Shortage Economy Research Articles

Homo Economicus in the Shortage Economy

Abstract Rational agents react to incentives in the market economy as well as in the centrally planned economy. Economic laws are persistent regardless of the economic system. The legislative system changes the outcome of the game between economic agents and managers. The aim of this paper is to show how rational agents reacted to legislative incentives in the Soviet-type economy in Czechoslovakia in the 1970s and 1980s, that is, how they reacted to the general shortage in the centrally planned economy. Based on the original survey among former managers as well as on the legislative sources from the 1970s and 1980s, a taxonomy was made of economic reactions to the shortage economy. This survey was possibly the last chance to map the experiences of socialist managers who tried to run companies in the centrally planned economy. We distinguish plan manipulation in order to ensure payment bonuses; bribery in order to obtain short-supplied inputs and the creation of reserves for the purpose of fulfilling the plan. It was shown that, if the rational agent wanted to obey the higher law, he was forced to ignore lower legislation.

Walking into Democratic Citizenship: Anti-Corruption Protests in Romania’s Capital

Walking into Democratic Citizenship: Anti-Corruption Protests in Romania’s Capital

Assembling lines: queue management and the production of market economy in post-socialist services

ABSTRACT‘Time priority’ by queuing is the epitome of market fairness in stock exchanges, while queuing also symbolizes the shortage economy of state-socialism. How are mundane queues made to constitute markets in settings where they performed anti-markets? The paper looks at this problem through ethnomethodology, which sees queuing as the prime example of how social-moral order is produced by participants of situations. Queues appear out of thin air, and can be analyzed as a ‘designed enterprise’ of small utterances and bodily gestures, accomplishing ordinariness. The paper rethinks how this theoretical approach can gauge the properties of ‘invisible lines’ in automated queues, and broadens its scope by framing queuers as objects of organizational control, and queues as not purely social but socio-technical accomplishments. Based on the observation of a digital waiting system in Hungarian banking, the paper shows how automated queue management changes the temporality and accountability between individuals and organizations, and reorders post-socialist banking as distinctly market-based service. Personal-physical lines are replaced with material ‘governance pairs’, which not only assess but rather format customers’ financial needs. Market economy, as produced in mundane automation ties together an obscure order for service customers with total accountability for bank employees’ performance.

Kornai: Shortage versus surplus economies

The economics of institutions and comparative systems owes an enormous debt to János Kornai. This was well exemplified by Kornai (2014a), offering a synthetic characterization of socialism and capitalism, respectively, as shortage and surplus economies. I was very fortunate, over the last fifty years, to have had many opportunities to meet him and to talk to him, and to discuss these issues directly with him. János can be very persuasive, and over the years I have somewhat converged towards his views, but in this essay, I am going to rehearse one residual major disagreement on the shortage economy, and three reservations on capitalism as the surplus economy which, after discovering from talking to him that he was in basic sympathy with them, I have downgraded to qualifications.

Revolutions and evolutions in Russia: In search of a solution to the path dependence problem

Abstract Russian history demonstrates its propensity to “revolving motions,” particularly in regard to the institutions of serfdom and autocracy, thus illustrating the existence of path dependence. Over time, Russia attempted to leave the inefficient development trajectory through two alternative modalities: revolution and evolution. However, the goals of revolutions are typically specific. As such, the primary vector of transition (after the revolutions of 1991 and 1993) was directed at overcoming the shortage economy and moving towards a consumer society, rather than at building a market economy and democratic society. In Russia, the social contract concept evolved since 2000, and included a sequence of three different formulations: “taxes in exchange for order” were announced, “loyalty in exchange for stability” de facto implemented, and “constrained consumption in exchange for belonging to the superpower” emerged after 2014. I thus argue that Russia's development strongly requires a long-term strategy focus on changing informal institutions and the social contract, so that institutional reforms and new incentives can be put in place.

Kornai’s Limitation Rules

János Kornai in [1] has shown why a socialistic economy should be an economy of shortage i.e. an economy where the supply does not keep up with the demand, and in [3] he has shown why a capitalistic economy should be a surplus economy i.e. an economy where the demand does not keep up with the supply. Unfortunately it is not quite clear what do the words socialism and capitalism mean, so instead of them two other theoretical types of polity are introduced. Next we apply the Gödel limitation theorem to the introduced model of polity and so we obtain a dichotomic partition of all economies into economies of shortage and surplus economies. In the second part of the article we apply the notions of shortage and surplus to a classification of state systems of law.

