The Great Socialist Calculation Debate. PT 1: False assumptions of free market supporters

During the 20th century, several countries took advantage of the general economic equilibrium theory. In India, the central planning of industrial and agricultural development was combined with the free competition of many private entrepreneurs. In contrast, the financial sector has been socialized. This feature film tells the story of a modest but ambitious and hardworking civil engineer (he scolds his son for being late for an important ceremony in the company) who took a loan from a nationalized bank and formed a company in which his junior partners and department managers were his college colleagues. In this way, another private construction company was created, generating moderate returns on capital movement.

In the third plan, passenger cars from a state-owned factory, produced using cheap parts, a maximum in standardization and cheap gray or white paint to slowly start motoring India with inexpensive vehicles. Reformist capitalism had sometimes impressive achievements due to compensating for the worst flaws of this system with establishing more or less socialist institutions.

[a screenshot from a YouTube movie: Love Story (1981) Full Hindi Movie Kumar Gaurav, Vijayta Pandit, Rajendra Kumar, Danny]

In the history of economics, the great Polish and American thinker Oskar Richard Lange (he’s named many times in English language books and articles as Oscar Lange, sometimes Professor Lange) is best known internationally for his book On the Economic Theory of Socialism published for first time in 1936, where he famously put Marxian economics and neoclassical economics together. In the book, Lange advocated the use of market tools (based on the neoclassical or Paretian pricing theory) in economic planning of socialism, and therefore he establshed and promoted many scientifically argued basic priniciples of Neo-Marxism.

The Great Depression had a dramatic even tragic effect on the social and economic development of almost all civilised world

Only fascist Italy remained largely untouched, while Soviet Union and China experienced their own terrible political and economic tragedy. As an answer the neoclassical general equilibrium theory was developed in Great Britain and United States of America, also many elements of central economic planning were in fact introduced in US and in the British Commonwealth.

The Great Deppression had shown it crystal clear; limitation of the State to mere police duties is obsolete and would most probably never work properly again

Facing an extremely grave situation caused by many millions of unemploeyd men with no benefits the national government in Britain and President Roosevelt were forced to seize entire gold reserve (in US) or to went off gold (in UK) and use it to provide an emergency financing for the national economy as a whole and especially for the poorest people, who were in desperate need for some money. What happened next must be described as an amazing fight against the Great Depression.

Because of an immense support among the ordinary people for FDR the capitalist circles were forced to obey but it was, of course, allowed to oppose his policies which he explained on a very clear and distinct way

His message was quite simple indeed: Capital is essential; reasonable earnings on capital are essential, but misuse of the powers of capital or selfish suspension of the employment of capital must end, or the capitalistic system will destroy itself through its own abuses.

During the 1930s a higly important question was in the air: Are the capitalists doomed to fall?

President Roosevelt could possibly consider a sophisticated and scientifically elaborated plan to turn United States into a socialist society preserving, however, all advantages of free market in its really practicable extent. Anyway, the decision about the practical use of the general equilibriumtheory was made in White House. One of the key figures who contributed to this very special theory was Oskar Lange.

That was the background before which the famous socialist calculation debate begun. We must, however, first understand this one, indeed very simple, main issue of the debate

Imagine that you have started your own business. Now you must run this enterprise. You will have to purchase everything necessary to run your business and secure a space for the work. You will, that’s an obvious thing, need to market your goods or other products, including setting proper prices for them, too. You will need to hire employees and later sometimes fire them.

You'll need plans for what to do if your goods or products fail to sell and if they succeed very much. Unfortunately, we have bad news for you. It’s possible for a private enterpreneur to make mistakes in any of these choices, a quite usual thing, and many small businesses will fail within the first year of operation.

Now please imagine that instead of running just this one business, you're running all the enterprises — every business across the country, large and small, and have all their problems on your mind

No doubt you would to make an attempt to delegate nearly all of the decisions to your subordinates but this doesn't eliminate the problem. Somebody have to bee at charge and you will still need to know how to allocate resources among them, what to do when one of them fails. and how to respond to their successes. You will need to know exactly where to put which resources, and at what times, and in what quantities.

