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In these two thoughtful essays, the very nature of capitalism is drawn out and exposed for examination and critique through its contrast with socialism. János Kornai, having both lived in and studied the socialist political and economic system, is in the unique position to compare these disparate economic systems. His first book, Overcentralization in Economic Administration, was the first critical analysis of the communist system written behind the Iron Curtain. Now, in Dynamism, Rivalry, and the Surplus Economy, Kornai has turned his attention to the opposing economic system in an effort to explain what makes capitalism successful and through that, what hampers the progress of socialism.

This book argues that the two systems bring about opposing patterns of supply and demand in the labor and goods markets. Socialism is defined by a shortage of goods and labor and an excess of demand. Capitalism, on the other hand, is an economy of surplus—a chronic excess of supply of goods and labor. Kornai responds to common criticisms of the capitalist system, explaining why full employment is still impossible even when with an abundance of goods and why it is not a fatal disorder of the system that resources are not fully utilized. On the latter point, Kornai claims that the underutilization of resources is, in fact, capitalism’s biggest merit. This environment breeds rivalry among producers, which in turn encourages innovation. Whereas socialism is slothful and imitative, capitalism is dynamic and progressive.




Dynamism, Rivalry and the Surplus Economy:

Two Essays on the Nature of Capitalism

Oxford: Oxford University Press

Translated by Brian McLean


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