This study originally appeared in Acta Oeconomica, vol. 66 (4)

♦ ♦ ♦

The term paradigm was introduced to the philosophy of science by Thomas Kuhn – he used this term to denote the specific approach applied by a school of research to examine its subject matter. Researchers using the same paradigm seek answers to similar questions, and employ similar methods and concepts. In an article published in 2000, the author of this essay introduced the term system paradigm, which focuses on the systems functioning in a society. This study develops the theoretical considerations outlined in that earlier article on the basis of experience on post-socialist transition. The first part compares the socialist and capitalist systems, describing their main characteristics, and concludes that the capitalist system has become established in former socialist countries, except for North Korea and Cuba. The second part analyzes varieties of capitalism within a typology which classifies prevailing forms of politics and government. Three markedly different types are identified: democracy, autocracy, and dictatorship. Huntington wrote about the “third wave” of democratization. This study concludes the third wave has dried up: for the 47 post-socialist countries, only a tenth of the population live in democracy, while autocracy or dictatorship prevails in all other countries in this group. The third part of this essay applies the conceptual and analytical apparatus to Hungary, where capitalism exists, and autocracy is the prevailing politico-governmental form – here we can find important characteristics common to other capitalist countries or other autocracies. This finding is compatible with the observation that there are some, less fundamental, characteristics unique to Hungary, or “Hungarica”, which differ from the characteristics of all other countries.1


What prompted this study? What type of readers am I addressing? My prime motivation in my academic life has been to discover what kind of society we live in, what its characteristics may be. As any researcher does, I have taken a conceptual apparatus and methodology as a point from which to view my subject matter. Still, as most researchers, I have rarely chosen the method itself, the outlook or approach driving my research, as the subject of a separate paper. The primary aim of my article “The System Paradigm” (Kornai 2000) was to summarize my principles in the theory of science. Seventeen years have passed since and I have been much influenced by new experiences: the changes that have occurred in China, the consolidation of the Putin regime, and most strongly of all, the events in Hungary under the political group headed by Viktor Orbán, the prime minister since the election in 2010. It is high time to review the conceptual framework, along with some other matters underlying comparative systems theory.

This study is intended above all for past and future readers studying my works, whether many or few. Apart from them, I target researchers into comparative economics, comparative political science and comparative sociology, and historians of the present-day period; researchers working at universities, research institutes, international bodies, financial institutions, and think tanks, or more specifically, those who professionally analyze the changes occurring in the post-socialist region.

One aim is to sum up, more thoroughly than my first study of the system paradigm did, some elements of my conceptual and analytical apparatus. I do not offer a survey of the literature on the problem. Were I to do so I would need to deal proportionately with views, concepts and methodological principles I agree with, and those I consider incorrect. I am not setting out to do that, I am simply setting out to describe my own paradigm. I mention others’ works only if I wish to stress my agreement with them, or the fact of adopting something from theirs into my own thinking – or if I dispute their statements. In that sense the study is not balanced or impersonal, and cannot be so.2

Although these aims have motivated me, I hope the study will go beyond my message concerning the theory of science, and as a side-product assist the reader in understanding some major phenomena of our time. For example, Huntington spoke of democracy’s “third wave” (Huntington 1991). Where has it gone? Is  it moving on or has it retreated? Or what place does Viktor Orbán’s Hungary hold in comparative systems theory? Is it a specific Hungarian model, a “Hungaricum,” or does it have close or distant relatives?3



The word “system” in everyday language and in many sciences occurs in several different senses, from the universe to living organisms, man-made machinery to various human communities, existing, directly observable systems to notional, intellectual ones. In all cases this term conveys the meaning that several lesser parts form a coherent whole. These parts interact. They are not separate items thrown together, for there are comprehensible relations among them organizing them into a structure. The first part of the study uses the term “system” with two meanings. I compare the socialist and the capitalist systems. On occasions I add an attribute, calling them the two great systems,4 but the attribute contains no value judgement: I am not bowing before the greatness of either.

