I interviewed Krisztina Demeter professor of the Institute of Business Economics about the role of manufacturing strategies in digitalization. We know that manufacturing in its current form and way of functioning does not have a bright future, the replacement of existing practices owing to digitalization is only a question of time.

Why does a company need a manufacturing strategy?
The management of a company might be aware of the necessity of digitalization and may introduce systems relying on new technologies, the success of the company, however, cannot be maintained without knowing what the new system is used for and how it is used. The way in which the company takes a new direction requires conscious decisions. One objective might be substituting workforce, i.e. to substitute the work of employees performing repetitive tasks with technological solutions. Another direction might be to increase the reliability of manufacturing through digitalization by eliminating human errors and lowering costs. The professor mentioned a particular case when one of the operators of General Electric noticed that the sound of the machine had changed, it was not as it used to be. When the engineers examined the machine, one of the parts turned out to be worn out. They could intervene before the machine would have broken down. It is good news that as a result of digitalization sensors make sure that worn out parts are only replaced when this becomes really necessary. Companies don’t need to rely on experienced ears anymore and can realize considerable savings.

Digitalization entails „top-heavy” costs
a fact that is often underestimated by company executives. In order to realize the digital transition of manufacturing, basic systems need to be built properly, for instance internet-based connection between the devices must be ensured in a stable way. Each unit must be equipped with a sensor and communication between them should rely on a central database. The recognition of how high the initial investment is can itself justify the rationale for a digital manufacturing strategy.

Will small companies be left out and go out of business?
In Krisztina Demeter’s view it cannot be excluded that the digital transition of the manufacturing systems of large companies that is currently taking place will represent a serious threat for smaller companies. Transition to the so-called additive manufacturing (more widely known as 3D printing) enables large enterprises to manufacture prototypes easily and cheaply and also to deal with small-batch orders in a cost effective manner. The question of how the competitive advantage of small companies in the field of manufacturing can then be maintained is still to be answered.

We live amidst market and technological turbulences
In a survey questionnaire compiled with Tamara Keszey, researcher of the Marketing Institute and János Kiss of the Institute of Business Economics, Krisztina Demeter is examining how far innovation and manufacturing performance can have a positive effect on business performance if we take into account current environmental turbulences. Owing to among others disruptive innovations, market turbulence cause demand trends to become increasingly volatile in a growing number of industrial segments. The problem of technological turbulence, on the other hand, means that corporate decision makers might be confronted with new technological solutions as often as every year, thus forcing them to face the eternal dilemmas of exploitation and discovery. It is not easy to decide, as a matter of fact, if higher business performance should be achieved through the further exploitation of the existing technology and product platform or time has come to try out new technologies, to introduce new products by means of major investments and thereby risk achieving return on previous investment.

Understanding the transformation of supply chains
in the light of the digitalization of manufacturing is in the focus of a major research project funded by EFOP (Human Resource Development Operational Program) involving the professor and many other colleagues at the university. The work is carried out with the contribution of colleagues engaged in different fields and involves major sectors like the retail sector, the FMCGs (Fast Moving Consumer Goods), mechanical engineering, SSCs (Shared Service Centres) and logistics service providers. The research topic addresses major questions out of which the optimization of the workforce of companies, i.e. whether major lay-offs can be avoided in the wake of digitalization is perhaps one of the issues of the widest general interest.

Miklós Kozma
Department of Business Studies

The great Hungarian political reformer of the first half of the 19th century, Count István Széchenyi closed his treatise „Hitel” (Credit) with the words: “many people believe that Hungary belongs to the past, but I believe firmly that Hungary is not a part of the past but the future." Most probably, the colleagues working for the Social Futuring Center established at the University share this view. So far, they have staged three workshops with the titles of Social Futuring- Concepts and context, Social Futuring- Expectations and risks and Social Futuring- Changes and Communities. Their very first international conference will take place in March with a line-up of world-renown speakers. We have taken this opportunity to introduce the research unit to our readers.

The head of the project team is Mr. János Csák Honorary Professor, former Chairman of MOL (Hungarian Oil and Gas Company) and former Ambassador of Hungary to the United Kingdom. We interviewed him about the philosophy and approach of the Social Futuring Center.

