By Andrej Nosko
Czech ambassador-at-large for energy Bartuska recently compared European countries' nuclear power policy to people, that want to legalize marijuana, while half of them already smoking in private, being afraid to admit it in public. In this post I look at three of these smokers - Czech Republic, Hungary and Slovakia.
Czech Republic, Slovakia as well as Hungary are experienced 'smokers.' Generating around 40%, 55% and around 40% of their electricity by nuclear respectively.
Czech Republic has two nuclear power plant (NPP) sites - Dukovany (2x WWER 440 / V213) and Temelín (2x WWER 1000). Slovakia has had two NPPs Jaslovské Bohunice (WWER 440 / V213) last two of its five units are scheduled for shutdown by the end of 2008 after the political decision during the EU accession negotiations; and Mochovce with two units functioning (WWER 440 / V213) and two more units foreseen to be completed in 2012 and 2013 respectively doubling its overall capacity. Hungary has a single NPP site at Paks, operating four WWER 440/V213 units (one of which was bought from Poland, after its nearly completed Żarnowiec NPP was abandoned)
The renewed interest in nuclear is not confined to CEE countries, whole world is reconsidering nuclear, since, although leaving many questions open, it currently is the only commercially tested and viable technology that provides CO2 free alternative to fossil fuels.
The debate was stirred-up again just before the Brussels summer holidays at July 2, 2008 conference, when Known supporter of nuclear energy, Hungarian MEP Edit Herczog (MSZP) mentioned that Hungary should increase its nuclear potential.
This comes at the same time as Czech ČEZ announced that it would double the capacity of its Temelín NPP, and Slovak PM mentioned at various occasions that political decision to close Bohunice NPP should be reconsidered, or a new NPP should be constructed at the site, as well as at other sites.
These moves are not limited to our three regional 'smokers,' Italy, country that shut down its NPPs after a referendum in 1987 has announced that it would go nuclear again. Poland, which after a local referendum suspended construction of its first NPP seems to be reconsidering its anti-nuclear stance and should join the 'smokers' club by 2020.
Although nuclear is currently the only viable solution if EU is to stay true to its aims of cutting the CE2 emissions, it is not without problems. Most of the EU countries have not considered answers to the question of spent fuel and associated waste. Also the question of nuclear proliferation is one that needs to be taken very seriously. Nonetheless, just like with the smoking, pretending that it doesn't happen is not helpful, we need to talk about the associated problems and weight the solutions.
EDITED 18/12/2008:
On December 18, 2008 Slovak government announced its selection of Czech national energy champion CEZ, as its strategic partner for construction of the 5th unit. This should be done by a common company with shares of 49%CEZ and 51% Slovak government to be set-up next year. New NPP unit should be operational in 2020. Minister of economy Jahnatek mentioned 7 points criteria for selection, including (quoting Minister Jahnatek):
- ability and experience with building 3rd generation reactors
- whether the company is vertically established in Slovakia
- opportunities and ability in terms of dynamic stability of transport network and grid
- sufficient financial backing
Minister mentioned EdF and Enel as trailing in the second group behind CEZ, according to government information, 10 companies were in the selection process.
The event gain attention in Slovak news primarily through the voiced criticism of government for not announcing a open competition, or transparent selection of this strategic partner.
Aug 16, 2008
Nuclear Energy revival in Czech Republic, Slovakia and Hungary
Jul 17, 2008
How do you tell a difference between political, and commercial? (Oil Cut to Czech Republic)
By Andrej Nosko
How does one tell what is politics and what is business? If business uses the state to further its interests, people call it state capture. How do you call it when state uses business to further its interests? Raison d'etre?
Following the recent news in Czech Republic makes one wonder about Russia, or maybe rather about the rest of the Europe? Is not Russia the 'normal' one in the equation? It is doing what states have been doing for hundreds of years - maximizing its power.
Oil supplies from Russia have been cut to Czech republic, without any warning (in accordance to the agreement with Russia, the EC should have been informed), and U.S. presidential candidate Mr. McCain, subconsciously turned-on his Cold War reflex, when he expressed “regret some of the recent behavior that Russia has exhibited [...] including reduction in oil supplies to Czechoslovakia.”
