Oskar R. Lange

Last updated
Oskar R. Lange
Oskar Lange 20-65.jpg
Oskar Lange
Born27 July 1904
Died2 October 1965(1965-10-02) (aged 61)
Nationality Polish
Field Political economy, Sociocybernetics
School or
Neo-Marxian economics [1]
Contributions Lange model
Market socialism
Theorems of welfare economics

Oskar Ryszard Lange (27 July 1904 – 2 October 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] He responded to the economic calculation problem proposed by Ludwig von Mises and Friedrich Hayek by claiming that managers in a centrally-planned economy would be able to monitor supply and demand through increases and declines in inventories of goods, and advocated the nationalization of major industries. [3] During his stay in the United States, Lange was an academic teacher and researcher in mathematical economics. Later in socialist Poland, he was a member of the Central Committee of the Polish United Workers' Party. [4]


Tomaszow Mazowiecki, Farbiarska 7 Street - place of birth Tomaszow Mazowiecki, Farbiarska 7. The house where Oskar Lange was born and grew up.jpg
Tomaszów Mazowiecki, Farbiarska 7 Street - place of birth
I Lyceum in Tomaszow Mazowiecki, Lange's secondary school Jaroslaw Dabrowski 1st Lyceum in Tomaszow Mazowiecki. For years, the school has been listed among the best Polish high schools.jpg
I Lyceum in Tomaszów Mazowiecki, Lange's secondary school


Lange was born in Tomaszów Mazowiecki as son of the Protestant manufacturer Arthur Julius Lange and his wife Sophie Albertine Rosner. His ancestors had emigrated at the beginning of the 19th century from Germany to Poland. [5] He studied law and economics at the University of Kraków, where he defended a doctoral dissertation in 1928 under Adam Krzyżanowski. From 1926 to 1927 Lange worked at the Ministry of Labor in Warsaw, and then was a research assistant at the University of Kraków (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. Lange became a professor at the University of Chicago in 1938 and was naturalized as a U.S. citizen in 1943. [6]

Joseph Stalin, who identified Lange as a person of leftist and pro-Soviet sympathies, prevailed on President Franklin D. Roosevelt to obtain a passport for Lange to visit the Soviet Union in an official capacity, so that Stalin could speak with him personally; he also proposed offering him a position in the future Polish cabinet. The State Department was opposed to Lange traveling as an emissary because they felt that his political views represented neither Americans of Polish descent nor American public opinion in general. Lange's trip to the Soviet Union in 1944 caused further controversy, as the newly established Polish American Congress condemned him and defended the interests of the London-based Polish government-in-exile. Lange returned to the United States at the end of May and met, at Roosevelt's request, with Prime Minister Stanisław Mikołajczyk of the government-in-exile, who was on a visit in Washington. Lange stressed how reasonable Stalin was prepared to be (Stalin told him of the Soviet desire to preserve an independent Poland under a coalition government), and asked the State Department to put pressure on the exiled Polish leadership to reach an understanding with the Soviet leader. [7]

Towards the end of World War II, Lange broke with the Polish government-in-exile and transferred his support to the Lublin Committee (PKWN) sponsored by the Soviet Union. 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 went back to the US in the same year as the Polish People's Republic's first ambassador to the United States. [8] In 1946, Lange also served as Poland's delegate to the United Nations Security Council. From 1947 he lived in Poland. [6]

Oskar Lange worked for the Polish government while continuing his academic pursuits at the University of Warsaw and the Main School of Planning and Statistics. He was deputy chairman of the Polish Council of State in 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 Wroclaw University of Economics Wroclaw AE Lange 2005.jpg
Oskar Lange monument at the Wrocław University of Economics

Academic contributions

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 the 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, mathematical methods would be employed to plan the economy: if there were shortages, prices would be raised; if there were surpluses, prices would be lowered. [9] 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. In Lange's opinion, such simulation of market mechanism would be capable of effectively managing supply and demand. Proponents of this idea argued 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. [9] His works provided the earliest model of market socialism. [10] Hayek's essay entitled "The Use of Knowledge in Society" is a rebuttal to Lange's work and is considered one of the most important articles ever written in the field of economics.

Lange also made contributions 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 (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 Oskar Lange an honorary fellowship in 1962.