“Social Futuring” may have several meanings. Should it be understood as an adaptational capability to new and fast changing situations, be they climate change or a new economic context?
Social futuring is the feature of social entities signifying their capacity to interpret the developments occuring around them and ensuring their preservation and reproduction by interpreting them, that is, how far they are able to organize themselves in order to influence their future, manage their destiny. To give a simple example, when we take a three-year old child to a swimming lesson or a six-year old to school or to a language class, we are not yet aware of his or her future, or the changes he or she is to cope with in the future, but we are trying to equip him or her with as many capabilities as possible. Professor Tamás Roska, the excellent man and outstanding scholar, who passed away a few years ago and was an international authority in bionics maintained that successful civilizations and cultures in the long run rest upon their capacity to interpret the world in a precise and realistic manner and to organize themselves accordingly in order to influence their future.

Could resilience, an ability to resist negative trends be such a feature? Or the ability to form, shape the future?
We are talking about a complex, multidimensional concept. It includes the reactive ability to cope with changes, something needed for instance during a natural catastrophe or an attack on an entity. Then there are a number of proactive abilities, which are applied when the entity shapes future trends and circumstances. Furthermore, there are active abilities meaning the creative exploitation of the changes in progress, when the entity captures the wind that is blowing anyway in its sails. Interestingly, while this approach sounda pretty simple , it has just now emerging as a whole new research field globally.

You mentioned that in order to appraise ourselves, we need social self-awareness. Is the center planning to take up research in that field?
We are not planning to do basic research or to proprietory data collection. We are rather relying on the findings of a number of disciplines and seek, together with colleagues of various backgrounds, to elaborate a framework in which the futuring of social entities can be understood and measured. Such entity can be the family, for instance the Ford, the Bertelsmann or the Esterházy families, it can be a country, a city, a company, a foundation, a church or the entire culture, civilization…

Our goal is to develop the Social Futuring Index. There is vast array of indices for measuring the economic aspects of an entity, if we only think of the GDP. An index can only be sound if what it measures is unambiguously defined. There are also several indices that try to capture the quality, of human life in entities, the UN’s Human Development Index for instance is a summary measure assessing the human development in a broader context. As a matter of fact, every decent research center or consulting company develops some kind of index to represent and explain the differences between entities investigated. In each scholar’s life there comes a moment when through classifying facts he or she creates a systematic comparison of the research subjects. They might, nevertheless, not call it an index. Let us take, for instance, the simple question of “what is the good life” that is worth preserving and reproducing. This ancient philosophical question had been addressed by Aristotle and Plato. What are the attributes of the good life? How should one shape one’s individual and community life to make it good and worth preserving?

Aristotle in his Nichomachean Ethics seeks to answer the question of how man can achieve happiness. The focus of his ethics is eudaimonia, literally translated as the “good-spirited” life. The Social Futuring Index handles these qualities and ambitions for both the individuals and the social entities simultaneously. While modern western thought promotes the individual, it is rather difficult to imagine the individual’s “good-spirited” life without the social entity behind it being “good”, and vice versa. Our research objective is to capture the notion of “good”, something that had already been sought for by the ancient Greeks, in a systematic way. This notion implies a state of social entities that is equally good for the individual and for the community. We hope that such an index, a ranking of the various entities will inspire the members and leaders of social entities to think systematically about their current situation and their future.

What are the specific areas of your enquiries?
We examine four pillars, the fist being the ecological- geopolitical background. It makes quite a difference, for instance, if a country is located by the sea or is land-locked, if there is an abundance of natural resources, arable lands, water in its territory or its land is bare and infertile. All this was described by the representatives of the French Annales school focusing on social history through the broad notion of “space”, i.e. how a people, a culture can articulate their abilities, how they can shape their future within that space. The second pillar is technology. I am referring to human-inflicted changes of our natural and human environment, and even the human being itself. Arguably, they have an enormous impact on the futuring of social entities.

The third pillar is the socio-economic one. Economy does not exist in itself, only within the metaphysical and ethical context of a social entity. Take alternative sources of energy such as solar or wind, for instance. Insofar as they are cheaper and entail better externalities, they logically decrease GDP. Nevertheless, we try to develop them as we do not only consider merely economic aspects, but socio-economic reasons as well. Another example would be the effect of purely economic decisions related to the systems of human “reproduction”, the family and educational institutions on the given entity’s ability to embrace the future.

In everyday life, the expressions “our way of thinking, our way of life” indicate the metaphysical and ethical context as well as the basic value and belief system of an entity. We examine the meaning of these expressions in our research. What is the way of life of the given entity like if its goal is to bring about good individual and community life? What is to be preserved and what is to be changed?

We have now reached the world of values, haven’t we?
We have, in fact this is the fourth pillar, cultural relations and the spiritual foundations of social entities. Understanding and mapping the world of values is indispensable for social futuring. We are thinking about such concepts as the image of man, a community’s view of the human person, about the entity’s organic and durable existence, its understanding of itself in the changing world. Our index will be tested when for instance, we will check what data from the 1980s would have predicted as far as futuring is concerned and where the social entity in question actually is in the present.

