Janos Kornai, a Hungarian economist who laid the theoretical foundations for the end of the Cold War, has died at the age of 93.
Among his notable works, “Anti-Equilibrium” published in 1971 and “Economics of Shortage” in 1980 attracted so much attention that intellectuals from the Soviet Union and the Eastern European bloc in financial difficulty under the socialist system wondered if they were reading any of Kornai’s works. titles during the East-West impasse.
Kornai’s focus on a planned economy with structural flaws served as a driving force for the change that saw the Berlin Wall demolished and the Soviet Union disintegrate.
The concept of “soft budget constraint” used by Kornai to explain the fundamental problems of socialist economies is still used by academics today.
Kornai argued that SOEs tend to be erratic and reckless in the way they do business because they know they can continue to operate even when the alarm bells ring about balloon spending, losses. and other market signals.
The concept has proven useful in analyzing Japan’s financial crisis triggered by the so-called Ministry of Finance’s convoy system, under which extraordinary measures were taken to protect weak companies from collapse.
Kornali was born into a Jewish family in 1928 in Budapest. Her father perished in the Holocaust after being transported by the Nazis from Hungary to the Auschwitz concentration camp in occupied Poland. Young Kornai escaped from a labor camp to survive the war.
After the end of World War II, Kornai worked as a journalist for the flagship newspaper of the Communist Party in Hungary. He then embarked on a career as a researcher. No sooner had he done so than the Hungarian Revolution of 1956 broke out.
The event made Kornai a critic of Marxism. He endured many hardships living under the surveillance of the secret police, but lived to see his homeland shift to democracy and a market economy.
In the 1980s, Kornai began teaching at Harvard University in the United States, while continuing to work in Hungary. Traveling frequently between East and West, Kornai studied society, politics and economics as one concept without separating them.
When Kornai visited China at Beijing’s invitation in the mid-1980s, his economic theory had a huge impact on reformist bureaucrats and intellectuals seeking to introduce a market economy.
For this reason, Kornai has never tried to hide his disappointment with President Xi Jinping’s administration, describing it as an increasingly authoritarian monster.
Calling for vigilance, Kornai pointed out to me in an interview that states overreact by concentrating authority.
Tsuneo Morita, who lives in Budapest and has translated some of Kornai’s texts publications, describes what Kornai was like.
âHe (Kornai) didn’t like nationalism and kept his distance from the current authoritarian Hungarian administration headed by Viktor Orban,â Morita said.
Kornai passed away on October 18. The cause of death has not been disclosed. A farewell ceremony was held by his relatives as well as academics and musicians in the United States, China and elsewhere close to him.