János Kornai and Marxism

A few days ago I promised to write something about a short essay by János Kornai, the famous Hungarian economist, on his encounter with Marxism. The essay, entitled “Marx egy kelet-európai értelmiségi szemével” (Marx through the eyes of an Eastern European intellectual), appeared in a volume of Kornai’s collected essays, Gondolatok a kapitalizmusról: Négy tanulmány (Thoughts on capitalism: Four essays) (Budapest, Akadémia, 2012).

Kornai in this essay describes his road to Marxism and his discovery of some of the fundamental flaws of the Marxist system. He had just turned eighteen in 1945 and was open to the ideas of the Hungarian Communist Party (MKP) after going through  a war, losing his father in Auschwitz and his older brother somewhere in the Soviet Union where he served in a labor battalion. He was attracted to the party that was most resolutely opposed to the Horthy regime and all that it entailed.  So he began his study of the works of Karl Marx in the original German because at that time no Hungarian translation was available.

He began with Das Kapital and was struck by the sharp logic and the precise formulations of his ideas. These attributes appealed to Kornai because he himself is “a maniac for order and precise thinking.” Moreover, eventually he began to surmise that Marxism had universal application. It was just as applicable to the evaluation of a theatrical production as it was to economic problems. Here Kornai steps back a little and observes that “young people desire some kind of universal explanation for all worldly phenomena.” In addition, Marxism appealed to him emotionally because of the German philosopher’s passionate commitment to the oppressed and the dispossessed.

But then came the disillusionment. This process occurred not on an intellectual plane but on moral grounds. It happened when he met an old communist who has been arrested and tortured. His faith in the system was shaken. He had encountered critical voices against Marxism earlier but refused to take them seriously. Once his faith in the moral superiority of the system started to waver, however, he began noticing things that he didn’t want to see before. Problems with the practical application of  socialism. In vain did he look for answers in Marx’s works. It was not that Marx gave wrong answers to these questions, like wastefulness, low quality products, the constant scarcity of goods. The real problem was that it never occurred to him to pose any of these questions in the first place.

Once Kornai’s faith was shaken he began studying Marx more critically and found that there are some really fundamental precepts of Marxism that have proven to be dead wrong in the years since Marx wrote the Communist Manifesto. One of these was Marx’s insistence that as a result of the capitalist mode of production the lives of workers will become more and more wretched. It was enough to look around in well-developed capitalist countries to see that this Marxist prediction was wrong. Exactly the opposite was true: the living standards of the proletariat were steadily improving. Without going step by step through his mental processes, the final result was that even before the 1956 Revolution Kornai had become a critic of the socialist system.

So, eventually he had to pose the question to what extent Marx was responsible for what was going on in the Soviet Union of Lenin, Stalin, Khrushchev, and Brezhnev, in the China of Mao Zedong, and in other socialist countries. What is the relation between the theoretical ideas of Marx and the historical reality of the socialist system? Here I will quote Kornai verbatim: “I will try to answer concisely: the socialist system realized Marx’s plan.”

Kornai is aware that some people might counter that this judgment goes too far. But in Marx’s opinion a market economy doesn’t work. The market is anarchy and chaos. In its place a planned economy must be introduced. Moreover, private property must be abolished and it must be replaced by commonly held ownership. Both of these very basic Marxist doctrines became a reality in the socialist countries. When Lenin, Stalin, Khrushchev, and others invoked Marx’s name and work to defend their policies, they were correct. They had every reason to appeal to him. They were the ones who realized Marx’s dreams.

Kornai also finds Marx “guilty” of rejecting “empty, formal bourgeois constitutionalism, the parliamentary system, and democracy.” He didn’t seem to realize that once a market economy and individual initiatives are gone the system must be directed from above and that very fact results in the repressive apparatus of the state or the ruling party. So, Marx is responsible for what happened in the Soviet Union and in other socialist countries, but it is “intellectual responsibility.”

Finally, Kornai briefly analyzes what we still can learn from Marx. After the collapse of the socialist system the belief spread in intellectual circles that Marxism was dead. But in the last few years, especially since the 2008 financial crisis, the opposite has been true. Marx is in vogue again. “Prophets” have arrived who predict that capitalism is dead, a view Kornai doesn’t share. Yes, capitalism right now is going through a deep crisis but it is alive and will most likely live for a very long time.

Nonetheless, Kornai believes there are some valuable Marxist teachings that are still applicable. One of these is the overextended expansion of credit and production that far surpasses demand. Marx talked about these problems in the first and third volumes of Das Kapital and called attention to the grave consequences of these phenomena. Today we see the results of the irresponsible granting of credit all too clearly. As for the balance between supply and demand, Marx was especially interested in imbalances in the labor market. Today the imbalance in the labor market poses serious problems in the developed world. Marx was one of the pioneers in discovering this danger.

In addition, Kornai also looks upon Marx as the first person who tried the develop something Kornai calls a “system paradigm” (rendszerparadigma). He was an economist, a sociologist, a political scientist, and a historian who tried to combine all these disciplines. Today we call this an interdisciplinary way of looking at the world which attempts a comprehensive understanding of society as a whole.

Kornai ends his brief essay by saying that he is not a Marxist but neither is he a Keynesian. He doesn’t belong to any school or -isms. He considers himself to be an eclectic economist who was influenced by Joseph A. Schumpeter, John Maynard Keynes, Friedrich Hayek, and Marx “who in this list is always mentioned in the first place.”