These are enormous tasks but they are also the tasks that central economic planner or economists in the central planning unit would need to accomplish to do their jobs well

 

To cover the socialist calculation debate it wouldn’t be enough to write that free market supporters from the then Austrian school triggered the discussion. Their statemets were of vital scientifical and political importance, both for development of economic science as well as creating the philosophical basics for the New Red Project. These men developed a thorough critique of socialism arguing that public ownership of industry would be inefficient to the point that it would inevitably lead any socialist experiment to a total failure.

There were two key arguments of the Austrians: the knowledge argument and the calculation argument and those problems were intertwined

The first argument was that the central planning board could obtain only incomplete, insufficient information about the society and its needs which are, in addition, not constant but changing. The Austrian economist von Hayek argued that decisions within an economy are normally made by individuals on the basis of the particular situation of their current needs and possibilities. As a result the knowledge of the particular circumstances is distributed in the minds of millions of the market actors and to obtain it from this source is hardly possible.

The second argument is that even if we assume that crucial elements of the above mentioned knowledge could be obtained by the State (for example as a result of the development of some complex communication devices), there will be tremendous amounts of data accumulated which can't be properly analyzed by any central economic planning committee. These unavoidable obstacles means that any endeavor to draft a socialist economy will be done — according to Austrian expats — in ignorance of basic social and economic facts and consequences of such an experiment could be only disastrous.

Therefore the free market supporters are claiming till today that capitalism serves as an only possible decentralised distribution mechanism in the properly functioning economy

… and can't be successfully replaced by any socialist economic planning units. Both these main arguments against the socialist planned economy are, however, not less obsolete than the main artillery of battleships. Already during the 1930s the best experts in the field of maritim warfare were able to foreseen that whole battleship squadrons will be sunk by the warplanes.

During the same decade a group of the most gifted and diligent political economists was already able to make suggestions for an entirely new approach to the planned economy. From the Polish and American scientist and ingenious thinker's Oskar Lange point of view these Austrians were like big fat mice who hasn't learned about relationship with cats.

During the 20th century, several countries took advantage of the general economic equilibrium theory. In India, the central planning of industrial and agricultural development was combined with the free competition of many private entrepreneurs. In contrast, the financial sector has been socialized. This feature film tells the story of a modest but ambitious and hardworking civil engineer (he scolds his son for being late for an important ceremony in the company) who took a loan from a nationalized bank and formed a company in which his junior partners and department managers were his college colleagues. In this way, another private construction company was created, generating moderate returns on capital movement.

In the third plan, passenger cars from a state-owned factory, produced using cheap parts, a maximum in standardization and cheap gray or white paint to slowly start motoring India with inexpensive vehicles. Reformist capitalism had sometimes impressive achievements due to compensating for the worst flaws of this system with establishing more or less socialist institutions.

[a screenshot from a YouTube movie: Love Story (1981) Full Hindi Movie Kumar Gaurav, Vijayta Pandit, Rajendra Kumar, Danny]

In the history of economics, the great Polish and American thinker Oskar Richard Lange (he’s named many times in English language books and articles as Oscar Lange, sometimes Professor Lange) is best known internationally for his book On the Economic Theory of Socialism published for first time in 1936, where he famously put Marxian economics and neoclassical economics together. In the book, Lange advocated the use of market tools (based on the neoclassical or Paretian pricing theory) in economic planning of socialism, and therefore he establshed and promoted many scientifically argued basic priniciples of Neo-Marxism.

The Great Depression had a dramatic even tragic effect on the social and economic development of almost all civilised world

Only fascist Italy remained largely untouched, while Soviet Union and China experienced their own terrible political and economic tragedy. As an answer the neoclassical general equilibrium theory was developed in Great Britain and United States of America, also many elements of central economic planning were in fact introduced in US and in the British Commonwealth.

