Oskar Ryszard Lange (; 27 July 1904 – 2 October 1965) was a Polish

economist An economist is a professional and practitioner in the social sciences, 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 ...

and diplomat. He is best known for advocating the use of

market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market *Marketing, the act of sat ...

pricing tools in

socialist Socialism is an economic ideology, economic and political philosophy encompassing diverse Economic system, economic and social systems characterised by social ownership of the means of production, as opposed to private ownership. It describes ...

systems and providing a model of

market socialism Market socialism is a type of economic system involving social ownership of the means of production within the framework of a market economy. Various models for such a system exist, usually involving cooperative enterprises and sometimes a mix ...

. He responded to the

economic calculation problem The economic calculation problem (ECP) is a criticism of using central economic planning as a substitute for Market (economics), market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article ...

proposed by

Ludwig von Mises Ludwig Heinrich Edler von Mises (; ; September 29, 1881 – October 10, 1973) was an Austrian-American political economist and philosopher of the Austrian school. Mises wrote and lectured extensively on the social contributions of classical l ...

and

Friedrich Hayek Friedrich August von Hayek (8 May 1899 – 23 March 1992) was an Austrian-born British academic and philosopher. He is known for his contributions to political economy, political philosophy and intellectual history. Hayek shared the 1974 Nobe ...

by claiming that managers in a centrally-planned economy would be able to monitor

supply and demand In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris_paribus#Applications, holding all else equal, the unit price for a particular Good (economics), good ...

through increases and declines in

inventories Inventory (British English) or stock (American English) is a quantity of the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying ...

of goods, and advocated the

nationalization Nationalization (nationalisation in British English) is the process of transforming privately owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization contrasts with p ...

of major industries. During his stay in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

, Lange was an academic teacher and researcher in

mathematical economics Mathematical economics is the application of Mathematics, mathematical methods to represent theories and analyze problems in economics. Often, these Applied mathematics#Economics, applied methods are beyond simple geometry, and may include diff ...

. Later in socialist Poland, he was a member of the Central Committee of the

Polish United Workers' Party The Polish United Workers' Party (, ), commonly abbreviated to PZPR, was the communist party which ruled the Polish People's Republic as a one-party state from 1948 to 1989. The PZPR had led two other legally permitted subordinate minor parti ...

.Witold Gadomski, ''Rynek trzyma smycz adomski o książce Belki' (The market holds the leash adomski about Belka's book. 11 June 2016
Rynek trzyma smycz
wyborcza.pl. Retrieved 26 June 2016.

Career

Lange was born in

Tomaszów Mazowiecki Tomaszów Mazowiecki (, or ''Tomashuv'') is a city in central Poland with 60,529 inhabitants (2021). It is the fourth most populous city in the Łódź Voivodeship and the second with free public transport. It is the seat of Tomaszów County, Ł ...

as son of the

Protestant Protestantism is a branch of Christianity that emphasizes Justification (theology), justification of sinners Sola fide, through faith alone, the teaching that Salvation in Christianity, salvation comes by unmerited Grace in Christianity, divin ...

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.''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. He studied

law Law is a set of rules that are created and are enforceable by social or governmental institutions to regulate behavior, with its precise definition a matter of longstanding debate. It has been variously described as a science and as the ar ...

and

economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...

at the University of Kraków, where he defended a

doctoral dissertation A thesis (: theses), or dissertation (abbreviated diss.), is a document submitted in support of candidature for an academic degree or professional qualification presenting the author's research and findings.International Standard ISO 7144: D ...

in 1928 under Adam Krzyżanowski. From 1926 to 1927 Lange worked at the Ministry of Labor in

Warsaw Warsaw, officially the Capital City of Warsaw, is the capital and List of cities and towns in Poland, largest city of Poland. The metropolis stands on the Vistula, River Vistula in east-central Poland. Its population is officially estimated at ...