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45 comments

  1. Kornai is right that capitalism is here to stay for the long term. It’s obviously an expression of natural human tendencies, and it developed spontaneously, over a long period of time, without a guiding ideology. Of course it has problems, and another human tendency, to look to a strong father figure to fix those problems, will probably always resurface. The question is, will Hungarians decide to finally stop looking to that father figure, or will we be stuck with Latin-American-type caudillos for the next generation or two? In many ways Hungary is much like a Latin American country, and that leadership style remains very popular there. Hopefully the Chilean and Brazilian models will prove to be more popular than the Venezuelan and Nicaraguan ones.

  2. The problem as I see it, is not with capitalism…it is with capitalists. Because man is not, by nature, altruistic, when the opportunity to acquire money, power, position, etc. presents itself, it is almost always taken advantage of, with little or no thought given to whether said acquisition is done in an ethical manner that does not cause widespread destruction and despair. The reason that the CEO’s of the Fortune 500 companies can sleep at night is because there are so many levels of corporate cushioning between them and the workforce that they swipe away into poverty with just a scratch of their pen, they haven’t a clue what they have done. It’s all about the bottom line, and, for humans, the bottom line is death.

  3. Ms KKA :
    The problem as I see it, is not with capitalism…it is with capitalists. Because man is not, by nature, altruistic, when the opportunity to acquire money, power, position, etc. presents itself, it is almost always taken advantage of, with little or no thought given to whether said acquisition is done in an ethical manner that does not cause widespread destruction and despair. The reason that the CEO’s of the Fortune 500 companies can sleep at night is because there are so many levels of corporate cushioning between them and the workforce that they swipe away into poverty with just a scratch of their pen, they haven’t a clue what they have done. It’s all about the bottom line, and, for humans, the bottom line is death.

    I respectfully disagree. It is not the “capitalists” who are the mean, bad wolves, as the same pattern was true for the communists. The lead members of the communist party were never equal with the working class, and they did live a way better lifestyle. Fidel Castro is one of the wealthiest man in Cuba, and you cannot call Cuba a capitalist country. China is also not capitalist, and the living conditions of the poor are dreadful. In fact many of the richest people in countries that just came out form socialism/communism are those who served the previous system so well. THis would simply mean one thing, in each and every communist there is a little capitalist hidden.
    Simply, I think saying that capitalists are the bad people is oversimplifying things. Many capitalist by the way are also great philanthropists.

  4. In every stockjobbing swindle every one knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in safety. Après moi le déluge! is the watchword of every capitalist and of every capitalist nation.

    Hence Capital is reckless of the health or length of life of the labourer, unless under compulsion from society. [Marx, Capital, Volume I, Chapter 10 (1867)

  5. “Everyone who knows anything of history also knows that great social revolutions are impossible without the feminine ferment. Social progress may be measured precisely by the social position of the fair sex”

    Marx, Letter to Kugelmann (1868)

  6. Marxists argued (correctly, in my opinion) that socialism must be established globally. It can not work nationally and all attempts to try have led to less than desirable places to live, if not outright hellholes.

    The global economy now subjugates every national economy. Yes, the living conditions for workers in Western countries have improved considerably. But global income distribution is as dismal as ever, if not worse. The few still control the lives of the many. So the way I see it, the possibility of establishing socialism globally now exits. No easy task, though.

  7. Öcsi :
    Marxists argued (correctly, in my opinion) that socialism must be established globally. It can not work nationally and all attempts to try have led to less than desirable places to live, if not outright hellholes.

    Gee, I wonder why that’s always happened?

    If one of the roles of government is to keep balance and fairness in the system, all we have to do is agree on a definition of fair and then decide what constitutes balance. Then setup rules for everyone to follow…see it’s simple!

  8. Some1 :

    Ms KKA :
    The problem as I see it, is not with capitalism…it is with capitalists. Because man is not, by nature, altruistic, when the opportunity to acquire money, power, position, etc. presents itself, it is almost always taken advantage of, with little or no thought given to whether said acquisition is done in an ethical manner that does not cause widespread destruction and despair. The reason that the CEO’s of the Fortune 500 companies can sleep at night is because there are so many levels of corporate cushioning between them and the workforce that they swipe away into poverty with just a scratch of their pen, they haven’t a clue what they have done. It’s all about the bottom line, and, for humans, the bottom line is death.

    I respectfully disagree. It is not the “capitalists” who are the mean, bad wolves, as the same pattern was true for the communists. The lead members of the communist party were never equal with the working class, and they did live a way better lifestyle. Fidel Castro is one of the wealthiest man in Cuba, and you cannot call Cuba a capitalist country. China is also not capitalist, and the living conditions of the poor are dreadful. In fact many of the richest people in countries that just came out form socialism/communism are those who served the previous system so well. THis would simply mean one thing, in each and every communist there is a little capitalist hidden.
    Simply, I think saying that capitalists are the bad people is oversimplifying things. Many capitalist by the way are also great philanthropists.

    The point I was trying to make is that it is not the systems that are bad, but the practitioners. And, that is true for every system, be it capitalism, socialism, or any other ism you care to name. They may all look great on paper, at one time or another, but when it comes time to walk the walk, greed just raises its ugly head and puts a screeching halt to the nice bits.
    As far as capitalists being great philanthropists is concerned, if you took away the tax breaks involved, I believe that philanthropy would go the way of the dodo. Call me cynical, but that’s the truth of the matter.

