Oskar Ryszard Lange was a
PolishPoland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north...
economistAn economist is a professional 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...
and
diplomatA diplomat is a person appointed by a state to conduct diplomacy with another state or international organization. The main functions of diplomats revolve around the representation and protection of the interests and nationals of the sending state, as well as the promotion of information and...
. He was most known for advocating the use of market pricing tools in
socialist systemsSocialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...
and providing the earliest model of
market socialismMarket socialism refers to various economic systems where the means of production are either publicly owned or cooperatively owned and operated for a profit in a market economy. The profit generated by the firms system would be used to directly remunerate employees or would be the source of public...
.
Personal life
Lange was born in
Tomaszów MazowieckiTomaszów Mazowiecki is a town in central Poland with 67,159 inhabitants . Situated in the Łódź Voivodeship , it was previously part of Piotrków Trybunalski Voivodeship...
as son of Arthur Julius Lange and Sophie Albertine Rosner. He studied
lawLaw is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
and
economicsEconomics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
at University of Krakow, where he received a B.A. (1926) and a Masters of Law (Ll.D, 1928). From 1926 to 1927 Lange worked at the Ministry of Labor in
WarsawWarsaw is the capital and largest city of Poland. It is located on the Vistula River, roughly from the Baltic Sea and from the Carpathian Mountains. Its population in 2010 was estimated at 1,716,855 residents with a greater metropolitan area of 2,631,902 residents, making Warsaw the 10th most...
. This was followed by a research assistantship at the University of Krakow (1927–1931). He married Irene Oderfeld in 1932. In 1934, a
RockefellerThe Rockefeller Foundation is a prominent philanthropic organization and private foundation based at 420 Fifth Avenue, New York City. The preeminent institution established by the six-generation Rockefeller family, it was founded by John D. Rockefeller , along with his son John D. Rockefeller, Jr...
fellowship brought him to
EnglandEngland is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
, from where he emigrated to the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
in 1937. He then became a professor at the
University of ChicagoThe University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
in 1938, and was
naturalizedNaturalization is the acquisition of citizenship and nationality by somebody who was not a citizen of that country at the time of birth....
U.S. citizen in 1943.
Joseph StalinJoseph Vissarionovich Stalin was the Premier of the Soviet Union from 6 May 1941 to 5 March 1953. He was among the Bolshevik revolutionaries who brought about the October Revolution and had held the position of first General Secretary of the Communist Party of the Soviet Union's Central Committee...
was so impressed with Lange's work that he not only prevailed on President
Franklin D. RooseveltFranklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
to obtain a
passportA passport is a document, issued by a national government, which certifies, for the purpose of international travel, the identity and nationality of its holder. The elements of identity are name, date of birth, sex, and place of birth....
for Lange to visit the
Soviet UnionThe Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
to speak with him personally, but also proposed offering him a position in the future Polish cabinet. Towards the end of
World War IIWorld War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, Lange broke with the Polish government-in-exile in
LondonLondon is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and transferred his support to the
Lublin CommitteeThe Polish Committee of National Liberation , also known as the Lublin Committee, was a provisional government of Poland, officially proclaimed 21 July 1944 in Chełm under the direction of State National Council in opposition to the Polish government in exile...
sponsored by the
Soviet UnionThe Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
. As a result of this trip, the
Polish American CongressThe Polish American Congress is a U.S. umbrella organization of Polish-Americans and Polish-American organizations.Its membership is composed of fraternal, educational, veterans, religious, cultural, social, business, and political organizations, as well as individuals.As of January 2009, it lists...
condemned Lange and defended the Polish government-in-exile. Lange returned to the United States at the end of May, met with
Free Polish London ExileThe Polish government-in-exile, formally 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 of Poland by Nazi Germany and the Soviet Union, which...
Prime Minister Stanisław Mikołajczyk, who happened then to be in
Washington, D.C.Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
, stressed how reasonable
Joseph StalinJoseph Vissarionovich Stalin was the Premier of the Soviet Union from 6 May 1941 to 5 March 1953. He was among the Bolshevik revolutionaries who brought about the October Revolution and had held the position of first General Secretary of the Communist Party of the Soviet Union's Central Committee...
was prepared to be, and asked the
State DepartmentThe United States Department of State , is the United States federal executive department responsible for international relations of the United States, equivalent to the foreign ministries of other countries...
to put pressure on the exiled Poles. Subsequently, Lange served as a go-between for Franklin Delano Roosevelt and
Joseph StalinJoseph Vissarionovich Stalin was the Premier of the Soviet Union from 6 May 1941 to 5 March 1953. He was among the Bolshevik revolutionaries who brought about the October Revolution and had held the position of first General Secretary of the Communist Party of the Soviet Union's Central Committee...
during the discussion on post-war Poland.
After the War ended in 1945, Lange renounced his American citizenship and returned to Poland. Lange returned to the United States in the same year as the new
Polish Communist régime'sThe People's Republic of Poland was the official name of Poland from 1952 to 1990. Although the Soviet Union took control of the country immediately after the liberation from Nazi Germany in 1944, the name of the state was not changed until eight years later...
first
AmbassadorAn ambassador is the highest ranking diplomat who represents a nation and is usually accredited to a foreign sovereign or government, or to an international organization....
to the United States. In 1946, Lange served as the Polish delegate to the
United Nations Security CouncilThe United Nations Security Council is one of the principal organs of the United Nations and is charged with the maintenance of international peace and security. Its powers, outlined in the United Nations Charter, include the establishment of peacekeeping operations, the establishment of...
