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 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 ...

Biography

Born in

Novoselytsia Novoselytsia (, ; , ; ; ) is a city in Chernivtsi Raion, Chernivtsi Oblast, Chernivtsi Raion, Chernivtsi Oblast (oblast, province) of Ukraine. It stands at the northern tip of Bessarabia region, on its border with Bukovina. It hosts the administra ...

Bessarabia Bessarabia () is a historical region in Eastern Europe, bounded by the Dniester river on the east and the Prut river on the west. About two thirds of Bessarabia lies within modern-day Moldova, with the Budjak region covering the southern coa ...

Russian Empire The Russian Empire was an empire that spanned most of northern Eurasia from its establishment in November 1721 until the proclamation of the Russian Republic in September 1917. At its height in the late 19th century, it covered about , roughl ...

, Lerner grew up in a

Jewish Jews (, , ), or the Jewish people, are an ethnoreligious group and nation, originating from the Israelites of History of ancient Israel and Judah, ancient Israel and Judah. They also traditionally adhere to Judaism. Jewish ethnicity, rel ...

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 (; ''ʿÎbrit'') is a Northwest Semitic languages, Northwest Semitic language within the Afroasiatic languages, Afroasiatic language family. A regional dialect of the Canaanite languages, it was natively spoken by the Israelites and ...

schools, and as an entrepreneur. In 1929, Lerner entered the

London School of Economics The London School of Economics and Political Science (LSE), established in 1895, is a public research university in London, England, and a member institution of the University of London. The school specialises in the social sciences. Founded ...

, where he studied under

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 ...

. A six-month stay at

Cambridge Cambridge ( ) is a List of cities in the United Kingdom, city and non-metropolitan district in the county of Cambridgeshire, England. It is the county town of Cambridgeshire and is located on the River Cam, north of London. As of the 2021 Unit ...

in 1934–1935 brought him into contact with

John Maynard Keynes John Maynard Keynes, 1st Baron Keynes ( ; 5 June 1883 – 21 April 1946), was an English economist and philosopher whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originall ...

. 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 ...

and

Barry Goldwater Barry Morris Goldwater (January 2, 1909 – May 29, 1998) was an American politician and major general in the United States Air Force, Air Force Reserve who served as a United States senator from 1953 to 1965 and 1969 to 1987, and was the Re ...

. 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 university, public Land-grant university, land-grant research university in Berkeley, California, United States. Founded in 1868 and named after t ...

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 the right of a teacher to instruct and the right of a student to learn in an academic setting unhampered by outside interference. It may also include the right of academics to engage in social and political criticism. Academic ...

. 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 (), commonly referred to as the Nobel Prize in Economics(), is an award in the field of economic sciences adminis ...

, he has been recognized as one of the greatest economists of his era.

Research

* Lerner developed 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 ...

which featured decentralised market pricing proportional to marginal social cost

Tibor Scitovsky Tibor de Scitovsky, also known as Tibor Scitovsky (November 3, 1910 – June 1, 2002), was a Hungarian-born, American economist best known for his writing on the nature of people's happiness in relation to consumption. He was an associate ...

, ( 9872008). "Lerner, Abba Ptachya (1905–1982)," ''

The New Palgrave Dictionary of Economics ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is a twenty-volume reference work on economics published by Palgrave Macmillan. It contains around 3,000 entries, including many classic essays from the original Inglis Palgrave Dictio ...

'', 2nd Edition. Previe
link.
/ref> and in so doing contributed to the Lange–Lerner–Taylor theorem. * Lerner contributed to the idea of a

social dividend The social dividend is the return on the natural resources and capital assets owned by society in a socialist economy. The concept notably appears as a key characteristic of market socialism, where it takes the form of a dividend payment to ea ...

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 affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

as the twin tools of

Keynesian economics Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomics, macroeconomic theories and Economic model, models of how aggregate demand (total spending in the economy) strongl ...

is credited to Lerner by historians such as David Colander. * The Lerner symmetry theorem 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 In economics, the marginal cost is the change in the total cost that arises when the quantity produced is increased, i.e. the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others it ...

divided by price or equivalently the negative inverse of demand elasticity. * Lerner improved a formula of

Alfred Marshall Alfred Marshall (26 July 1842 – 13 July 1924) was an English economist and one of the most influential economists of his time. His book ''Principles of Economics (Marshall), Principles of Economics'' (1890) was the dominant economic textboo ...

, 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 ...

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 ...

. * 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 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 context, utility refers to a goal or objective that we wish ...

with a given amount of wealth. * Based on

effective demand Effectiveness or effectivity is the capability of producing a desired result or the ability to produce desired output. When something is deemed effective, it means it has an intended or expected outcome, or produces a deep, vivid impression. Et ...

and chartalism, Lerner developed functional finance, a theory of purposeful financing (and funding) to meet explicit goals, including

full employment Full employment is an economic situation in which there is no cyclical or deficient-demand unemployment. Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may ...

. 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 goes back to Lerner.Murray C. Kemp, 2008. ''International Trade Theory: A Critical Review'', Routledge, pp
xiv–xvii.Description.
/ref>

References

External links

* .

* * 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 busin ...

. * {{DEFAULTSORT:Lerner, Abba P. 1903 births 1982 deaths People from Novoselytsia 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 University of California, Berkeley faculty Florida State University faculty Socialist economists