Who is involved in these research projects? I assume that you did not only invite researchers from the Corvinus University?
We invite a wide range of researchers and will continuously upload the findings on our website. We co-operate with a number of Hungarian research groups and universities as well as with Chinese and American institutions. We have invited three eminent speakers, George Friedmann (Geopolitical Futures, Austin, TX), Huang Ping Director of the Chinese Academy of Social Sciences, Beijing and Albert-László Barabási one of the greatest authorities in network science (Northeastern University, Boston, MA).

Many think that futuring depends on our ability to get involved in various networks. Is the future really about networks?
Ever since the world has existed, the key to futuring has been the ability to connect to networks. There existed networks within tribes, villages, larger settlements and entities, and the individual’s destiny have always been largely influenced by the quality and strength of his or her connections, be they kinship or relations beyond blood. The social being lives and unfolds within the context of networks defined by space, technological, socio-economic, cultural-spiritual factors. This therefore is not a novelty. Owing to technological developments, however, we can gain unprecedented knowledge about the functioning of mass society in the form of digital information. Until recently, sociologists had gained information, beyond the data collected through large statistical surveys, by observing certain populations or information that was based on self-declaration. The late Professor Rudolf Andorka himself had us conduct time-use survey through self-declaration. By contrast, nowadays the information on where people are located, with who and – to a certain extent – what they are doing is available, obviously ona population-level, without individual specifics. What is the movement pattern of people? How much time do they spend and on what subjects on the internet? Putting together this vast quantity of factual information is essential for portraying ourselves in a more precise and perhaps less flattering manner than we would have preferred to see ourselves. It shows who we actually are. As a matter of fact, networks have always been present in our lives, but today we can know way more than, say, 20 years ago. If we raise the right questions, we are able to learn a lot about human life and networks.

Although with a different research objective, futures research had already existed at the University headed by Professor Erzsébet Nováky. I believe that one of your first tasks was to demarcate the two research areas…
Certainly, futuring is a multidisciplinary area that exploits the synergies between sociology, network science, and as you said futures studies, sustainable development, demography, philosophy, psychology, economics, political science. Three of our key studies have served to specify our research area. The study by Professor Petra Aczél analyses the scientific discourses on the future and identifies the conceptual-linguistic-cultural characteristics of futuring. Tamás Kocsis examines the differences between the approaches of ecological sustainability and futuring. Eszter Monda presents the differences between futures studies and futuring.

As the University might also rely on these research projects to build its strategy, may I ask how you are planning to make available your findings within and outside the University?
The center is characterized by utmost transparency. On the one hand, owing to the publication of the methodological premises that is coordinated by Zoltán Szántó who is also the Head of the Research Center. On the other hand, due to the fact that we use publicly available databases, and as a result, anyone can check our findings both with regard to data and method. We are currently working on the specific components of the index and will share our findings at conferences going forward. We are trying to achieve similar transparency with respect to the normative framework that serves as a basis for our research projects. This area happens to belong to me, expert consultations are underway which will be followed by the publication of the framework.

What do you mean by normativity in the context of research?
I will tell you an example. In a country or in a city the percentage of one-person households increases by 20% in ten years. This in itself is a data, but is that good or not? It is obviously good for the electricity utility company since each household consumes electricity, it is good for the TV broadcasters, the book publishers. It might, however, not be good for producing children. It might allow people to contemplate as they are not disturbed in their thought by anyone. This social development may, however, have unintended personal and socio-psychological consequences. The question of what is “good” cannot be avoided. Our Research Center is concerned with what is equally good for the social entity and the individual as this what we consider as one of the key aspects to futuring.

A huge challenge…
It is, and that makes it so exciting.

Your personal attachment to the University is indubitable. Why have you taken up the challenge in the light of what you have achieved so far?
I graduated from this university in 1987 in Finance and Sociology. Since then, I have mainly been active in business and cultural endeavours. In retrospect, my life, my work seems to have always been dedicated to contributing to the futuring of entities, be it MOL, Central Europe, my loved ones or persons I mentor. How and by what can I help a person or a social entity to preserve what seems to be good in an unknown future? Even when I am not there anymore. I am delighted that my relationship with the university has recently become tighter, besides my work at the Futuring Research Center I have also been awarded an honorary professorship by the Faculty of Business and Management of Corvinus. It is an honour to share my experience in this temple of systematic thinking and to learn just like in 2009 when I spent nearly a year in the US as a visiting researcher in political economics and energy security. I hope that my mentor Professor Andorka enjoys what he sees when he looks at me from the heaven above.