Demand Side Abundance

In this essay, the discussion proceeds from the public image of the functionary at the end of the Rákosi era, through the Kádárist policies of ‘new sobriety’ disciplining the functionary in order not to irritate and provoke the rest of society, to the new contrat sociale established by the mid-1960s in which the party-state apparatus class and the commoners join one another in pursuing shared (consumerist) ideas of good life and happiness, within the constraints and coping with the conditions of demand side abundance (the tension between consumerist aspirations, desires and an economy of sustained shortages). The article draws on archival sources as well as texts from contemporary cabarets and an analysis of the 1964 feature film, Don’t Waste the Gas!, and its manuscript.

Shortage Economy: Production, Distribution and Consumption of Clothes in Socialist Yugoslavia in the Time of Command Economy (1945 – 1951)

Starting from the concept of the “social life of things” proposed by Arjun Appadurai, the paper considers the “journey” of clothing items from production, through distribution to consumption in post-war Yugoslavia. Even though the rationing of clothing and footwear was caused by the destruction of war and subsequent insufficient production of these items due to the official favoring of heavy industry, the major part of consumers’ frustration was the result of structural characteristics of the command economy. Through comparison with the literature on the economy of scarcity in other socialist countries, we will strive to uncover the anomalies of the production and distribution systems, contradictions between the proclaimed ideological goals and everyday practices, the (non)hidden discontent of the citizens caused by the constant search for clothes that fit, as well as the importance of social bonds for the process of purchasing. The sources of data on bureaucratic planning and specific imbalances built into the system will be news articles and caricatures.

Delicacies for a Privileged Class in a Risk Society: The Chinese Communist Party’s Special Supplies Food System

This paper discusses the history and operation of the tegong (special supplies) system for foodstuffs operated by the Chinese Communist Party (CCP). The system has been in existence since the Yan’an period and is still being practiced today. It was originally introduced to deal with China’s shortage economy during the era of Mao Zedong. Nowadays, the issue of food safety has made China a risk society, making it necessary for the CCP to provide its privileged class with food that is safe for consumption. We distinguish two categories of food supplies in terms of their operation: dedicated supplies for special needs and routine tegong. In addition, we believe that an alliance relationship between the government and food enterprises has emerged within the tegong system, with government officials and businesses colluding to their mutual benefit and profit. The paper concludes that the continuation of the tegong system signifies the persistence of a high degree of social inequality in modern-day China.

From <i>Anti-equilibrium</i> to the <i>Socialist System</i> and beyond

This essay attempts to understand János Kornai’s works from a political economy perspective. It argues that Kornai has significantly contributed to the formation of a new paradigm of political economy. The main endeavor of Kornai has been the combination of analytical concepts of economics with the empirical description of real economies. After a certain period of theoretical experimentation János Kornai formulated his research program that can be called the shortage economy explanation of the socialist system. The Economics of Shortage and The Socialist System have created a new theoretical paradigm in a framework in which it has become possible to establish a connection between the analytical and empirical, universal and historical aspects of the theory studying the socialist system as a real economic entity. János Kornai has built his analysis of the socialist system on the primary role of politics in the creation of economic institutions. In his present work on capitalism he has extended this thesis to the capitalist system. This seems to be an important contribution of his to a new political economy paradigm that is just in the process of formation.

Of Economic Policy and Development: An Intellectual Journey of I.G. Patel

Ten years ago the late I.G. Patel opened his presentation to the Stanford University Conference with a citation from the Reserve Bank's Report on Currency and Finance thus: "India is no longer an economy of scarcity and shortages: food stocks and foreign exchange shortages and rationing of essential goods and materials are memories of the past. In the macroeconomic and financial spheres inflation has been contained, external debt indictors have improved, exchange rate is flexible and the country is free of financial repression.India has become much more integrated with the world economy".

Risk Aversion, Shortage Economy, and Gender Differences in Religious Activities in China

The vast majority of studies in the sociology of religion show that women are more religious than men. We test a rather controversial conclusion that these differences stem from gender differences in risk aversion. Utilizing Yang's shortage economy perspective on religion in China, we argue that risk is inherent in gray market religious activities. From the risk aversion perspective, we hypothesize that women should participate in gray market less than men. Using the 2007 Spiritual Life Survey, a study of 7,021 respondents in the People's Republic of China, we model gender differences in the number of reported gray market religious activities during the previous 12 months. Our analysis fails to find support for the risk aversion hypothesis. We find that women report significantly more gray market activities than men, even after controlling for a variety of theoretically important variables. Implications for theory and research are discussed.

Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?

China is on the eve of a demographic shift that will have profound consequences on its economic and social landscape. Within a few years the working age population will reach a historical peak, and then begin a precipitous decline. This fact, along with anecdotes of rapidly rising migrant wages and episodic labor shortages, has raised questions about whether China is poised to cross the Lewis Turning Point, a point at which it would move from a vast supply of low-cost workers to a labor shortage economy. Crossing this threshold will have far-reaching implications for both China and the rest of the world. This paper empirically assesses when the transition to a labor shortage economy is likely to occur. Our central result is that on current trends, the Lewis Turning Point will emerge between 2020 and 2025. Alternative scenarios-with higher fertility, greater labor participation rates, financial reform or higher productivity-may peripherally delay or accelerate the onset of the turning point, but demographics will be the dominant force driving the depletion of surplus labor.

Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?

China is on the eve of a demographic shift that will have profound consequences on its economic and social landscape. Within a few years the working age population will reach a historical peak, and then begin a precipitous decline. This fact, along with anecdotes of rapidly rising migrant wages and episodic labor shortages, has raised questions about whether China is poised to cross the Lewis Turning Point, a point at which it would move from a vast supply of low-cost workers to a labor shortage economy. Crossing this threshold will have far-reaching implications for both China and the rest of the world. This paper empirically assesses when the transition to a labor shortage economy is likely to occur. Our central result is that on current trends, the Lewis Turning Point will emerge between 2020 and 2025. Alternative scenarios—with higher fertility, greater labor participation rates, financial reform or higher productivity—may peripherally delay or accelerate the onset of the turning point, but demographics will be the dominant force driving the depletion of surplus labor.

The resonance and impact of Economics of Shortage

Since the first publication of Economics of Shortage in 1980, an entire economist generation has grown up, whose members are well-versed in numerous sub-themes of the economic sciences. They find their way around the most modern methodological schools, yet they know significantly less about the workings of the social systems. To the younger generations, the socialist system, whose heritage still lives with us and whose characteristic behavioural forms and attitudes have not yet disappeared at all from the economic practices of the post-socialist countries, seems like the distant past, just like the Turkish occupation or the Austro-Hungarian Monarchy.The target audience of Kalligram Publishing House is this generation, to the majority of whom János Kornai’s works will probably come as a revelation. The years of crisis — whose end is still far off — has made even those uncertain about the workings of economic systems, who have personal experiences of the decades of socialism. Therefore, it would be quite important for them to re-read Kornai’s works written during the socialist era in order to be able to grasp the workings of economic systems through the help of balanced and objective analyses. Moving beyond the momentary shocks and nostalgias, the older ones also have a great need to evaluate the roles of the market and the state in a bias-free manner resting on a solid theoretical foundation, to realistically see the mechanisms of shortage and surplus economies. This way it is perhaps possible to avoid “going down the same river twice”, which disappears somewhere underground and never reaches the sea.

Criticism as Crisis, or Why the Soviet Union Collapsed

Criticism as Crisis, or Why the Soviet Union Still Collapsed Mikhail Gorbachev's perestroika was the response to a crisis? Historians who believe in progress provided clear answers to this question: Soviet socialism was a promise aimed at eliminating all human suffering, fulfilling all material desires and making world history. However, because of the deficits of the Soviet shortage economy, this promise of salvation was neglected every day. Those who promise paradise on earth but only administer deficits lose their legitimacy, and consensus disintegrates. In the end, the Soviet Union experienced a deep crisis. But the contemporaries did not feel that way. And if people do not experience a crisis in their hearts and minds, there is no crisis. It is not so much the times that change but rather the circumstances and how they are perceived. The perestroika was not an expression of crisis. Rather, it triggered the crisis. What is currently taking place in authoritarian Russia and in most of the successor states of the former Soviet Union is only understandable if one considers it as a response to the crisis that was actually generated by the collapse of the Soviet Union.