  9. “He didn’t seem to realize that once a market economy and individual initiatives are gone the system must be directed from above and that very fact results in the repressive apparatus of the state or the ruling party.” – writes Kornai and he is very wrong. He, and many others, equate the practice of socialism in Eastern Europe between 1948 and 1990, in Cuba and other places as socialism. It was nothing of the kind. No space here to go into how and why Lenin’s socialism had deteriorated into Stalinism in the Soviet Union, but once it did all the other so called “socialist” regimes were set up in its image. Hungarian ‘socialism’ was established on the bayonets of the Red Army, not fought for and won by the Hungarian people themselves. It never had workers’ democracy which is the other criteria for a free and democratic socialist system apart from the nationalization of he means of production and exchange. The only time Hungary had ever seen workers’ democracy was in 1956 when the workers’ councils were the embryonic form of this new type of democracy and it would have developed into that had it not been drowned in blood by Russian tanks.

    Kornai’s moral objections are totally correct. But they were not of socialism, but of Stalinism, which is an abomination and is not inevitable in all socialist systems. Öcsi is right when he suggests that now globalization creates the conditions for socialism as a world system. Capitalism is dying: I don’t care that temporarily it gave rising living standards to the workers in many places. Look at it now, is there a corner of the planet without ferment about poverty, oppression and hopelessness? Including the US, except the capitalist media does not advertise it for obvious reasons. Do you want to live like that? I don’t. No wonder that Marx is coming back into vogue. Everything he had ever written has a relevance today and yes, the very human yearning for explanations can all be found in his writings. The current level of development of the productive forces in most economies and the culture of the workers the world over (even in Hungary!!!) is high enough to establish workers’ democracy which provides the life blood of democracy even in a nationalized economy. It does not have to be like it was before 1990 and a new democracy would and will be far superior to a dying social and economic system which only leads to wars and misery the world over. I often said here and in other fora that the criticize the current government is one thing, but what you would put in its places is the 64 thousand dollar question. I assume that all those commenters who think capitalism is the only option that it will be around forever would answer that questions with capitalism, just with a more rational, more human face . Well, I have got bad new for them: capitalism has run its course, it is degenerating into its death agony and had been doing so for quite a while now. Hungary has never had a “healthy” capitalist system (not even between 1989 and 2010!!) and will never have one. It has not got the conditions for it and will always be either an economic colony or a dictatorship, like the one Orbán is building as we debate here. So, what is the alternative? I vote for socialism any day, but establish by a popular revolution, by the people, for the people and with workers’ democracy. I hope I will live long enough to see it!

  10. If socialism worked, it would’ve worked in Israel where the kibbutzes were the closest thing to it. It didn’t work. Or, it might’ve worked in China, which has the most obedient citizenry in the world. It (China) has injected liberal doses of capitalism into its system.

    Socialism gives rise to laziness, and lacks the incentive for individual self-improvement. It’s flawed as a political system for People.

  11. Marx once said to Lafargue:
    ‘Ce qu’il y a de certain c’est que moi, je ne suis pas Marxiste.’

  12. Orban government will give the revenue from online gambling to soccer.

    Orban was a third-rate soccer player, would have been a good chairman of the the soccer association, and a horrible Duce for Hungary.

  13. What is Marxism, or capitalism for that matter? I think concepts were left undefined, which makes debate in this case impossible.

    Can Hungary or Denmark be called capitalist states where more than half of the GDP is redistributed every year (and thus 50% of the income in aggregate is not subject to market forces)? When Marx wrote up his ideas the state (central government) perhaps maintained an army, courts, a limited administration, but now we have social security, pensions, football stadiums, public transport mostly paid for by the taxpayers, competition laws, building codes etc.

    My personal question would be why would anybody think that one single person could write (dream up) everything as a coherent (belief) system, the theses of which would provide answer to everything? Isn’t it obvious to everybody, though not at age 18 perhaps, that the world is extremely complex?

    Marx like all canonized thinkers had indeed a lot of important insights, but why would anybody want to create a world on his ideas (which he changed over time and have been interpreted in various ways) alone?

    Kornai’s book sounds to me more of an account of a personal intellectual journey rather than a thorough ideological analysis, for which he may even lack the analytical tools (being an economist and a mathematician in his early career, if I am not mistaken).

    As to capitalism (whatever it means), I refer to the Chinese communist government official who said when asked what he thought of the French revolution: it’s too early to tell. As we are killing our only planet, ‘capitalism’ (unlimited consumption and ‘development’) may not turn out to be the best idea in the long term.

  14. Marxism calls itself the theory of scientific socialism. It dissociates itself from unscientific version of socialist ideas, branding them naive and utopian. According to its own assertions, Marxism alone presents a scientific method for researching society and comprehending the body of knowledge about it.I broke with Marxism because I became convinced that it lacked foundations in precisely this respect. (…)The problem was not just that the theories performed badly in all these comparisons, that the Marxist dogmas failed to match reality. The main trouble was that Marx himself and his later disciples did not feel the primary intellectual duty to apply the elementary criterion of scholarship: testing their ideas against reality.