The Great Deppression had shown it crystal clear; limitation of the State to mere police duties is obsolete and would most probably never work properly again

Facing an extremely grave situation caused by many millions of unemploeyd men with no benefits the national government in Britain and President Roosevelt were forced to seize entire gold reserve (in US) or to went off gold (in UK) and use it to provide an emergency financing for the national economy as a whole and especially for the poorest people, who were in desperate need for some money. What happened next must be described as an amazing fight against the Great Depression.

Because of an immense support among the ordinary people for FDR the capitalist circles were forced to obey but it was, of course, allowed to oppose his policies which he explained on a very clear and distinct way

His message was quite simple indeed: Capital is essential; reasonable earnings on capital are essential, but misuse of the powers of capital or selfish suspension of the employment of capital must end, or the capitalistic system will destroy itself through its own abuses.

During the 1930s a higly important question was in the air: Are the capitalists doomed to fall?

President Roosevelt could possibly consider a sophisticated and scientifically elaborated plan to turn United States into a socialist society preserving, however, all advantages of free market in its really practicable extent. Anyway, the decision about the practical use of the general equilibrium theory was made in White House. One of the key figures who contributed to this very special theory was Oskar Lange.

That was the background before which the famous socialist calculation debate begun. We must, however, first understand this one, indeed very simple, main issue of the debate

Imagine that you have started your own business. Now you must run this enterprise. You will have to purchase everything necessary to run your business and secure a space for the work. You will, that’s an obvious thing, need to market your goods or other products, including setting proper prices for them, too. You will need to hire employees and later sometimes fire them.

You'll need plans for what to do if your goods or products fail to sell and if they succeed very much. Unfortunately, we have bad news for you. It’s possible for a private enterpreneur to make mistakes in any of these choices, a quite usual thing, and many small businesses will fail within the first year of operation.

Now please imagine that instead of running just this one business, you're running all the enterprises — every business across the country, large and small, and have all their problems on your mind

No doubt you would to make an attempt to delegate nearly all of the decisions to your subordinates but this doesn't eliminate the problem. Somebody have to bee at charge and you will still need to know how to allocate resources among them, what to do when one of them fails. and how to respond to their successes. You will need to know exactly where to put which resources, and at what times, and in what quantities.

These are enormous tasks but they are also the tasks that central economic planner or economists in the central planning unit would need to accomplish to do their jobs well

To cover the socialist calculation debate it wouldn’t be enough to write that free market supporters from the then Austrian school triggered the discussion. Their statemets were of vital scientifical and political importance, both for development of economic science as well as creating the philosophical basics for the New Red Project. These men developed a thorough critique of socialism arguing that public ownership of industry would be inefficient to the point that it would inevitably lead any socialist experiment to a total failure.

There were two key arguments of the Austrians: the knowledge argument and the calculation argument and those problems were intertwined

The first argument was that the central planning board could obtain only incomplete, insufficient information about the society and its needs which are, in addition, not constant but changing. The Austrian economist von Hayek argued that decisions within an economy are normally made by individuals on the basis of the particular situation of their current needs and possibilities. As a result the knowledge of the particular circumstances is distributed in the minds of millions of the market actors and to obtain it from this source is hardly possible.

The second argument is that even if we assume that crucial elements of the above mentioned knowledge could be obtained by the State (for example as a result of the development of some complex communication devices), there will be tremendous amounts of data accumulated which can't be properly analyzed by any central economic planning committee. These unavoidable obstacles means that any endeavor to draft a socialist economy will be done — according to Austrian expats — in ignorance of basic social and economic facts and consequences of such an experiment could be only disastrous.

