"The Socialist System" - János Kornai

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'The Socialist System' presents itself as a daunting read: a 600 page, somewhat dry analysis of the detailed workings of the socialist (ie post-capitalist) system in all its aspects. Kornai was trained as a philosopher, becoming an economist and then a journalist in socialist Hungary, in the period after the second world war.

His book identifies three phases of socialism: the 'heroic' period of the revolutionary-transitional system (think 'War Communism'), the classical system of totalitarian bureaucratic control (prototypically Stalinism) and the reform period (NEP; the Gorbachev reforms). The historical order is usually (but not always) as written - with occasional reversions.

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It is commonplace to review the political horrors of socialism: the great famines of the thirties in Russia and the Gulag, the 'Great Leap Forward' in China. But underlying such political episodes of class struggle and bureaucratic consolidation are deeper issues, those associated with the consequences of bureaucratic coordination of the economy.

Bureaucratic coordination just doesn't work that well. Kornai is forensic in considering how the dictates of forced growth (due to the regime's often-justified sense of their encirclement by more advanced and hostile capitalist states) generates aggressive, top-down 'tight plans' incapable of fulfillment even in principle.

It's simply impossible to centrally-plan a modern economy with any degree of success. All layers of the bureaucracy see it in their interests to organise outputs against static, inflexible and ignorant plan-objectives, regardless of the real needs they plainly see around them. Indeed they will be rewarded for plan-fulfillment and punished for failure.

Hoarding, shortages, poor quality goods and lack of motivation are endemic. The system works, after a fashion, but once the extensive phase of development has been achieved progress slows and the centrally-planned economy falls further behind advanced capitalist countries.

Kornai is especially good on the organic and protean nature of the bureaucracy. Industrial societies are just too interdependent: they must be coordinated. In the absence of market (price) mechanisms, top-down bureaucratic coordination is the only alternative and its daily failures lead to further bureaucratic growth. Anything which is not being centrally controlled is potentially dangerous to the achievement of the plan.

Eventually, though, something must be done. Reforms are called for. Wherever market mechanisms are introduced - in agriculture or in small business - productivity soars. Yet the market is anathema to the plan: the two organising principles cannot cohere. In one place capitalism is allowed to advance and the communist party's monopoly of power begins to falter; in another place the party strikes back and property rights begin to to look shaky causing investment collapse.

The masses are conflicted. On the one hand they welcome the lessening of repression, the chances for higher incomes in the private sector and the greater availability of higher-quality goods. On the other hand, their innate and indoctrinated sense of egalitarianism is offended by capitalism's inequities and meritocratic qualities let alone the elements of price-gouging and rip-offs attendant upon the reemergence of private property and market relations.

Nowhere does the Trotskyist model of a socialised economy under the democratic control of workers' councils get a look-in. Somehow, there's a disconnect between the operation of the economy as a whole and the specific interests of individual workers and their families. The principal-agent problem at all scales is just too overarching, too ubiquitous.

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For a while, China has seemed a counter-example to Kornai's thesis. We are told that the Chinese Communist Party leadership has studied and learned from the collapse of the Soviet Union. It may be too early to say but the story on China in 2018, as growth continues to slow, suggests that Kornai's prognosis will again be proven correct.

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If this book, rich in details and experience were made into a TV series, could it transform the illusions of western leftists who still believe a planned economy could be made to work? I was studying Kornai's book while also reading Vasily Grossman's 'Life and Fate' and it was extraordinary how Kornai's general principles were exactly replicated in the experiences of Grossman's characters.

Yet I have no illusions. The myth of the benevolent centrally-planned economy is probably written in our genes: every generation has to painfully learn better, hopefully through works such as this.

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Let us return to the intriguing question of China. Andrew Batson writes:

"I put János Kornai’s The Socialist System: The Political Economy of Communism on my best books list for last year, but I’ve been slow in writing something longer about it. It’s taken some time for me to think through how to understand China in the context of his arguments.

Kornai’s book is brilliant in its diagnoses of the internal conflicts and problems of “market socialism” or “reform socialism”, in which market mechanisms are permitted but the Communist Party maintains political primacy and a large public sector. This is a still a pretty accurate definition of China’s system. There were so many moments while reading when I wanted to shout out loud in recognition: “Yes! That’s exactly how it is!”

