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

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  • 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
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    Cited by:

    1. Mehrdad Vahabi, 2022. "In Janos Kornai’s memory," Public Choice, Springer, vol. 190(3), pages 265-271, March.
    2. 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.
    3. 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.

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    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

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