A distinct, specific system may emerge in a country over a shorter or longer period, as far as a distinct combination of forms of political power, dominant ideology, ownership relations, and coordination of social activities are concerned. In this sense it has become customary to refer even colloquially to the Putin system or Orbán system. The use of the word system here has an important clarifying force: it points to the mutual effects of various elements in the public state of affairs, operation of the country, and structure of the machinery of power.

I use the capitalism versus socialism pair of concepts purely in a descriptive, positive sense. I am not referring to an imaginary socialism – not to conditions that socialists or communists think should pertain under a socialist system – but to existing socialism (to fall back on an old communist party jargon).  Likewise, I am not examining an imaginary capitalism – not what uncritical devotees of capitalism think should be present – but existing capitalism, as it is.

I obviously did not invent the two terms. Historians of ideas report that both expressions antedate Marx, “capitalism” appearing in Louis Blanc and Pierre-Joseph Proudhon, and “socialism” in the works of Henri de Saint-Simon. However, they became widespread through Marx’s main work Capital (Marx 1867/1990, 1885/1992, 1894/1992), and not simply among Marxists, believers in socialism and antagonists of capitalism. They are used by several moderate or radical opponents of socialism as well, such as Ludwig von Mises and Joseph Schumpeter (Mises 1922/1981; Schumpeter 1942/2010). These days they are heard constantly from politicians and the media, and have been taken up in everyday speech, as well.

However, it must be said that many people avoid this pair of concepts. With “capitalism” there are several reasons. Former reform communists were ashamed to find formations of capitalism appearing out of their efforts. German economic politicians after the Second World War, sensing anti-capitalist feelings among broad swathes of voters, thought it wise to give the long-standing system a new name: “social market economy.”5 Nor are conservative populists fond of calling their institutional creation capitalism, as they wish to be seen as anti-profit, anti-bank anti-capitalists.

There are several considerations behind the avoidance of the term “socialist” as well. Marxists reserve the word “communist” for the Marxian vision, where people share goods according to their needs. Existing socialism was seen as a transitional state that would last only until communism appeared.6 Meanwhile many Westerners, including politicians, scholars and journalists, referred consistently to the Soviet Union and other countries controlled by communist parties as “communist countries,” and do so to this day. The same people would reserve the term “socialist” for the welfare states created by social democratic parties.

It is vital in the theory of science to distinguish sharply between the content of a concept and the name it bears. Many terms in the social sciences and the political sphere have a political slant – associations redolent of value judgement and Weltanschauung. In this respect, it is impossible to reach a consensus on  terms.

My experience, especially in the academic world, is that people cling more tightly to their vocabularies than to the views they express with the words included in those vocabularies. Their compulsive insistence is upon a vocabulary which have been hammered into their heads, or to use a more elegant term, which has become imprinted in their minds by the reading matter and lectures that have affected them most. If that is how it was put by Marx, Max Weber or Polányi (or whoever made the biggest impression on them), it cannot be put otherwise. Or it may happen that the favored term is one they invented themselves and wish to establish as their own terminological innovation.

I abandoned long ago my efforts to end the conceptual confusions. I acknowledged that an absence of conceptual consensus often leads to a dialogue of the deaf. This applies not only to the capitalism versus socialism pair of concepts, but to many other expressions, on which this study touches later (e. g., democracy versus dictatorship). I am attempting only to ensure that readers of my works will understand clearly what one expression or another means in my vocabulary.

Types and their characteristics

The capitalist system and the socialist system represent two types of socio-political formation in the recent past and in the present.