    Is the essay you’re referring to different from the text that was published in English as By Force of Thought: Irregular Memoirs of an Intellectual Journey (MIT Press, 2006)?

  15. Karl Hungus :
    Kornai’s book sounds to me more of an account of a personal intellectual journey rather than a thorough ideological analysis, for which he may even lack the analytical tools (being an economist and a mathematician in his early career, if I am not mistaken).

    On the contrary since Marx himself (and Marxists) always posed as scientists, notably economists, Kornai is one of those who have precisely, patiently, demonstrated their flaws.

    Or has « ideology » become a science and nobody warned me? I wouldn’t put Marx’s works to the trash, far from it, yet it is ironic that he has eventually met the fate he had scornfully assigned to Proudhon for: a philosopher for economists, and an economist for philosophers.

  16. Kornai is fun. His contribution to our thinking is remarkable.
    It would be important to improve the thinking of each individuals.
    A self-liberation is essential.
    Hungarians in most cases are too dependent on central theories.
    And most Hungarians may fail simple moral tests.
    Each individual must evaluate his own moral failures.
    In America, the average individual is superior to most other nations.
    The plain protestant ethics is working. Forget the silly judeo-christian mambo-jumble.
    America can adopt capitalism or socialism, and will remain a superior country.
    Land of the free and brave.
    It is always refreshing to pass the immigration control, and enter freedom here.

  17. Self-liberator :
    Kornai is fun. His contribution to our thinking is remarkable.
    It would be important to improve the thinking of each individuals.
    A self-liberation is essential.
    Hungarians in most cases are too dependent on central theories.
    And most Hungarians may fail simple moral tests.
    Each individual must evaluate his own moral failures.
    In America, the average individual is superior to most other nations.
    The plain protestant ethics is working. Forget the silly judeo-christian mambo-jumble.
    America can adopt capitalism or socialism, and will remain a superior country.
    Land of the free and brave.
    It is always refreshing to pass the immigration control, and enter freedom here.

    The average American is superior in what way? If you compare America’s crime rate to other countries, or its capital punishment rate, or its obesity rate, or its inequality rate, or its average life-span, or even its score on science and math tests, America is arguably inferior, especially to other wealthy nations. If more nations were as wealthy as the U.S., Americans would probably look even less impressive.

    I hate to say it, but your idea of “freedom” probably differs from most people’s.

    In my extensive experience, Hungarians are no less “moral” than Americans. Of course, morals vary from country to country, so such a test would tend to be highly subjective.

  18. Karl Hungus :
    What is Marxism, or capitalism for that matter? I think concepts were left undefined, which makes debate in this case impossible.
    Can Hungary or Denmark be called capitalist states where more than half of the GDP is redistributed every year (and thus 50% of the income in aggregate is not subject to market forces)? When Marx wrote up his ideas the state (central government) perhaps maintained an army, courts, a limited administration, but now we have social security, pensions, football stadiums, public transport mostly paid for by the taxpayers, competition laws, building codes etc.
    My personal question would be why would anybody think that one single person could write (dream up) everything as a coherent (belief) system, the theses of which would provide answer to everything? Isn’t it obvious to everybody, though not at age 18 perhaps, that the world is extremely complex?
    Marx like all canonized thinkers had indeed a lot of important insights, but why would anybody want to create a world on his ideas (which he changed over time and have been interpreted in various ways) alone?

    Good point! I agree that the most successful systems are hybrids of capitalism and socialism, and arguably have been developed as an indirect result of Marx’s work. In that sense, we’ll never know what would have happened had he not published his manifesto.

  19. J Grant :
    “He didn’t seem to realize that once a market economy and individual initiatives are gone the system must be directed from above and that very fact results in the repressive apparatus of the state or the ruling party.” – writes Kornai and he is very wrong. He, and many others, equate the practice of socialism in Eastern Europe between 1948 and 1990, in Cuba and other places as socialism. It was nothing of the kind. No space here to go into how and why Lenin’s socialism had deteriorated into Stalinism in the Soviet Union, but once it did all the other so called “socialist” regimes were set up in its image. Hungarian ‘socialism’ was established on the bayonets of the Red Army, not fought for and won by the Hungarian people themselves. It never had workers’ democracy which is the other criteria for a free and democratic socialist system apart from the nationalization of he means of production and exchange. The only time Hungary had ever seen workers’ democracy was in 1956 when the workers’ councils were the embryonic form of this new type of democracy and it would have developed into that had it not been drowned in blood by Russian tanks.
    Kornai’s moral objections are totally correct. But they were not of socialism, but of Stalinism, which is an abomination and is not inevitable in all socialist systems. Öcsi is right when he suggests that now globalization creates the conditions for socialism as a world system. Capitalism is dying: I don’t care that temporarily it gave rising living standards to the workers in many places. Look at it now, is there a corner of the planet without ferment about poverty, oppression and hopelessness? Including the US, except the capitalist media does not advertise it for obvious reasons. Do you want to live like that? I don’t. No wonder that Marx is coming back into vogue. Everything he had ever written has a relevance today and yes, the very human yearning for explanations can all be found in his writings. The current level of development of the productive forces in most economies and the culture of the workers the world over (even in Hungary!!!) is high enough to establish workers’ democracy which provides the life blood of democracy even in a nationalized economy. It does not have to be like it was before 1990 and a new democracy would and will be far superior to a dying social and economic system which only leads to wars and misery the world over. I often said here and in other fora that the criticize the current government is one thing, but what you would put in its places is the 64 thousand dollar question. I assume that all those commenters who think capitalism is the only option that it will be around forever would answer that questions with capitalism, just with a more rational, more human face . Well, I have got bad new for them: capitalism has run its course, it is degenerating into its death agony and had been doing so for quite a while now. Hungary has never had a “healthy” capitalist system (not even between 1989 and 2010!!) and will never have one. It has not got the conditions for it and will always be either an economic colony or a dictatorship, like the one Orbán is building as we debate here. So, what is the alternative? I vote for socialism any day, but establish by a popular revolution, by the people, for the people and with workers’ democracy. I hope I will live long enough to see it!

