A Short Biography of János Kornai

János Kornai was born in Budapest in 1928. He began (but did not complete) his
university studies after the Second World War. At the age of seventeen, he joined
the Communist Party as a true believer and rapidly advanced in its ranks. At
nineteen he was appointed economics editor of the Szabad Nép, the daily with the
largest circulation in Hungary. This was Kornai’s first real “university,” and it offered
him the chance to observe the socialist economy from within. When the crimes of
Stalin’s regime came to light, however, he lost his faith in the system irretrievably.
He joined the party’s anti-Stalinist wing and accordingly was fired from the Szabad
Nép. In 1956 he left the Party for good, whereupon he was branded a renegade and
a traitor. In this respect Kornai’s experience resembles that of Koestler, Malraux,
or Orwell: a committed Party member sees the light and becomes an implacable
critic.
In 1955 Kornai entered the newly founded Institute of Economics (Hungarian
Academy of Sciences), and the following year produced the first book (Over-
centralization) by a citizen of a communist state that described the socialist system
realistically and critically, rather than in idealized form. This was Kornai’s Ph.D.
thesis. In Hungary, Ph.D. defenses are normally conducted in the presence of a small
number of experts. However, several hundred people came to hear Kornai defend,
and the occasion turned into a mass demonstration against the failures and absur-
dities of the system. After the book was published (in Hungarian in 1957 and in
English in 1959), he was fired from the Institute for initiating “revision threatening
the socialist system” and “counter-revolution” and as “a traitor to Marxism-
Leninism.” Fortunately, he was not banned from scientific work. Between 1958 and
1963 he worked in the less prestigious Institute of Textile Industry, where he started
to learn mathematical economics.
In 1963 Kornai entered the newly formed Cybernetics Institute (also part of the
Hungarian Academy of Sciences). The main fruit of this stage of his career was his
monumental work Mathematical Planning, first published in 1967. He also guided a
team of several dozen economists and computer experts, charged with making plan-
ning more rational (a concise description of the underlying mathematical method
of two-level planning was published in Econometrica, co-authored by Tamás
Lipták).
In 1967 Kornai was reinstated to the Institute of Economics, where he remained
until 1992. By this time he was pessimistic about the prospect for rational planning
and turned to general equilibrium theory (GET) for the light it might throw on eco-
nomics. One fruit of this study was Anti-Equilibrium (published in 1971), which
argues that GET’s grip on economic reality would be improved by incorporating
elements of bounded rationality, systems theory, and disequilibrium theory.

Downloaded from https://direct.mit.edu/books/chapter-pdf/176516/9780262279222_fd.pdf