The creation of a typology is among the major steps in scientific examination. It has played a big part in developing many disciplines (e.g., biology, genetics, medicine, linguistics, cognitive sciences, anthropology or psychology).7 A type  is a theoretical construct. Actual, individual historical constructs such as Hitler’s Germany or Churchill’s UK differ from each other in important respects. Nonetheless, I describe, within my own conceptual apparatus, both of them as capitalist countries. Similarly different in their essential characteristics were Stalin’s Soviet Union, Kádár’s Hungary and Ceauşescu’s Romania. Still, I call all three socialist countries. To distinguish the types within a typology calls for describing their characteristics, which may differ sharply.8 Here the task is to find the characteristics which, on the one hand, distinguish the two types, the capitalist and socialist systems; and on the other hand, they show what is common to the many individual phenomena occurring in each country belonging to the same type in a given period.

Although a type is a theoretical construct existing only in researchers’ minds, it is based on the observation of reality and underlines important common features of past and present structures. Given the specific realizations of the “great system” that vary between countries and periods, the type is created to embody their common characteristics in a theoretical generalization.9 So the usable, operable typology is based on observation of the historical reality. Social science distills it from experience.

In the rest of this study I employ the pairs capitalist system/capitalism and socialist system/socialism as synonymous.10

In creating types, the method here is to pick out the various characteristics in which each type differs markedly from the others. The aim is not profuse description. On the contrary, it is to grasp the relatively few, highly characteristic, conspicuous features. The best would be to list as few as possible – simply those necessary and sufficient for differentiation.11 I do not claim that the number of such characteristics should be exactly nine; I would be open to altering Table 1 if there were convincing arguments for doing so.

It is essential to list among the characteristics only those that are system-specific. The comparative table should by no means include phenomena which are found frequently in both great systems, important and influential though they may be to the operation of certain institutions or the lives of citizens. For example, repression cannot appear as a system characteristic because it does not appear exclusively under the socialist system. Ruthless examples have occurred and continue to occur under the capitalist system as well: in Hitler’s Germany,  in Hungary under the Horthy and the Nazi Arrow-Cross regime, Franco’s Spain, and many Latin American military dictatorships. Under both systems it may happen that incompetent people gain leading positions. In both, the major economic indicators fluctuate strongly. However great the effects of these phenomena, they are not system-specific.

I do not want to give an impression of exactitude. In describing the characteristics, I have to allow myself to use umbrella terms such as “state ownership” and “private ownership,” although I know that both categories can take many different legal forms.12 There appear repeatedly in the table words like “dominant” and “largely”, without mention of a quantitative value for them. If it is 70 per cent, then it is dominant but if it is 69 per cent, it is not? I content myself with not describing the system in terms of quantification but in a qualitative fashion, and relying on the intuition of those using the conceptual apparatus, in the hope that they will likewise sense the meaning of these inadequately precise words. My professional conscience is quieted by knowing that many scientific typologies do the same. Taking that into account, caution must be shown in using such typologies: there are some analytical tasks to which they are fitted and some to which they are not.

Another reason I tend to use expressions like “dominant” and “largely” is because I know that there can appear in a given type of country phenomena that differ from, or are even contrary to, the dominant phenomenon. For example, while the Soviet or Polish economy was tormented by the shortage economy there were still unsold goods in the stores and warehouses. In the western world with its typical surplus economy, there are long queues of consumers waiting for tickets to a new and exciting film.

Is there not a discrepancy of size in comparing capitalism, which has been around for centuries and will probably continue to exist for several more, with socialism, which existed historically for only a few decades and then collapsed? Is my reason for bringing the latter up not that I was a citizen under the socialist system for much of my life? I firmly answer both questions in the negative. Now, 25 years after the collapse, I am convinced that such a comparison has great explanatory power. History, at a price of suffering for millions of people, set up a laboratory experiment by bringing into being a system markedly different from capitalism. Comparing them yields a better understanding of what capitalism is. Such randomly generated experiments also teach a lot in other branches of science. Examining the victim of an accident marked an important step in neurology. Part of the patient’s brain was damaged and researchers knew precisely which part, and from that they could deduce what functions that part of the brain played.