    One could argue that socialism would always degenerate into Stalinism or something like it, because of the natural predilection of people to resist it.

    There are places in the world “without ferment about poverty, oppression and hopelessness”, unless you mean a place where no one cares about such things happening in other countries.

  20. Ms KKA :

    Some1 :

    Ms KKA :
    The problem as I see it, is not with capitalism…it is with capitalists. Because man is not, by nature, altruistic, when the opportunity to acquire money, power, position, etc. presents itself, it is almost always taken advantage of, with little or no thought given to whether said acquisition is done in an ethical manner that does not cause widespread destruction and despair. The reason that the CEO’s of the Fortune 500 companies can sleep at night is because there are so many levels of corporate cushioning between them and the workforce that they swipe away into poverty with just a scratch of their pen, they haven’t a clue what they have done. It’s all about the bottom line, and, for humans, the bottom line is death.

    I respectfully disagree. It is not the “capitalists” who are the mean, bad wolves, as the same pattern was true for the communists. The lead members of the communist party were never equal with the working class, and they did live a way better lifestyle. Fidel Castro is one of the wealthiest man in Cuba, and you cannot call Cuba a capitalist country. China is also not capitalist, and the living conditions of the poor are dreadful. In fact many of the richest people in countries that just came out form socialism/communism are those who served the previous system so well. THis would simply mean one thing, in each and every communist there is a little capitalist hidden.
    Simply, I think saying that capitalists are the bad people is oversimplifying things. Many capitalist by the way are also great philanthropists.

    The point I was trying to make is that it is not the systems that are bad, but the practitioners. And, that is true for every system, be it capitalism, socialism, or any other ism you care to name. They may all look great on paper, at one time or another, but when it comes time to walk the walk, greed just raises its ugly head and puts a screeching halt to the nice bits.
    As far as capitalists being great philanthropists is concerned, if you took away the tax breaks involved, I believe that philanthropy would go the way of the dodo. Call me cynical, but that’s the truth of the matter.

    I agree with the first part, but semi-agree wit the second. For Bill Gates and such giving away a few million (a billion) is not such a big deal, tax break or not. When you can live one million dollar/day income tax break or not I am not sure that you are very concerned about tax breaks. Probably you are most concerned about where your money is going if it is taken as tax or if you give it to certain causes you believe in. I think people have this notion that you give for charities instead of paying tax. That is somehow true for Hungary (1% from your tax money can be directed to your selected charities), but not for many other countries. The money you give away lovers your total earnings, so maybe you would be put into a lover tax bracket. It is not that instead of paying taxes you give it to charities. Well with flat tax in Hungary that is already out of the question, you pay 16% if you earn 10,000,0000 forint or if you earn 200,000 forint/year. (Of course when money for stadiums were given away to lower tax base, this system was not in place yet.) I for one donate time and money for charities, still I never managed to get into the lower bracket as my donations are not piling up for thousands of dollars.
    Poor people can also be greedy and mean by the way. That is just human nature. What I am saying is that there is no reason to write of any system solely based on the behaviour of certain segments. I think the problem arises when a system that does not consider that every demographic group have a segment that would take advantage of the system. Communism has this flaw. There is no built-in safety net with the one party system.

  21. Ms KKA :

    Some1 :

    Ms KKA :
    The problem as I see it, is not with capitalism…it is with capitalists. Because man is not, by nature, altruistic, when the opportunity to acquire money, power, position, etc. presents itself, it is almost always taken advantage of, with little or no thought given to whether said acquisition is done in an ethical manner that does not cause widespread destruction and despair. The reason that the CEO’s of the Fortune 500 companies can sleep at night is because there are so many levels of corporate cushioning between them and the workforce that they swipe away into poverty with just a scratch of their pen, they haven’t a clue what they have done. It’s all about the bottom line, and, for humans, the bottom line is death.

    I respectfully disagree. It is not the “capitalists” who are the mean, bad wolves, as the same pattern was true for the communists. The lead members of the communist party were never equal with the working class, and they did live a way better lifestyle. Fidel Castro is one of the wealthiest man in Cuba, and you cannot call Cuba a capitalist country. China is also not capitalist, and the living conditions of the poor are dreadful. In fact many of the richest people in countries that just came out form socialism/communism are those who served the previous system so well. THis would simply mean one thing, in each and every communist there is a little capitalist hidden.
    Simply, I think saying that capitalists are the bad people is oversimplifying things. Many capitalist by the way are also great philanthropists.

