János Kornai
Encyclopedia
János Kornai is an economist
noted for his analysis and criticism of the command economies
of Eastern Europe
an communist state
s.
for two years at the Pázmány Péter University (now called Eötvös Loránd University) in Budapest
. He gained his knowledge in economics
on his own, and holds a 'candidate' degree in the field from the Hungarian Academy of Sciences
. He wrote that he chose to become an economist after reading Marx's Das Kapital
. He started working in Szabad Nép, the Hungarian Communist Party newspaper, and rose to the rank of editor of news related to the economy, but after a few years of work, he was fired for lack of Communist convictions in April 1955.
From 1958 onward Kornai received many invitations to visit foreign institutions, but he was denied a passport
by the Hungarian authorities and was not allowed to travel until 1963, after political restrictions had begun to ease.
From 1967 until 1992 he was a Research Professor at the Institute of Economics, Hungarian Academy of Sciences. He became corresponding member (1976), member (1982) of the Hungarian Academy of Sciences
. Kornai joined the faculty of Harvard University
in Cambridge, Massachusetts
, USA, in 1986 and was named the Allie S. Freed Professor of Economics in 1992. He retired from Harvard in 2002. In the same year, he became a Permanent Fellow of Collegium Budapest, Institute for Advanced Study. He is also a Distinguished Research Professor at Central European University
.
He was a Member of the Board of the Hungarian National Bank
(central bank
) until 2001, and has authored many economics-related books and papers.
with Tamás Lipták and directed the first large-scale economy-wide multi-level planning project. Professor Kornai's early article Overcentralization (1953) created a stir in the West and represented his first disillusionment with the communist central planning.
His 1971 book, Anti-Equilibrium, criticizes neoclassical economics
, particularly general equilibrium theory
.
In his 1980 book, Economics of Shortage, perhaps his most influential work, Kornai argued that the chronic shortages seen throughout Eastern Europe
in the late 1970s (and which continued during the 1980s) were not the consequences of planners’ errors or the wrong prices, but rather systemic flaws. In his 1988 book, The Socialist System, The Political Economy of Communism he argued that the command economy based on the unchallenged control by a Marxist-Leninist
communist party
leads to a predominance of bureaucratic administration
of state firms, through centralized planning and management, and the use of administrative pricing to eliminate the effects of the market
, leading to individual responses to the incentives of this system, ultimately causing observable and inescapable economic phenomena known as the shortage economy
. Kornai is very skeptical of efforts to create market socialism
.
His later works including The Road to a Free Economy (1990), Highway and Byways (1995), Struggle and Hope (1997) and Welfare in Transition
(2001) deal with macroeconomic aspects and the interaction between politics and economic policy in the period of economic transition in the post-Soviet states
. At present he leads a comprehensive research project, Honesty and Trust in the Light of Post-Socialist Transition at Collegium Budapest, where he now is an emeritus fellow.
Kornai is a member of the Royal Swedish Academy of Sciences
.
In 2007 he published a memoir, By Force of Thought, on his research and the social and political environments in which he did his work.
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
noted for his analysis and criticism of the command economies
Planned economy
A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency...
of Eastern Europe
Eastern Europe
Eastern Europe is the eastern part of Europe. The term has widely disparate geopolitical, geographical, cultural and socioeconomic readings, which makes it highly context-dependent and even volatile, and there are "almost as many definitions of Eastern Europe as there are scholars of the region"...
an communist state
Communist state
A communist state is a state with a form of government characterized by single-party rule or dominant-party rule of a communist party and a professed allegiance to a Leninist or Marxist-Leninist communist ideology as the guiding principle of the state...
s.
Biography
Professor Kornai studied philosophyPhilosophy
Philosophy is the study of general and fundamental problems, such as those connected with existence, knowledge, values, reason, mind, and language. Philosophy is distinguished from other ways of addressing such problems by its critical, generally systematic approach and its reliance on rational...
for two years at the Pázmány Péter University (now called Eötvös Loránd University) in Budapest
Budapest
Budapest is the capital of Hungary. As the largest city of Hungary, it is the country's principal political, cultural, commercial, industrial, and transportation centre. In 2011, Budapest had 1,733,685 inhabitants, down from its 1989 peak of 2,113,645 due to suburbanization. The Budapest Commuter...
. He gained his knowledge in economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
on his own, and holds a 'candidate' degree in the field from the Hungarian Academy of Sciences
Hungarian Academy of Sciences
The Hungarian Academy of Sciences is the most important and prestigious learned society of Hungary. Its seat is at the bank of the Danube in Budapest.-History:...
. He wrote that he chose to become an economist after reading Marx's Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
. He started working in Szabad Nép, the Hungarian Communist Party newspaper, and rose to the rank of editor of news related to the economy, but after a few years of work, he was fired for lack of Communist convictions in April 1955.
From 1958 onward Kornai received many invitations to visit foreign institutions, but he was denied a passport
Passport
A passport is a document, issued by a national government, which certifies, for the purpose of international travel, the identity and nationality of its holder. The elements of identity are name, date of birth, sex, and place of birth....
by the Hungarian authorities and was not allowed to travel until 1963, after political restrictions had begun to ease.
From 1967 until 1992 he was a Research Professor at the Institute of Economics, Hungarian Academy of Sciences. He became corresponding member (1976), member (1982) of the Hungarian Academy of Sciences
Hungarian Academy of Sciences
The Hungarian Academy of Sciences is the most important and prestigious learned society of Hungary. Its seat is at the bank of the Danube in Budapest.-History:...
