Abraham "Abba" Ptachya Lerner (also Abba Psachia Lerner; 28 October 1903 – 27 October 1982) was a Russian-born American-British
economist
An economist is a professional and practitioner in the social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this field there are ...
.
Biography
Born in
Novoselytsia,
Bessarabia,
Russian Empire
The Russian Empire was an empire and the final period of the Russian monarchy from 1721 to 1917, ruling across large parts of Eurasia. It succeeded the Tsardom of Russia following the Treaty of Nystad, which ended the Great Northern War. ...
, Lerner grew up in a
Jewish
Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""The ...
family, which emigrated to Great Britain when Lerner was three years old. Lerner grew up in London's
East End and from age 16 worked as a machinist, a teacher in
Hebrew
Hebrew (; ; ) is a Northwest Semitic language of the Afroasiatic language family. Historically, it is one of the spoken languages of the Israelites and their longest-surviving descendants, the Jews and Samaritans. It was largely preserved ...
schools, and as an entrepreneur. In 1929, Lerner entered the
London School of Economics
The London School of Economics and Political Science (LSE) is a public university, public research university located in London, England and a constituent college of the federal University of London. Founded in 1895 by Fabian Society members Sidn ...
, where he studied under
Friedrich Hayek
Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Haye ...
. A six-month stay at
Cambridge
Cambridge ( ) is a College town, university city and the county town in Cambridgeshire, England. It is located on the River Cam approximately north of London. As of the 2021 United Kingdom census, the population of Cambridge was 145,700. Cam ...
in 1934–1935 brought him into contact with
John Maynard Keynes. In 1937, Lerner emigrated to the United States. While in the US, he befriended intellectual opponents
Milton Friedman
Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
and
Barry Goldwater.
Lerner never stayed at one institution long, serving on the faculties of nearly a dozen universities and accepting over 20 visiting appointments.
Lerner was 62 when he was given a professorship at the
University of California, Berkeley
The University of California, Berkeley (UC Berkeley, Berkeley, Cal, or California) is a public land-grant research university in Berkeley, California. Established in 1868 as the University of California, it is the state's first land-grant u ...
in 1965 and left after reaching mandatory retirement age six years later.
[ During his time there, Lerner criticized the unrest caused by the student protests as a threat to ]academic freedom
Academic freedom is a moral and legal concept expressing the conviction that the freedom of inquiry by faculty members is essential to the mission of the academy as well as the principles of academia, and that scholars should have freedom to teac ...
.[
Abba Lerner taught in the Economics Department at Florida State University, for several years. He stopped teaching after he suffered a stroke while visiting Israel.
Although Lerner never received the Sveriges Riksbank's ]Nobel Memorial Prize in Economic Sciences
The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...
, he has been recognized as one of the greatest economists of his era.
Research
* Lerner developed a model of market socialism which featured decentralised market pricing proportional to marginal social cost[ Tibor Scitovsky, ( 9872008). "Lerner, Abba Ptachya (1905–1982)," '' The New Palgrave Dictionary of Economics'', 2nd Edition. Previe]
link.
/ref> and in so doing contributed to the Lange–Lerner–Taylor theorem
The Lange model (or Lange–Lerner theorem) 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 econ ...
.
* Lerner contributed to the idea of a social dividend by incorporating it into Oskar R. Lange's original model of socialism, where the social dividend would be distributed to each citizen as a lump-sum payment.[''Who framed 'social dividend'?'', by Van Tier, Walter. March 2002. USBIG Conference, CUNY.]
* The use of fiscal policy
In economics and political science, fiscal policy is the use of government revenue collection (taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variab ...
and monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...
as the twin tools of Keynesian economics is credited to Lerner by historians such as David Colander.
* The Lerner symmetry theorem The Lerner symmetry theorem is a result used in international trade theory, which states that an ad valorem import tariff (a percentage of value or an amount per unit) will have the same effects as an export tax. The theorem is based on the observ ...
states that an import tariff can have the same effects as an export tax.
* The Lerner Index
The Lerner index, formalized in 1934 by British economist of Russian origin Abba Lerner, is a measure of a firm's market power.
Definition
The Lerner index is defined by:
L=\frac
where P is the market price set by the firm and MC is the firm's ...
measures potential monopoly power as mark-up of price over marginal cost divided by price or equivalently the negative inverse of demand elasticity.
* Lerner improved a formula of Alfred Marshall, which is known since as the Marshall–Lerner condition.
* Lerner improved the calculations made by Wilhelm Launhardt
Carl Wilhelm Friedrich Launhardt (7 April 1832 – 14 May 1918) was a German mathematician and economist.
Launhardt was born in Hannover, the capital of the Kingdom of Hannover. He studied and taught at Hannover's technical school. Following H ...
on the effect of terms of trade
The terms of trade (TOT) is the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods.
An i ...
.
* Lerner developed the concept of distributive efficiency In welfare economics, distributive efficiency occurs when goods and services are received by those who have the greatest need for them. Abba Lerner first proposed the idea of distributive efficiency in his 1944 book '' The Economics of Control''.
...
, which argued that economic equality will produce the greatest probable total utility
As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosoph ...
with a given amount of wealth.
* Based on effective demand
In economics, effective demand (ED) in a market is the demand for a product or service which occurs when purchasers are constrained in a different market. It contrasts with notional demand, which is the demand that occurs when purchasers are not ...
and chartalism
In macroeconomics, chartalism is a heterodox theory of money that argues that money originated historically with states' attempts to direct economic activity rather than as a spontaneous solution to the problems with barter or as a means with whi ...
, Lerner developed functional finance Functional finance is an economic theory proposed by Abba P. Lerner, based on effective demand principles and chartalism. It states that government should finance itself to meet explicit goals, such as taming the business cycle, achieving full emp ...
, a theory of purposeful financing (and funding) to meet explicit goals, including full employment. This is in contrast to “sound finance” principles where taxation is designed solely to fund expenditure or finance investment and low inflation.
* The Lerner–Samuelson theorem Factor price equalization is an economics, economic theory, by Paul A. Samuelson (1948), which states that the prices of identical factors of production, such as the wage rate or the rent of capital, will be equalized across countries as a result of ...
goes back to Lerner.[Murray C. Kemp, 2008. ''International Trade Theory: A Critical Review'', Routledge, pp]
xiv–xvii.Description.
/ref>
References
External links
"Abba Lerner"
*
* Mathew Forstater (July 1999)
"Functional Finance and Full Employment: Lessons from Lerner for Today?"
''Working Paper''. No. 272. The Jerome Levy Economics Institute
Founded in 1986 as the Jerome Levy Economics Institute, the Levy Economics Institute of Bard College is a nonprofit, nonpartisan public policy think tank. The purpose of its research and other activities is to enable scholars and leaders in busi ...
.
*
{{DEFAULTSORT:Lerner, Abba P.
1903 births
1982 deaths
Bessarabian Jews
Emigrants from the Russian Empire to the United Kingdom
British emigrants to the United States
Alumni of the London School of Economics
Post-Keynesian economists
Welfare economists
20th-century British economists
Fellows of the Econometric Society
Distinguished Fellows of the American Economic Association
Academics of the London School of Economics