Shortage Economy Research Articles

The connection between growth imperative of monetary production economies, the realization problem and Kornai's surplus economy

AbstractKornai challenged not only the dominant economic views of the socialist system, but also those of market economies. The former brought him fame, and the latter remained, so to speak, his scientific testament. He studied the systemic properties of different economic systems through the analytical grid of the sign of aggregate excess supply, which defined three categories: shortage economies, equilibrium economies and surplus economies. In this paper, we show that business plans postulated with the aim of realizing strictly positive net retained profits in nominal terms exclude equilibrium economies; these business plans imply a surplus economy. This definition of the business plan makes it possible to combine seemingly disparate results from different parts of the economic literature. An economy in which business plans are the rule and no economic agent can run a permanent negative budget is a surplus economy, which manifests itself in the phenomena of both growth imperative and realization problem. In short, all these phenomena are the manifestations of the same essence: the working of the business plans.

János Kornai on planning and disequilibrium: Theoretical dilemmas and solutions

AbstractJános Kornai has achieved a wide-scope multifaceted theoretical analysis moving from Marx to Walras-Lange, then to post-Keynesian disequilibrium economics, and eventually, to Hayek and economic institutionalism. Such a travel is not without meeting dilemmas that Kornai has had to struggle with and opt to resolve them in some way. Such process is illustrated first with a planner's dilemma. On the one hand, Kornai has elaborated on – together with Tamás Lipták – a mathematically ‘super’ solution to finding the optimal plan through a two-level planning procedure. But once implemented the latter has appeared to be too slow, and Kornai has rejected Lange's ideas for Hayek's criticism against central planning. A second dilemma is about how to analyse a centrally-planned shortage (excess demand) economy in which those industries privileged in the planners' pecking order priorities were producing an excess supply of (useless) goods. Kornai did not find a solution in the current disequilibrium economics but, instead, in a ‘lax’ communist bureaucracy generating a soft budget constraint. The third dilemma is that Kornai's views about disequilibria have not converged with the Post-Keynesian disequilibrium models. The latter were unable to conceive a simultaneous excess demand and excess supply in a same market, due to their so-called shorter-side rule. Instead, Kornai has found a solution that fits with theorising the observed micro (or even infra-micro) disequilibria in a Debreu's book, some years after having published a hard criticism of neo-classical microeconomics. A final question is raised: is Kornai's theory a decisive contribution to the analysis of comparative economic systems – that no one denies – or has he added some value to a more general theory of economic disequilibrium?

The place of dichotomous structures in the thought system of János Kornai

AbstractThe most significant concept of János Kornai's oeuvre is the shortage economy theory as it was presented in Anti-equilibrium more than fifty years ago. According to this, modern economies are never in equilibrium. On the markets of goods and services, the aggregate demand is either significantly higher or significantly lower than the aggregate supply. This dichotomous model is discussed in the first part of the paper.After the collapse of the communist system in 1989/90, shortages disappeared everywhere unexpectedly quickly. But it was also an unexpected development that the institutions of liberal democracy have not developed in several countries and/or collapsed after a short period. Regarding Hungary, Kornai issued an alarm signal at the turn of 2010/2011. He was the first who said that the Orbán regime had turned the country into an autocracy in barely a year. The second part of the paper examines whether Kornai's assertion, shared by many transition-economy specialist, that there are only two political systems (democracies and autocracies) is adequate for the entire range of post-socialist countries. The author's answer to this question is negative.

The Rise of Status Consumption in the Estonian SSR: Socialist “Good Taste” and Western Influence

Abstract The article focuses on the role of Western goods and cultural influences in the Estonian SSR during late socialism, aiming to analyze “conspicuous” consumption practices, behaviors, and attitudes. Situated in the context of Soviet modernization and the economy of shortages, the article moves beyond the dominant discourse of scarcity and contributes to a growing body of literature that has uncovered the Soviet consumer as a modern shopper with distinctive tastes, demands, and sensibilities that were formed at the interplay between the socialist “good taste” and the imagined, yet incredibly tangible manifestations of Western material objects. The article argues that younger, urban, and largely female consumers in Soviet Estonia were susceptible to the enticement of materiality and status-oriented consumption that could be explained by the rise of “new” Soviet consumer’s consciousness, Western-imitating do-it-yourself practices, and acquisition of Western goods that were regarded as a sign of knowledge, prestige, and social standing.

