Photo/Illutration Janos Kornai, with an ink and wash painting he bought in Beijing in the background, poses in the study of his home along the Danube in Budapest on March 6, 2014. (Photo by Szilard Voros)

Janos Kornai, a Hungarian economist who provided the theoretical foundation for bringing about an end to the Cold War, is dead at the age of 93. 

Among his noted works, “Anti-Equilibrium” released in 1971 and “Economics of Shortage” in 1980 drew so much attention that intellectuals in the Soviet Union and Eastern European bloc struggling financially under the socialist system asked one another whether they read any of Kornai’s titles during the East-West standoff.

Kornai’s central point about a planned economy having structural flaws served as the driving force for change that saw the Berlin Wall torn down and the Soviet Union disintegrate.

The concept of “soft budget constraint” used by Kornai to explain fundamental problems with socialist economies is still used among academics today.

Kornai argued that state-run companies tend to be erratic and reckless in the way they do business because they know they can continue their operations even when alarm bells are ringing over ballooning spending, losses and other market signals.

The concept proved helpful in analyzing Japan’s financial crisis triggered by the Finance Ministry’s so-called convoy system, under which extraordinary steps were taken to protect weak businesses from collapse.

Kornali was born into a Jewish family in 1928 in Budapest. His father perished in the Holocaust after being transported by the Nazis from Hungary to the Auschwitz concentration camp in occupied Poland. The younger Kornai escaped from a labor camp to survive the war.

Following the end of World War II, Kornai worked as a journalist for the Communist Party’s flagship newspaper in Hungary. He later embarked on a career as a researcher. No sooner had he done so than the Hungarian Revolution of 1956 broke out.

The event rendered Kornai a critic of Marxism. He endured many hardships living under secret police surveillance but lived to see his homeland shift to democracy and a market economy.

In the 1980s, Kornai began teaching at Harvard University in the United States, while continuing to work in Hungary. Frequently traveling between East and West, Kornai studied society, politics and economy as a single concept without separating them.

When Kornai visited China at Beijing’s invitation in the mid-1980s, his economic theory had a huge impact on reformist bureaucrats and intellectuals pursuing the introduction of a market economy.

For that reason, Kornai never tried to hide his disappointment at the administration of President Xi Jinping, describing it as a monster that had become increasingly authoritarian.

Urging vigilance, Kornai noted to me in an interview that states act excessively in concentrating authority.

Tsuneo Morita, who lives in Budapest and has translated some of Kornai’s publications, described what Kornai was like.

“He (Kornai) disliked nationalism and kept a distance from the current authoritarian Hungarian administration headed by Viktor Orban,” Morita said.

Kornai died on Oct. 18. The cause of death was not disclosed. A sendoff ceremony was held by his relatives as well as scholars and musicians in the United States, China and elsewhere who were close to him.

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