When Nicollo Machiavelli wrote to his friend Francesco Vettori 495 years ago, that he can only talk about politics, because he doesn't understand business, the political reality was quite different. In the contemporary polyarchic political systems (people sometiems call them democracies, but this is energy security section, so I leave the conceptualization issues aside) interests (whose?) tend to be aggregated through political parties. Therefore state should cater for the needs of its citizens, through politicians aggregating the preferences and interests of their constituencies to maximize their potential for re-election, (which, if democracy functions well, should happen through catering for the decisive amount of electorate). Nonetheless, this is theory, the reality is, as usual, bit different. State uses business to pursue its needs and interests, and business uses the state reciprocally. This is particularly the case in the energy sector.
Without advertising a new movie (which in itself advertises bio fuels), the first few seconds of the following clip fit this blog: "Energy is really political, and it was always political."
On the July 10, Czech Ministry of Economy confirmed cuts in oil supplies from Russia. Nothing serious, previously I have written about the fact that Czech Republic has diversified its oil supplies, it also has sufficient strategic stockpiles (at 02/06/2008 CR had more than required 90 days of its consumption of fuels) this means that Czech refineries have sufficient time to buy substitute crude oil elsewhere, and they also have alternative route to ship it into the country.
So if there is nothing serious, one could ask why this blog-post. I would like to point out couple of similarities from the history, and pose couple of questions, without any definitive answers. On July 8, Czech Republic and USA signed an agreement on 'controversial' anti-missile shield radar base to be stationed in Czech Republic. This is part of a US system, that aims to protect USA against Iran, the other part of the system to be stationed in EU - the ten interceptor missiles are planned for Poland. Russia was not happy about this. At numerous occasions Russia has voiced its discontent with US plans to station its installations in Europe. Another example is at the end of this video, when Mr. Putin, back than president of Russia, 'theorizes' over aiming missiles at Ukraine, if it joins NATO - a potential move that Russia is not very happy about.
Therefore it is interesting, that the oil supplies were significantly 'reduced' only to Czech Republic, and this happened just a day after the signing of the agreement with USA. Russian side claims reasons are unpolitical (the official press statement states reasons as "technical organizational problems in Russia"). Nonetheless, even Russian media makes the connection, see an article in Kommersant, Pravda or longer historical and regional comparison in RIA Novosti. Let's review context of similar events from the recent past, when supplies of energy were significantly reduced, or cut completely, for business or technical reasons.
Besides the well known issue of 'gas row' with Ukraine in 2006, 2007 and 2008, which would deserve a separate post, and very interesting case of gas cut for Georgia (2001, 2004, and combined with electricity in 2006 - mostly in connection with the Russian supported separatism movements), or oil cut in Belarus in 2007 (over prices of products and transit fees, followed by an agreement on early warning system), the case of Lithuanian refinery Mazeikiu deserves more attention.
In July 2006, Lithuanian refinery Mazeikiu ceased to receive its oil supplies through Druzhba pipeline allegedly due to technical problems. Ideas of some, who have pointed out, that the fact that the cut, and a peculiar fire in the refinery, occurred after Gazprom was not succesful in trying to acquire the only Baltic refinery, over Polish PKN Orlen, are supported by the fact that the supplies have still not been restored. The refinery imports oil through its Butinge terminal, originally conceived as an export terminal.
Seeing this situation, and the experience of PKN Orlen, from Lithuania, and Latvia (Ventspils bid), its Czech operator Unipetrol (owning both of the Czech Refineries), may be facing another struggle with the Russians in the eastern part of the EU. It may also be another proof, that the distance between the politics and business is much smaller than the 15 km, that Alexander Medvedev mentions. (In an interview for Euronews at 5:30"/6:55" in this video referring to the distance between the Kremlin and HQ of Gazprom in Moscow).
Jul 14, 2008
Energy, Environment, Philosophy and a Couple of Related (not only summer) Videos
By Andrej Nosko
It is summer. According to the calendar also in Brussels, and although the heating season in Europe is out of sight (well, its not too warm here in Brussels, but heating is not required, at least not yet), with the increasing temperature swings, and the requirements for air conditioning energy consumption does not decrease too much. People travel more, go on holidays, politicians go on their long summer holidays, so it may be appropriate to provide also our readers with bit lighter 'summer post.' Here it comes, after bit more philosophical beginning, there is a selection of energy related videos (some even bit lighter). So just kick off your shoes, turn on the fan, grab a cooled refreshment and see the more interactive side of energy.
This first video is actually rather long (30min) presentation by (or rather of) Al Gore. His usual message. Lots of words.
