János Kornai's "Soft Budget Constraint" explores the phenomenon where organizations expect financial rescue, leading to inefficient behavior. The concept, introduced in 1976, has evolved into a syndrome characterized by expectations of bailouts, influencing decision-making and behavior. The syndrome manifests in various organizations, including households, firms, NGOs, and governments, where financial trouble is often met with rescue. The rescue can come from state, banks, or private entities, and methods include subsidies, debt forgiveness, and tax relief. The key elements are expectation and behavior, with the syndrome reflecting a power dynamic between rescuers and the rescued. The syndrome is not merely financial but also social, involving unequal relationships. Kornai argues that the syndrome leads to inefficiency, excessive spending, and moral issues, as organizations prioritize rescue expectations over efficiency. In socialist systems, the budget constraint was soft, leading to chronic shortages, while in capitalist systems, the syndrome affects various sectors, including state-owned enterprises, local governments, banks, and large firms. The syndrome is also present in central governments, where fiscal crises can lead to bailouts. Kornai concludes that the syndrome is a significant issue in both systems, with the capitalist system showing more varied manifestations. The syndrome's effects include moral hazard, reduced efficiency, and unfair redistribution. Kornai's analysis highlights the need for understanding and addressing the syndrome to improve economic efficiency and fairness.János Kornai's "Soft Budget Constraint" explores the phenomenon where organizations expect financial rescue, leading to inefficient behavior. The concept, introduced in 1976, has evolved into a syndrome characterized by expectations of bailouts, influencing decision-making and behavior. The syndrome manifests in various organizations, including households, firms, NGOs, and governments, where financial trouble is often met with rescue. The rescue can come from state, banks, or private entities, and methods include subsidies, debt forgiveness, and tax relief. The key elements are expectation and behavior, with the syndrome reflecting a power dynamic between rescuers and the rescued. The syndrome is not merely financial but also social, involving unequal relationships. Kornai argues that the syndrome leads to inefficiency, excessive spending, and moral issues, as organizations prioritize rescue expectations over efficiency. In socialist systems, the budget constraint was soft, leading to chronic shortages, while in capitalist systems, the syndrome affects various sectors, including state-owned enterprises, local governments, banks, and large firms. The syndrome is also present in central governments, where fiscal crises can lead to bailouts. Kornai concludes that the syndrome is a significant issue in both systems, with the capitalist system showing more varied manifestations. The syndrome's effects include moral hazard, reduced efficiency, and unfair redistribution. Kornai's analysis highlights the need for understanding and addressing the syndrome to improve economic efficiency and fairness.