What is to be understood by a hierarchy of characteristics? How do primary and secondary characteristics differ?13 In my line of thought, primary characteristics determine the system as a whole, including secondary characteristics. The joint presence of the primary characteristics is a necessary and sufficient condition for the appearance of the secondary ones. It could also be said that primary characteristics form the minimum conditions for the existence of the capitalist or the socialist system. A sensible first stage when beginning to study a country is to concentrate on these primary characteristics. The results of doing so will then have predictive force. However, the primary characteristics do not generate all the secondary ones in a deterministic way. The effect is stochastic. There is a very good chance of finding the secondary characteristics in a country examined if the primary characteristics have already been identified.

This relationship is shown in Figure 1. The figure shows mutual effects: the primary and secondary characteristics have mutual influences on each other. The thick arrow denotes that the primary characteristics are the decisive ones, and the thin arrow in the opposite direction that the reactive influence is less strong.

The expression “decisive,” as I have noted already, shows a tendency, not full determination. Many people whose forebears have suffered from heart disease will inherit that susceptibility. But whether the disease actually emerges depends to a large extent on the patients’ way of life – if they drink alcohol, smoke, fail to take exercise, or find themselves in stressful situations, they are more likely to suffer acute heart disease than if they live moderate, cautious lives, do sports and live calmly. All socialist systems are inclined to develop a shortage economy, but the intensity of shortage was very strong in the 1980s in the Soviet Union, Poland and Romania, but less so in East Germany (Kornai 1980a, 2014c).

Within the two blocs shown in Figure 1 there are also interactions among the characteristics. To simplify the explanation, these are ignored in the figure and in this textual commentary on it.

Classifying the post-socialist region’s countries by the typology of capitalist versus socialist systems

Let us apply the conceptual apparatus introduced above to the countries which qualified as socialist countries in 1987 (Kornai 1992). Altogether 47 countries belong here; let us call the area they occupied the post-socialist region.14 The word “region” is not applied in a geographical sense, as this is not a group of adjacent countries; most are in Europe and Asia, but some in Africa and Latin America also belong here.15

Rule under the socialist system is marked in black.16 The whole region would be black if the map showed the situation in 1987. Now the only spot of black on the world map is the territory of one country, North Korea – a tiny dot on the map of the world. Countries in transition from socialism to capitalism are marked in dark grey. Again, this applies to only one country, Cuba, making a single spot of dark grey at a global scale. Most of the region is colored light grey: these are the countries where the capitalist system operates.17

A sizable part of the region has a diagonally striped pattern. This denotes uncertainty: I am uncertain whether these countries should be marked black, light grey or dark grey.

The sources for placing the countries in these categories are considered again in the comments on another world map (Figure 3). There I will shed light on the relation between the two world maps and the background materials accessible on my website.18

There is a broad if not full consensus among experts as to when the change of system occurred in the countries affected. This expression, often used in political jargon and everyday speech, gains considerable content in the conceptual and analytical framework already discussed. With a few exceptions, the countries in the group qualifying as socialist in 1987 all have undergone a transition from socialism to capitalism.

Static representation and the transformations

 Figure 2 presents a still image, as if a snapshot were taken of the world and a specific group of countries within it. The shot shows a static state of the present, but if a motion picture camera were to be used instead, it would show the dynamics of the changes of system as well.

The map conveys the presence of the two systems at a point in history when both are operating according to the characteristics apparent in Table 1.19 It does not depict the creation phase of the system. I draw attention to this primarily in connection with Characteristic 1. The initiatory role in the genesis of the socialist system is played by the political sphere; the communist party makes very rapid moves in historical terms to impose state ownership and centralized bureaucratic coordination on society. By comparison, the transitions in most countries from pre-capitalist forms to the capitalist system were very slow. Initially, the political authorities only tolerated and took advantage of the services and resources of the bourgeoisie. The relation of the political forces to capitalism changed gradually until they had become active defenders of private ownership, market coordination and enforcer of private contract. Different again was the role of the political sphere in the route back after 1989–1990 from socialism towards capitalism, in which the processes of transformation were instigated and headed by the pro-capitalist political forces.