Therefore the free market supporters are claiming till today that capitalism serves as an only possible decentralised distribution mechanism in the properly functioning economy

… and can't be successfully replaced by any socialist economic planning units. Both these main arguments against the socialist planned economy are, however, not less obsolete than the main artillery of battleships. Already during the 1930s the best experts in the field of maritim warfare were able to foreseen that whole battleship squadrons will be sunk by the warplanes.

During the same decade a group of the most gifted and diligent political economists was already able to make suggestions for an entirely new approach to the planned economy. From the Polish and American scientist and ingenious thinker's Oskar Lange point of view these Austrians were like big fat mice who hasn't learned about relationship with cats.

Wielka socjalistyczna debata ekonomiczna. Cz. 1: Fałszywe założenia wolnorynkowców

W XX wieku kilka krajów skorzystało z teorii całkowitej równowagi gospodarczej. W Indiach połączono centralne planowanie rozwoju przemysłu i rolnictwa ze swobodną konkurencją wielu prywatnych przedsiębiorców. Natomiast sektor finansowy został uspołeczniony. Ten film fabularny opowiada o skromnym, ale ambitnym i pracowitym inżynierze budownictwa lądowego (strofuje swojego syna za spóźnienie na ważną uroczystość w firmie), który wziął kredyt ze znacjonalizowanego banku i utworzył spółkę, w której młodszymi partnerami i kierownikami działów byli jego koledzy ze studiów. W ten sposób powstało kolejne prywatne przedsiębiorstwo budowlane, osiągające umiarkowane zyski z puszczania w ruch kapitału.

Na trzecim planie samochody osobowe z państwowej fabryki, wykorzystującej tanie części, ich maksymalną standaryzację i tani szary albo biały lakier, aby powoli zacząć motoryzować Indie przy pomocy niedrogich pojazdów. Kapitalizm reformistyczny miał nieraz imponujące osiągnięcia dzięki kompensowaniu najgorszych wad tego ustroju przy pomocy instytucji o charakterze mniej lub bardziej socjalistycznym.

[kadr z filmu z YouTube: Love Story (1981) Full Hindi Movie Kumar Gaurav, Vijayta Pandit, Rajendra Kumar, Danny]

Wielki polski i amerykański myśliciel Oskar Ryszard Lange zapisał się w historii myśli ekonomicznej i jest do dzisiaj znany w skali międzynarodowej głównie z powodu tej jednej książki. Książki pod tytułem Przyczynek do teorii ekonomicznej socjalizmu (On the Economic Theory of Socialism), która została po raz pierwszy wydana w roku 1936. W tej książce Lange opowiedział się za wprowadzeniem (w oparciu o zasady szkoły neoklasycznej w ekonomii politycznej czy też teorii kształtowania cen według Pareto) gry sił rynkowych do socjalistycznego planowania gospodarczego. Postawil zarazem szereg naukowo podbudowanych twierdzeń i dał tym samym początek filozofii neomarksistowskiej.

Wielki kryzys wywarł dramatyczny, a nawet wręcz tragiczny wpływ na społeczny i gospodarczy rozwój niemal całego cywilizowanego świata.

Faszystowskie Włochy zdołały niemal zupełnie go uniknąć, zaś Związek Radziecki i Chiny przeżywały w tym czasie swoją własną wielką polityczną i gospodarczą tragedię. W odpowiedzi w Wielkiej Brytanii oraz w Stanach Zjednoczonych Ameryki została opracowana neoklasyczna teoria całkowitej równowagi gospodarczej. Tak w USA jak w Brytyjskiej Wspólnocie Narodów wprowadzono faktycznie elementy centralnego planowania gospodarczego.

Wielki kryzys sprawił, że stało się to jasne jak słońce; ograniczenie państwa do roli stróża nocnego to przestarzałe podejście, które najpewniej już nigdy więcej nie da właściwych wyników.

