19, January.
    9. Leeson, Peter T. & Harris, Colin, 2018. "Wealth-destroying private property rights," World Development, Elsevier, vol. 107(C), pages 1-9.
    10. Mehrdad Vahabi, 2021. "Socialism and Kornai’s revolutionary perspective," Public Choice, Springer, vol. 187(1), pages 37-54, April.
    11. Levy, David M, 1990. "The Bias in Centrally Planned Prices," Public Choice, Springer, vol. 67(3), pages 213-226, December.
    12. Peter J. Boettke & Rosolino A. Candela, 2020. "Productive specialization, peaceful cooperation and the problem of the predatory state: lessons from comparative historical political economy," Public Choice, Springer, vol. 182(3), pages 331-352, March.
    13. Boettke, Peter J., 2020. "Property, predation and socialist reality," Journal of Institutional Economics, Cambridge University Press, vol. 16(2), pages 185-197, April.
    14. Kornai, J, 1979. "Resource-Constrained versus Demand-Constrained Systems," Econometrica, Econometric Society, vol. 47(4), pages 801-819, July.
    15. G. Warren Nutter & Israel Borenstein & Adam Kaufman, 1962. "Introduction to "Growth of Industrial Production in the Soviet Union"," NBER Chapters, in: Growth of Industrial Production in the Soviet Union, pages 3-10, National Bureau of Economic Research, Inc.
    16. Cai, Meina & Murtazashvili, Ilia & Murtazashvili, Jennifer, 2020. "The politics of land property rights," Journal of Institutional Economics, Cambridge University Press, vol. 16(2), pages 151-167, April.
    17. Ilia Murtazashvili & Jennifer Murtazashvili, 2019. "The political economy of legal titling," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 32(3), pages 251-268, September.
    18. Mehrdad VAHABI, 2001. "The Soft Budget Constraint : A Theoretical Clarification," Discussion Papers (REL - Recherches Economiques de Louvain) 2001024, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    19. Ennio E. Piano & Louis Rouanet, 2020. "Economic calculation and the organization of markets," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 33(3), pages 331-348, September.
    20. Oskar Lange, 1936. "On the Economic Theory of Socialism," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 4(1), pages 53-71.
    21. G. Warren Nutter & Israel Borenstein & Adam Kaufman, 1962. "Growth of Industrial Production in the Soviet Union," NBER Books, National Bureau of Economic Research, Inc, number nutt62-1.
    22. Candela, Rosolino A., 2020. "The political economy of insecure property rights: insights from the Kingdom of Sicily," Journal of Institutional Economics, Cambridge University Press, vol. 16(2), pages 233-249, April.
    23. Andrei Shleifer & Robert Vishny, 1992. "Pervasive Shortages under Socialism," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 237-246, Summer.
    24. Barzel,Yoram, 1997. "Economic Analysis of Property Rights," Cambridge Books, Cambridge University Press, number 9780521597135, February.
    25. Peter T. Leeson & Colin Harris & Andrew Myers, 2021. "Kornai goes to Kenya," Public Choice, Springer, vol. 187(1), pages 99-110, April.
    26. Leeson, Peter T., 2011. "Government, clubs, and constitutions," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 301-308.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eric Magnin & Nikolay Nenovsky, 2024. "Soft monetary constraint and shortage in the European sovereign debt economy," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 37(1), pages 55-80, March.
    2. Mehrdad Vahabi, 2022. "In Janos Kornai’s memory," Public Choice, Springer, vol. 190(3), pages 265-271, March.
    3. Mykola Bunyk & Leonid Krasnozhon, 2023. "State capacity and the socialist calculation debate," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 694-707, January.