Fragmented but Enduring Authoritarianism: Supply-side Reform and Subnational Entrepreneurialism in China's Rail Delivery Services

AbstractChina's economic reform since 1978 has turned a shortage economy into an economy of overcapacity. To curb the capacity surplus, the government put forward a sweeping proposal of “supply-side structural reform,” although without any specifics of implementation. This vagueness has resulted in fragmentation between China's central leadership and local agents. Based on two rail delivery services – China Railway Express Delivery (Zhongtie kuaiyun 中铁快运, CRED) and China–Europe Rail Freight (Zhong–Ou banlie 中欧班列, CERF) – this article argues that fragmentation in authority has allowed and even encouraged local actors to carve profit-making opportunities out of the excess capacities (including idle assets). In so doing, they give substance to what would otherwise be hollow policy rhetoric. Such subnational entrepreneurialism and the resulting tacit dynamics between state and local-level actors add another layer to the fine-grained theorization of fragmented authoritarianism in China: despite fragmentation, China's authoritarian governance endures, but with outcomes now shaped by a cyclical process of decentralization and re-centralization as well as continuous central–local interplay.

Language Management Strategies and Slovenian SMEs: An Update on Recent Developments

In line with numerous studies, export success of small and medium-sized enterprises (SMEs) could be considerably improved were companies aware of the importance of foreign language skills among their employees. In other words, many business opportunities are lost within the European Union because of the lack of language skills. Many authors report that adopting a language management strategy is linked to a significant increase in companies' export sales. The ELAN (Effects on the European Economy of Shortages of Foreign Language Skills in Enterprise) findings should also be considered because of the relatively high importance of SMEs in providing employment. This article investigates, by means of a questionnaire sent to 1499 Slovenian exporting SMEs from various industries, how aware these companies are of the ELAN findings, and which language strategies they have implemented in their business operations. The findings of our 2021 study revealed that Slovenian exporting SMEs are slowly becoming more aware of the benefits of language management strategies, but that some improvements are nevertheless still possible.

The decline of US manufacturing productivity between 1941 and 1948

AbstractThe view that war benefits potential output has been influential in treatments of US mobilization for the Second World War, where it has been largely premised on the benefits of learning by doing in producing military durables. If the thesis that war benefits aggregate supply is correct, it is indeed within manufacturing that we should most likely see its effects. Total factor productivity within the sector in fact fell at a rate of −1.4 per cent per year between 1941 and 1948, −3.7 per cent a year between 1941 and 1944, and −5.1 per cent a year between 1941 and 1945. The emphasis on learning by doing has obscured the negative effects of the sudden, radical, and temporary changes in the product mix, the behavioural pathologies accompanying the transition to a shortage economy, and the resource shocks inflicted on the country by the Japanese and Germans. From a long‐run perspective, the war can be seen, ironically, as the beginning of the end of US world economic dominance in manufacturing.

The Parish Choir Movement and Generational Festivals in Romania’s Socialist Period: New Community Festivities in Transylvania’s Gheorgheni (Gyergyó) Region

Among the post-1945 East European socialist regimes, Romania and Poland were the only countries where the Catholic Church—despite government interventions, controls, and bans—managed to play a significant social and political role in community life. This case study provides an ethnographic description of the parish choir movement and graduating class reunions, called “generational festivals” in Hungarian, in the Gheorgheni (Hu: Gyergyó) region in the 1970s and 1980s. The gatherings will be analyzed in the context of everyday life, the socialist system’s distinctive shortage economy, and official limits on religious activity that characterized the era. I will first describe the world of parish choir festivals, including the outside (official government) pressures that shaped the festivals by forcing organizers to make accommodations. In my descriptions of the choir festivals, I highlight ways in which participants exploited opportunities to engage in Catholic rituals as “informal” practices despite the government’s official ban on public religious ceremonies. I will also reconstruct and describe the most important features of these socialist-era festivals.

Legitimate Transgression: Home Video Culture and Screen Translation(s) in the Late Soviet Union

ABSTRACT: The arrival of consumer-grade video had a dramatic impact on the 1980s Soviet Union: the unregulated cross-border traffic in the new medium and foreign, primarily Western, screen entertainment erupted; the state monopoly over circulation and exhibition of moving image media collapsed; and the alternative, allegedly aberrant and debased, transcultural viewing habits and tastes of the Soviet audiences surfaced. In examining these transgressive effects of home video, this article simultaneously traces the factors, ranging from socialist cultural doctrines to the conditions of shortage economies and distinctive screen translation practices, that contributed to legitimation of emerging video cultures within the Soviet project.

