Everything about Oskar R Lange totally explained
Oskar Ryszard Lange (
July 27,
1904 in
Tomaszów Mazowiecki, then
Russian Empire –
October 2,
1965 in
London,
United Kingdom) was a
Polish economist and
diplomat. He was most known for advocating the use of market pricing tools in
socialist systems and providing the earliest model of
market socialism.
Personal life
Lange was the son of a textile merchant. He studied
law and
economics at
Poznań and
Kraków, where he graduated in 1928. In 1934, a
Rockefeller fellowship brought him to
England, from where he emigrated to the
United States in 1937. He then became a professor at the
University of Chicago in 1938, and was
naturalized U.S. citizen in 1943. Towards the end of
World War II, in a highly controversial move, Lange broke with the Polish government-in-exile in
London and transferred his support to the
Lublin Committee sponsored by the
Soviet Union. Lange served as a go-between
Franklin Delano Roosevelt and
Joseph Stalin during the post-war discussion on Poland. Lange returned to the United States at the end of May, met with
Free Polish London Exile Prime Minister
Stanisław Mikołajczyk, who happened then to be in
Washington, D.C., and stressed how reasonable
Joseph Stalin was prepared to be, and asked the
State Department to put pressure on the exiled Poles. Lange's covername with the
KGB was FRIEND. He was alleged to have been recruited into the NKVD by Boleslaw Gebert
After the War ended in 1945, Lange renounced his American citizenship and returned to Poland. Lange returned to the United States in 1946 as the new Polish Communist régime's first Ambassador to the United States. In 1946, Lange served as the Polish delegate to the
United Nations Security Council. He went back to Poland in 1947, where he continued working for the Polish government, while continuing his academic pursuits at the
University of Warsaw and the
Main School of Planning and Statistics. Lange was one of four acting
Chairmen of the Council of State (
head of state) from
August 7, to
August 12,
1964.
In 1974, the
Wrocław University of Economics was named after Lange (the official Polish name is
Akademia Ekonomiczna we Wrocławiu im. Oskara Langego).
Academic contributions
The bulk of Lange's contributions to economics came during his American interlude of 1933-1945. Despite being an ardent
socialist, Lange deplored the
Marxian labor theory of value, being very much a believer in the
Neoclassical theory of price. In the history of economics, he's probably best known for his work
On the Economic Theory of Socialism published in 1936, where he famously put Marxian 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 occurred rather than relying on a free price mechanism. 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 their 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. Therefore, it would be a simulation of the market mechanism, which Lange thought 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 economics.
By this idea, Lange also argued that a state-run economy could at least be as efficient as -— if not more efficient than —- a free market economy. He argued that this was possible if the government planners used the price system as if in a market economy and instructed state industry managers to respond parametrically to the state-determined prices (minimize cost, etc.). Lange's argument was one of the pivots of the
Socialist Calculation Debate with the
Austrian School.
His works provided the earliest model of
market socialism.
Besides the work on market socialism, he also contributed in various areas. Lange 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, on to his remarkable "integration" of money into general equilibrium theory. Lange made several seminal contributions to the development of the
Neoclassical synthesis (for example 1938, 1943, 1944). He worked on integrating
classical and
neoclassical economics into a single theoretical structure (for example 1959). In his final years, Lange also worked on cybernetics and the use of computers for economic planning.
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