, and then was a research assistant at the University of Kraków (1927–31). He married Irene Oderfeld in 1932. In 1934, a

Rockefeller Foundation The Rockefeller Foundation is an American private foundation and philanthropic medical research and arts funding organization based at 420 Fifth Avenue, New York City. The foundation was created by Standard Oil magnate John D. Rockefeller (" ...

fellowship brought him to

England England is a Countries of the United Kingdom, country that is part of the United Kingdom. It is located on the island of Great Britain, of which it covers about 62%, and List of islands of England, more than 100 smaller adjacent islands. It ...

, from where he emigrated to the

in 1937. Lange became a professor at the

University of Chicago The University of Chicago (UChicago, Chicago, or UChi) is a Private university, private research university in Chicago, Illinois, United States. Its main campus is in the Hyde Park, Chicago, Hyde Park neighborhood on Chicago's South Side, Chic ...

in 1938 and was

naturalized Naturalization (or naturalisation) is the legal act or process by which a non-national of a country acquires the nationality of that country after birth. The definition of naturalization by the International Organization for Migration of the ...

as a U.S. citizen in 1943. Halik Kochanski (2012). The Eagle Unbowed: Poland and the Poles in the Second World War, pp. 612–613. Cambridge, MA: Harvard University Press. .

Joseph Stalin Joseph Vissarionovich Stalin (born Dzhugashvili; 5 March 1953) was a Soviet politician and revolutionary who led the Soviet Union from 1924 until Death and state funeral of Joseph Stalin, his death in 1953. He held power as General Secret ...

, who identified Lange as a person of leftist and pro-Soviet sympathies, prevailed on President

Franklin D. Roosevelt Franklin Delano Roosevelt (January 30, 1882April 12, 1945), also known as FDR, was the 32nd president of the United States, serving from 1933 until his death in 1945. He is the longest-serving U.S. president, and the only one to have served ...

to obtain a passport for Lange to visit the

Soviet Union The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...

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 The United States Department of State (DOS), or simply the State Department, is an executive department of the U.S. federal government responsible for the country's foreign policy and relations. Equivalent to the ministry of foreign affairs o ...

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 London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...

-based

Polish government-in-exile The Polish government-in-exile, officially known as the Government of the Republic of Poland in exile (), was the government in exile of Poland formed in the aftermath of the Invasion of Poland of September 1939, and the subsequent Occupation ...

. 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.Halik Kochanski (2012). The Eagle Unbowed: Poland and the Poles in the Second World War, pp. 441–444. Towards the end of

World War II World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...

, 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 The Yalta Conference (), held 4–11 February 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 sta ...

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 The Polish People's Republic (1952–1989), formerly the Republic of Poland (1947–1952), and also often simply known as Poland, was a country in Central Europe that existed as the predecessor of the modern-day democratic Republic of Poland. ...

's first ambassador to the United States. In 1946, Lange also served as Poland's delegate to the

United Nations Security Council The United Nations Security Council (UNSC) is one of the six principal organs of the United Nations (UN) and is charged with ensuring international peace and security, recommending the admission of new UN members to the General Assembly, an ...

. From 1947 he lived in Poland. Oskar Lange worked for the Polish government while continuing his academic pursuits at the

University of Warsaw The University of Warsaw (, ) is a public university, public research university in Warsaw, Poland. Established on November 19, 1816, it is the largest institution of higher learning in the country, offering 37 different fields of study as well ...

and the Main School of Planning and Statistics. He was deputy chairman of the

Polish Council of State The Council of State of the Polish People's Republic, Republic of Poland () was introduced by the Small Constitution of 1947 as an organ of executive (government), executive power. The Council of State consisted of the President of Poland, Presid ...

in 1961–65, and as such one of four acting chairmen of the Council of State (a

head of state A head of state is the public persona of a sovereign state.#Foakes, Foakes, pp. 110–11 " he head of statebeing an embodiment of the State itself or representative of its international persona." The name given to the office of head of sta ...

function).