Only one country in Figure 2 is marked in dark grey, to show that it is in transition from socialism to capitalism. As mentioned before, the one country I put here when writing this study in 2016 was Cuba. Though a member of the Castro family remains at the pinnacle of power, this is no longer the Cuba of Fidel Castro. Cautiously, the country has begun to display the characteristics of capitalism.

To continue the earlier comparison, of using a motion picture camera instead of taking a still image, many more countries would appear as dark grey in the squares representing the 1990s and 2000s. The speed of change and the pace of the transformation of certain characteristics varied from country to country.

Historians and historical recollections like to focus on a particular calendar date for the beginning or end of a historical period. The October Revolution in 1917 Tsarist Russia is often understood to have been started by the blank shot from the Aurora cruiser signalling the attack on the Winter Palace in St. Petersburg. In fact, most period changes are more blurred in time.

Figure 2 shows the world-historical defeat of socialism through the lens of my conceptual apparatus. Three decades earlier, the socialist system prevailed over 34.7 per cent of the world’s population and 30.7 per cent of its area (Kornai 1992). Nowadays, when the socialist system persists only in North Korea, the proportions have shrunk to 0.3 per cent of the population and 0.1 per cent of the area.20

The explanatory power of a capitalist-versus-socialist typology

When examining a complex historico-social phenomenon, it is rare to find a convincing single-factor explanation to account for its appearance and/or long-term duration. Complex phenomena are complex indeed and call for a multi-factor explanation.

Both under capitalism and socialism appear several important complex phenomena, explained by several factors; one of them is the system. I emphasize the word one because not for a moment do I claim that a full explanation of a certain complex phenomenon can be gained by simply pinpointing the great system in which it appears. But there can often be found within a larger ensemble of explanatory factors some that are system-specific. Indeed, one or two may turn out to be the most important elements of explanation. Here are two examples.

One is the speed and quality attributes of technical progress, which is affected by several factors, e. g., the country’s level of economic development, the state of its education system, and the size of its state support for research. Alongside these, the system-specific effects are notably important. It can be shown how large numbers of revolutionary innovations have appeared under capitalism, which deeply affect production and people’s lives, whereas the socialist system could produce just one outside the arms industry (Kornai 2014c, pp. 3–24). Promising inventions that appeared in a socialist country could find no innovator able to spread it on a mass scale; this function would be usurped by a capitalist innovator instead. One well-known example is Ernő Rubik’s invention, Rubik’s Cube. In then-socialist Hungary, Rubik had no luck touting his creation round the industrial leaders. Rubik’s Cube began its worldwide conquest when its manufacture and mass marketing were taken over by capitalist firms abroad. Even the distribution process for this first pioneering innovation was immeasurably swifter under capitalist conditions than under the socialist system.

The other example is the labor-market situation. Search processes take place under all systems: employees seek employers that meet their needs and vice versa. The search process is accompanied by ubiquitous frictions: everywhere there are temporarily unfilled jobs and ready workers unable to find jobs. This  is a complex matter explainable by many concurrent factors. One example is the flexibility of knowledge generated by the education system. Does it facilitate quick adjustment to the rapidly changing demand for labor? Other factors include legal constraints on dismissing employees, the effectiveness of labor recruitment agencies, and so on. But some basic explanatory factors are system-specific. What are the general labor-market proportions of supply to demand? Does it tend towards excess supply (capitalism) or excess demand (socialism in its mature, relatively developed stage)? That determines to what extent employees are at the mercy   of employers. An employee is under constant threat of dismissal and unemployment, they feel more defenseless than those who find jobs easily. Here we have arrived at deep-rooted system-specific effects, namely the relative power of employers and employees (Kornai 1980, 2014b).

