János Kornai, the Austrians, and the Political and Economic Analysis of Socialism

Public Choice, Forthcoming

24 Pages Posted: 9 Jan 2021

See all articles by Peter J. Boettke

Peter J. Boettke

George Mason University - Department of Economics; Mercatus Center at George Mason University

Rosolino Candela

George Mason University - Mercatus Center

Multiple version iconThere are 2 versions of this paper

Date Written: September 11, 2020

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 of 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.

Keywords: János Kornai; Political Economy; Socialism

JEL Classification: B53; D73; P51

Suggested Citation

Boettke, Peter J. and Candela, Rosolino, János Kornai, the Austrians, and the Political and Economic Analysis of Socialism (September 11, 2020). Public Choice, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3691360

Peter J. Boettke

George Mason University - Department of Economics ( email )

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Mercatus Center at George Mason University ( email )

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Rosolino Candela (Contact Author)

George Mason University - Mercatus Center ( email )

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