See also


  1. Bruce Williams, Making and Breaking Universities, Macleay Press, p. 103.
  2. Thadeusz Kowalik, [1987] 2008. "Lange, Oskar Ryszard (1904–1965)", The New Palgrave Dictionary of Economics , 2nd Edition. Abstract.
  3. "Oskar Ryszard Lange". Econlib. Retrieved 2019-04-17.
  4. Witold Gadomski, Rynek trzyma smycz [Gadomski o książce Belki] (The market holds the leash [Gadomski about Belka's book]). 11 June 2016. Rynek trzyma smycz. wyborcza.pl. Retrieved 26 June 2016.
  5. Who is Who in Central and East-Europe 1933/34 Zürich 1935, referenced in: Beate Kosmala: Juden und Deutsche im polnischen Haus. Tomaszów Mazowiecki 1914–1939. Berlin 2001, p. 227.
  6. 1 2 Halik Kochanski (2012). The Eagle Unbowed: Poland and the Poles in the Second World War, pp. 612–613. Cambridge, MA: Harvard University Press. ISBN   978-0-674-06814-8.
  7. Halik Kochanski (2012). The Eagle Unbowed: Poland and the Poles in the Second World War, pp. 441–444.
  8. "Lange to yield citizenship to be Poles' envoy". Chicago Daily Tribune. 20 August 1945.
  9. 1 2 Dalmia, Shikha, 2012, Cheer Up, Liberty Lovers, Schumpeter Was Wrong, Reason , Feb. 23.
  10. Robin Hahnel, 2005.Economic Justice and Democracy, Routledge, page 170

Related Research Articles

A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, participatory or Soviet-type forms of economic planning. The level of centralization or decentralization in decision-making and participation depends on the specific type of planning mechanism employed.

The economic calculation problem is a criticism of using economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article "Economic Calculation in the Socialist Commonwealth" and later expanded upon by Friedrich Hayek.

<span class="mw-page-title-main">Economic system</span> System of ownership, production, and exchange

An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community.

Maurice Herbert Dobb was an English economist at Cambridge University and a Fellow of Trinity College, Cambridge. He is remembered as one of the pre-eminent Marxist economists of the 20th century.

In economics, a price system is a system through which the valuations of any forms of property are determined. All societies use price systems in the allocation and exchange of resources as a consequence of scarcity. Even in a barter system with no money, price systems are still utilized in the determination of exchange ratios between the properties being exchanged.

<span class="mw-page-title-main">Michał Kalecki</span> Polish economist

Michał Kalecki was a Polish Marxian economist. Over the course of his life, Kalecki worked at the London School of Economics, University of Cambridge, University of Oxford and Warsaw School of Economics and was an economic advisor to the governments of Poland, France, Cuba, Israel, Mexico and India. He also served as the deputy director of the United Nations Economic Department in New York City.

<span class="mw-page-title-main">Abba P. Lerner</span> Russian-British economist (1903–1982)

Abraham "Abba" Ptachya Lerner was a Russian-born American-British economist.

The Lange model is a neoclassical economic model for a hypothetical socialist economy based on public ownership of the means of production and a trial-and-error approach to determining output targets and achieving economic equilibrium and Pareto efficiency. In this model, the state owns non-labor factors of production, and markets allocate final goods and consumer goods. The Lange model states that if all production is performed by a public body such as the state, and there is a functioning price mechanism, this economy will be Pareto-efficient, like a hypothetical market economy under perfect competition. Unlike models of capitalism, the Lange model is based on direct allocation, by directing enterprise managers to set price equal to marginal cost in order to achieve Pareto efficiency. By contrast, in a capitalist economy, private owners seek to maximize profits, while competitive pressures are relied on to indirectly lower the price, this discourages production with high marginal cost and encourages economies of scale.

Economic planning is a resource allocation mechanism based on a computational procedure for solving a constrained maximization problem with an iterative process for obtaining its solution. Planning is a mechanism for the allocation of resources between and within organizations contrasted with the market mechanism. As an allocation mechanism for socialism, economic planning replaces factor markets with a procedure for direct allocations of resources within an interconnected group of socially owned organizations which together comprise the productive apparatus of the economy.

<span class="mw-page-title-main">Enrico Barone</span>

Enrico Barone was a soldier, military historian, and an economist.