I do not want to endorse Al Gore, I would rather like to offer a complementary reading, to balance the opinions, You our dear reader can make up your mind for yourself, as a teaser here is an excerpt:"This small example of environmental atavism reveals a more fundamental aspect of the public discourse about climate change. At the core of environmentalist animus [...] is a categorical suspicion about technology itself, which is connected to a larger philosophical pessimism about human civilization and man’s supposed separation or alienation from nature. We have seen this style of argument during the long controversy over the arms race in the late stages of the Cold War, during which the immense political and technical aspects of the problem were, for a certain cast of mind, entirely subsumed beneath a more general critique of how the arms race was merely symptomatic of a larger crisis of civilization. Unless this larger crisis was addressed, it was suggested, there would be no hope the arms race could be solved.
I recommend reading the whole thing here. Okay, its bit long and I know that it's not entirely summery and light, but philosophy and seeing things in wider context is often important to be able to tell BS and possible also see hidden agendas. (Without referring to anything in particular, of course)
It was not but twenty years ago that the large nuclear weapons arsenals of the superpowers threatened the instantaneous destruction of civilization and perhaps human life itself. Today, climate change is said to threaten the same things, only more slowly. It is remarkable how similarly the leading advocates for these two problems understand and conceptualize them. In the case of both the arms race then and climate change today, we are told that the issue is ultimately philosophical in nature, and that wholesale changes in our philosophical perspective must necessarily precede political and policy remedies to the problem. Should this perspective be taken seriously? What can it really mean?"
For some reason when I saw the following commercial of Vatenfall AB, it reminded me of... well, see for yourself, if it reminds you of anything.
We like to buy stuff, when we feel guilty, just as this commercial points out:
If you feel guilty about your carbon footprint you can buy unlimited amount of clean consciousness here.
Here is a totally new and alternative source of energy, I have never heard of it before:
And finally two 'summer energy music hits' :
And another bit more energetic version of the same song:
Here is lyrics that comes with it (original by NFX):
One source of energy the ultimate discovery electric blue for me never more to be free electricity nuclear and H.E.P. Carbon fuels from the sea wasted electricity.
One source of energy electricity all we need to live today a gift for man to throw away the chances has nearly gone the alternative is one final source of energy solar electricity.
Jul 13, 2008
Europe’s greatest energy-secret hidden beneath the onions and garlic!
By Andrej Nosko
The natural gas field near the city of Makó, known for the garlic and onion farming, is considered to be one of the largest continental troughs in the world. If the initial estimates prove to be accurate, amount of the non-conventional gas found under the garlic and onion fields of Makó would mean it is the biggest onshore gas field since 1959 discovery of Groningen field in Netherlands. This would position Hungary as an important gas producer, potential exporter and would free Hungary altogether from its gas import dependence.
Makó in the recent news
Although the presence of the non-conventional gas in Hungary strictly speaking, is not such a novelty. The news reemerged when on March 31, 2008 USA, Texas based consultant RPS Scotia Group, published the Resource Estimates of the Makó trough, and in the begining of April MOL Nyrt, the largest acreage holder for unconventional plays in Hungary and the owner of a well-developed energy infrastructure in Hungary, announced results of its joint study with Exxon, noting great potential in the Makó area.
The following map has been compiled and redrawn from various illustrative images, included in the Falcon Oil and Gas Ltd. FORM 51-102F1 (Management Discussion and Analysis for the year ended December 31, 2007) and MOL April 14, Press release, to illustrate the contractual relationships in the Makó trough. The map is interactive, and annotated, feel free to click on the colored polygons, or open the larger map before reading further.
View Larger Map
Open Map in Google Earth Progam (You must have Google Earth software installed)
Contractual relations in Makó trough
Although the largest acreage owner of the unconventional gas resources in Hungary is MOL, the news of Makó deposits was publicized mainly in connection with a series of announcement of joint deals between Canadian Falcon Oil and Gas Ltd., Hungarian MOL, and USA based ExxonMobil.
On April 10, 2008 the TXM Exploration and Production LLC, wholly owned subsidiary of Canadian British-Columbia based Falcon Oil and Gas Ltd. entered into a Production and Development Agreement with ExxonMobil Corporation affiliate Esso Exploration International Limited (acting in Hungary through its subsidiary ExxonMobil Kutatas es Termeles Magyarorszag Kft). On April 11, 2008, was this agreement followed by MOL and Exxon which signed an agreement to start a joint exploration work program in blocks 106 and 107 (see the map) in Makó Trough, as well as MOL's taking part on the Exxon's stake of the previous deal with Falcon. On May 16, MOL and ExxonMobil signed a Heads of Agreement to undertake a joint technical study of basins in Hungary with unconventional hydrocarbon potential.