    4. Boettke, Peter J. & Candela, Rosolino A. & Zhukov, Konstantin, 2023. "The morality of illicit markets: “Greasing the wheels” or “greasing the palm”?," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 411-422.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Harris,Colin & Cai,Meina & Murtazashvili,Ilia & Murtazashvili,Jennifer Brick, 2020. "The Origins and Consequences of Property Rights," Cambridge Books, Cambridge University Press, number 9781108969055, September.
    2. Boettke, Peter J. & Candela, Rosolino A. & Zhukov, Konstantin, 2023. "The morality of illicit markets: “Greasing the wheels” or “greasing the palm”?," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 411-422.
    3. Jennifer Murtazashvili & Ilia Murtazashvili, 2020. "Wealth-destroying states," Public Choice, Springer, vol. 182(3), pages 353-371, March.
    4. Mehrdad Vahabi, 2022. "In Janos Kornai’s memory," Public Choice, Springer, vol. 190(3), pages 265-271, March.
    5. Gregory W. Caskey & Ilia Murtazashvili, 2022. "The predatory state and coercive assimilation: The case of the Uyghurs in Xinjiang," Public Choice, Springer, vol. 191(1), pages 217-235, April.
    6. Vahabi,Mehrdad, 2019. "The Political Economy of Predation," Cambridge Books, Cambridge University Press, number 9781107591370.
    7. Vahabi, Mehrdad, 2011. "Soft budget constraint and the parastatal sector," MPRA Paper 37926, University Library of Munich, Germany.
    8. Xu, Cheng-Gang, 2017. "Capitalism and Socialism: Review of Kornai’s Dynamism, Rivalry, and the Surplus Economy," CEPR Discussion Papers 11866, C.E.P.R. Discussion Papers.
    9. Alston, Eric & Crepelle, Adam & Law, Wilson & Murtazashvili, Ilia, 2021. "The chronic uncertainty of American Indian property rights," Journal of Institutional Economics, Cambridge University Press, vol. 17(3), pages 473-488, June.
    10. Mehrdad Vahabi, 2021. "Socialism and Kornai’s revolutionary perspective," Public Choice, Springer, vol. 187(1), pages 37-54, April.
    11. Chenggang Xu, 2017. "Capitalism and Socialism: A Review of Kornai's Dynamism, Rivalry, and the Surplus Economy," Journal of Economic Literature, American Economic Association, vol. 55(1), pages 191-208, March.
    12. Vahabi, Mehrdad, 2002. "The Soft Budget Constraint: An Institutionalist Approach," MPRA Paper 17649, University Library of Munich, Germany.
    13. Mehrdad Vahabi, 2001. "The Soft Budget Constraint: A Theoretical Clarification," Post-Print hal-00629160, HAL.
    14. Mehrdad Vahabi, 2021. "Introduction: a special issue in honoring Janos Kornai," Public Choice, Springer, vol. 187(1), pages 1-13, April.
    15. Soldatos, Gerasimos T., 2000. "The Firm-Bank Interaction Regime and "Softness"," MPRA Paper 58203, University Library of Munich, Germany.
    16. Vahabi, Mehrdad, 2020. "نئولیبرالیسم و مقابله با تورم [The Neoliberalism and the Inflation Control]," MPRA Paper 102539, University Library of Munich, Germany.
    17. Lin, Wanlin & Lin, George C.S., 2023. "Strategizing actors and agents in the functioning of informal property Rights: The tragicomedy of the extralegal housing market in China," World Development, Elsevier, vol. 161(C).
    18. Vahabi, Mehrdad, 2003. "La contrainte budgétaire lâche et la théorie économique [Soft Budget Constraint and Economic Theory]," MPRA Paper 17651, University Library of Munich, Germany.
    19. Justin Yifu Lin, 2007. "Development and Transition : Idea, Strategy, and Viability," Development Economics Working Papers 22709, East Asian Bureau of Economic Research.
    20. Charles, Sébastien & El Karouni, Ilyess, 2008. "La transformation postsocialiste chinoise : ouverture économique et contrainte extérieure," L'Actualité Economique, Société Canadienne de Science Economique, vol. 84(4), pages 391-413, Décembre.

    More about this item

    Keywords

    János kornai; Political economy; Socialism;
    All these keywords.

    JEL classification:

    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:187:y:2021:i:1:d:10.1007_s11127-020-00851-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.