. He went back to Poland in 1947, where he continued working for the Polish government, while continuing his academic pursuits at the
University of WarsawThe University of Warsaw is the largest university in Poland and one of the most prestigious, ranked as best Polish university in 2010 and 2011...
and the
Main School of Planning and StatisticsWarsaw School of Economics is the oldest economic university in Poland.The Warsaw School of Economics was founded in 1906 as a private school under the name August Zieliński Private Trade Courses for Men. On 30 July 1919 it became a separate legal entity and was granted the status of an...
. Lange was deputy chairman of the
Polish Council of StateThe Council of State of the Republic of Poland was introduced by the 1947 Small Constitution. It consisted of the President of the Republic of Poland, the Marshal and Vicemarshals of Constituent Sejm, President of the Supreme Chamber of Control and could consist of other members...
1961–1965 and as such one of four acting Chairmen of the Council of State (
head of stateA head of state is the individual that serves as the chief public representative of a monarchy, republic, federation, commonwealth or other kind of state. His or her role generally includes legitimizing the state and exercising the political powers, functions, and duties granted to the head of...
) from August 7, to August 12, 1964.
Academic contributions
The bulk of Lange's contributions to economics came during his American interlude of 1933-1945. Despite being an
ardentArdent may refer to:* Ardent , a French automobile produced from 1900 to 1901*Ardent Computer, a graphics minicomputer manufacturing company*Ardent Productions, a film recording company founded by Prince Edward, Earl of Wessex...
socialistSocialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...
, Lange deplored the
MarxianMarxian economics refers to economic theories on the functioning of capitalism based on the works of Karl Marx. Adherents of Marxian economics, particularly in academia, distinguish it from Marxism as a political ideology and sociological theory, arguing that Marx's approach to understanding the...
labor theory of valueThe labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...
, being very much a believer in the
NeoclassicalNeoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
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 and
Neoclassical economicsNeoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
together.
In this book, Lange advocated the use of market tools (especially the neoclassical pricing theory) in economic planning of socialism and
MarxismMarxism is an economic and sociopolitical worldview and method of socioeconomic inquiry that centers upon a materialist interpretation of history, a dialectical view of social change, and an analysis and critique of the development of capitalism. Marxism was pioneered in the early to mid 19th...
. 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
simulationSimulation is the imitation of some real thing available, state of affairs, or process. The act of simulating something generally entails representing certain key characteristics or behaviours of a selected physical or abstract system....
of the market mechanism, which Lange thought would be capable of effectively managing
supply and demandSupply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
. 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 capitalist or private 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 SchoolThe Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...
.
His works provided the earliest model of
market socialismMarket socialism refers to various economic systems where the means of production are either publicly owned or cooperatively owned and operated for a profit in a market economy. The profit generated by the firms system would be used to directly remunerate employees or would be the source of public...
.
Besides the work on
market socialismMarket socialism refers to various economic systems where the means of production are either publicly owned or cooperatively owned and operated for a profit in a market economy. The profit generated by the firms system would be used to directly remunerate employees or would be the source of public...
, he also contributed in various areas. Lange was one of the leading lights of the "
ParetianPareto efficiency, or Pareto optimality, is a concept in economics with applications in engineering and social sciences. The term is named after Vilfredo Pareto, an Italian economist who used the concept in his studies of economic efficiency and income distribution.Given an initial allocation of...
Revival" in general equilibrium theory during the 1930s. In 1942, he provided one of the first proofs of the
First and Second Welfare TheoremsThere are two fundamental theorems of welfare economics. The first states that any competitive equilibrium or Walrasian equilibrium leads to a Pareto efficient allocation of resources. The second states the converse, that any efficient allocation can be sustainable by a competitive equilibrium...
. He initiated the analysis of stability of general equilibrium (1942, 1944). His critique of the
quantity theory of moneyIn monetary economics, the quantity theory of money is the theory that money supply has a direct, proportional relationship with the price level....
(1942) prompted his student,
Don PatinkinDon Patinkin was an Israeli/American monetary economist, and the president of Hebrew University in Jerusalem.- Biography :...
, on to his remarkable "integration" of money into general equilibrium theory. Lange made several seminal contributions to the development of the
Neoclassical synthesisNeoclassical synthesis is a postwar academic movement in economics that attempts to absorb the macroeconomic thought of John Maynard Keynes into the thought of neoclassical economics...
(e.g. 1938, 1943, 1944). He worked on integrating
classicalClassical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill....
and
neoclassical economicsNeoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
into a single theoretical structure (e.g. 1959). In his final years, Lange also worked on
cyberneticsCybernetics is the interdisciplinary study of the structure of regulatory systems. Cybernetics is closely related to information theory, control theory and systems theory, at least in its first-order form...
and the use of computers for
economic planningEconomic planning refers to any directing or planning of economic activity outside the mechanisisms of the market, in an attempt to achieve specific economic or social outcomes. Planning is an economic mechanism for resource allocation and decision-making in contrast with the market mechanism...
.
The International Institute of Social Studies (ISS) awarded an Honorary Fellowship to Oskar Lange in 1962
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