Kornai János: Over-centralization of economic management: Critical analysis, based on research within the light industry. Brief summary of the work. In English. Mimeograph. Budapest: Insitute of Economics, Hungarian Academy of Sciences, 1957.
Preface This paper le a product of Investigations made by the Institute of National Economy of the Hungarian Academy of Sciences. Ite topic became actual by the fact that Independent Initiative by leaders and workers of enterprises and local authorities was felt to be hindered more end more in theee last years in Hungary by over-centralisation of direction and by the bureaucracy by which it was accompanied. The first step to be taken for thie investigation was description and analysis of given methods of economic management. One feels induced to think this could be found in dozens of books but this is not so. There are of course books describing methods used in Hungary for leadk^ the national economy, for planning, the system of wages and prices etc. But all theee have a common feature* they do not tell how this economic mechanism really doee work but how it would work if it were as the authors wish it to be. These booke make tEe impression on the readers as though in this planned economy the most perfect harmony ruled, as though in thie machinery all gears fitted most smoothly into each other. Just therefore it mennt a new task which till now had not been carried out in Hungarian economic literature, to give a coherent description of how the economic mechanism doee work in reality. Naturally, this paper could solve but a part of this problem. It doee not try to give a full perspective of all advantages and disadvantages of actual methods for economic direction, it has no intention to set the balance of results and mistakes. This investigation eet deliberately the purpose to show contradictions and insuffle le noise of the economic mechanism In vigour till now. This paper investigates its problems taglng its examples from the light industry. But many of the phenomena described here may be found in other fields also and considered as more or less general. I. THE SYSTEM OF PRECEPTS 1. Enterprise Plans In the light industry, yearly plans of enterprises have been prepared centrally by the Industrial Departments of the Ministry. Yearly plane of the enterprises had but slight foundation by detailed calculations of needs. The manager, chief engineer and the chief of the planning department had almost no share in the preparation of his own enterprise plan.