The Concise Encyclopedia of Economics

Oskar Ryszard Lange

Polish economist Oskar Lange is best known for his contributions to the economics of socialism. His views on the feasibility of socialism changed back and forth throughout his life.

While teaching at the University of Krakow in 1934, he outlined, with coauthor Marek Breit, a version of socialism in which the government owned all plants and in which each industry, called a public trust, was organized as a monopoly. Workers would have a large say in running each industry.

Lange left Europe in 1935 to teach at the University of Michigan. In 1936 and 1937 he entered the debate with Friedrich Hayek (see Hayek) about the feasibility of socialism. He presented "market socialism," in which the government would own major industries and a central planning board (CPB) would set prices for those industries. The CPB would alter prices to reach equilibrium, raising them to get rid of shortages and lowering them to get rid of surpluses. Hayek pointed out that having government set prices to mimic competition, as Lange suggested, seemed inferior to having real competition. Whether in response to Hayek's criticism or for other reasons, Lange modified his proposal, advocating that only in industries with few firms would he have the government set prices.

In 1943 Lange moved to the University of Chicago. That same year he advocated that the Polish government socialize key industries, but that farms, shops, and many other small and medium-sized industries remain in private hands. A large private sector, wrote Lange, was necessary to preserve "the kind of flexibility, pliability and adaptiveness that private initiative alone cannot achieve."

In 1945, Poland's newly formed communist government appointed Lange ambassador to the United States and in 1946 Poland's delegate to the United Nations. When Stalinist orthodoxy was imposed in Poland in 1949, Lange was recalled to Poland and given a minor academic job. In 1953, with Poland still under Stalinist oppression, Lange reversed himself and wrote an article praising Stalin's totalitarian economic control.

In 1955, with the political oppression having lifted somewhat, Lange was made a professor at the University of Warsaw and chairman of the Polish State Economic Council.

Selected Works

"The Foundations of Welfare Economics." Econometrica 10, no. 3-4 (July-October 1942): 215-28.

"On the Economic Theory of Socialism, Part I." Review of Economic Studies 4, no. 1 (October 1936): 53-71.

"On the Economic Theory of Socialism, Part II." Review of Economic Studies 4, no. 2 (February 1937): 123-42.

Working Principles of the Soviet Economy. 1943.

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