W obliczu niezwykle poważnej sytuacji spowodowanej przez wiele milionów bezrobotnych mężczyzn bez żadnych świadczeń rząd jedności narodowej w Wielkiej Brytanii i prezydent Roosevelt zostali zmuszeni do przejęcia całej rezerwy złota (w USA) lub odrzucenia złota jako miary wartości materialnych (w Brytanii) i wykorzystania go do zapewnienia awaryjnego finansowania całej gospodarki narodowej, a zwłaszcza ludzi najbiedniejszych, którzy rozpaczliwie potrzebowali choć trochę pieniędzy. Dalszy ciąg wydarzeń był związany z fascynującą walką z wielkim kryzysem lat trzydziestych.

Ze względu na ogromne poparcie zwykłych ludzi dla Roosevelta kręgi kapitalistyczne zostały zmuszone do posłuchu, acz oczywiście wyrażanie sprzeciwu wobec jego polityki, którą wyjaśniał w bardzo jasny i wyraźny sposób, nie było zabronione

Miał zaś do przekazania w gruncie rzeczy bardzo proste przesłanie. Mianowicie: Kapitał to konieczna podstawa (życia gospodarczego), zaś zyski z kapitału, utrzymane w rozsądnych granicach, są niezbędne. Natomiast niezbędne jest również położenie kresu nadużywaniu władzy, którą daje kapitał albo samolubna odmowa puszczenia w ruch posiadanego kapitału. W przeciwnym razie ustrój kapitalistyczny sam się zniszczy w wyniku swoich nadużyć.

W latach trzydziestych w powietrzu wisiało niezwykle ważne pytanie: Czy kapitaliści są skazani na przegraną?

Prezydent Roosevelt mógłby ewentualnie rozważyć zaawansowany i naukowo opracowany plan przekształcenia Stanów Zjednoczonych w społeczeństwo socjalistyczne, zachowując jednak wszystkie zalety wolnego rynku w jego rzeczywiście wykonalnym zakresie. W każdym razie w Białym Domu zapadła decyzja o praktycznym zastosowaniuteorii równowagi ogólnej – całkowitej równowagi gospodarczej. Jedną z kluczowych postaci, które przyczyniły się do powstania tej wyjątkowej teorii, był Oskar Lange.

Na tym tle doszło do słynnej debaty w sprawie rachunku ekonomicznego w socjalizmie. Najpierw jednak spróbujmy zrozumieć w gruncie rzeczy prosty główny problem tej debaty

Wyobraź sobie, że założyłeś/-aś własne przedsiębiorstwo. Teraz masz obowiązek je prowadzić. Trzeba będzie kupić wszystko co niezbędne do prowadzenia działalności gospodarczej oraz zdobyć odpowiednie pomieszczenia do wykonywania określonej pracy. Trzeba będzie – rzecz oczywista – także zapewnić zbyt dla twoich towarów lub uslug, a zarazem określić ich ceny tak aby to ułatwić. Trzeba będzie zatrudnić pracowników, a potem czasem ich zwalniać.

Niezbędny będzie plan działania na wypadek gdyby twoje towary lub usługi sprzedawały się zbyt słabo jak również w przypadku jeżeli będą rozchwytywane. Niestety, mamy dla ciebie złą wiadomość. Zdarza się, że prywatny przedsiębiorca podejmuje błędne decyzje w tych sprawach i wręcz nie ma w tym nic dziwnego. Wiele małych firm prywatnych upada w ciągu pierwszego roku działalności.

Teraz zaś wyobraź sobie, że zamiast prowadzić tylko ten jeden interes masz na głowie wszystkie firmy w całym kraju, tak małe jak duże, wraz ze wszystkimi ich problemami

Bez wątpienia można próbować przenieść jak największą część ciężaru podejmowania decyzji na podwładnych, ale to nie rozwiąże problemu. Ktoś stojący na czele tego wszystkiego w dalszym ciągu będzie musiał wiedzieć w jaki sposób podzielić między nich dostępne w danym okresie środki materialne oraz finansowe, a także co robić kiedy któryś z nich nie wykona swojego zadania oraz jak wynagradzać tych co będą wykonywać swoje zadanie z powodzeniem. Równie niezbędne będzie zdobywanie wiedzy na temat tego jak i dokąd, w jakim czasie oraz w jakich ilościach te środki przydzielać.

