In the list of economists who would have deserved the Nobel Memorial Prize in Economics, but did not receive it, János Kornai is one of the top places.

Kornái was an eclectic thinker interested in the workings of economic and social systems, an eminently hardworking writer, and a fearless man.

He did not belong to any school, but counted among his influencers with Karl Marx, Friedrich von Hayek, Joseph Schumpeter and John Maynard Keynes very different thinkers.

Gerald Braunberger

Editor.

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Kornai made the fundamental distinction between a planned economy as a shortage economy and a market economy as a surplus economy.

Kornai defined the so-called budget constraint as an important criterion: In a market economy, privately owned companies are subject to strict budget constraints because they are liable for their own wrong decisions and, in extreme cases, fail due to unsuccessfulness.

This ensures that resources are used carefully and promotes innovative action.

In a planned economy with state-owned companies, there is a soft budget constraint because the state prevents companies from going under.

This leads to a careless use of resources and prevents progress because unsuccessful companies cannot fail.

Depending on the math

Kornai viewed real existing market and planned economies as systems that were permanently in imbalance with inadequacies, contradictions and dilemmas. Since he also rejected comparisons between real economies and unrealistic model economies, he was critical of the analyzes of economic equilibria that are widespread in economics. On the other hand, he felt connected to the mainstream with his work techniques.

“I consider myself a mathematical economist; therefore my critical comments do not come from outside, but from within the circle, ”Kornai once remarked. “It is my conviction that the further progress of economic theory, if not exclusively, depends to a large extent on advances in the field of mathematical economics. I hope to be able to contribute to this. "

János Kornai was born in 1928 under the name János Kornhauser into a Jewish family based in Budapest. His father was later murdered in Auschwitz. The crimes of the National Socialists made the young Kornai a Marxist. A good ten years later he distanced himself from Marxism when he received reports of the arrest of many Hungarians after the popular uprising against the communist regime of 1956.

In his doctoral thesis, published in the same year, Kornai described weaknesses in the socialist economic system that produced political oppression under the title “Over-centralization”: “The less the system relies on material incentives (and the less it can count on people's enthusiasm), the more it has to use coercive methods. ”For the Hungarians, the real existing socialism remained the transfer of a notoriously inefficient war economy, strongly influenced by the state, to peacetime.

His book on “Scarcity Economy”, published in 1980, caused a sensation. “The only living economist who can claim to have influenced the views of an entire generation in communism is Kornai. He meticulously dissected the system of central planning and demonstrated its irrationality and self-destructive power, ”said the later Russian Prime Minister Yegor Gaidar.

Even before the collapse of the Eastern Bloc, Kornai was allowed to live in the west.

In 1984 he was offered a professorship at the renowned Harvard University.

His work on the different budget constraints of private and state companies influenced adjustment programs of the International Monetary Fund for countries in trouble.

The distinction is also suitable for contemporary analyzes of state aid for ailing companies in market economies.

János Kornai died last Monday at the age of 93 in Budapest.