Oskar R. Lange

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Oskar R. Lange
Oskar Lange 20-65.jpg
Oskar Lange
Born 27 July 1904
Tomaszów Mazowiecki, Congress Poland
Died 2 October 1965(1965-10-02) (aged 61)
London, United Kingdom
Nationality Polish
Field Political economy
School or
tradition
Neo-Marxian economics
Influences Karl Marx, Vilfredo Pareto, Léon Walras
Influenced Abba P. Lerner, Don Patinkin, Jan Tinbergen,[1] Robin Hahnel

Oskar Ryszard Lange (27 July 1904 – 2 October 2 1965) was a Polish economist and diplomat. He is best known for advocating the use of market pricing tools in socialist systems and providing a model of market socialism.[2]

Personal life[edit]

Lange was born in Tomaszów Mazowiecki as son of Arthur Julius Lange and Sophie Albertine Rosner. He studied law and economics at the University of Krakow, where he received a B.A. (1926) and a Masters of Law (Ll.D, 1928) degrees. From 1926 to 1927 Lange worked at the Ministry of Labor in Warsaw, and then was a research assistant at the University of Krakow (1927–31). He married Irene Oderfeld in 1932. In 1934, a Rockefeller Foundation fellowship brought him to England, from where he emigrated to the United States in 1937. There he became a professor at the University of Chicago in 1938, and was naturalized as a U.S. citizen in 1943. Joseph Stalin was so impressed with Lange's work that he not only prevailed on President Franklin D. Roosevelt to obtain a passport for Lange to visit the Soviet Union to speak with him personally, but also proposed offering him a position in the future Polish cabinet. Towards the end of World War II, Lange broke with the Polish government-in-exile in London and transferred his support to the Lublin Committee sponsored by the Soviet Union. As a result of this trip, the Polish American Congress condemned Lange and defended the Polish government-in-exile. Lange returned to the United States at the end of May and met with Prime Minister Stanisław Mikołajczyk of the government-in-exile, who happened to be in Washington. Lange stressed how reasonable Stalin was prepared to be, and asked the State Department to put pressure on the exiled Polish leadership. Subsequently, Lange served as a go-between for Roosevelt and Stalin during the Yalta Conference discussions on post-war Poland.

After the war ended in 1945, Lange returned to Poland. He then renounced his American citizenship and returned to the United States in the same year as the Polish communist regime's first ambassador to the United States.[3] In 1946, Lange served as the Polish delegate to the United Nations Security Council. He went back to Poland in 1947, where he worked for the Polish government, while continuing his academic pursuits at the University of Warsaw and the Main School of Planning and Statistics. Lange was deputy chairman of the Polish Council of State 1961–65 and as such one of four acting chairmen of the Council of State (a head of state function).

Oskar Lange monument at the Wrocław University of Economics

Academic contributions[edit]

The bulk of Lange's contributions to economics came during his American interlude of 1933–45. Despite being an ardent socialist, Lange deplored the Marxian labor theory of value because he was very much a believer in the neoclassical theory of price. In the history of economics, he is probably best known for his work On the Economic Theory of Socialism published in 1936, where he famously put Marxian economics and neoclassical economics together.

In this book, Lange advocated the use of market tools (especially the neoclassical pricing theory) in economic planning of socialism and Marxism. He proposed that central planning boards set prices through "trial and error", making adjustments as shortages and surpluses occur rather than relying on a free price mechanism. Under this system, central planners would arbitrarily pick a price for products manufactured in government factories and raise it or reduce, depending on whether it resulted in shortages or gluts. After this economic experiment had been run a few times, mathematicians capable of solving complex simultaneous equations would be able to plan the economy:[4] if there were shortages, prices would be raised; if there were surpluses, prices would be lowered. Raising the prices would encourage businesses to increase production, driven by their desire to increase profits, and in doing so eliminate the shortage. Lowering the prices would encourage businesses to curtail production in order to prevent losses, which would eliminate the surplus. Such simulation of market mechanism in Lange's opinion would be capable of effectively managing supply and demand. Proponents of this idea argue that it combines the advantages of a market economy with those of socialist economy.

With the utilization of this idea, Lange claimed, a state-run economy would be at least as efficient as a capitalist or private market economy. He argued that this was possible, provided the government planners used the price system as if in a market economy and instructed state industry managers to respond parametrically to state-determined prices (minimize cost, etc.). Lange's argument was one of the pivots of the socialist calculation debate with the Austrian School economists. At that time, the view among English socialists of the Fabian Society was that Lange had won the debate.[4]

His works provided the earliest model of market socialism.[5]

Besides his work on market socialism, Lange contributed in various other areas. He was one of the leading lights of the "Paretian Revival" in general equilibrium theory during the 1930s. In 1942, he provided one of the first proofs of the First and Second Welfare Theorems. He initiated the analysis of stability of general equilibrium (1942, 1944). His critique of the quantity theory of money (1942) prompted his student Don Patinkin to develop his remarkable "integration" of money into general equilibrium theory. Lange made several seminal contributions to the development of neoclassical synthesis (e.g. 1938, 1943, 1944). He worked on integrating classical economics and neoclassical economics into a single theoretical structure (e.g. 1959). In his final years, Lange also worked on cybernetics and the use of computers for economic planning.