The shortage economy and its implications for supply chain and operations management

Supply chain (SC) and operations management has been developed for decades under the fundamental assumption of continuous availability (with some temporary fluctuations and disruptions) of resources to satisfy demand. Under extreme shocks and long-lasting disruptions, SCs and operations face long-term shortages of components, energy, capital, and labour, as well as rapidly rising prices. These long-term resource shortages and risks of hyper-inflation pose novel and unexpected challenges potentially leading to global ripple effects. In this conceptual paper, we first analyse and categorise the available literature on SC and operations management with resource shortages. We then systemise some managerial implications of resource shortages and rising inflation, conceptualising some potential research directions which appeared or may appear in the settings of shortage economy. We conclude that the shortage economy provides a distinct and specific context which goes beyond the conventional problems under constrained or disrupted resources – i.e. the long-term resource shortages with simultaneous disruptions in labour, material, energy, and capital availability. This paper could be useful for researchers and practitioners alike to systemise potential impacts of a shortage economy on SCs and operations, and to navigate adaptation and recovery processes in a structured way to help society cope with deep uncertainties.

Food and Revolution: Fighting Hunger in Nicaragua, 1960–1993

Food and Revolution: Fighting Hunger in Nicaragua, 1960–1993

Professional and ethical dilemmas of economists (In memoriam János Kornai, 1928–2021)

AbstractJános Kornai, the most distinguished Hungarian economist passed away on 18 October 2021. This short essay, written by a long-time disciple of Kornai tries to prioritize his scientific achievements spreading over six decades. The conclusion is that Kornai's most important contribution to the principles of economics was already presented in his 1971 book, entitled Anti-equilibrium, and without this book his most respected later works and his other original concepts, like the soft budget constraint or the shortage economy, cannot be understood.

Ekonomia niedoboru na nieludzkiej ziemi. O wspomnieniach polskich zesłańców z lat czterdziestych XX wieku do Kazachstanu

Artykuł omawia problemy szczególnego typu wymiany ekonomicznej, które pojawiły się w sowieckim Kazachstanie lat czterdziestych dwudziestego wieku – ukazuje różne aspekty tej wymiany, jej podstawy i wartości, jej jednostki i obiegi. Problematyka ta ukazana zostaje w swym wycinku, na przykładzie wspomnień Polaków przymusowo deportowanych do Kazachstanu w latach 1939–1941. Wprowadzenie ustroju totalitarnego – w jego wyjątkowej, brutalnej, stalinowskiej postaci – na terenach zamieszkiwanych przez nomadycznych Kazachów, których wymieszano z falami przymusowych przesiedleńców, wywołało bezprecedensową dysfunkcję życia społecznego, której ofiarą padli wszyscy uczestnicy wymiany ekonomicznej, w tym zesłani tam Polacy. By opisać tę sytuację, korzystam z dwóch dopełniających się konstrukcji teoretycznych: rozważań Janosa Kornaia (ekonomia niedoboru), a także Pierre’a Bourdieu (kapitały kulturowy). Tekst podejmuje rozważania nad pozapieniężnymi i niemonetarnymi środkami płatniczymi na „nieludzkiej ziemi”.

Monotonous motorscapes: Uzbekistan’s car industry and the consolidation of a post-socialist shortage economy

ABSTRACT In Uzbekistan, the pure monopoly enjoyed by the state-owned car manufacturer UzAvtosanoat has resulted in domestic car shortages and long waiting periods. This article examines the politico-economic mechanisms behind these shortages, as well as the ways in which the latter affect – and are curtailed by – aspirant car owners. It argues that shortages are a consequence of the Karimov-era policy of ‘self-reliance’ and in particular of the goal of attaining a positive trade balance by means of export prioritization and import substitution. The article juxtaposes the workings of Uzbekistan’s car industry and market with the Soviet era and suggests that they lead to the consolidation of a post-socialist shortage economy. Inevitably, similarly to their Soviet-era counterparts, local consumers face often insurmountable obstacles in their attempts to purchase a car and are exposed to access inequalities, debt, corruption, speculation, and the rent-seeking practices of local patronage networks.