(JS.)

István Benczes is professor at the Institute of World Economy of the Faculty of Social Science and International Relations. Out of his current research projects, he selected one that focuses on the reform of European studies.

He uses a theoretical approach to analyse the „unparalleled” institutions of the EU. Studies related to this specific institutional system neglected US mainstream discussions on economics and political science. For decades, the American literature did not look upon European Studies as a separate discipline that they thought was based on a somewhat ”naive belief” in integration.

The turning point occurred when the crisis reached Europe in 2008 and called in question former achievements:
it became evident that thinking about Europe in terms of a straight-line progress as assumed by the prevailing neofunctionalist ideology and as advocated by the ”supranational elites” was unrealistic. The process of integration turned out to be at best an undertaking ridden with conflicts that Europe had attempted to survive. They preferred to keep silent on the dividing lines. The negotiations, coordination between the members were dominated by the topics of co-operation, common construction and the details thereof. The time had come for the integration theories that had so far determined our thinking on Europe to return to the mainstream discussions in which conflict and its management are both focal points.

As a matter of fact, by the 1990s the American realist school (underlining conflict) and the representatives of the neoliberal institutional theory (placing co-operation in the centre) had already merged into a rational synthesis that promoted the simultaneous management of conflict and co-operation between the states as main actors. István Benczes thinks that what happened in Europe in the past 8-10 years can paradoxically be interpreted as a trade-off among states that awakened to the sobering effects of crisis. It became clear that the deepening of integration cannot be taken for granted, i.e. states may not gradually renounce a slice of their sovereignty in order to hand it over to a supranational body. We are coming to understand why US economists held that the euro zone without political integration was condemned to fail. They predicted that the euro zone would either fall into pieces or would entail a federal structure with a larger central budget. By contrast, the European narrative argued that it was possible to build Europe from the bottom up and the jointly elaborated set of rules could safeguard the future of the euro zone.

Nevertheless, the pragmatic question to be addressed is how Europe can be made stronger without strengthening its centre,
but rather by enshrining the desired progress in intergovernmental treaties. So much so that practical issues like “who pays to who, how much and what for” arise more and more often. It is a sobering recognition that co-operation does not lack conflicts, and that the resolution of conflicts is by its nature ridden with conflicts. Conflicts result from the fact that European leaders do not deliberate on regulatory issues only, they also take a position in conflicts over distribution. This mundane approach reflects the crisis of the former views. István Benczes believes that the current situation is not only about the crisis of the euro zone, but also an outcome of mistaken policies at the level of the member states, i.e. to some extent a failure of their economic policies, exchange rate policies and decisions connected to competitiveness.

How do we see the future, Europe’s future?
István Benczes stressed that rather than seeking the origin of the problems in the institutions of the Union, we should take a closer look at the member state level. If we manage to grasp the consequences of local decisions, it will be worth thinking about the systemic shortcomings affecting Europe as a whole. Another practical question is whether sanctions can be enforced against the offenders. Thus, the tightening of rules does not offer a solution in itself.

Can the euro zone be saved?
Yes, with the following conditions: better policies at the level of member states, smarter decisions and in addition to these, a stronger central budget (corresponding to 5-6% of the GDP) in order to make central measures enforceable through transfer policies. There are doubtless many question marks, even in Germany which has been an engine of European integration from the very outset. Surveys show that at present the German public is mainly concerned with migration and the public budget, consequently Germany, as required by the pressures of domestic politics, tries to make any support to the functioning of the Union subject to certain conditions. In such a situation it is crucial that while bargaining may take on an increasingly materialistic character, both the leading powers of the Union and we ourselves stick to European values. Interestingly, whereas the core countries of the Union are prepared to move forward, domestic politics often prevents the elites from taking up highly controversial European issues.

All in all, István Benczes considers that the greatest problem
is that while the EU is undergoing a distribution crisis, we fail to react to global power shifts. For instance, no breakthrough has been achieved towards increasing the European defence budget, despite the fact that the United States under Trump is less keen to police the world than in previous decades. Will Europe in the midst of its internal disputes perceive that it is left out of global power games and may easily slide to the periphery?