Makó deposits in historical perspective
The predecessor of MOL, Hungarian state-owned oil company was exploring nonconventional gas deposits in Hungary (click for map overlay) already in 1960's and 1970's, and as WSJ quotes, geologist Dr. Gyorgy Szabó, currently a director at Falcon, who took part in the geological survey of the region in 1970s, Hungarian geologists "knew there were hydrocarbons there, but we also knew the rock was low-permeability and low-porosity." According to WSJ, in the late 1980s, the World Bank financed a deep-drilling program in Hungary, supervised by experts from the U.S. Geological Survey. The results of that review ended up in the hands of John Gustavson, founder of USA Boulder-Colorado based Gustavson Associates, who was touring former Warsaw Pact nations in 1991 on the lookout for oil and gas. In 1998 he acquired the license for a big chunk of Makó. Gustavon unsuccessfully tried to entice major oil companies into the project. Acording to WSJ he won interest of Marc Brunner, now CEO of Falcon Oil and Gas and, back than founding chairman of Ultra Petroleum, Pannonian Energy (which was in 2001 acquired by Gasco Energy of which Mr Brunner is currently a Chairman) and Pennaco Energy (Acquired by Marathon Oil), all companies with significant exprience in nonconventional gas exploration, notably in Wyoming.
Estimations of recoverable sources
Besides the news converage which is rather unreliable, since it does not provide citations, one can use two available reports for the 'preise' estimations. It is the September 2006 Independent Resource Assessment from The Scotia Group and March 2008 update to this report. The reports can be obtained throught search in the SEDAR database. The selected data from the reports is included in the following table (The comparison data is used from the BP Statistical Review of World Energy 2008):
Show the table in full screen.
This table summarizes the probabilistic summation of the recoverable resource estimates, nonetheless, this is only the technical probability of the project, and the certainty of the exploration still varies significantly. According to various sources, time to go online for the Makó gas varies from late 2008 to 2012 or to even later dates. Nonetheless, the news of the Makó deposits is very interesting and important, and although the nonconventional resources are not the cheapests there are, with the prices of gas predicted to rise substantially for Europe, even the nonconventional gas resources will prove indispensable and affordable.
If the predictions of Alexei Miller, Gazprom CEO, of gas prices rising to $500 per 1,000 cubic metres from the current $400 by the end of 2008 - or even $1,000, should the oil prices hit $250 per barrel - prove accurate, Makó's Hungaricum will not be onions and garlic, but natural gas and, a new landscape populated by hundreds of gas drill rigs.
Link to photo gallery of drills (added on November 19, 2008)
May 27, 2008
The Renaissance of A Nuclear Option?
By Petr Lang, PERG guest author and PSSI Program Coordinator
As the oil prices are skyrocketing and biofuels have recently lost much of their charm due to their partial impact on rising food prices, the majority of participants of the second European Nuclear Energy Forum, which took place on May 22-23 in Prague, might have been expected to wax lyrical about the bright future of their industry. However that was not the case. Not because they have lost their drive for increasing the proportion of the nuclear energy in the European energy mix, they are certain about that indeed.
As CEO of Areva Anne Lauvergeon put it, whatever you think, we are going to go nuclear. The reasons for such an assertive statement are well known: EU energy consumption is increasing and EU has obliged itself to a substantial reduction of carbon dioxide emissions in the coming years. Add the feeling of insecurity surrounding the imports of natural gas from Russia and the nuclear renaissance will seem inevitable. These arguments were continuously repeated during the forum. Czech Prime Minister Mirek Topolánek added the novel argument to the toolbox of nuclear aficionados, when he cited Andrei Sakharov, who once wrote that the nuclear energy is the only chance for the West to stay free and secure. Should we stick to this assumption, the future of European security and freedom will look uncertain, because as Czech Foreign Minister Karel Schwarzenberg soberly mentioned, we will have to wait for the nuclear renaissance for some time to come. There are several factors delaying the return of the nuclear age.