by Universidade de São Paulo user
 xvi A Short Biography of János Kornai

Kornai began work in the 1970s on several research topics laid out in Anti-
Equilibrium.This led to a number of journal articles and the book Nonprice Control,
jointly edited by Béla Martos in 1981. At the same time he produced a monograph,
Economics of Shortage, published in 1980, perhaps his most influential work. The
book has been translated into many languages, including a 100,000-copy printing in
Mandarin. Ironically, it was not published in Russian until 1990, although the Soviet
Union probably provided the best evidence in support of the thesis that shortage is
an inevitable feature of the socialist system (indeed, that is probably why it was not
translated earlier).
Kornai’s early monograph Overcentralization created a stir in the West, and from
1958 onward he received many invitations to visit foreign institutions. However, he
was denied a passport by the Hungarian authorities and was not allowed to travel
until 1963, after political repression had begun to ease. He had several visiting
appointments at universities in the United States and elsewhere. In 1986 he accepted
a permanent professorship (on a half-time basis) at Harvard University. In 1992 he
left the Institute of Economics for the Collegium of Budapest, which is the Hun-
garian equivalent of the Institute for Advanced Study at Princeton.
Kornai started work in 1988 on a book summarizing his life’s work on socialism
(it was published in 1992 as The Socialist System). At the same time, he joined in
the task of analyzing postsocialist transition and formulating policy recommenda-
tions. His book The Road to a Free Economy (Hungarian version, 1989; English
version, 1990), which has been published in sixteen languages, was a pioneering study
of stabilization, liberalization, and privatization. Ever since, he has been working on
transition issues. Happily, he has witnessed the virtual disappearance of economic
shortage, one of the major features that he attributed to the socialist system. Less
fortunately, he has seen one of the predictions of Anti-Equilibrium come true: the
transition from a “shortage” to a “slack” economy typically gives rise to recession.
Kornai’s influence has been profound. Vast numbers of people were first exposed
to the true nature of socialism through his books. And his critical writings con-
tributed significantly to early attempts to reform communism. It is remarkable too
that the number of Kornai students far outstrips that of any other economics pro-
fessor in Eastern Europe, although he has never had a regular affiliation with any
Hungarian university.
We have no space to list all of Kornai’s many honors. Let us just mention that he
received the F. E. Seidman Distinguished Award in Political Economy in 1980 and
the Alexander von Humboldt Prize (Federal Republic of Germany) in 1983. He was
president of the Econometric Society in 1978 and of the European Economic Asso-
ciation in 1987.

Downloaded from https://direct.mit.edu/books/chapter-pdf/176516/9780262279222_fd.pdf

by Universidade de São Paulo user
 A Short Biography of János Kornai xvii

Having outlined János’s scientific career, we would like to indulge in a few per-
sonal remarks.
Simonovits’s reflections: I first met János in 1969 and worked under his guidance
over two decades. We wrote several papers together, and from this I absorbed the
elements of good economic research: the importance of choosing a significant topic,
studying the literature on the subject thoroughly, and expressing oneself as simply
as possible, always emphasizing the economics, not technique.
I attended several of János’s courses at the Budapest University of Economics,
where he has been an Honorary Professor since 1968. I was astonished by how much
time János devoted to students. If there were too many student papers to read by
himself, he would distribute some of them among his colleagues and assistants. I
recall that, as one of those unofficial assistants, I spent hours in discussion with him
and the students whose papers I refereed.
Maskin’s reflections: I first got to know János when he joined the Harvard Eco-
nomics Department in 1986. We would meet from time to time to discuss how some
of his intuitions and observations about the socialist system could be modeled for-
mally. These conversations became more frequent when I had the pleasure of acting
as his discussant for his 1991 Tanner Lectures at Stanford. We went through the text
of the lectures beforehand almost line by line, arguing every step of the way. It was
an exciting and intense experience.
János also had a profound effect on my research agenda. Indeed, his concept of
the soft budget constraint syndrome inspired Mathias Dewatripont and me to
propose a formal theory for why centralized economies are more vulnerable to this
syndrome than are decentralized economies.
But the most rewarding aspect of having János as a colleague—indeed, one of the
great highlights of my career—was our joint supervision of a remarkable cohort of
Chinese graduate students, all deeply fascinated by the working of the Chinese eco-
nomic system. These students turned to János for his unsurpassed expertise in the
economics of socialism and to me for help with the tools of modern theory. It was
an honor to participate with János in their training. Two of those students—Yingyi
Qian and Chenggang Xu—are represented in this volume.
Of course, we admire János for his accomplishments as an economist but we love
him for his great warmth and friendship. He is devoted both to the well-being of his
family—his wife Zsuzsa, his children Gábor, Judit, and András, and a host of grand-
children—and to that of his colleagues. It is a privilege to know him.
Long live János!

Eric Maskin and András Simonovits

Downloaded from https://direct.mit.edu/books/chapter-pdf/176516/9780262279222_fd.pdf

by Universidade de São Paulo user
Downloaded from https://direct.mit.edu/books/chapter-pdf/176516/9780262279222_fd.pdf
by Universidade de São Paulo user