Recently, I have been working with a friend of mine on an article on the socialist calculation debates between Mises and Hayek on the one hand, and Otto Neurath and Oskar Lange. Concerning Lange we wrote:
---------------------------------------------------------------------- The most notable other representative of the Socialist side in the social-calculation debate was Oskar Lange. He was a Polish economist who migrated to England (subsidized by a Rockefeller fellowship) in 1934 and then served as an economics professor at the University of Chicago from 1938 to 1945, when he gave up his American citizenship and returned home to Poland. During the war he had worked initially for the Polish government in exile, but then broke with them to work for the Soviet-backed Lublin Committee instead.112 He was a Marxist and a neo-classical economist. He thought that Marxism provided the key to understanding the historical evolution of capitalism (including its supposed ultimate displacement by socialism), but he regarded traditional Marxist economics as inadequate in several ways. He considered the “labor theory of value” (as shared to a great extent by Adam Smith and David Ricardo as well as Marx) unscientific, and held that a Marxian concept of exploitation could be restated without it. His made statements like
“If people want to anticipate the development of Capitalism over a long period, a knowledge of Marx is a much more effective starting point than a knowledge of [Friedrich von] Wieser, [Eugen von] Bohm-Bawerk, Vilfredo Pareto or even [Alfred] Marshall (although the last-named is in this respect much superior). But Marxian economics would be a poor basis for running a central bank or anticipating the effects of a change in the rate of discount.”
and
“[I]n providing a scientific basis for the current administration of the capitalist economy ‘bourgeois’ economics has developed a theory of equilibrium which can also serve as a basis for the current administration of a socialist economy. It is obvious that Marshallian economics offers more for the current administration of the economic system of Soviet Russia than Marxian economics does, though the latter is surely the more effective basis for anticipating the future of capitalism.”113 (Keynes was also among the non-Marxian economists whom he regarded as very informative about the dynamics of capitalism.)114
Lange held that Mises’s original argument floundered on a confusion over the nature of prices. The concept of price-ratio could, according to Lange, mean not only the exchange-ratio between two commodities in the market, but also, more generally, the “terms on which alternatives are offered”; and he contended that only price ratios in this more generalized sense are indispensable for achieving a rational allocation of resources. In a centrally planned socialist economy, there would be no price ratios in the narrower sense among capital goods, but this would not, he said, preclude the existence of such ratios in the more general sense, because central planners and administrators would have access to the same knowledge of production-functions that is available to capitalist entrepreneurs, and could thus manage to make rational economic decisions.115
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Jim Farmelant http://independent.academia.edu/JimFarmelant http://www.foxymath.com Learn or Review Basic Math
From: Wojtek S <wsoko52 at gmail.com> To: lbo-talk at lbo-talk.org Date: Mon, 23 Jan 2012 10:35:43 -0500 Subject: Re: [lbo-talk] How would democratic ownership and control move us towards serving human needs? Message-ID: <CA+U5cEzzTLSbwYZ+ciXF40X9F9SDxZYCmGqG0kf56_4zmJqdrQ at mail.gmail.com> References: <4F1CFC1C.4090607 at verizon.net> Reply-To: lbo-talk at lbo-talk.org
[WS:] Oskar Lange argues that private ownership of the means of production and wealth inequality associated with it creates impediment to achieving optimal distribution of resources (aka Pareto optimum http://en.wikipedia.org/wiki/Pareto_efficiency) since most people do not have adequate resources to make market purchases according to their needs and preferences. This skews the supply toward luxury goods that the rich can afford (aka "plutonomy"). A socialist economy, or market -socialist economy to be more precise, will eliminate this problem by two means: first by nationalizing the means of production and subjecting them to rational planning (setting prices) that is responsive to consumer demands, and second by providing certain amount of purchasing power to everyone.
The beauty of Lange's argument is that it relies solely on the "bourgeois" economic theory to make the point - more precisely, on the claims of superior economic efficiency of the socialist system rather than on a moral imperative. As Lange himself would say, the problem with socialism is not economics but sociology - that is to say, socialism (public ownership + planning) can be more efficient in distributing resources than capitalism (private ownership + free market) but it faces a major obstacle in the form of power structure i.e. undemocratic governance that impedes good economic planning.
Wojtek
On Mon, Jan 23, 2012 at 1:20 AM, Rick <cr70814 at verizon.net> wrote:
> I keep wondering about a very basic question in political economy that
I'm
> sure has been answered a million times but I keep forgetting the
answer: if
> our goal is a society that serves human needs rather than profits, how
> exactly would changing the mode of ownership from private to
> public/community/worker accomplish that? It seems that a society based
on
> democratic ownership might not necessarily escape the nexus of capital
> accumulation, profit above all else, highest return on investment, etc.
> Conceptualizations of "a system based on private ownership of the
means of
> production" and "a system based on serving profits rather than human
needs"
> don't really describe the same thing, so why would ending the former
end the
> latter? How exactly would socialism end the dominance by the profit
system
> and instead serve human needs? It seems all it would do is change
ownership
> relations.
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-- Wojtek http://wsokol.blogspot.com/
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