János Kornai

Harvard has an economist on their faculty who understands how the hardness or softness of budget constraints varies among institutional structures.

János Kornai is a Hungarian who, as I understand it, published his first article on economics in 1956. During the 1960s, he researched a planning methodology in parallel with the official Hungarian planning; the official planning was based on Leontief input-output analysis. Kornai's methodology consisted of sectorial planning, addressed by Linear Programming, and a "central problem" of allocating resources, based on a game-theoretical formulation (Kornai and Liptak 1965).

Among the Post Keynesian economists I read, though, I think some of Kornai's later work is more frequently cited. In this work (Kornai (1971 and 1970), Kornai and Martos (1973)), he compares and contrasts certain institutional characteristics of actually existing capitalism and socialism. If I understand correctly, Kornai found that he had to create a lot of terminology because his observations did not fit into economic theory as he found it. In particular, neoclassical price theory ignores the institutional detail and non-price signals Kornai thinks important. Frank Hahn thought well enough of this work to engage it.

Lately Kornai (1990 and 2000) has been writing about post-communist transition economies.

I would like to be more familar with Kornai's work than I am. I would have trouble sumarizing his major points more than above.

References

• F. H. Hahn (1973). "The Winter of Our Discontent", Economica, New Series, V. 40, N. 159 (Aug.): 322-330
• J. Kornai and T. Liptak (1965). "Two-Level Planning", Econometrica, V. 33, N. 1 (Jan.): 141-169
• J. Kornai (1971). Anti-Equilibrium, Amsterdam: North Holland
• J. Kornai and B. Martos (1973). "Autonomous Control of the Economic System", Econometrica, V. 41, N. 3 (May): 509-528
• J. Kornai (1979). "Resource-Constrained versus Demand-Constrained Systems", Econometrica, V. 47, N. 4 (Jul.): 801-820
• J. Kornai (1990). The Road to a Free Economy: Shifting from a Socialist System: The Example of Hungary, New York: W. W. Norton
• J. Kornai (2000). "What the Change of System from Socialism to Capitalism Does and Does Not Mean", Journal of Economic Perspectives, V. 14, N. 1 (Winter): 27-42