The two examples enhance in a further way the argument for the explanatory power of the capitalism-versus-socialism typology. The nine system-specific factors listed in Table 1 were compiled with a positive approach. They do not reflect the author’s desires or choices of values. These are the characteristics of countries considered socialist or capitalist, an observable group from which the list of characteristics in Table 1 can be “distilled.” Those who acknowledge this as a positive description, and shift to the normative approach, can append to them their views on the capitalism-versus-socialism pair, based on their own system of values. For my part, I do not reach any summary moral conclusion. By my system of values, dynamism and rapid technical advance form a great virtue in capitalism, but I see the risks and drawbacks of such development. For one, I see the vulnerability of the workforce as a repugnant characteristic of capitalism. As for the socialist system, it did not just have repulsive characteristics. Many of them were attractive: upward social mobility for the poor, some reduction in social distances, and employee security stemming from the labor shortage. The typology described above offers methodological assistance to evaluating the great systems. Value judgments should be based upon considering the whole set of characteristics for the system in question.

It is not unlike the marking system in education. Let us assume that the individual marks reflect each student’s attainments. Then it is up to the teachers, the parents, the classmates or the personnel department of a future workplace, to decide what configuration of the marks to take as a basis for forming an opinion of each student: the simple average of the marks, or the mark in some successful subject taken by the evaluator to be the most important. I will return to this question later, but before discussing the value judgments about the great systems, let me present the typology I use for the alternative forms of politics and government.


1Let me express my gratitude here first of all to my wife, Zsuzsa Dániel, who encouraged me to write this study despite all hardships; she was the first reader of several earlier drafts, supporting my progress with several thoughtful suggestions. I also owe my thanks to all the people who read the manuscript and supported me with their recommendations, helped me to collect data and explore the literature. I would like to emphasize Ádám Kerényi’s role, who helped me most with his initiatives and exceptional working capacity. It would be really hard to compare the invaluable support from the other contributors, therefore I simply list their names: Dóra Andrics, Réka Branyiczki, Rita Fancsovits, Péter Gedeon, Péter Mihályi, Quang A. Nguyen, Ildikó Pető, Andrea Reményi, Eszter Rékasi, Miklós Rosta, András Simonovits, Ádám Szajkó, Zoltán Sz. Bíró, Judit Ványai and Chenggang Xu. I am grateful to Brian McLean, my friend and permanent translator for many decades, for the faithful and well readable translation. I would also like to thank Corvinus University of Budapest for providing me the conditions of undisturbed work and “By Force of Thought” Foundation for its contribution to research funding.

2With most subjects it is thought immodest for authors to quote their own works repeatedly and thus to crowd the bibliography, but many such references are inevitable if the subject is an author’s own work. This study is aimed primarily at those who have read my works, whom I am trying to assist in the “maintenance” of their ideas evoked by those works.

3The term “Hungaricum” was used originally to mark goods which are produced in Hungary  and became worldwide known as “Tokaji aszú”, a desert wine called ‘The King of Wines’ already in the Middle Ages, or “barackpálinka”, a brandy made from apricot.

4What I call a great system is related, but not identical, to the Marxist “mode of production” or the neo-Marxist concept of “social formation.” I stand aloof from the simplified, primitive theory that political economy lecturers of the socialist period would drum into seminar students, citing in a deterministic, ostensibly “progressive” order of primitive communism, slave-owning society, feudalism, capitalism, and finally, victorious socialism or its full-fledged version, communism.

5 Nowadays, when the use of the term “varieties of capitalism” is widespread, we could say:    they wanted to create a variety of capitalism with strong welfare-state characteristics. This intention was inherent in the term “social market economy”, dissociating the capitalism of Northern and Western Europe from its Anglo-American counterpart.

6While the socialist system existed, no country in the bloc ever termed itself communist. That is why I entitled my work The Socialist System, not the “Communist”, which many would have recognized more easily. It can be disputed whether the decision was apt, but it left no room for misunderstanding, as I wrote down clearly what I meant by “socialist system” (Kornai 1992).

