Soft Budget Constraints and Predatory States

Mehrdad Vahabi, University of Paris 8, published “Soft Budget Constraints and Predatory States” on February 3rd, 2012 in the Review of Radical Political Economics. To view other OnlineFirst articles, please click here.

The abstract:

The concept of the soft budget constraint (SBC) was initially formulated by economist Janos Kornai in the context of socialist economies. I argue that the SBC can be regarded as the political economy of a predatory state in both the so-called socialist and capitalist economies. The hard budget constraint (HBC) is not related to an ideal competitive market economy but to a household level budget constraint, particularly by salaried members of the population in both types of economies.

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