As regards research cooperation opportunities,
István Benczes said that his Institute maintained good research relations with the Institute of World Economics of the Hungarian Academy of Sciences, with the international and world economy research centres of the universities of Szeged and Debrecen, as well as with the University College London and several Czech and Polish universities. Although within the Corvinus University the Faculty of Social Science and the Corvinus School of Economics are natural allies of the Institute, there is a huge potential in working together with the Corvinus Business School, too. The theme of International Business Economics at the Institute of Business Economics may be connected to the subject discussed in this interview as it is within the context of international institutions and politics that businesses are managed.

Miklós Kozma
Department of Business Studies

Grzegorz Kołodko professor of the Polish Kozminiski University, founder and Director of TIGER (Transformation, Integration and Globalization Economic Research) was interviewed by Miklós Kozma on the occasion of the Corvinus workshop, one of the events celebrating the 90th birthday of Professor János Kornai.

He started by saying how inspiring Professor Kornai’s writings had been for him in the 70s
and that they served as a basis for creating an alternative model to Kornai’s shortage economy, “shortageflation”. He associated the interpretation of this concept with Chinese economic practices. To his mind China is the only Socialist economy that operates under a semi-hard budget constraint and as such is not plagued by the phenomenon of shortage that had led to the demise of Socialism in Hungary. In China, anyone can buy a Ferrari if they have the necessary means as opposed to our former Socialist economies in which it often happened that we could not get certain goods in exchange for our money. Thus, the Chinese system cannot be considered either as classical socialism or capitalism in the conventional sense of the word. Professor Kołodko coined a word to describe it: Chinism.

China owes its rapid economic growth of the previous decades
to the fact, among others, that it did not move toward political democracy which by its nature would have supported growth to a lesser degree. “Nonetheless, I regard democracy an asset in itself even if it not as efficient as the politically centralized Chinese economic model” said Professor Kołodko. China does not allow shortage to occur in economy as this would mean the end of the system. At the same time, inequalities in China are currently greater than in the stronghold of capitalism, the United States.

I asked him whether the Chinese model could be implemented in other countries.
It could indeed be a model for certain countries like Vietnam, Laos, Cambodia, Cuba and for other poorer developing countries such as Ethiopia, Tanzania and Burkina Faso. In their case the Chinese solution may be the way out from poverty. In traditional economies, however successful they are deemed, growth took place in an exclusive fashion, and as a result, inequalities have not decreased while poverty has subsisted. Chinism solved the problem, thereby offering an attractive alternative to less wealthy developing countries.

This led to another question: Can Hungary learn from the Chinese model?
It cannot serve as a model to follow, since we Europeans respect democracy as a value in itself, unlike the Chinese. We could, however, learn how to exploit synergies. In China the economy is not subjected to parliamentary elections taking place every four years. Long-term development ideas prevail. That is how they managed to extend the expressways from 650 km in 1989 to a network of more than 60 thousand kilometres in our days. One of the major challenges they are currently facing are the catastrophic effects of pollution on the environment. In fact, they are working on long-term solutions to address them. The Professor thinks that one of the lessons learned is that whereas we view democracy as a value, the fact that the democratic majority is often wrong or at least prefers short-term solutions does not help overcome economic difficulties. Professor Kołodko suggests that enlightened authoritarian systems, among them the United Arab Emirates and China, perform much better economically. It can be said to China’s credit that although it runs an authoritarian system, it is definitely a meritocracy with competent leaders taking decisions following technocratic logic.

Could the Chinese model be used to help address the present crisis of Western democracies?
was my last question. The professor immediately understood that I was referring to the crisis of Neoliberalism and mentioned a few examples. The America of Trump, Brexiting England, Germany with a stronger AfD, the French Marine Le Pen, the Dutch Wilders and the Turkey of Erdogan all raise questions for the followers of Neoliberalism. He instantly added that recent Hungarian and Polish trends fitted well in this sequence, too. Kołodko believes that the crisis of Neoliberalism is due to “a minority getting rich at the expense of the majority”, with the ensuing and perpetuated inequalities resulting in losing confidence in political leaders. He has described the phenomenon of the emerging political forces as “new Nationalism” and does not find it a good response to the problems that undoubtedly exist. He is convinced that globalisation is irreversible and therefore there is no scope for nationalism and xenophobia in progressive thinking. He has called his own concept “New Pragmatism” that aims to create a three-fold balance: economic, social and environmental. He uses an interdisciplinary approach that can be applied differently in each context. Besides present-day China, he also sees France under Macron to be adopting this approach. Finally, Kołodko trusts that he will be able to convince the new Polish Prime Minister of the relevance of this ideology-free attitude that places economic prosperity in a wider, more result-oriented perspective than before.

Miklós Kozma
Department of Business Studies