First, EU has only recently started to overcome the nuclear hangover caused by the Chernobyl disaster. The presence of the President of the European Commission José Manuel Barroso at the European Nuclear Energy Forum was maybe the most important point of the whole session, although rather symbolic. The European Commission is at pains to stress that it is up to every member state to choose the structure of its energy mix, including nuclear energy, deliberately refusing to either bless the nuclear option or doom it for good. Mr Barroso called for a greater cooperation among EU institutions and member states with nuclear facilities (15 EU countries operate commercial nuclear power plants) to establish common framework for nuclear waste management, security standards etc. Compared to the flood of initiatives and subsidies fueling the recent biofuels bonanza in the EU, the nuclear industry might feel like the Cinderella. Even if the Commission decided to pledge its support for the nuclear option, it would take some time to get the business back to pre-Chernobyl levels.
Furthermore, the nuclear industry is experiencing the same problems as the oil business. The majority of skilled professionals is nearing the retirement age, and the universities cannot fill this gap immediately, although the situation is getting better according to Jean-Pierre Le Roux, Vice Chairman of French Atomic Energy. The time factor plays also crucial role because the nuclear power plants cannot be built as quickly as their gas or coal fueled alternatives. Should the new nuclear power plants get operational by 2020 and thus help the EU to fulfill its environmental plans, the construction would need to start soon.
The last and maybe the most important factor inhibiting the nuclear boom is uncertainty. The construction of the power plant is very expensive and the operator needs some safeguards that it will not be forced to close the shop because of the sudden change in political or popular mood. This weakness was exploited by the representative of Friends of Earth Patricia Lorenz who said that when so rationally oriented entities as investment banks have their doubts about the nuclear energy, why should this industry get support from the governments whose primary responsibility is the well-being of its citizens?
Needless to say, there were not so many antinuclear participants at the forum, but the environmentalist rhetoric was omnipresent as the fight against the global warming may be the decisive element triggering the nuclear renaissance in EU. In the appeal to the European Commission the participants recommend the Commission “to declare nuclear energy as a low carbon and emission free energy generation technology, with positive impact on environment and sustainable development.” Furthermore, “as an expression of responsibility of the EU in fighting climate change [the EC is recommended] to declare unambiguous support to nuclear energy as a way to fulfill EU targets in lowering emissions gases by 20% by 2020.” This wording points to win-win situation. If the nuclear option gets such an acknowledgment, the investors will be more willing to open their wallets and the EU will be able to reduce the carbon dioxide emissions much more easily.
The second European Nuclear Energy Forum was not designed as a discussion of the pros and cons of nuclear energy (the opponents were clearly outnumbered by the supporters) but as a rapprochement towards the European Commission and EU institutions in general. Given the fact that over the next twelve months EU will be presided by France and the Czech Republic, who generally support the nuclear renaissance, there is a chance that the Atomium in Brussels will shine brighter than ever.
May 22, 2008
European Nuclear Forum is like a “Legalize Marijuana” club
By Andrej Nosko
Czech economic daily E15, in May published an interview with my favorite Czech Ambassador-at-Large for Energy Security Václav Bartuška. In his as usually very sobering remarks, Bartuška talks about short-sightedness of management of Czech energy company subsidiaries, energy policies in Europe and need for an energy crisis in Europe as a 'wake-up' call.
Although, as usually, Ambassador Bartuska's comments would be worth translating in full. There are two comments that deserve translation for the non Czech reader above all other:
The first one is regarding the Nuclear Energy in Europe:
Original:
"[Jaderné] fórum připomíná takovou schůzku lidí, kteří chtějí prosadit legalizaci marihuany. Půlka z nich už tak potají pokuřuje na záchodě a bojí se to říct na veřejnosti."
My translation: "[Nuclear] forum reminds me of a gathering of people, that would like to legalize marijuana. Half of them smokes in private in the bathroom and is afraid to say that in public."
The second one concerns the problem of energy policy in Europe:
Original: “Evropa potřebuje týdenní blackout. Ne pětihodinový, týdenní. Aby to maso pochodovalo z mrazáku. Protože týdenní výpadek proudu vám maže civilizaci”
My translation:
“Europe needs a week-long blackout. Not five-hour, a week-long. So that the meat would walk out of the freezer. Because week-long blackout starts to erase civilization”
Further comments are not necessary.
If you'd like to read more, check out my presentation at Prague Security Studies' Summer School in Telč, and especially slides 35 and 37, but the included videos on slides 30-32 might be instructive as well.
Greskovits' speech at Kornai's book launch
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.
Read more on Greskovits' speech at Kornai's book launch
