"Strong, wide ranging measures to harden the budget constraint came earliest in Hungary. The assessment of J. Barkley Rosser Jr. and Marina V. Rosser, in one of the best-known textbooks of comparative economics, points to the strong intellectual influence of my work on that outcome, and their assessment seems convincing. [Footnote:] 'Hungary has by far the hardest budget constraint of any of the formerly socialist economies... Arguable this reflects the immense policy influence of János Kornai in his native country' (Rosser and Rosser 2004, pp. 377-378)." -- János Kornai (2006) By Force of Thought: Irregular Memoirs of an Intellectual Journey, Massachusetts Institute of TechnologyI find there is much about Kornai's views I was not aware of before reading his intellectual memoirs.
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12 years ago
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Which kind of budget constraints is he writing of?
Kornai is writing about enterprises under no-longer-actually existing socialism. Apparently, in some countries attempts were made to incentivize managers of such enterprises by simulating market forces. But enterprises that made profits ended up subsidizing enterprises that made losses. Their budget constraints were not effective (or "hard").
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