János Kornai „From Socialism to Capitalism. Eight Essays.” Budapest and New York: Central European University Press 2008.
Book launch speech of CEU professor Béla Greskovits on May 21, 2008
Ladies and Gentlemen, Dear Colleagues, Students, Guests and Future Readers,
János Kornai wrote a powerful, sophisticated and inspiring book again. I wholeheartedly recommend it to exacting thinkers also including non-academic professionals, such as policy makers, journalists, politicians, diplomats and other educated audiences. The volume has especially great potential to form the research agenda of new generations of social scientists. It encourages graduate students from multiple disciplines - economists and political scientist, sociologists and historians - to not shy away from asking and searching answers even to the biggest, most puzzling questions. Such questions, as once Karl Marx, Friedrich Hayek, Joseph Schumpeter, Karl Polanyi, Albert Hirschman and now János Kornai has taught us, always require intense curiosity but also the courage to „trespass” narrow disciplinary boundaries. In addition, the volume highlights for young social scientists still „in the making” some essentials concerning proper scholarly attitude and behavior.
Clarity, self-reflection and humility
This collected essay volume is an exemplary demonstration of how productive an ambitious research program can be – especially when conducted with a measure of clarity, self-reflection and humility. Such important messages are being delivered as much by the style as by the content of the volume.
a) As to clarity, Kornai is very clear whenever he comes to separating scholarly (positive) statements from normative judgements. This is what he expects from others too. Clearly, for a social scientist that is the right (but not always easy) way to go. At the same time, I truly appreciate that the author does not hide his own personal choices and preferences in cases when not all good things go hand-in-hand: He chooses being a democrat versus an advocate of rapid transformation at any cost (Essay 7), and prefers peaceful and non-violent change over revolutionary ferver and justice (Essay 6).
b) Self-reflection equals honesty and manifests itself in admitting failure or limits of knowledge. Kornai does not hide from the reader where he feels to have been wrong: e.g. in underestimating the speed and acceleration of the erosion of the socialist system (Essay 8). He also points out the questions to which he lacks answer: e.g. where are the boundaries of mainstream economics’ versus the system paradigm’s competence (Essay 8). Surely the point is not simply that honesty is a virtue that scholars must adhere to. Even more important is that self-reflection brings „dividends” for the dissemination of knowledge. Readers will easier trust an author who is sometimes wrong, sometimes has no idea of the correct answer, but admits whenever this is the case. Conversely, if a scholar claims to be right always and on everything, we might start wondering whether s/he has ever been right in anything at all.
c) Last but not least, a degree of humility is indispensable precisely because our world is complex, interdisciplinary research is a demanding enterprise, and our knowledge has its limits – more serious ones than typically admitted.
I feel the need to emphasize these merits of the volume because they are rare in the world of social research populated by too many over-size Egos. Indeed, oftentimes we meet more self-righteousness and arrogance in a single short journal article, which equals a life’s scholarly output, than in Kornai’s collected volume that summarizes only some of his path-breaking contributions. Let me now turn to some of the substantive issues elaborated in the book.
In defense of holistic social science
This would be my shortest way to interprete the general thrust of Kornai’s Eight Essays. I admit that his approach is close to my heart and has been formative of my own profile. Holism – in Kornai’s term the system paradigm - is one of the major (although nowadays not the most fashionable) traditions in social thought. At its core lies „the idea of totality, a social whole that provides the necessary context for grasping particular social dynamics” (Fred Block and Margaret R. Somers, „Beyond the Economistic Fallacy: The Holistic Social Science of Karl Polanyi,” in Theda Skocpol, ed. Vision and Method in Historical Sociology, Cambridge: Cambridge University Press 1984: 62). Kornai, who has been and will remain in future a grand-master for many of us attracted by this kind of thinking in Hungary and abroad, has built up the volume from the first essay to the last one, to introduce, present and defend the holistic approach in a number of ways and at various levels.
a) First, the system paradigm’s analytic potential is demonstrated by Kornai’s pioneering account of the classical socialist system as an ideology- and politics-driven bureaucratically coordinated socio-economic totality (Essay 1). Those who so far have not read his The Socialist System. The Political Economy of Communism (Princeton N.J.: Princeton University Press 1992) certainly should get a taste of that important work by reading this essay. At least in my view, no one else has offered a more convincing and theoretically more sophisticated account of state-socialism.