    The point I was trying to make is that it is not the systems that are bad, but the practitioners. And, that is true for every system, be it capitalism, socialism, or any other ism you care to name. They may all look great on paper, at one time or another, but when it comes time to walk the walk, greed just raises its ugly head and puts a screeching halt to the nice bits.
    As far as capitalists being great philanthropists is concerned, if you took away the tax breaks involved, I believe that philanthropy would go the way of the dodo. Call me cynical, but that’s the truth of the matter.

    Completely agree.
    It could be the best ideology ever, as soon as the “human factor” gets involved, even the best intentions can drive askew from the original direction, not to mention the usually dominant selfish interpretations. When it goes down to individual level only the human quality of the person in place what count, how the ideology what comes to you has been filtered and modified to fit to one or another need.

    My simplified view about the capitalism, if we are at it:

    Either you exploit someone, or you’re getting exploited – there is no other way. The difference is only the level, how you experience it, what grade your position on the food-chain or the totem pole.
    Some may say, that for such and such salary let me be “exploited” – the principle still the same, even with seven digit income – if you get well paid, you certainly produce multiple times as much profit to your employer, that’s the point.
    Remember, if you feel good and live comfortably, you perform better too, only the straightforward, honest to God interest what counts, not you as a person.

    To make it clear, I live in such system too, quite well, thank you, but this is how it works, as I see it.

  22. Spectator wrote: “Some may say, that for such and such salary let me be “exploited” – the principle still the same, even with seven digit income – if you get well paid, you certainly produce multiple times as much profit to your employer, that’s the point.
    Remember, if you feel good and live comfortably, you perform better too, only the straightforward, honest to God interest what counts, not you as a person.

    To make it clear, I live in such system too, quite well, thank you, but this is how it works, as I see it.”
    ——–
    Ah, I’m all right Jack! Thanks for asking.

    That attitude is very well described in the Urban Dictionary:

    “Attitude of ‘every man for himself, survival of the fittest, devil take the hindmost’, … but also, that all the possible advantages (however gained), success (however won) and satisfaction (whatever the cost to others) belong to me first!’ Narrow-focus, narrow-gauge pseudo-Darwinian selfishness glorified as a sensible philosophy of society and life.”

    I couldn’t have said it better myself.

  23. I just returned from a Sunday drive through the villages of Zemplen. The roads there are in a worse condition than I have ever seen. I have been there almost every year since the early seventies. I am tempted to believe that the multitude of potholes has something to do with the priorities of the present regime as opposed to those of the Kadar regime.

  24. Öcsi :
    Spectator wrote: “Some may say, that for such and such salary let me be “exploited” – the principle still the same, even with seven digit income – if you get well paid, you certainly produce multiple times as much profit to your employer, that’s the point.
    Remember, if you feel good and live comfortably, you perform better too, only the straightforward, honest to God interest what counts, not you as a person.
    To make it clear, I live in such system too, quite well, thank you, but this is how it works, as I see it.”
    I couldn’t have said it better myself.

    I bet you could’t. Very sad. You have no idea how much these people give back. They maybe the ones delivering water right now to a roma community in Ozd, where the authorities closed rhe water supply in the heatwave. This the problem with Marx. This good guy bad guy view of humanity based on paycheck. That’s why Marxism is meanest bullshit in history.

    Regarding Kornai’s “I dabbled in Marxism, how come they never occured to them what happens if people don’t want it. Say they want to keep their properties … After decades of bshevism in the SU it still takes them years to hiteir forehead.

  25. It’s really interesting to see how worldviews (“Weltanschauungen”) clash over this topic and how long many comments are, including this one… The discussion about it seems to me much more typical for former Soviet satellite countries than for Western countries where capitalism is so much taken for granted that nobody uses the term anymore except for some far-left parties (Die Linken in Germany, the hard-core socialists in France) or young socialdemocrats (Jusos) in several countries. These form a political periphery.

    As for it’s shortcomings, I’d like to paraphrase one of Churchill’s sayings about democracy: Capitalism is by far the worst form of an economy – except for all others.

    In Germany the economic system is called a “social market economy”, and in the German constitution it says property entails obligations (“Eigentum verpflichtet.”) The emphasis on both social content and the contribution of the rich is continually changing and requires political debate and balancing all the time.

    Just like most people are too young to have seen the EU and its predecessors being founded and for what reasons, people who were born around the 1980s know so little about socialism – and that it really existed! – that they honestly regard it as a potential and viable solution to the world’s problems.

    Éva Balogh just referred to one essay among a collection of Kornai’s essays. It can be rightly called “an account of a personal intellectual journey”. Yet his most influential book was the “Economics of Shortage” (1980). And that had nothing to do with mistaking Stalinism for socialism. Amongst my girlfriend’s students and colleagues regretfully nobody has ever read it, although he was the first debunker of a myth that doesn’t want to die – although it failed and had to.

    I believe what we have to see is that both a market economy and a democracy offer two essential tools you won’t see with any other systems: It is the way to handle change. Profit-oriented capitalism fosters innovation and makes sure that resources are allocated in a pragmatic and efficient way that in the longer run benefits everybody. Why some wrong allocations took so long to lead to crashes is another matter. This is where politics comes in.

    Similarly, democracy allows for change (of governments) in a peaceful and civilized manner. Karl Popper – who appreciated some of the libertarian and humanitarian aspects of Marx’ work and saw parts of Marxist analysis of capitalism as useful – saw the great opportunity of democracy to judge a government and turn thumbs up or down on it. He also coined the term “open society”. In short, he stood for everything that is foreign to the present regime in Hungary.