<span class="mw-page-title-main">Edward Lipiński (economist)</span> Polish economist, intellectual, and human rights activist (1888–1986)

Edward Lipiński was a Polish economist, intellectual, social critic and human rights advocate. During the almost seven decades of his career, he held a series of academic and government advisory positions, founded several organizations, published books and essays on economic policy. His works concerned business cycles, growth theory, history of economic thought and other areas of economics. Lipiński was a fighter for Polish independence and a socialist activist in the Second Polish Republic. In the Polish People's Republic, Lipiński was an influential Marxian economist and a long-term member of the communist party. Outspoken in his criticism of government policies, he became active in opposition circles.

<span class="mw-page-title-main">Neoclassical synthesis</span> Postwar academic movement in economics

The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a neoclassical economics academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It was formulated most notably by John Hicks (1937), Franco Modigliani (1944), and Paul Samuelson (1948) dominated economics in the post-war period and formed the mainstream of macroeconomic thought in the 1950s 1960s, and 1970s.

<span class="mw-page-title-main">Fred M. Taylor</span> American economist and educator

Fred Manville Taylor was a U.S. economist and educator best known for his contribution to the theory of market socialism. He taught mostly history at Albion College from 1879 to 1892. He taught in the department of economics at University of Michigan from 1892 to 1929 after receiving his Ph.D. in political philosophy there in 1888. His Principles of Economics (1911) went through 9 editions. Of a libertarian ideology, he was noted as a clear and rigorous expositor of economic theory in the partial-equilibrium lineage of Alfred Marshall.

Don Patinkin was an American-born Israeli monetary economist, and the President of the Hebrew University of Jerusalem.

<span class="mw-page-title-main">Neo-Marxism</span> Modern politico-economic ideology

Neo-Marxism is a Marxist school of thought encompassing 20th-century approaches that amend or extend Marxism and Marxist theory, typically by incorporating elements from other intellectual traditions such as critical theory, psychoanalysis, or existentialism.

<span class="mw-page-title-main">Socialist mode of production</span> Marxian economy centered around use value, planning and contribution-based distribution

The socialist mode of production, sometimes referred to as the communist mode of production, or simply (Marxian) socialism or communism as Karl Marx and Friedrich Engels used the terms communism and socialism interchangeably, is a specific historical phase of economic development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism within Marxist theory. The Marxist definition of socialism is that of production for use-value, therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning. According to Marx, distribution of products is based on the principle of "to each according to his needs", however soviet models have often distributed products based on the principle of "to each according to his contribution". The social relations of socialism are characterized by the proletariat effectively controlling the means of production, either through cooperative enterprises or by public ownership or private artisanal tools and self-management. Surplus value goes to the working class and hence society as a whole.

<span class="mw-page-title-main">Marxian economics</span> School of economic thought

Marxian economics, or the Marxian school of economics, is a heterodox school of political economic thought. Its foundations can be traced back to Karl Marx's critique of political economy. However, unlike critics of political economy, Marxian economists tend to accept the concept of the economy prima facie. Marxian economics comprises several different theories and includes multiple schools of thought, which are sometimes opposed to each other; in many cases Marxian analysis is used to complement, or to supplement, other economic approaches. Because one does not necessarily have to be politically Marxist to be economically Marxian, the two adjectives coexist in usage, rather than being synonymous: They share a semantic field, while also allowing both connotative and denotative differences.

Market socialism is a type of economic system involving the public, cooperative, or social ownership of the means of production in the framework of a market economy, or one that contains a mix of worker-owned, nationalized, and privately owned enterprises. The central idea is that, as in capitalism, businesses compete for profits, however they will be "owned, or at least governed," by those who work in them. Market socialism differs from non-market socialism in that the market mechanism is utilized for the allocation of capital goods and the means of production. Depending on the specific model of market socialism, profits generated by socially owned firms may variously be used to directly remunerate employees, accrue to society at large as the source of public finance, or be distributed amongst the population in a social dividend.

Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist economic systems. A socialist economic system is characterized by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use rather than for profit. Socialist systems that utilize markets for allocating capital goods and factors of production among economic units are designated market socialism. When planning is utilized, the economic system is designated as a socialist planned economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind to value resources and goods.

The socialist calculation debate, sometimes known as the economic calculation debate, was a discourse on the subject of how a socialist economy would perform economic calculation given the absence of the law of value, money, financial prices for capital goods and private ownership of the means of production. More specifically, the debate was centered on the application of economic planning for the allocation of the means of production as a substitute for capital markets and whether or not such an arrangement would be superior to capitalism in terms of efficiency and productivity.