b) Second, in essays 2, 3 and 4, the system paradigm is adopted as an analysis of social dynamics. The accounts of reform-socialism (Essay 2) and of the genealogy of its very different underlying ideas (Essay 3) are there to demonstrate a key systemic propensity: until a system persists it is able to reproduce its major features. Thus socialist reforms – experiments to mix or combine bureaucratic with market coordination and public with private ownership – repatedly ran into systemic constraints, both ideological and institutional. Taken together, essays 1, 2 and 3 are also useful reminders for social scientists, journalists and politicians who by now have become nostalgic about the socialist system and tend to deemphasize its abhorrent and debilitating features. Furthermore, precisely because social systems are held together by interlocking institutions and mechanisms, they are difficult and slow to change. This is demonstrated in Essay 4 on the example of various policy efforts in the course of post-socialist transformation. Kornai warns radical reformers that being „fast” with every aspect of institutional change simultaneously is impossible and even counterproductive. Since advances in varied areas – e.g. price and trade liberalization versus property transformation - take different time to unfold, uniform haste might produce large waste.
c) The second half of the volume accomplishes three tasks. Essay 5 is an effort to build a bridge between the macro-social historical significance and achievements of Central and Eastern Europe’s Great Transformation on the one hand - and the everyday feelings, joys and anxieties of the individual on the other. Essay 6 and 7 demonstrate how the system paradigm can help comparisons of socialism and capitalism, autocracy and democracy, as well as countries in different phases of transformation. Finally, Essay 8 is devoted to a general theoretical appraisal of the system paradigm. Here Kornai also gives examples of his companions in paradigm. Among them, Marx with 16, Schumpeter 10, Hayek 8, and Polanyi 6 references appear as by far the most frequently (approvingly and critically) cited scholars in the volume.
Although it is not central to our purposes today, but this list made me curious to ask János: If the above are the main companions who are the main adversaries? Are there important thinkers - rather than merely thoughts not readily linked to specific authors - in social science whose views Kornai intensely dislikes and critically rejects?
The main task of Essay 8 is to summarize the system paradigm’s principles, puzzles and methodology, and outline tasks for future research. The latter include encouragement of further inquiry into the micro-, macro, and mega-worlds of social systems: the study of China that is becoming capitalist without being democratic; varieties of capitalism; sub-systems such as the welfare states and their interactions across different political- economic areas. Last but not least, Kornai raises the biggest question that seems the more pertinent as it appears to be entirely out of fashion in capitalism’s current hegemonic phase: If – as both logic and history tell us – there is no such thing as an ever-lasting system, then how to think in a responsible manner about capitalism’s future prospects, potential successors or alternatives? His programmatic outline takes me to the next interesting issue raised in the book.
Relationship between the „mainstream” and the system paradigm
I who felt more than convinced by János Kornai about the merit of the macro-social approach generally, and specifically by his own way of cultivating it in the book, was surprised to sense a measure of disappointment and, perhaps, even defensiveness in his tone and posture – especially when he comes to delineating the place of the system paradigm vis a vis mainstream neoclassical economics.
„It is not a scientific revolution in Kuhn’s sense that I miss. I am not calling for the mainstream paradigm to be superseded by another paradigm. All that is needed, after the great experience of the post-socialist transformation, is for mainstream normal science to recognize more clearly its limitations. It has to understand better what it is competent to do and what it is not” (p. 197).
I thought it would be very interesting for all of us to hear János’s reflection upon the following questions:
a) Why not call for more than merely a modest place under the sun - or what Kornai calls a „complementary role” on mainstream’s flanks - for the system paradigm?
b) One might or might not be convinced about the merit of a „peaceful coexistence” between alternative truths - but is this possible at all in this specific case?
I am the more curious about the answer as Kornai tells his readers:
„I may be wrong, but I have the impression there are very few people in the economic profession who accept this narrowed, more modest domain of validity for the ’mainstream paradigm’. Indeed, there are some who have drawn precisely the opposite conclusion from the change of the system in the 1990s. They mistake the victory of the actual capitalist system over the actual socialist system, for a victory of neoclassical mainstream economics over all other, alternative paradigms” (ibid.)
Let me briefly list the main features of the system paradigm as summarized by Kornai (pp. 190-3) and contrast them with their stylized alternatives (as I understand them) in mainstream economics:
a) methodological holism versus methodological individualism;
b) inter-disciplinarity versus anxiously guarded disciplinary boundaries of what Albert Hirschman earlier dubbed „mono-economics”;
c) focus on institutions and their historical paths versus individuals and (if at all) institutions without history;
d) system-shaped preferences versus given individual preferences;
e) focus on social dynamics versus on social statics;
f) concrete qualitative and quantitative comparisons versus abstract modeling.