The Agricultural Reform of 1981 and the Competition for Resources Between Peasant Farms and State-Owned Farms in the 1980s

Abstract In the economy of the Polish People’s Republic in the field of agriculture, the key resources which were a subject of competition included: land; production assets (machines, devices, tools for agricultural production, fertilizers, plant protection chemicals) and people necessary to work on farms and for farms. The command economy of the times of the People’s Republic of Poland was an example of an economy of permanent shortages, which increased in times of crises of the entire system. The collapse of 1979-1982 was such a socio-economic crisis. The Trade Union of Independent Farmers’ “Solidarity”, which was part of the great social protest movement in 1980-1981, forced a change in the communist regime’s approach to the peasantry and, together with other pressure groups, contributed to the implementation of the agricultural reform covering the entire sphere of agriculture and not only its state farm segment. The reform of 1981, initiated by the Rzeszów-Ustrzyki agreements, gradually changed the living situation of farmers and, above all, led to changes in the profitability of agricultural production and the legalization of trade in meat products at marketplaces as well as the release of prices for food products in 1989. Peasant farms won the competition with state-owned farms for capital resources – new production factors, and they expanded their land acreage (land factor). Farmers, however, were losing competition for workers in confrontation with industry and services in cities and state-owned farms, where farm workers could count on very generous social benefits.

Task content routinisation, technological change and labour turnover: Evidence from China

This article addresses the unresolved question of whether recent technological change causes job instability in a non-western context. China is now the world’s largest user of industrial robots. A Lewis turning point has been predicted, involving a transition from a plentiful supply of rural low-cost workers to a labour shortage economy in which rising labour costs drive labour-technology substitution. The routine-biased technological change hypothesis suggests that technology-induced routinisation in job task content has a profound impact on employment structure. This study captures the extent of routinisation of jobs in the transitional context of China and examines the incidence and impact of routinisation on labour turnover in the labour market. Using rotating panel data from the China Labour-force Dynamics Survey 2012, 2014 and 2016, this study, based on individual information with regard to flexibility in work schedules and degree of autonomy in workload and task content on the job, follows a recently developed measure to construct a routine intensity index and indicates a division into three routine intensity groups. The empirical findings show that the probability of job mobility is significantly increased with the magnitude of routine task intensity, suggesting that the process of technology-induced routinisation is strongly associated with labour turnover.JEL Codes: J63, J20

Management of water resources sector to face climatic shocks in Algieria: A dynamic CGE model analysis

Abstract Climate change is a major global issue, which is becoming increasingly important on the international scene. As it has a direct impact on ecosystems and societies. Water is at the heart of these changes. The aim of this article was to capture all the microeconomic and macroeconomic effects of resource availability, and to propose a sequential dynamic computable general equilibrium (CGE) model that takes into account long-term changes in the availability of the primary resource (water supply) with regard to population growth (demand). The results show that the very negative effects on the economy of water shortages could be counteracted by the introduction of a marginal cost demand management policy. This makes it possible to better manage the scarcity of this resource. In fact, the model shows that when Algeria is facing water deficits, the marginal cost tariff policy reverses the trends of an economy that would maintain a tariff policy at average cost. Total investment increases, and total welfare deteriorates less. The drop in the price of water (input and final good), generated by the transition from an average cost pricing to a marginal cost pricing, generates an expansion of many sectors, and stimulates economic activity which reduces the rate of unemployment.

Gaming the Iron Curtain: How Teenagers and Amateurs in Communist Czechoslovakia Claimed the Medium of Computer Games by Jaroslav Švelch

