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 th… - Oskar Lange

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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.

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About Oskar Lange

Oskar Ryszard Lange (July 27, 1904 – October 2, 1965) was a Polish economist and diplomat. He was most known for advocating the use of market pricing tools in socialist systems and providing a model of market socialism.

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Alternative Names: Oskar Ryszard Lange Oskar R. Lange
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No scientific law applies when its prerequisite conditions do not occur. Since the administration of scarce resources is influenced by social organisation and institutions, such organisation and institutions are among the conditions implied in economic laws. Consequently, economic laws which hold under one type of social organisation may fail to do so under another type. Most economic laws are thus "limited historically" to certain given types of social organisation and institutions. This, however, does not imply any basic difference between the laws of economics (or of other social sciences) and the laws of the natural sciences. The latter, too, are contingent upon conditions which are subject to change. Different laws of the natural sciences have different degrees of historic permanence, usually a much higher one than the laws of economics, though even this is not always the case (some laws of meteorology are less permanent than some laws of economics). The differences is but one of degree. Like all scientific laws, economic laws are established in order to make successful prediction of the outcome of human actions.

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.

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The rules of consistency of decisions and of efficiency in carrying them out in a socialist economy are exactly the same as those that govern the actual behavior of entrepreneurs on a purely competitive market. Competition forces entrepreneurs to act much as they would have to act were they managers of production in a socialist system. The fact that free competition tends to enforce rules of behavior similar to those in an ideal planned economy makes competition the pet idea of the economist. But if competition enforces the same rules of allocating resources as would have to be accepted in a rationally conducted socialist economy, what is the use of bothering about socialism? Why change the whole economic system if the same result can be attained within the present system, if only it could be forced to maintain the competitive standard?
But the analogy between the allocation of resources in a competitive capitalist and a socialist economy is only a purely formal one. The formal principles are the same, but the actual allocation may be quite different.

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