7Of special interest are the typologies of modern psychology and the cognitive sciences. Studying these could be very useful to comparative system theory in the social sciences.

8There are several synonyms for the word “characteristic” in this context: trait, feature or attribute, for example.

9In my phraseology, I employ the unqualified word “type.” It has the same meaning as what   Max Weber calls an “ideal type” (Weber 1922/2007). Yet I avoid Weber’s term, since I find that the attribute “ideal” has a distractingly normative ring. However, Weber too used the expression “ideal type” to denote an abstract theoretical mapping of existing systems.

10The second term in each pair (capitalism and socialism, respectively) denotes, for many authors, a system of ideas rather than a formation that exists or has existed. It should be clear from the context that I am discussing the latter: “capitalism” denotes the capitalist system as it exists or has existed, “socialism” likewise.

11Table 1 contains many expressions I have taken over from my earlier works, where I discussed their meanings in detail. They include coordination mechanism, market and bureaucratic coordination, shortage economy, surplus economy, labor shortage, labor surplus, revolutionary innovation, soft and hard budget constraints. For space reasons I cannot go into these again here.

12 The category of state ownership includes both central- and local-government ownership. This needs mentioning as the Hungarian vernacular often inaccurately confines state ownership to central-government ownership. If a school, say, or a hospital passes from local-government into central-government hands, this is labelled “nationalization”, while it means only that the execution/implementation of the state’s ownership rights has been centralized, important though that change may be as well.

13Basic and fundamental are commonly used synonyms for “primary” in this context.

14Like many authors, I apply the epithet “post-socialist” to the countries that were under the control of the communist party in 1989–90. Here again there appears a conceptual mix-up: many politicians and political analysts apply the labels “post-socialist” or “post-communist”, usually with a pejorative ring, to parties that emerged from the former ruling communist party after the change of system, taking over many officials of the previous party and most of its assets. This they do regardless of what changes have occurred in the leadership or membership or in its ideology.

15 A list of the post-socialist countries appears on my website as Tables 1 and 2 in Background Material 1.

16Background Material 2, appearing on my website shows the two world maps, Figure 2 and 3, not in black-and-white but in various colors. The colors might help in recognizing the distribution of various types in the region.

17Empirical support for the classifications would be much clearer if there were reliable statistics on the developments in ownership relations and the spread of the market mechanism. Unfortunately, the data available are only partial and sporadic. All countries prepare statistics on production and added value, broken down by industries, geographical regions, occupations, or output produced, but nowhere do national statistical offices calculate or publish regularly any breakdown of output data by form of ownership, or the proportion of total production sold at administratively set prices. It is surprising to find that only non-state institutions in a handful of countries concern themselves with ownership relations and the radical transformation of coordination mechanisms, although these were among the basic requirements for the change of system. Prestigeous international organizations regularly publish comparative figures on production, foreign trade, or financial affairs, but – in my view – they pay insufficient attention to the transformation of ownership relations and the relative weights of bureaucratic and market coordination.

18See Background Material 2 and 3 on my website.

19Cuba is an exception. It has been qualified here as a country at a transitional stage.

20See Background Material 4 on my website.

February 22, 2017
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I agree with Jean P.

Kornai needs a few rides on the public transportation in Budapest and Moscow, to realize the problems of the real people.

It is useful to leave the four walls of his office, and reconnect with the people.


Sorry, but this has to be said…
MOMENTUM was never mentioned in the press release by Horvath on the Orban withdrawal from the Olympic bid, but it was Momentum who pulled the plug on the Orban washing machine.
More power to Momentum! They said they would do it and they did it, in style along with 266,151 enthusiastic supporters! “Don’t trust anyone over 35”, used to be the Fidesz slogan. Not any more. These guys are running scared that they will be swept away by the new Hungarian youth movement. Momentum! And so they should be.
No doubt this is a heavy defeat for the Orban government (La Repubblica this morning notes it is the second one, following the failed migrant referendum) and the attempt is now being made to cover it up with Matolcsy’s fake news of a US coup d’etat and migrants pouring into the south of Hungary. Typical Orban tactics, desperately controlling the news, controlling the discussion.
It is time to get the thieves out of the palaces on the Kossuth ter and on Castle Hill and into more appropriate accommodation – a prison cell.


