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Desperately Seeking Adam Smith
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18107 |
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BOOK WORLD
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11 / 1990 |
2,058 Words |
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D. Gale Johnson
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THE ROAD TO A FREE ECONOMY
Shifting from a Socialist System: The Example of Hungary
Janos Kornai
New York: W.W. Norton & Company, 1990
224 pp. $16.95
For nearly four decades Janos Kornai has been an outstanding observer and critic of the functioning of socialist economies. Much of what we know about how such economies actually function is because of his insights. As a young man, he was a reformer - he participated in devising reforms of the Hungarian socialist economy. He is now a revolutionary, a peaceful one to be sure. He calls not for the reform of socialist economies but for their abolition. His alternative is a market economy based upon private property and competition.
This book's contents will come as an enormous disappointment to those who hold that there is a third economic system somewhere between socialism and capitalism. Kornai persuasively argues that such a third way dos not exist. This is a particularly shattering conclusion for those who do not want to accept the importance of private property as the engine of economic prosperity. It is shattering, at least in part, because in his early studies of socialist planned societies Kornai did believe that if decisions could be decentralized them market socialism could be made to work. In 1959 he argued that much of the failure of socialism, at least in Hungary, was the over centralization of decisions. But perhaps worst of all, for those who still are looking for ways to reform socialist economies, he comes down on the side of the two economists who are most disliked and hated by the socialist left, namely Ludwig von Mises and Fried-rich von Hayek.
In his foreword to the American edition of The Road to a Free Economy, Kornai wrote: "More than four decades ago Hayek wrote than his classic The Road to Serfdom, pointing out that the way toward tight central planning, overwhelming power of the state, and abolition of private endangers political freedom as well. The title of the present [American] edition is an echo of the Hayek title, and considers the first section of the road in the reverse direction." In other words, this book could have been accurately entitled The Road to Freedom.
In the body of the book, his most direct statement concerning the impossibility of market socialism is:
I wish to use strong words here, without any adornment: the basic idea of market socialism simply fizzled out. Yugoslavia, Hungary, China, the Soviet Union, and Poland bear witness to its fiasco. The time has come to look this fact in the face and abandon the principle of market socialism, even though a number of people still want to continue rearguard action for this credo. I cannot go along with them
But his appeal is not solely based on examples of enormous failures, since some would argue that market socialism was never given a fair try in any country. The fundamental cause of the failures of the experiments in market socialism is that there is no way to re-create the effects of private property upon the functioning of the market system through state ownership of resources. He makes this point
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