“Comments on Professor J. Tinbergen's Article, Development Strategy and Welfare Economics“, Co-Existence, 1970, Vol. 7, No. 2, pp. 161-163.

Kornai János: “Comments on Professor J. Tinbergen's Article, Development Strategy and Welfare Economics“, Co-Existence, 1970, Vol. 7, No. 2, pp. 161-163.

Co-existence, Vol. 7, pp. 161-163. Pergamon Press, 1970. Printed in Great Britain. COMMENTS ON PROFESSOR J. TINBERGEN’S ARTICLE, “DEVELOPMENT STRATEGY AND WELFARE ECONOMICS”1 J. KORNAI Professor Tinbergen calls “World Problem Number One” the question of accelerating the development of low-income, economically underdeveloped countries. In his analysis he arrives at the thought that it is not enough to debate on what the economic-strategy of development should be like, which branches should grow quicker and which slower and what should be the rate of accumulation and consumption. It is of vital importance, what types of socio-economic institutions are working in the country and which are the characteristics of the economic system. The economists should not confine themselves to recommending their own, favoured economic system and the institutions of their own country to the third world, but should analyse more profoundly the advantages and disadvantages of the different social orders, the possibilities of realizing their combinations. My remarks refer to these important thoughts. And I would deal with the question not only in relation to the under-developed countries (though this is in itself an important problem) but in a more general sense. I think it the gravest, most distressing debt of our science to be so far behind in the comparative study of social orders. The picture our science shows us is rather distressing. The average economist, trained in the Western school, is accustomed to think but little about the system of the institutions of the “market economy”, he takes them simply as one of the “data” of the economic problems. It is enough of a problem to find the optimal resource allocation, the balance between production and consumption, as well as between demand and supply. It is with full right that Professor Tinbergen criticizes this narrow interpretation of the “welfare economics”. From this point of view it is worth having a look at the university textbooks which form the ideas of the young economists. Let us take for example the most widely used book, Samuelson’s famous Economics, published in a million copies. The title of the book does not refer to any specialization, delimitation, so the student may expect a description of the general theory of economics in the modern age, or at least of its popular outlines. Instead of this, the book offers not much more than a description of the system ruling in the United States; we can say it considers this system as the “normal” state of economy. Socialism is no more than an aberration, a distortion, a degeneration—it is worth mentioning only to point out that sooner or later the socialist economy will be forced also to adopt the “normal” forms of market calculation. Of the several hundred pages in this book only a few are dedicated to the socialist countries and to the low-income, economically under-developed systems of Africa, Asia and Latin-America, though more than two-thirds of the world population live in these countries. 1 Article published in Co-Existence Vol. 6, No. 2.