Oskar Lange Quotes

I have pointed out that the real source of the superiority of Marxian economics is in the field of explaining and anticipating a process of economic evolution. It is not the specific economic concepts used by Marx, but the definite specification of the institutional framework in which the economic process goes on in capitalist society that makes it possible to establish a theory of economic evolution different from mere historical description. Most orthodox Marxists, however, believe that their superiority in understanding the evolution of Capitalism is due to the economic concepts with which Marx worked, i.e. to his using the labour theory of value. They think that the abandonment of the classical labour theory of value in favour of the theory of marginal utility is responsible for the failure of "bourgeois" economics to explain the fundamental phenomena of capitalist evolution. That they are wrong can be easily shown by considering the economic meaning of the labour theory of value. It is nothing but a static theory of general economic equilibrium. In an individualistic exchange economy, based on division of labour, in which there is no central authority to direct which commodities, and in what quantities, are to be produced, the problem is solved automatically by the fact that competition enforces such a distribution of productive resources between the various industries that prices are proportional to the amount of labour necessary for producing the respective commodities (these being the "natural prices" of classical economics).

Our results may be summarised as follows:
(1) The superiority of Marxian economics in analysing Capitalism is not due to the economic concepts used by Marx (the labour theory of value), but to the exact specification of the institutional datum distinguishing Capitalism from the concept of an exchange economy in general.
(2) The specification of this institutional datum allows of the establishment of a theory of economic evolution from which a "necessary" trend of certain data in the capitalist system can be deduced.
(3) Jointly with the theory of historical materialism this theory of economic evolution accounts for the actual changes occurring in the capitalist system and forms a basis for anticipating the future.

In my essay I refuted the Hayek-Robbins argument by showing how a market mechanism could be established in a socialist economy which would lead to the solution of the simultaneous equations by means of an empirical procedure of trial and error. [...] Were I to rewrite my essay today my task would be much simpler. My answer to Hayek and Robbins would be: so what’s the trouble?
Let us put the simultaneous equations on an electronic computer and we shall obtain the solution in less than a second. The market process with its cumbersome tatonnements appears old-fashioned. Indeed, it may be considered as a computing device of the preelectronic age.

Planning and the market do not exclude each other. Planning may utilise the uniformity of behaviour patterns of units operating in the market as one of the means of influencing their decisions. This happens, for instance, when the planning authority imposes tariffs or pays subsidies in order to influence the quantities bought or sold. Sometimes regulation—a special method of planning—is necessary in order to enable the market to achieve co-ordination of the units' decisions. The two methods of co-ordination co-exist with each other. However, in different historic societies, one or the other of these methods plays the preponderant role and appears as the chief means of co-ordinating all the units in the economy. The development of economics as a science is closely connected with the growing preponderance of the market in modern times. The co-ordinating operation of the market and, at times, the failure of the market to achieve co-ordination of decisions have posed the intellectual problems which have led to the emergence and growth of economic science.