Oskar R. Lange
|Born||27 July 1904|
|Died||2 October 1965 61) (aged|
|Influences||Karl Marx, Vilfredo Pareto, Léon Walras|
|Contributions||Paretian Revival in general equilibrium theory|
|Part of a series on|
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.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. 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.
Poland, officially the Republic of Poland, is a country located in Central Europe. It is divided into 16 administrative subdivisions, covering an area of 312,696 square kilometres (120,733 sq mi), and has a largely temperate seasonal climate. With a population of approximately 38.5 million people, Poland is the sixth most populous member state of the European Union. Poland's capital and largest metropolis is Warsaw. Other major cities include Kraków, Łódź, Wrocław, Poznań, Gdańsk, and Szczecin.
Economics is the social science that studies the production, distribution, and consumption of goods and services.
A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and resource allocation in a society. Markets allow any trade-able item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale.
Lange was born in Tomaszów Mazowiecki as son of Arthur Julius Lange and Sophie Albertine Rosner. His ancestors had emigrated at the beginning of the 19th century from Germany to Poland.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.
Tomaszów Mazowieckipronounced [tɔˈmaʂuf mazɔˈvjɛt͡skʲi] is a town in central Poland with 62,649 inhabitants (2018). It is situated in the Łódź Voivodeship ; previously, it was part of Piotrków Trybunalski Voivodeship (1975–1998). Tomaszów occupies an area of 41.3 square kilometres (15.9 sq mi) as of 2002.
Law is a system of rules that are created and enforced through social or governmental institutions to regulate behavior. It has been defined both as "the Science of Justice" and "the Art of Justice". Law is a system that regulates and ensures that individuals or a community adhere to the will of the state. State-enforced laws can be made by a collective legislature or by a single legislator, resulting in statutes, by the executive through decrees and regulations, or established by judges through precedent, normally in common law jurisdictions. Private individuals can create legally binding contracts, including arbitration agreements that may elect to accept alternative arbitration to the normal court process. The formation of laws themselves may be influenced by a constitution, written or tacit, and the rights encoded therein. The law shapes politics, economics, history and society in various ways and serves as a mediator of relations between people.
The Jagiellonian University is a research university in Kraków, Poland.
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-establish 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 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.
Joseph Vissarionovich Stalin was a Georgian revolutionary and Soviet politician who led the Soviet Union from the mid–1920s until 1953 as General Secretary of the Communist Party of the Soviet Union (1922–1953) and Premier (1941–1953). Initially presiding over a collective leadership as first among equals, by the 1930s he was the country's de facto dictator. A communist ideologically committed to the Leninist interpretation of Marxism, Stalin formalised these ideas as Marxism–Leninism, while his own policies are known as Stalinism.
Franklin Delano Roosevelt, often referred to by initials FDR, was an American statesman and political leader who served as the 32nd president of the United States from 1933 until his death in 1945. A member of the Democratic Party, he won a record four presidential elections and became a central figure in world events during the first half of the 20th century. Roosevelt directed the federal government during most of the Great Depression, implementing his New Deal domestic agenda in response to the worst economic crisis in U.S. history. As a dominant leader of his party, he built the New Deal Coalition, which realigned American politics into the Fifth Party System and defined American liberalism throughout the middle third of the 20th century. His third and fourth terms were dominated by World War II, which ended shortly after he died in office. He is rated by scholars as one of the three greatest U.S. presidents, along with George Washington and Abraham Lincoln, but has also been subject to substantial criticism.
The Soviet Union, officially the Union of Soviet Socialist Republics (USSR), was a Marxist-Leninist sovereign state in Eurasia that existed from 1922 to 1991. Nominally a union of multiple national Soviet republics, its government and economy were highly centralized. The country was a one-party state, governed by the Communist Party with Moscow as its capital in its largest republic, the Russian Soviet Federative Socialist Republic. Other major urban centres were Leningrad, Kiev, Minsk, Tashkent, Alma-Ata, and Novosibirsk. It spanned over 10,000 kilometres (6,200 mi) east to west across 11 time zones, and over 7,200 kilometres (4,500 mi) north to south. It had five climate zones: tundra, taiga, steppes, desert and mountains.
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.
World War II, also known as the Second World War, was a global war that lasted from 1939 to 1945. The vast majority of the world's countries—including all the great powers—eventually formed two opposing military alliances: the Allies and the Axis. A state of total war emerged, directly involving more than 100 million people from over 30 countries. The major participants threw their entire economic, industrial, and scientific capabilities behind the war effort, blurring the distinction between civilian and military resources. World War II was the deadliest conflict in human history, marked by 70 to 85 million fatalities, most of whom were civilians in the Soviet Union and China. It included massacres, the genocide of the Holocaust, strategic bombing, premeditated death from starvation and disease, and the only use of nuclear weapons in war.
The Polish Committee of National Liberation, also known as the Lublin Committee, was an executive governing authority established by the communists in Poland at the later stage of World War II. It was officially proclaimed on 22 July 1944 in Chełm, installed on 26 July in Lublin and placed formally under the direction of the State National Council. The PKWN was a provisional entity functioning in opposition to the Polish government-in-exile, the internationally recognized government of Poland. The PKWN exercised control over Polish territory retaken from Nazi Germany by the Soviet Red Army and the Polish People's Army. It was sponsored and controlled by the Soviet Union and dominated by Polish communists.