    I see globalisation as a similar challenge as that of industrialisation in the 19th century. It took decades before the first factory laws were passed in England, and it took until the second half of the 19th century for trade unions to establish themselves and again until the end of that century for the Labour Party to be formed. So to right the “collateral damage” of major economic changes is a long haul.

    As the big powers of the world are unwilling to reign in the abuses of globalisation, it should again be Europe and the EU to start to formulate policies to enforce social justice, humane working conditions, fair trade and higher incomes. Although Europe is a military dwarf, the size of its combined population and economic leverage should be able to make a dent.

  26. Mrs KKA: “The point I was trying to make is that it is not the systems that are bad, but the practitioners. And, that is true for every system, be it capitalism, socialism, or any other ism you care to name. They may all look great on paper, at one time or another, but when it comes time to walk the walk, greed just raises its ugly head and puts a screeching halt to the nice bits.
    As far as capitalists being great philanthropists is concerned, if you took away the tax breaks involved, I believe that philanthropy would go the way of the dodo. Call me cynical, but that’s the truth of the matter.”

    Greed indeed exists, it seems to be part of human nature. Still, based on history, capitalism is the only system that produced some progress and survived for centuries.

    As far as philanthropy only being fed by tax advantages, reality contradicts that statement. Several very wealthy people gave or are in the process of giving away ALL their wealth. Carnegie comes to mind or Gates. I doubt that in either case their tax bill comes close to their giving. But even if this weren’t true, what’s wrong with giving and getting a tax advantage for it? Do you think that to the receivers of philanthropy it makes a difference? If I had a choice, I always chose philanthropy, where a person who had the wisdom to gather wealth decides how to give away his/her wealth for the public good vs. some government bureaucrat wasting it away.

  27. Now back on the laptop …

    What I wanted to say is that Marxism needs to peg certain people as evil otherwise the whole system just doesn’t work. This is what keeps baffling marxists for more then a century. The world is just not evil.

    Sorry for the typos in my previous post. I was out in the woods with my dog. I was punching in the post on my phone while my dog was trying to convince a raccoon to give up his hole for the greater good (it didn’t work – the raccoon refused).

    The poor dog deserves a bit of freedom to live by his instincts because last night I used some cut rate ear cleaner on him and he was shaking his head the whole night like Johnny Boy on the Hungarian Spectrum. This morning we flushed the ears out with clean cold water from the garden hose and he seems to be ok now. I wonder this would work on Johnny Boy and the other FIdesz belivers … Does he have big floppy ears?

    Speaking about Johnny Boy … and Professor Kornai. What I like in Johnny Boy is this occasional honesty. I hope he doesn’t get into trouble for it. He said once that he is pro-Fidesz, because they definitely do horrible things, but they are the best on the lot. I think this is like when Kornai liked the communists. I wonder how long does it take for Johnny and his friends to realize that their idol does more wrong than good.

  28. OT: Going to Nograd from Buda, I saw two Demokracia billboards featuring Gyurcsanyi’s photo (almost half the billboard)–no name was prominent.

  29. OT II: Further to the hospital experience in Budapest. My girlfriend had to sign a piece of paper that she was released a day later than she actually was.

  30. OT III: Beginning shortage. My girlfriend noticed that after French MATCH was ousted from Hungary and most shops were taken over by Fidesz-supported CBA (and a few by Austrian SPAR), more and more goods, especially foreign brands disappear, the choice shrinks. She assumes that as a near monopolist they can dictate both supply and prices (which have gone up since I was last in Budapest a year ago).

    My own observation: During two weeks you couldn’t get any basil in SPAR or CBA. The one you can buy on the indoor market is expensive and tastes of nothing. CBA at Moskva tér had only tarragon and chives (really nothing else), the CBA on Svobhegy only had parsley and dill.

  31. Spectator: “My simplified view about the capitalism, if we are at it:

    Either you exploit someone, or you’re getting exploited – there is no other way. The difference is only the level, how you experience it, what grade your position on the food-chain or the totem pole.
    Some may say, that for such and such salary let me be “exploited” – the principle still the same, even with seven digit income – if you get well paid, you certainly produce multiple times as much profit to your employer, that’s the point.
    Remember, if you feel good and live comfortably, you perform better too, only the straightforward, honest to God interest what counts, not you as a person.

    To make it clear, I live in such system too, quite well, thank you, but this is how it works, as I see it.”

    Well, in essence you quote Marx: if someone is employed in the private sector, s/he is exploited. So what? I’d rather be exploited and have a decent life, than live in the socialist golden era, where everyone is equally poor, there is no chance for a good life, except for those in charge, who keep feeding the rest with this BS.

    Capitalism works, because everybody has a chance. Maybe not equal chance, maybe luck has a lot to do with it, but there is a chance. To understand the chances in socialism, I suggest you read Orwell’s Animal Farm.

  32. Reblogged this on Vostok Cable and commented:
    A great summary of economist Janos Kornai’s essay on Marxism by Hungarian Spectrum. Kornai began his career as a committed communist but came to expose the flaws in Marx’s thinking. Hungary was one of the first countries in the Eastern Bloc to experiment with a market economy.