Academic contributions

The bulk of Lange's contributions to economics came during his American interlude of 1933–45. Despite being an ardent

, Lange deplored the Marxian

labor theory of value The labor theory of value (LTV) is a theory of value that argues that the exchange value of a good or service is determined by the total amount of " socially necessary labor" required to produce it. The contrasting system is typically known as ...

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 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 ...

and

neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption, and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a go ...

together. In the book, Lange advocated the use of

tools (especially the neoclassical pricing theory) in economic planning of socialism and

Marxism Marxism is a political philosophy and method of socioeconomic analysis. It uses a dialectical and materialist interpretation of historical development, better known as historical materialism, to analyse class relations, social conflict, ...

. 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.Dalmia, Shikha, 2012
Cheer Up, Liberty Lovers, Schumpeter Was Wrong
''

Reason Reason is the capacity of consciously applying logic by drawing valid conclusions from new or existing information, with the aim of seeking the truth. It is associated with such characteristically human activities as philosophy, religion, scien ...

'', Feb. 23. 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 A simulation is an imitative representation of a process or system that could exist in the real world. In this broad sense, simulation can often be used interchangeably with model. Sometimes a clear distinction between the two terms is made, in ...

of market mechanism would be capable of effectively managing

. Proponents of this idea argued that it combines the advantages of a

market economy A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a mark ...

with those of

socialist economy 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 m ...

. 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 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 ...

with the

Austrian School The Austrian school is a Heterodox economics, heterodox Schools of economic thought, school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivat ...

economists. At that time, the view among English socialists of the

Fabian Society The Fabian Society () is a History of the socialist movement in the United Kingdom, British socialist organisation whose purpose is to advance the principles of social democracy and democratic socialism via gradualist and reformist effort in ...

was that Lange had won the debate. His works provided the earliest model of

. Hayek's essay entitled

The Use of Knowledge in Society "The Use of Knowledge in Society" is a scholarly article written by Austrian-British academic economist Friedrich Hayek, first published in the September 1945 issue of ''The American Economic Review''. Written (along with ''The Meaning of Compet ...

is a rebuttal to Lange's work and is considered one of the most important articles ever written in the field of economics.American Economic Review, 2011
100 Years of the American Economic Review:The Top 20 Articles
/ref> Lange also made contributions in various other areas. He was one of the leading lights of the " Paretian Revival" in

general equilibrium theory 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 ov ...

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 The quantity theory of money (often abbreviated QTM) is a hypothesis within monetary economics which states that the general price level of goods and services is directly proportional to the amount of money in circulation (i.e., the money supply) ...

(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 The neoclassical synthesis (NCS), or neoclassical–Keynesian synthesis Mankiw, N. Gregory. "The Macroeconomist as Scientist and Engineer". '' The Journal of Economic Perspectives''. Vol. 20, No. 4 (Fall, 2006), p. 35. is an academic movement a ...

(1938, 1943, 1944). He worked on integrating

classical economics Classical economics, also known as the classical school of economics, or classical political economy, is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. It includ ...

and neoclassical economics into a single theoretical structure (e.g. 1959). In his final years, Lange also worked on

cybernetics Cybernetics is the transdisciplinary study of circular causal processes such as feedback and recursion, where the effects of a system's actions (its outputs) return as inputs to that system, influencing subsequent action. It is concerned with ...

and the use of computers for

economic planning 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 ...

. The International Institute of Social Studies (ISS) awarded Oskar Lange an honorary fellowship in 1962.

Bibliography

* 1934. "The Determinateness of the

Utility Function In economics, utility is a measure of a certain person's satisfaction from a certain state of the world. Over time, the term has been used with at least two meanings. * In a Normative economics, normative context, utility refers to a goal or ob ...