Religion in China under Communism: A Shortage Economy Explanation

When a government imposes its own religion or ideology and suppresses its competitors, to what extent can it succeed? Throughout human history, many regimes have sought to establish a state religion and eradicate theircompetitors. In the recent past, the Soviet-blocgovernments tried to impose the Communist ideology on the people and suppress all religions. China went even further, experimenting with a ban on all religions for over a decade. Despite their best efforts, religion survived. The government has also failed to keep religion at a reduced level during the reform era. This article attempts to explain the failures of suppression from a political economy perspective. Religion can be studied as a subsystem of society similar to the economic subsystem. Like the material economy, the religious economy is driven by the interactions of demand, supply, and regulation. This economic approach has shed light on the dynamics of religious change in American and European societies. It has been applied to explain the religious situation in China as well. In the

Managing, Learning and Sending

This article investigates the material lives and journeys of eight women who migrated to Britain from Poland during the time of the socialist regime. Although the state created obstructions to emigration, it was viable for women with family overseas to travel to the West as visitors, sometimes turning temporary stays into permanent settlements through marriage. For others, westward travel was made possible by professional employment opportunities. These journeys of migration not only crossed political divides, but also forced a fundamental shift in the material lives of the migrants, transporting them from a shortage economy supported by black market activities to a relatively affluent consumer society. Based on in-depth interviews, this article considers three aspects of the telling of this change in these women's material lives: how they related their material experiences of socialist Poland; how they framed their encounters with their new consumer environment; and how they reconfigured their material relationships with those left behind.

BlatandGuanxi: Informal Practices in Russia and China

This paper compares informal practices used to obtain goods and services in short supply and to circumvent formal procedures in Russia and China, and assesses their changes and continuities during the market reforms. I divide my presentation into four parts. The first tackles similarities betweenblatandguanxiunder socialism: language games and idioms that referred to these practices; similar pressures of the shortage economy that forced individuals to satisfy their needs through informal exchanges; and the contradictory role of informal practices—they supported but also subverted the socialist systems. In the second part I shift my focus to the differences betweenblatandguanxithat stem from different cultural traditions in the two societies. These traditions determine the moral force of reciprocity, the degree of codification of informal practices, and their legitimacy. The third part illustrates differences in market reforms in China and in Russia. Finally, I compareblatandguanxipractices as responses to these reforms and discuss both intriguing similarities and significant differences in the new forms ofguanxiandblat. Thus, the post-Soviet reforms have changed informal practices so much thatblathas almost lost its relevance as a term that describes the corrupt use of personal networks in contemporary Russia. In contemporary Chinese society, by contrast,guanxihas deeper roots in kinship structures and traditions, and both the term andguanxipractices continue to be important.1The partial nature of reforms in China and the persistence of communist rule may account for some of this difference, but we must also consider a range of historical and cultural factors that shape and help reproduce informal practices.

Trapped in a Vicious Circle

Uzbekistan. Collins argues that neither of the two currently popular approaches to regime transition-identified as the preconditions and the transitions schools, respectively-is adequately equipped to explain regime dynamics in Central Asia. The preconditions school, represented by such authors as Barrington Moore (1966), has a hard time explaining the period of democratization in an economically, socially, and culturally unprepared Kyrgyzstan. By contrast, the transitions school, pioneered by Guillermo O'Donnell and Philippe Schmitter (1986), considers democratization possible in all countries in which the elites consciously renounce authoritarianism, most typically through an intraelite pact. Yet, Collins is critical of the applicability of this approach to Central Asia. Pacts, she argues, made between clan elites, are not a mode of transition to democracy, but an informal agreement that fosters the durability of the state, irrespective of the regime (p. 10). Collins states that three conditions present in Central Asia made the persistence of clans possible: late state formation, late formation of a national identity, and the absence of a developed market (which implies the presence of what Collins calls an economy of shortages in which clans thrive). In societies organized around the principle of clans, which are networks of individuals connected by a subjective understanding of kinship (p. 17), the power of elites is constrained by clan interests. As the case of Kyrgyzstan shows, even though a short-lived divergence of regime trajectories is possible in such societies, the eventual conformity of regime types can be explained by the predominance of clan politics over the formal regime structures. The regime collapse in Tajikistan-in the absence of a powersharing agreement among the various clans-likewise testifies to the significance of clan deals for regime durability. According to Collins, the contrasting trajectories in these cases make sense when one realizes that clan politics is devoid of ideology. Thus, interclan pacts do not presuppose a certain type of political regime, only its durability. Clans are interested in their own self-preservation and prosperity. Clan members in influential positions negatively affect state development by patronizing and promoting their kin regardless of merit, by stripping state assets at a fast pace because of the