Re: [OPE-L] Lange's vindication

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Apr 21 2007 - 15:41:36 EDT

for another purposes.
> Please, consider the following Lange’s quotation:
> Clearly the relative merits of Marxian economics and of modern “bourgeois”
> economic theory belong to different “ranges”. Marxian economics can work
> the economic evolution of capitalist society into a consistent theory from
> which its necessity is deduced, while “bourgeois” economists get no
> further than mere historical description. On the other hand, “bourgeois”
> economics is able to grasp the phenomena of the every-day life of a
> capitalist economy in a manner that is far superior to anything the
> Marxists can produce […] In 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 Wieser, Boehm-Bawerk, Pareto or even
> Marshall (though 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. (pp.
> 191-192) Oskar Lange, “Marxian Economics and Modern Economic
>  Theory”, The Review of Economic Studies, Vol. 2, Nº 3, (Jun., 1935).

This quote from Lange is silly. Marx was ultimately not interested in
everyday life but understanding the meanings of crises in everyday life.
In this regard, he had no advice for the running of a central bank, but
his theory does allow us to anticipate that (and understand why)
manipulations of the discount rate (or other central bank manipulations)
will likely be much more effective in dampening inflation than lifting an
economy out of Depression. Of course from Major Douglas to Ezra Pound
demaogues, paving the way for the Judeocide, found the root of (or route
to) all evils in restrictive credit. One would think that this practical
aspect of Marx's theory would have appealed to Lange in 1935. Apparently
not. I don't see why we should cede superiority to Marshall who wouldn't
have been able to make sense of the mountain of idle reserves that banks
were holding at that time. Indeed Lange's comment is strangely removed
from the not normal times in which he was then living.

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