Oskar R. Lange | |
|---|---|
 Langec. 1940s | |
| Born | Oskar Ryszard Lange 27 July 1904 |
| Died | 2 October 1965(1965-10-02) (aged 61) London, England |
| Academic background | |
| Education | University of Kraków |
| Influences | |
| Academic work | |
| Discipline | Political economy |
| School or tradition | Neo-Marxian economics[1] |
| Notable ideas | Lange model Market socialism Theorems of welfare economics |
Oskar Ryszard Lange (Polish:[ˈlanɡɛ]; 27 July 1904 – 2 October 1965) was a Polisheconomist and diplomat. He is best known for advocating the use ofmarket pricing tools insocialist systems and providing a model ofmarket socialism.[2] He responded to theeconomic calculation problem proposed byLudwig von Mises andFriedrich Hayek by claiming that managers in acentrally-planned economy would be able to monitorsupply and demand through increases and declines ininventories of goods, and advocated thenationalization of major industries.[3] During his stay in theUnited States, Lange was an academic teacher and researcher inmathematical economics. Later insocialist Poland, he was a member of theCentral Committee of thePolish United Workers' Party.[4]
Lange was born inTomaszów Mazowiecki as son of theProtestant 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 studiedlaw andeconomics at theUniversity of Kraków, where he defended adoctoral dissertation in 1928 under Adam Krzyżanowski. From 1926 to 1927 Lange worked at the Ministry of Labor inWarsaw, and then was a research assistant at the University of Kraków (1927–31). He married Irene Oderfeld in 1932. In 1934, aRockefeller Foundation fellowship brought him toEngland, from where he emigrated to theUnited States in 1937. Lange became a professor at theUniversity of Chicago in 1938 and wasnaturalized as a U.S. citizen in 1943.[6]
Joseph Stalin, who identified Lange as a person of leftist and pro-Soviet sympathies, prevailed on PresidentFranklin D. Roosevelt to obtain a passport for Lange to visit theSoviet 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. TheState 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 establishedPolish American Congress condemned him and defended the interests of the London-basedPolish government-in-exile. Lange returned to the United States at the end of May and met, at Roosevelt's request, with Prime MinisterStanisław Mikołajczyk of the government-in-exile, who was on a visit inWashington. 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 ofWorld War II, Lange broke with the Polish government-in-exile and transferred his support to theLublin Committee (PKWN) sponsored by the Soviet Union. Lange served as a go-between for Roosevelt and Stalin during theYalta Conference discussions on post-war Poland.
After the war ended in 1945, Lange returned to Poland. He thenrenounced his American citizenship and went back to the US in the same year as thePolish People's Republic's first ambassador to the United States.[8] In 1946, Lange also served as Poland's delegate to theUnited Nations Security Council. From 1947 he lived in Poland.[6]
Oskar Lange worked for the Polish government while continuing his academic pursuits at theUniversity of Warsaw and theMain School of Planning and Statistics. He wasdeputy chairman of thePolish Council of State in 1961–65, and as such one of four actingchairmen of the Council of State (ahead of state function).
The bulk of Lange's contributions to economics came during his American interlude of 1933–45. Despite being an ardentsocialist, Lange deplored theMarxianlabor theory of value because he was very much a believer in theneoclassical theory of price. In the history of economics, he is probably best known for his workOn the Economic Theory of Socialism published in 1936, where he famously putMarxian economics andneoclassical economics together.
In the book, Lange advocated the use ofmarket tools (especially the neoclassical pricing theory) in economic planning of socialism andMarxism. 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, suchsimulation of market mechanism would be capable of effectively managingsupply and demand. Proponents of this idea argued that it combines the advantages of amarket economy with those ofsocialist economy.
With the utilization of this idea, Lange claimed, astate-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 thesocialist calculation debate with theAustrian School economists. At that time, the view among English socialists of theFabian Society was that Lange had won the debate.[9] His works provided the earliest model ofmarket socialism.[10] Hayek's essay entitledThe 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.[11]
Lange also made contributions in various other areas. He was one of the leading lights of the "Paretian Revival" ingeneral equilibrium theory during the 1930s. In 1942, he provided one of the first proofs of theFirst and Second Welfare Theorems. He initiated the analysis of stability of general equilibrium (1942, 1944). His critique of thequantity theory of money (1942) prompted his studentDon Patinkin to develop his remarkable "integration" of money into general equilibrium theory. Lange made several seminal contributions to the development ofneoclassical synthesis (1938, 1943, 1944). He worked on integratingclassical economics and neoclassical economics into a single theoretical structure (e.g. 1959). In his final years, Lange also worked oncybernetics and the use of computers foreconomic planning.
TheInternational Institute of Social Studies (ISS) awarded Oskar Lange an honorary fellowship in 1962.
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