. Kornai joined the faculty of Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
in Cambridge, Massachusetts
Cambridge, Massachusetts
Cambridge is a city in Middlesex County, Massachusetts, United States, in the Greater Boston area. It was named in honor of the University of Cambridge in England, an important center of the Puritan theology embraced by the town's founders. Cambridge is home to two of the world's most prominent...
, USA, in 1986 and was named the Allie S. Freed Professor of Economics in 1992. He retired from Harvard in 2002. In the same year, he became a Permanent Fellow of Collegium Budapest, Institute for Advanced Study. He is also a Distinguished Research Professor at Central European University
Central European University
For other uses, see European University Central European University is a graduate-level, English-language university offering degrees in the social sciences, humanities, law, public policy, business management, environmental science, and mathematics...
.
He was a Member of the Board of the Hungarian National Bank
Hungarian National Bank
The Hungarian National Bank is the central bank of Hungary. The principal aim of the bank is to retain price stability. It is also responsible for issuing the national currency, the forint, controlling the cash circulation, setting the Central Bank base rate, publishing official exchange rates...
(central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
) until 2001, and has authored many economics-related books and papers.
Works
In the late 1950s, he was among those initiating the use of mathematical methods in economic planning. He elaborated the theory of two-level planningTheory of two-level planning
The Theory of two-level planning is a method that decomposes large problems of linear optimization into sub-problems. This decomposition simplifies the solution of the overall problem. The method also models a method of coordinating economic-decisions so that decentralized firms behave so as to...
with Tamás Lipták and directed the first large-scale economy-wide multi-level planning project. Professor Kornai's early article Overcentralization (1953) created a stir in the West and represented his first disillusionment with the communist central planning.
His 1971 book, Anti-Equilibrium, criticizes neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
, particularly general equilibrium theory
General equilibrium
General equilibrium theory is a branch of theoretical economics. It seeks to explain the behavior of supply, demand and prices in a whole economy with several or many interacting markets, by seeking to prove that a set of prices exists that will result in an overall equilibrium, hence general...
.
In his 1980 book, Economics of Shortage, perhaps his most influential work, Kornai argued that the chronic shortages seen throughout Eastern Europe
Eastern Europe
Eastern Europe is the eastern part of Europe. The term has widely disparate geopolitical, geographical, cultural and socioeconomic readings, which makes it highly context-dependent and even volatile, and there are "almost as many definitions of Eastern Europe as there are scholars of the region"...
in the late 1970s (and which continued during the 1980s) were not the consequences of planners’ errors or the wrong prices, but rather systemic flaws. In his 1988 book, The Socialist System, The Political Economy of Communism he argued that the command economy based on the unchallenged control by a Marxist-Leninist
Marxism-Leninism
Marxism–Leninism is a communist ideology, officially based upon the theories of Marxism and Vladimir Lenin, that promotes the development and creation of a international communist society through the leadership of a vanguard party over a revolutionary socialist state that represents a dictatorship...
communist party
Communist party
A political party described as a Communist party includes those that advocate the application of the social principles of communism through a communist form of government...
leads to a predominance of bureaucratic administration
Bureaucracy
A bureaucracy is an organization of non-elected officials of a governmental or organization who implement the rules, laws, and functions of their institution, and are occasionally characterized by officialism and red tape.-Weberian bureaucracy:...
of state firms, through centralized planning and management, and the use of administrative pricing to eliminate the effects of the market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
, leading to individual responses to the incentives of this system, ultimately causing observable and inescapable economic phenomena known as the shortage economy
Shortage economy
Shortage economy is a term coined by the Hungarian economist, János Kornai. He used this term to criticize the old centrally-planned economies of the communist states of the Eastern Bloc...
. Kornai is very skeptical of efforts to create market socialism
Market socialism
Market socialism refers to various economic systems where the means of production are either publicly owned or cooperatively owned and operated for a profit in a market economy. The profit generated by the firms system would be used to directly remunerate employees or would be the source of public...
.
His later works including The Road to a Free Economy (1990), Highway and Byways (1995), Struggle and Hope (1997) and Welfare in Transition
Welfare, Choice and Solidarity in Transition
"Welfare, Choice and Solidarity in Transition: reforming the health sector in Eastern Europe" was written by János Kornai and , published in 2001....
(2001) deal with macroeconomic aspects and the interaction between politics and economic policy in the period of economic transition in the post-Soviet states
Post-Soviet states
The post-Soviet states, also commonly known as the Former Soviet Union or former Soviet republics, are the 15 independent states that split off from the Union of Soviet Socialist Republics in its dissolution in December 1991...
. At present he leads a comprehensive research project, Honesty and Trust in the Light of Post-Socialist Transition at Collegium Budapest, where he now is an emeritus fellow.
Kornai is a member of the Royal Swedish Academy of Sciences
Royal Swedish Academy of Sciences
The Royal Swedish Academy of Sciences or Kungliga Vetenskapsakademien is one of the Royal Academies of Sweden. The Academy is an independent, non-governmental scientific organization which acts to promote the sciences, primarily the natural sciences and mathematics.The Academy was founded on 2...
.
In 2007 he published a memoir, By Force of Thought, on his research and the social and political environments in which he did his work.
External links
- Kornai´s homepage at Harvard UniversityBiography and ideas of Janos Kornai