Yet the book finally concludes that market socialism is an inherently unstable and unsustainable system that cannot last. Essentially Kornai argues that the combination of a weakened version of state intervention and the half-hearted embrace of market competition enjoys the vices of both systems and the virtues of neither.

A government that no longer truly believes in socialism cannot enforce its plans, while market forces are allowed to operate only inconsistently, so that they amplify rather than alleviate distortions. The inevitable accumulation of economic problems means that the public and officials get fed up with the system and eventually decide to jettison it entirely."

Batson then continues to the key question: So what did Kornai miss?

The Mystery of Death

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This is chapter 49 from "Life and Fate", by Vasily Grossman.

"When a person dies, they cross over from the realm of freedom to the realm of slavery. Life is freedom, and dying is a gradual denial of freedom. Consciousness first weakens and then disappears. The life-processes - respiration, the metabolism, the circulation - continue for some time, but an irrevocable move has been made towards slavery; consciousness, the flame of freedom, has died out.

The stars have disappeared from the night sky; the Milky Way has vanished; the sun has gone out; Venus, Mars and Jupiter have been extinguished; millions of leaves have died; the wind and the oceans have faded away; flowers have lost their colour and fragrance; bread has vanished; water has vanished; even the air itself, the sometimes cool, sometimes sultry air, has vanished. The universe inside a person has ceased to exist.

This universe is astonishingly similar to the universe that exists outside people. It is astonishing similar to the universes still reflected within the skulls of millions of living people. But still more astonishing is the fact that this universe had something in it that distinguished the sound of its ocean, the smell of its flowers, the rustle of its leaves, the hues of its granite and the sadness of its autumn fields, both from those of every other universe that exists and ever has existed within people, and from those of the universe that exists eternally outside people.

What constitutes the freedom, the soul of an individual life, is its uniqueness. The reflection of the universe in someone's consciousness is the foundation of his or her power, but life only becomes happiness, is only endowed with freedom and meaning when someone exists as a whole world that has never been repeated in all eternity. Only then can they experience the joy of freedom and kindness, finding in others what they have already found in themselves."

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Our consciousness probably evolved to share experiences - a necessary function for an adaptable, flexible and competent social animal. Of course, to share experiences you first have to have them.

We are used to experiencing in consciousness the objective events of our lives: events and reflection engage in parallel. Death is anomalous. Like your own deep sleep, you don't experience it yourself, although others can. For yourself, you're never dead as such, you experience only the process of dying: that is, being alive.

"Life and Fate" - Vasily Grossman

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'Life and Fate' is one of the greatest Russian novels of the twentieth century, a semi-autobiographical account by Vasily Grossman of life under the twin horrors of Stalinism and Nazism. Grossman, a Russian Jew, was a war reporter and his book (banned in Russia under Khrushchev) focuses on an extended family scattered across the siege at Stalingrad, a Jewish ghetto and Nazi death camp, and a Stalinist concentration camp, mostly in the period 1941-43.

Robert Chandler, its translator, has written an impressive introduction to the book.

Grossman rejected all total ideologies, as Chandler observes:

"The tribute that a Grossman character pays to Chekhov is a statement of Grossman’s own hopes and beliefs: “Chekhov brought Russia into our consciousness in all its vastness… He said, let’s put God - and all these grand progressive ideas - to one side. Let’s begin with man; let’s be kind and attentive to the individual man - whether he’s a bishop, a peasant, an industrial magnate, a convict in the Sakhalin islands or a waiter in a restaurant. Let’s begin with respect, compassion and love for the individual - or we’ll get nowhere.”

Large Russian novels, books compared to Tolstoy's 'War and Peace' and acclaimed as classics, can appear intimidating. In fact 'Life and Fate' is beautifully written (and I should also add, translated) and many of the chapters are quite short, little more than a page.

In the Kindle version, it's quite easy to do a book search to refresh one's memories of the large cast of characters.

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Those of us who have led sheltered lives shudder at the thought of what the Grossman generation had to endure. Yet his conclusion seems too austere: history is driven forwards by social movements, and those necessarily clothe themselves in banners and ideals. Few great social upheavals have been unmarked by sustained, collective violence against those invested in the status quo.

The atrocious luck of Grossman (and millions of others) was that the twin forces of Stalinism and Fascism, which pressed so lethally upon them, were going nowhere in history.