," RES. * 1935. "

Marxian Economics 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 ...

and Modern Economic Theory," ''Review of Economic Studies'', 2(3), pp
189
��201. * 1936a. "The Place of Interest in the Theory of Production", RES * 1936b. "On the Economic Theory of Socialism, Part One," ''Review of Economic Studies'', 4(1), pp
53
��71. * 1937. "On the Economic Theory of Socialism, Part Two," ''Review of Economic Studies'', 4(2), pp.
123
��142. * 1938. ''On the Economic Theory of Socialism,'' (with Fred M. Taylor), Benjamin E. Lippincott, editor. University of Minnesota Press, 1938. * 1938. "The Rate of Interest and the Optimum Propensity to Consume", ''Economica'' * 1939. "Saving and Investment: Saving in Process Analysis", QJE * 1939. "Is the American Economy Contracting?", AER * 1940. "Complementarity and Interrelations of Shifts in Demand", RES * 1942. "Theoretical Derivation of the Elasticities of Demand and Supply: the direct method", Econometrica * 1942. "The Foundations of Welfare Economics", Econometrica * 1942. "The Stability of Economic Equilibrium", Econometrica. * 1942. " Say's Law: A Restatement and Criticism", in Lange et al., editors, Studies in Mathematical Economics. * 1943. "A Note on Innovations", REStat * "The Theory of the Multiplier", 1943, ''Econometrica'' * "Strengthening the Economic Foundations of Democracy", with Abba Lerner, 1944, American Way of Business. * 1944. ''Price Flexibility and Employment''. * 1944. "The Stability of Economic Equilibrium" (Appendix of Lange, 1944) * 1944. "The Rate of Interest and the Optimal Propensity to Consume", in Haberler, editor, Readings in Business Cycle Theory. * 1945a. "Marxian Economic in the Soviet Union," ''American Economic Review'', 35( 1), pp
127
��133. * 1945b. "The Scope and Method of Economics", RES. * 1949. "The Practice of Economic Planning and the Optimum Allocation of Resources", ''Econometrica'' * 1953. "The Economic Laws of Socialist Society in Light of Joseph Stalin's Last Work", Nauka Paulska, No. 1, Warsaw (trans ., 1954, ''International Economic Papers'', No. 4, pp. 145–ff. Macmillan. * 1959. "The Political Economy of Socialism," ''Science & Society'', 23(1) pp
1
��15. * ''Introduction to Econometrics'', 1958. * 1960. "The Output-Investment Ratio and Input-Output Analysis", Econometrica * 1961. ''Theories of Reproduction and Accumulation'', * 1961. ''Economic and Social Essays, 1930–1960''. * 1963. ''Political economy'', Macmillan. * 1963. ''Economic Development, Planning and Economic Cooperation''. * 1963. ''Essays on Economic Planning''. * 1964. ''Optimal Decisions: principles of programming''. * 1965.
Problems of Political Economy of Socialism
', Peoples Publishing House. * 1965. ''Wholes and Parts: A General Theory of System Behavior'', Pergamon Press. * 1965. "The Computer and the Market", 1967, in Feinstein, editor, Socialism, Capitalism and Economic Growth. * 1970. ''Introduction to Economic Cybernetics'', Pergamon Press. Revie
extract.

Citations

References

* Milton Friedman, 1946. "Lange on Price Flexibility and Employment: A Methodological Criticism", ''American Economic Review'', 36(4)
pp. 613–
631. Reprinted in Friedman, 1953,

Essays in Positive Economics Milton Friedman's book ''Essays in Positive Economics'' (1953) is a collection of earlier articles by the author with as its lead an original essay "The Economic methodology, Methodology of Positive Economics." This essay posits Friedman's famous ...

, pp. 277–300. * Charles Sadler, 1977. "Pro-Soviet Polish-Americans: Oskar Lange and Russia's Friends in the Polonia, 1941–1945", ''Polish Review'', 22(4), pp
25
��39.

External links

* *
Oskar Lange in Encyclopædia Britannica.
*

In the History of Economic Thought by the

Institute for New Economic Thinking The Institute for New Economic Thinking (INET) is a New York City–based nonprofit think tank. It was founded in October 2009 as a result of the Great Recession, and runs a variety of affiliated programs at major universities such as the Cambr ...