  33. @gdfxx
    “Well, in essence you quote Marx: if someone is employed in the private sector, s/he is exploited. So what? I’d rather be exploited and have a decent life, than live in the socialist golden era, where everyone is equally poor, there is no chance for a good life, except for those in charge, who keep feeding the rest with this BS.
    Capitalism works, because everybody has a chance. Maybe not equal chance, maybe luck has a lot to do with it, but there is a chance. To understand the chances in socialism, I suggest you read Orwell’s Animal Farm.”

    In my opinion the exploitation isn’t limited to the private sector alone, the state just as well using its status to hold the average employee on a leash, just look at the education or the healthcare for inspiration.
    Otherwise what marked that “socialist golden era” wasn’t as everyone were equally poor, far from it, if you measured by the local standard of course. Something for sure, the level of poverty what is in Hungary today was simply unheard of at least the last ten years of the system definitely. Yes, there was no real chance to the average people to get rich, but it’s isn’t really the case today either, is it?

    Capitalism by itself not the solution, as you can see in Hungary.
    Capitalism working properly in those countries, where the people and their chosen leaders equally aware of the whole picture, say, they paying their taxes and able to finance their healthcare and education, they’re able to care for their poor and elderly people as well.

    Such places than Hungary, where only personal ambitions, loony dreams and fuzzy theories backing financial decisions totally screwed. Just as well as the former comrades politically motivated economy led to near bankruptcy, remember.

    After all, Marx has some valid points, even if he’s out of fashion, don’t you think?

  34. Ninotchka: Why should you carry other people’s bags?
    Porter: Well, that’s my business, Madame.
    Ninotchka: That’s no business. That’s social injustice.
    Porter: That depends on the tip.

    From Ninotchka by Ernst Lubitsch, a great fan of Budapest in the early twenties; based on a story by Melchior Lengyel, Balmazújváros native.

  35. Minusio: Match (before that Csemege/Meinl) has been loss-making for twenty years. They (the Belgian owners) tried everything but did not succeed (of course Match shops were the most terrible of all grocery chains).

    It seems that the real estate (essentially the leases, and not the business entity because it was worth nothing) were divided between CBA and SPAR.

    Spar got the big area shops (in malls mostly), CBA the small ones.

    CBA has no experience in running big area shops and it has no money (CBA is a actually a kind of franchise, so shops may be owned by various enterpreneurs, but I mean the big CBA franchise owners, they are already indebted, had no money to upgrade the shops). In any way, each CBA shop has its own policy what to order, so the variety is different. Plus it is a bit risky to invest in grocery shops, where location is everything, when the previous owners could never make them profitable for decades. Plus you got Aldi in very urban areas as well, so competition is increases.

    There is no conspiracy here.

    OTII: this has been standard practice for years. Bad, but voters are OK with it, health care is number x on their priority list, way behind football, sorry. Until the plurality values football more than health care investment will go into football (plus too many interest in health carse, eats up lot of political capital see MSZP/SZDSZ or Obama).

  36. Mitic: “but voters are OK with it, health care is number x on their priority list, way behind football, sorry.”

    These statements are invaluable. I wonder how Hungarians managed to put a state together in the first place. And keep an appearance of a society that maintains some social standards.

  37. With proper allocation of capital, investment is directed where it is most valuable and everyone wins. How much they win varies.

    Marx advocated the elimination of market forces in the allocation system. This was a mistake.

    Equally an allocation system which depends only on market forces results in huge issues every few generations, because markets are driven by greed and fear. Slowly the world will recognise this too is a mistake.

    I am proud to say a capitalist as well as a liberal. Proud not because I have lots of money which I use to change the world with (I don’t), but because I help the world allocate capital better than a central panning system can.

    Unfortunately the system for allocating capital in Hungary is broken, with returns on investment now being taken by the State or by people who have not invested in the first place. Its not great elsewhere either, but at least it is not broken.

    So I don’t work in Hungary. But one day I hope some politicians will create an environment here in Hungary in which I can work again.

  38. Famous? Economist? Where is he highly regarded outside the small left-liberal kennel?
    Is he an acclaimed analyst? No. He is not quoted anywhere, he is not considered anywhere, he is virtually unknown. He is a nobody outside any distorted Marxist standards.

  39. Johnny Boy :
    Famous? Economist? Where is he highly regarded outside the small left-liberal kennel?
    Is he an acclaimed analyst? No. He is not quoted anywhere, he is not considered anywhere, he is virtually unknown. He is a nobody outside any distorted Marxist standards.

    The small left-liberal kennel? and who Johnny Boy is a well known economist? László Bogár?
    Matolcsy?
    From 1967 until 1992 Kornai was a Research Professor at the Institute of Economics, Hungarian Academy of Sciences. He became corresponding member (1976), member (1982) of the Hungarian Academy of Sciences. Kornai joined the faculty of Harvard University in Cambridge, Massachusetts, USA, in 1986 and was named the Allie S. Freed Professor of Economics in 1992. He retired from Harvard in 2002. In the same year, he became a Permanent Fellow of Collegium Budapest, Institute for Advanced Study. He is also a Distinguished Research Professor at Central European University. From 2011 he works also as professor emeritus at the Corvinus University of Budapest.
    He was a Member of the Board of the Hungarian National Bank (central bank) until 2001, and has authored many economics-related books and papers.

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