The Yalta Conference, also known as the Crimea Conference and code-named the Argonaut Conference, held February 4–11 1945, was the World War II meeting of the heads of government of the United States, the United Kingdom, and the Soviet Union to discuss the postwar reorganization of Germany and Europe. The three states were represented by President Franklin D. Roosevelt, Prime Minister Winston Churchill, and Premier Joseph Stalin, respectively. The conference was held near Yalta in Crimea, Soviet Union, within the Livadia, Yusupov, and Vorontsov Palaces.
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.In 1946, Lange also served as Poland's delegate to the United Nations Security Council. From 1947 he lived in Poland.
The Polish People's Republic was a country in Central Europe that existed from 1947 to 1989, and the predecessor of the modern democratic Republic of Poland. With a population of approximately 37.9 million inhabitants near the end of its existence, it was the most populous state of the Eastern Bloc after the Soviet Union. Having a unitary Marxist–Leninist communist government imposed by the Soviet Union following World War II, it was also one of the main signatories of the Warsaw Pact. The largest city and official capital since 1947 was Warsaw, followed by industrial Łódź and cultural Kraków.
The United Nations Security Council (UNSC) is one of the six principal organs of the United Nations (UN), charged with ensuring international peace and security, accepting new members to the United Nations and approving any changes to its charter. Its powers include the establishment of peacekeeping operations and international sanctions as well as the authorization of military actions through resolutions – it is the only body of the United Nations with the authority to issue binding resolutions to member states. The council held its first session on 17 January 1946.
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).
The University of Warsaw, established in 1816, is the largest university in Poland. It employs over 6,000 staff including over 3,100 academic educators. It provides graduate courses for 53,000 students. The University offers some 37 different fields of study, 18 faculties and over 100 specializations in Humanities, technical as well as Natural Sciences.
The Council of State of the Republic of Poland was introduced by the Small Constitution of 1947. It was preceded by the State National Council created in 1943 by Gomułka. The Council of State consisted of the President of the Republic of Poland, the Marshal and Vice-marshals of the Sejm, President of the Supreme Chamber of Control and other members. The Council of State had the power to approve decrees issued by the Council of Ministers of the Sejm, exercise the supreme control over the local national councils, approve promulgation of laws concerning the budget and military draft, declare a state of emergency and martial law, originate bills and others.
A head of state is the public persona who officially represents the national unity and legitimacy of a sovereign state. Depending on the country's form of government and separation of powers, the head of state may be a ceremonial figurehead or concurrently the head of government. In a parliamentary system, such as India, the head of state usually has mostly ceremonial powers, with a separate head of government. However in some parliamentary systems, like South Africa, there is an executive president that is both head of state and head of government. Likewise, in some parliamentary systems the head of state is not the head of government, but still has significant powers, for example Morocco. In contrast, a semi-presidential system, such as France, has both heads of state and government as the de facto leaders of the nation. Meanwhile, in presidential systems such as the United States, the head of state is also the head of government.
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.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.His works provided the earliest model of market socialism.
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.
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.
In economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the interaction of demand and supply will result in an overall general equilibrium. General equilibrium theory contrasts to the theory of partial equilibrium, which only analyzes single markets.
A market economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.
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. As such, an economic system is a type of social system. The mode of production is a related concept. All economic systems have three basic questions to ask: what to produce, how to produce and in what quantities and who receives the output of production.
Maurice Herbert Dobb was a British 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 component of any economic system that uses prices expressed in any form of money for the valuation and distribution of goods and services and the factors of production. Except for possible remote and primitive communities, all modern societies use price systems to allocate resources, although price systems are not used exclusively for all resource allocation decisions.
Michał Kalecki was a Polish 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.
Abraham "Abba" Ptachya Lerner was a Russian-born 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 managers are instructed to maximize profits for private owners, while competitive pressures are relied on to indirectly lower the price to equal marginal cost.
Economic planning is a mechanism for the allocation of resources between and within organizations which is held in contrast to the market mechanism. As an allocation mechanism for socialism, economic planning replaces factor markets with a direct allocation of resources within a single or interconnected group of socially owned organizations.
Enrico Barone was a soldier, military historian, and an economist.
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.
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.
Production for use is a phrase referring to the principle of economic organization and production taken as a defining criterion for a socialist economy. It is held in contrast to production for profit. This criterion is used to distinguish socialism from capitalism, and was one of the fundamental defining characteristics of socialism initially shared by Marxian socialists, evolutionary socialists, social anarchists and Christian socialists.
Don Patinkin was an Israeli-American monetary economist, and the president of Hebrew University in Jerusalem.
A decentralized-planned economy or decentrally-planned economy is a type of planned economy in which the investment and allocation of consumer and capital goods is explicated accordingly to an economy-wide plan built and operatively coordinated through a distributed network of disparate economic agents or even production units itself. Decentralized planning is usually held in contrast to centralized planning, in particular the Soviet Union's command economy, where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a single central authority. Decentralized planning can take shape both in the context of a mixed economy as well as in a post-capitalist economic system.
The terms neo-Marxian, post-Marxian and radical political economics were first used to refer to a distinct tradition of economic theory in the 1970s and 1980s that stems from the Marxian economic thought. Many of the leading figures were associated with the leftist Monthly Review School.
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. 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.
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.
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