Bürokratikus és piaci koordináció[Bureaucratic and market coordination]

Here the author has two goals. One is to raise some theoretical ideas and outline an analytical apparatus suited to this group of questions. The other is to address the problems of economic reform in terms of the subject-matter stated in the title. The study is a partial outcome of lengthy research. Restrictions on length mean the author must cover large, complex questions very briefly. More detailed expressions of these will appear in later publications. In this inaugural lecture at the Hungarian Academy of Sciences the author distinguishes four mechanisms of coordination conceived as the regulatory basis for any kind of transformational and transactional process: bureucratic, market, ethical and aggressive coordination. This classification is distinct from the usual one in literature in classifying the control procedures, not the individual organization(s), in the sense that direct control of every microprocess is performed by one of the four basic forms or by some combination of them. From analysis of a few characteristic indicators the author reaches the conclusion that the scope of bureaucratic regulation in Hungary (despite the general stand against bureaucracy) is at best stagnating, rather than increasing. There are four causes behind this tenacity of bureaucracy: 1. Bureaucracy is inclined to complement the general regulations with ever more concrete and detailed rules. 2. While bureaucracy is confronted in one area, the point of emphasis of its activity shifts frequently to other areas. 3. If there is a shortage, and insofar as market coordination does not fulfil its task of adjusting supply and demand to each other, bureaucratic coordination becomes inevitable. 4. Those with power within the bureaucratic system and those enjoying its advantages fight to retain their positions. The author challenges the view that in Hungary s society and economy both market and bureaucratic coordination should be relegated and the role of ethical norms increased. For the latter is unsuited to becoming the main road to coordination in modern societies. The author takes an unambiguous stand for expanding the scope of market coordination - and in doing so urges the development of the Hungarian system of control towards more indirect, more market" directions. But he sees that externalities, transaction costs and problems related to just income distribution and to monopolies, make the survival of bureaucratic regulation inescapable in some areas, of course with far smaller scope than is the case today.