Kornai evaluates self

Doug Henwood dhenwood at panix.com
Fri Oct 6 13:10:04 PDT 2000


"Ten Years After 'The Road to a Free Economy': The Author's

Self-Evaluation"

BY: JANOS KORNAI

Harvard University

Department of Economics

Document: Available from the SSRN Electronic Paper Collection:

http://papers.ssrn.com/paper.taf?abstract_id=235875

Contact: JANOS KORNAI

Email: Mailto:jkornai at harvard.edu

Postal: Harvard University

Department of Economics

Littauer 222

Littauer Center

Cambridge, MA 02138-3001 USA

Phone: 617-495-1236

Fax: 617-495-7730

ABSTRACT:

The book discussed several topics; the paper presents an

evaluation of two issues only. As for ownership reform, there

were alternative strategies suggested at that time. Strategy A

recommended organic development: creating favorable conditions

for bottom-up development of new entries; sale of state-owned

firms, avoiding give-away schemes; and hardening the budget

constraint. Strategy B proposed accelerated privatization,

putting the emphasis on quick elimination of state-ownership.

The main instrument was to give away state property (e.g. via a

voucher-scheme), and shifting ownership into the hands of

managers. "Road" suggested Strategy A, but the majority of the

Western economics profession supported Strategy B. Experience

seems to show the superiority of Strategy A. The author is less

satisfied with the suggestions presented in the book for a

stabilization program. The main weakness was the one-sided

attention paid to short-term adjustment measures without

sufficient elaboration of the profound institutional changes

needed for sustainable stability.

JEL Classification: G34, L33



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