If I were the Orbán government, I would not have mentioned Momentum either. Nor does Momentum need to be mentioned, for the Hungarian public knows full well that Momentum was a major factor in the decision to withdraw. Regardless, Fidesz saw the writing on the wall that was long apparent: Budapest was a distant third in the race for Olympic gold.



@exTor, 6:00 a.m.

No, it was Momentum that pulled the plug on the Orban washing machine. Without their numbers, without their effort, the signature drive would not have been successful. Before Christmas 2016 there was a desultory MSzP attempt to collect signatures but it faded into nothing.

And by the way, if I were the Orban government, I wouldn’t have mentioned Momentum either…


In an interview published in the late ’90’s Kornai was asked about the look of a Magyar post-communist government considering ‘reforms’ 20 years on and surmised it would be a ‘normal’ capitalist economy.

And went on, ‘If you have the right friends plus you have certain gifts and talents then you can make it’. How prescient in terms if what is seen today. A bumbled ‘capitalist’ economy both in the ‘macro’ as well as ‘micro’ greased by individuals with constantly open palms who don’t know what they are doing if the eco data is any indication.

It would seem only certain blessed ‘networks’ seem to be only plugged in when making eco policy. To the detriment of the nation where expediency and dishonesty erode ethics in behavior.


This is great!! That Gorka seems just a big balloon, soon a sharp something will touch it, and pppfffffff…………..


“Seismic political shifts in 2016 exposed the potential of hateful rhetoric to unleash the dark side of human nature.
Whether it is Trump (USA), Orban (Hungary), Modi (India), Erdogan (Turkey) or Duterte (the Philippines),
more and more politicians call themselves anti-establishment and wield politics of demonization that
hounds, scapegoats and dehumanizes entire groups of people to win the support of voters.”



@ tappanch

What’s even worse, is making the lowest, common, denominator in discourse and argumentation…acceptable
in politics. This is endlessly distressing. The fact that the average Joe thinks that it is ok, suggests nothing less than the ‘televisionalization’ of the average mind–that is, that spectacle and excitement is paramount.

We’re back in Roman times reveling in the feeding of humans to the lions…


Re:’televisionalization of the average mind’

Kind of harks back to the old ‘boob tube’ which allegedly made watchers into passive beings as they were stuffed with programming that offered nothing in the realm of intelligence. I’d think despots, autocrats etc sure know the power of that ‘dopey’ box.


A thought about capitalism and socialism

There were only a few lucky circumstances in human history, when “bottom-up” societies survived. Switzerland is the only example of a successful peasant uprising in Europe. They got rid of feudalism early – it is no surprise they are the richest country of Europe.

US is another example of a feudalism-free start of society and Kentucky, Virginia, Pennsylvania and Massachusetts are officially named “bottom-up” “commonwealth”s and not “top-down” “state”s.

Apart from these and other lucky examples, most “capitalist” societies were impregnated with “etatism” of various strength from the beginning, resulting in state capitalism of various degree.

The Communist utopia was to build “bottom-up” societies in the hapless countries, where states started strong. The experiment was a failure – the states became even more oppressive under the “Socialist” system.


The only humorous weekly show critical of the Orban government, “Heti Hetes”, has been discontinued on the television channel RTLKlub II.


It’s kinda surprising to see how poor Rasi Orban’s English is. I actually think her father speaks better English.



Complete lack of self-awareness on the part of the spoilt brat.
Unlike her fathers mentality (videki kocsma thug), his daughter is more typical Buda nouveau-riche.... as thick as a 6-inch plank but livimg off loads of daddys criminal cash.