At least in my own understanding these two paradigms appear not as complementary but rather opposite to each other in many key attributes of their profile.
Can they both be „half-way right”or wrong? Can they peacefully divide their territories by a demarcation line not passed except with good intentions?
Systems and individuals
Let me address the last important issue that the book made me think about. This is the issue of linking the life of big systems, structures, institutions and processes with the everyday life, hopes, fears and decisions of the small individual or firm. Holistic social science is often criticized for not doing a good enough job in connecting these two fundamental levels of social existence.
I believe that by focusing on the interactions between the micro behavior of firms, workers, consumers and bureaucrats on the one hand, and the systemic macro-logic on the other, the first part of the volume offers a sophisticated and rather complete picture of the intricate links between agency and structure under the socialist system in all its variants.
Yet, I also found that the second part – with the emerging capitalist democracies in its focus – should rather be read as an account of not yet completed work that urges further in-depth inquiry. In concrete, I sensed that the responses of individuals and firms to the challenges and incentives of the new system – and especially their impact and feedback on its functioning, stabilization and prospects - deserve more attention and stronger emphasis. Let me give two examples.
a) In Essay 6 Kornai tells capitalism from socialism, and democracy from autocracy, on grounds of admittedly minimal, formal and procedural criteria (pp. 125-6 and 132). But my feeling is that even the positive – rather than normative – approach should go far beyond the minimal criteria to be able to define systems. Why? By the term “system” we refer to constructs that exhibit a degree of order, stability and durability. Constructs lacking these aspects are “non-systems.” Instead, they might represent states of chaos, uncertainty and disorder. To come up with an analogy, our global climate is a system while the daily weather is not. Of course, the former – as we witness today – can change too, but its changes denote very different processes than the usual capriciousness of April weather. It follows that without having a relatively clear idea of the stability and sustainability of capitalist and democratic orders, it is ambiguous to positively define them as “systems” to begin with. How do we know that a social construct (such as democracy) that seems like a system today, will still look like one tomorrow, if we do not inquire into its degree of popular acceptance and legitimacy upon which its stability ultimately hinges? However, as Kornai himself warns: “The minimum conditions say nothing about the stability of democracy. They allow a test of whether there is democracy in a country at a particular time” (p. 134). In terms of the weather analogy this means that minimum conditions do not allow testing the shape of the “system” – the global climate that might be in deep disorder – they only allow telling something about the “event,” the daily weather. Back to the general question: How helpful are, then, minimal formal and procedural criteria in separating a system from a non-system – and, by implication, one system from another? Surely such criteria might qualify as necessary conditions of a system – but are they sufficient?
b) In Essay 5, János Kornai assesses the outcome of The Great Transformation of Central Eastern Europe in the contradictory terms of success and disappointment.
“I keep two accounts, not one, and do not merge them. On one account, I gladly acknowledge great success on the level of world history: the system created is superior to the old and has arisen without bloodshed, at incredible speed. On the other account, I have the list of good and bad experiences in everyday life: much joy and much pain. I consider it sensible and defensible to say that the events in this region can be considered simultaneously as a success in terms of global historical significance and at the same time in many important aspects a process associated with trouble and suffering because it is a cause of pain, bitterness and disappointment to so many people” (pp. 119-20).
Again, a question similar to the above can be asked. I am not sure to have fully understood the reasons for Kornai’s reluctance to - not so much drawing a balance but - elaborating on the implications of the above contradiction, since this further step would fall within the domain of competence of the system paradigm. As with my previous questions, I think it would be very interesting for all of us to hear János Kornai’s reflections.
My concern - both normative and positive with a stress on the latter - is the same as above. Clearly, the new system’s short and long-term prospects are shaped – to talk with Albert Hirschman - by elite and popular exit, voice, and loyalty, which ultimately hinge upon how these actors draw their own balance between gains and losses, the joy and pain of everyday life. If the new system is cause of pain, bitterness and disappointment on massive scale then how long is it likely to last? Will there be - say in a decade or two – still any world historical success to speak of? I share Kornai’s skepticism about predicting the future. I would rather wish to emphasize a more modest ambition: Simply put, further work awaits us to try and link structure with agency, macro-social systemic processes with human micro-behavior, gains and losses, fears and hopes.
Dear János, congratulations to the new book, and thank you for your guidance and inspiration.
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