Overcentralization in Economic Administration

Review from previous edition Kornai found little evidence of comprehensive planning. Instead, he determined that the planning system consisted of quarterly gross output orders that could readily be manipulated by managers and had to be fulfilled at any price. Kornai's Overcentralization already contained the seeds of Kornai's later key findings of the dysfunctionalities of socialist planning; namely, soft budget constraints and the shortage economy. Kornai's most important finding was largely overlooked throughout the socialist world-that the planned economy could not be reformed by partial measures. * Paul R. Gregory, Public Choice *
Kornai's interest in methodology arose from the inadequacy of existing economic theory, both Marxist-Leninist and Western mainstream, to help solve major topical economic problems. He used the methodology that he developed to analyse concrete economic issues. The major economic problem that he analysed was the reform of the bureaucratic-command system in his native Hungary. His PhD thesis, which was published in English translation as Overcentralization in economic administration was a detailed account of some problems of that system. He was involved in plans to reform it. However, it became very obvious that there was no economic theory that could provide guidance for reformers. Some people were attracted to market socialism, but Kornai rejected it both in theory and as a basis for improving the Hungarian economic system. * Michael Ellman, Cambridge Journal of Economics *
The Hungarian Janos Kornai is the most famous, and certainly the most influential, economist to have emerged from postwar Communist Europe. His reputation is based on three books, Overcentralization, Economics of Shortage, and The Socialist System, which knocked away the intellectual foundations of the publicly owned, bureaucratically planned economy. * Robert Skidelsky *