Development and Underdevelopment in the History of Economic Thought

Kornai and the Austrians

Gabriel Amadeus, La Rochelle Business School

Kornai read most of the work by Austrian economists in the mid-60s and highlights the high impact of Hayek’s work on his thinking. This paper studies to which extent Kornai’s theoretical concepts are connected to the thinkers of the Austrian tradition and go beyond their intellectual achievements. Kornai’s refinements of the shortage economy and soft budget constraints provide essential arguments for a theory of institutions under state ownership. Austrian ideas, except for Hayek, are slightly overlooked in his writings, but the same applies to Kornai’s work in current Austrian literature. This paper demonstrates how the Austrian School of Economics could benefit from integrating Kornai’s work in their analysis to create a more thorough theoretical framework for the study of institutions.

Area:

Keywords: János Kornai, Austrian School of Economics