The International Institute of Social Studies (ISS) awarded an Honorary Fellowship to Oskar Lange in 1962.

Bibliography[edit]

  • 1934. "The Determinateness of the Utility Function," RES.
  • 1935. "Marxian Economics and Modern Economic Theory," Review of Economic Studies, 2(3), pp. 189–201.
  • 1936a. "The Place of Interest in the Theory of Production", RES
  • 1936b. "On the Economic Theory of Socialism, Part One," Review of Economic Studies, 4(1), pp. 53–71.
  • 1937. "On the Economic Theory of Socialism, Part Two," Review of Economic Studies, 4(2), pp. 123–142.
  • 1938. On the Economic Theory of Socialism, (with Fred M. Taylor), Benjamin E. Lippincott, editor. University of Minnesota Press, 1938.
  • 1938. "The Rate of Interest and the Optimum Propensity to Consume", Economica
  • 1939. "Saving and Investment: Saving in Process Analysis", QJE
  • 1939. "Is the American Economy Contracting?", AER
  • 1940. "Complementarity and Interrelations of Shifts in Demand", RES
  • 1942. "Theoretical Derivation of the Elasticities of Demand and Supply: the direct method", Econometrica
  • 1942. "The Foundations of Welfare Economics", Econometrica
  • 1942. "The Stability of Economic Equilibrium", Econometrica.
  • 1942. "Say's Law: A Restatement and Criticism", in Lange et al., editors, Studies in Mathematical Economics.
  • 1943. "A Note on Innovations", REStat
  • "The Theory of the Multiplier", 1943, Econometrica
  • "Strengthening the Economic Foundations of Democracy", with Abba Lerner, 1944, American Way of Business.
  • 1944. Price Flexibility and Employment.
  • 1944. "The Stability of Economic Equilibrium" (Appendix of Lange, 1944)
  • 1944. "The Rate of Interest and the Optimal Propensity to Consume", in Haberler, editor, Readings in Business Cycle Theory.
  • 1945a. "Marxian Economic in the Soviet Union," American Economic Review, 35( 1), pp. 127–133.
  • 1945b. "The Scope and Method of Economics", RES.
  • 1949. "The Practice of Economic Planning and the Optimum Allocation of Resources", Econometrica
  • 1953. "The Economic Laws of Socialist Society in Light of Joseph Stalin's Last Work", Nauka Paulska, No. 1, Warsaw (trans ., 1954, International Economic Papers, No. 4, pp. 145–ff. Macmillan.
  • 1959. "The Political Economy of Socialism," Science & Society, 23(1) pp. 1–15.
  • Introduction to Econometrics, 1958.
  • 1960. "The Output-Investment Ratio and Input-Output Analysis", Econometrica
  • 1961. Theories of Reproduction and Accumulation,
  • 1961. Economic and Social Essays, 1930–1960.
  • 1963. Political economy, Macmillan.
  • 1963. Economic Development, Planning and Economic Cooperation.
  • 1963. Essays on Economic Planning.
  • 1964. Optimal Decisions: principles of programming.
  • 1965. Problems of Political Economy of Socialism, Peoples Publishing House.
  • 1965. ' 'Wholes and Parts: A General Theory of System Behavior, Pergamon Press.
  • 1965. "The Computer and the Market", 1967, in Feinstein, editor, Socialism, Capitalism and Economic Growth.
  • 1970. Introduction to Economic Cybernetics, Pergamon Press. Review extract.

See also[edit]

Notes[edit]

  1. ^ J. Tinbergen, 1991. "Solving the Most Urgent Problems First", in Michael Szenberg (ed.) 1993, Eminent Economists: Their Life Philosophies, Cambridge University Press, p. 279 (cambridge.org).
  2. ^ Thadeusz Kowalik, [1987] 2008. "Lange, Oskar Ryszard (1904–1965)", The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
  3. ^ "Lange to yield citizenship to be Poles' envoy". Chicago Daily Tribune. 20 August 1945. 
  4. ^ a b Dalmia, Shikha, 2012, Cheer Up, Liberty Lovers, Schumpeter Was Wrong, Reason, Feb. 23.
  5. ^ Robin Hahnel, 2005.Economic Justice and Democracy, Routlege, page 170

References[edit]

  • Milton Friedman, 1946. "Lange on Price Flexibility and Employment: A Methodological Criticism", American Economic Review, 36(4), pp. 613– 631. Reprinted in Friedman, 1953, Essays in Positive Economics, pp. 277–300.
  • Charles Sadler, 1977. "Pro-Soviet Polish-Americans: Oskar Lange and Russia's Friends in the Polonia, 1941–1945", Polish Review, 22(4), pp. 25–39.

External links[edit]