Reviewed by: Gaming the Iron Curtain: How Teenagers and Amateurs in Communist Czechoslovakia Claimed the Medium of Computer Games by Jaroslav Švelch Elisabeth van Meer (bio) Gaming the Iron Curtain: How Teenagers and Amateurs in Communist Czechoslovakia Claimed the Medium of Computer Games. By Jaroslav Švelch. Cambridge, MA: MIT Press, 2018. Pp. 400. Hardcover $45. The first monograph to appear in MIT's Game Histories series, Gaming the Iron Curtain offers an engaging, well-researched, and clearly organized social history of DIY gaming culture in 1980s Communist Czechoslovakia. It places the amateurs and teenagers who imported, "cracked," played, and circulated Czechoslovakia's gaming technologies deservedly front and center. Their inventions did not achieve the commercial success of Soviet-invented Tetris, and their pioneering political games did not end the Communist regime in 1989. Instead, Czechoslovak youths turned games into their medium of expression, carving out their own digital spaces despite the restrictions that life behind the Iron Curtain entailed. By analyzing games as continuous bricolage, Švelch greatly adds to our understanding of technological development, youthful agency, and "everyday life" during the final decade of state socialism. Gaming the Iron Curtain underscores that Communist power was not "monolith[ic]" but operated through "numerous rules" that gamers creatively "circumvented or subverted" (p. xxxiv). The book's first three chapters detail the tactics involved in assembling hardware in a "shortage economy." For although Czechoslovakia's authorities endorsed computing for productivity and education purposes, their production plan focused on mainframes and minis. The Federal Ministry of Electrotechnical Industry tried to game the lack of micros themselves by calling for "bottom-up" initiatives (p. 22). This resulted, by the mid-1980s, in the PMD 85, the IQ 151, and the Ondra (all using COMECON components), while agricultural cooperative Didaktik even managed to develop a home computer for retail with imported British ULA chips. Combined [End Page 702] domestic output, however, remained small. The Iron Curtain was only successfully gamed by committed enthusiasts who "hunted" down their hardware through individual Western imports (p. 38), preferring the British Sinclair ZX Spectrum—not the Atari—for its affordability and compatibility with local electronics. Hobbyists also gamed their own accessories (with DIY mice, joysticks, and keyboards) and repurposed furniture in cramped family apartments. All these individual acts of bricolage, Švelch stresses, were ultimately anchored in hundreds of computer clubs, embedded in state-sponsored youth and paramilitary organizations, across Czechoslovakia. By accepting official patronage, youths gamed access to local buildings where they could use computers, share technical know-how, exchange games, and communicate with peers, all largely uncensored. Czechoslovakia's gaming culture, including its national discourse on gaming, its informal distribution networks, its hobbyist and homebrew productions, and their expressive significance, is analyzed in the final four chapters. Drawing on interviews, club publications, and an impressive range of gaming technologies, Švelch finds that for many Czechoslovaks, "playing with the game was [as] rewarding as playing the game" itself (p. 118). This pro-hacking attitude was encouraged by hobbyists in charge of computer clubs but also necessitated by the scarcity of games. Czechoslovak authorities, moreover, did not consider games part of culture or politics (unlike Western music or dissident literature). They saw little reason (and lacked the knowledge) to stop youths from "poking," "cracking," "cloning," or "converting" Western originals. While engaged in such distribution bricolage, Švelch argues, youths learned to code and, by the mid-1980s, produced over two hundred originals for their peers. Text adventures (textovkas) became the hallmark of Czechoslovak gaming; amateurs employed the medium to comment on unofficial popular culture, on their local surroundings (e.g., turning one's mundane socialist dwelling into a text adventure); even political protests were incorporated into games just days from their occurrence. ("Text adventures" are a subset of games, dating back to the 1976 U.S. text-based game Adventure, in which the player controls the protagonist by typing in "verb+object" style commands [p. 175]. The Czech term textovka refers to text-based games in a broader sense, including "text-based management and strategy titles" and "hacking games" [p. 178].) In sum, Gaming the Iron Curtain offers a fascinating read for students and scholars of STS, history, and media studies alike...

Kornai’s Overcentralization and naïve empiricism

This paper addresses Janos Kornai’s early work on the socialist economy as summarized in his first book, Overcentralization in Economic Administration. In this context, I discuss the parallel research of the 1950s by American scholars, such as Joseph Berliner, David Granick, Gregory Grossman and Eugene Zaleski, who used similar methods and arrived at similar conclusions. Kornai found little evidence of comprehensive planning. Instead, he determined that the planning system consisted of quarterly gross output orders that could readily be manipulated by managers and had to be fulfilled at any price. Kornai’s Overcentralization already contained the seeds of Kornai’s later key findings of the dysfunctionalities of socialist planning; namely, soft budget constraints and the shortage economy. Kornai’s most important finding was largely overlooked throughout the socialist world—that the planned economy could not be reformed by partial measures.

“Bricolage” as a Strategy of Pursuing Beauty in the Social Reality of the Polish People’s Republic

In 2013, the authors participated in the international research grant titled “Towards the Comparative Sociology of Beauty: The Transnational Modelling Industry and the Social Shaping of Beauty Standards in Six European Countries”, which was carried out in Amsterdam, at the Institute for Social Science of Research (University of Amsterdam), under the direction of Professor Giselinde Kuipers. Some of the respondents in Poland were women, whose early adulthood took place in the times of the Polish People’s Republic and the subsequent regime change. After the research had been concluded, the authors decided to devote more attention to them, and conducted additional interviews with women over fifty, with tertiary education, living in large or medium Polish cities. In this article, strategies of pursuing beauty in the context of the shortage economy of the Polish People’s Republic are presented. Based on in-depth interviews, the analysis is framed in terms of bricolage, a term coined by Claude Lévi-Strauss, as well as of homo eligens and homo egens, which are concepts developed by Polish sociologists. The aim of such applications is to systematise studieson lifestyles.