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Janos Kornai and General Equilibrium Theory


  • Mehrdad Vahabi

    () (Centre d'Economie de l'Université de Paris Nord (CEPN))


This paper explores the evolution of Kornai’s thought on General Equilibrium Theory (GET) and his position on mainstream economics. Three moments in this evolution will be highlighted starting by rejecting GET and advocating disequilibrium in Anti-Equilibrium (1971). While Kornai does not treat the ‘equilibrium paradigm’ as irrelevant, he suggests an alternative paradigm, namely economic systems theory that he further develops in the eighties as ‘system paradigm’. Economics of Shortage (1980) marks a second phase in which Kornai distinguishes Walrasian equilibrium from normal state or Marshallian equilibrium. In this phase, he supports Marshallian equilibrium rather than disequilibrium. Finally By Force of Thought (2006) is a critical self-appraisal in which Kornai considers Anti-Equilibrium as a ‘failure’ and acknowledges GET as a benchmark of an ideal competitive market. He now advocates a Walrasian equilibrium as an abstract reference model but refuses to consider this model as a description of reality. In this sense, he refuses the New Classical economics. Paradoxically however, his original heterodox concept of ‘soft budget constraint’, irreconcilable with standard microeconomics, has been integrated in new microeconomics as an optimal intertemporal strategy of a maximizing agent in the absence of credible commitments. It will be argued that Kornai’s so-called failure is rather related to his half-in, half-out mainstream position, while his institutionalist system paradigm is still a heterodox research project of the future.

Suggested Citation

  • Mehrdad Vahabi, 2017. "Janos Kornai and General Equilibrium Theory," CEPN Working Papers 2017-16, Centre d'Economie de l'Université de Paris Nord.
  • Handle: RePEc:upn:wpaper:2017-16

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    References listed on IDEAS

    1. Avi J. Cohen, 2003. "Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 199-214, Winter.
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    More about this item


    Disequilibrium; Economic Systems Theory; General Equilibrium Theory; Marshallian and Walrasian Equilibrium; New Microeconomics; Normal State; System Paradigm;

    JEL classification:

    • B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • P2 - Economic Systems - - Socialist Systems and Transition Economies
    • P5 - Economic Systems - - Comparative Economic Systems

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