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Innovation and dynamism

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  • János Kornai

Abstract

Literature on post-socialist transformation usually deals with the political, economic and social sides of it, although there have also been important changes in the field of technical advance in the last twenty years. One of capitalism's main virtues is the strong incentive it gives to dynamism, enterprise and the innovation process. Every revolutionary new product (for civilian use) has been brought about by the capitalist system. The socialist system was capable at most of developing new military products. The article analyzes how far the radical difference can be explained by the innate tendencies and basic attributes of the two systems. Our daily lives have been transformed by these new products (for instance, the sphere of information and communications by the computer, the mobile phone and the internet). While many people see all these as favourable changes, fewer discern the causal relation between the capitalist system and rapid technical progress. Yet the usual syllabus of microeconomics does not enlighten students on this important virtue of capitalism, neither it is not adequately emphasized in the statements of leading politicians. Copyright (c) 2010 The Author. Journal compilation (c) 2010 The European Bank for Reconstruction and Development.

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  • János Kornai, 2010. "Innovation and dynamism," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(4), pages 629-670, October.
  • Handle: RePEc:bla:etrans:v:18:y:2010:i:4:p:629-670
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    1. Eric J. Bartelsman & John Haltiwanger & Stefano Scarpetta, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," Tinbergen Institute Discussion Papers 04-114/3, Tinbergen Institute.
    2. Yingyi Qian & Chenggang Xu, 1998. "Innovation and Bureaucracy Under Soft and Hard Budget Constraints," Review of Economic Studies, Oxford University Press, vol. 65(1), pages 151-164.
    3. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
    4. Arnold Heertje, 2006. "Schumpeter on the Economics of Innovation and the Development of Capitalism," Books, Edward Elgar Publishing, number 3891.
    5. Daron Acemoglu & Philippe Aghion & Claire Lelarge & John Van Reenen & Fabrizio Zilibotti, 2007. "Technology, Information, and the Decentralization of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1759-1799.
    6. Huang, Haizhou & Xu, Chenggang, 1998. "Soft Budget Constraint and the Optimal Choices of Research and Development Projects Financing," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 62-79, March.
    7. János Kornai, 2006. "The great transformation of Central Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(2), pages 207-244, April.
    8. Janos Kornai, 2006. "The Great Transformation Of Central Eastern Europe: Success And Disappointment - First Published," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 2(4), pages 11-38.
    9. Kornai, J., 1993. "Transformational Recession; A General Phenomenon Examined Through the Example of Hangary's Development," Harvard Institute of Economic Research Working Papers 1648, Harvard - Institute of Economic Research.
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