Są to ogromne i niezmiernie trudne do osiągnięcia cele, ale bez tego planifikator czy też centralny urząd planowania nie będzie w stanie właściwie wykonywać swojej pracy

Chcąc przedstawić na czym polegała debata w sprawie wykonalności planowania ekonomicznego w socjalizmie nie wystarczy napisać, że rozpętali ją wolnorynkowcy z ówczesnej szkoły austriackiej. Ich wystąpienie miało istotne znaczenie w rozwoju nauk ekonomicznych oraz filozofii Nowego Czerwonego Projektu. Ci ludzie wdali się w dogłębną krytykę socjalizmu dowodząc, że uspołeczniony przemysł okaże się do tego stopnia niewydolny, że doprowadzi to do niechybnej klęski całego tego socjalistycznego eksperymentu.

Austriacy posługiwali się w tej krytyce dwoma glównymi argumentami: argumentem braku wiedzy planifikatora oraz argumentem niewykonalności odpowiednich wyliczeń matematycznych; oba te zagadnienie były ze sobą ściśle związane

Argument numer jeden był taki, że centralny urząd planowania może zdobyć tylko niekompletne i niewystarczające informacje o społeczeństwie i jego potrzebach. Na dodatek te ostatnie nie wyrażają się w liczbach stałych, ale bezustannie się zmieniają. Austriacki ekonomista von Hayek dowodził, że w normalnych warunkach wszystkie decyzje mające wpływ na gospodarkę podejmują osoby fizyczne na podstawie sytuacji występującej w danym miejscu i w danej chwili, w oparciu o bieżące potrzeby oraz możliwości tych osób. W wyniku wiedza o tych decydujących potrzebach i możliwościach społeczeństwa jest rozproszona – zawarta w umysłach milionów uczestników gry rynkowej, zaś uzyskanie jej z tego źródła jest w praktyce niemożliwe.

Argument numer dwa był taki, że nawet gdyby przyjąć założenie, że państwo mogłoby uzyskać kluczowe elementy wyżej wymienionej wiedzy (na przykład w wyniku dalszego rozwoju szczególnie wszechstronnych urządzeń telekomunikacyjnych), to pojawiłyby się potworne ilości wszelkiego rodzaju danych. Tego ogromu danych nie byłaby w stanie przeanalizować żadna komisja powołana w ramach centralnego planowania. W obliczu takich nieuniknionych przeszkód wszelkie projekty wprowadzenia socjalistycznego sposobu gospodarowania będą – zdaniem austriackich wygnańców – przejawem odrzucającego podstawowe, społeczne i ekonomiczne fakty awanturnictwa, które doprowadzi do jednej wielkiej katastrofy.

Stąd też wolnorynkowcy do dzisiaj twierdzą, że kapitalizm jest jedynym zdecentralizowanym systemem poprawnej dystrybucji dóbr materialnych, zapewniającym sprawne działanie gospodarki

Dlatego też nie może zostać z powodzeniem zastąpiony przez jakiekolwiek socjalistyczne instytuty i organy planowania. Oba te dwa główne argumenty przeciwko planowej gospodarce socjalistycznej są jednak równie przestarzałe jak artyleria główna pancerników. Już w latach trzydziestych najlepsi rzeczoznawcy w dziedzinie prowadzenia działań wojennych na morzu byli w stanie przewidzieć, że całe eskadry pancerników zostaną zatopione przez samoloty bojowe.

W tymże dziesięcioleciu grupa niezwykle uzdolnionych i pracowitych ekonomistów politycznych była już w stanie przedstawić zupełnie nowe podejście do planowania gospodarczego. Z punktu widzenia pracującego w Stanach Zjednoczonych polskiego naukowca i genialnego myśliciela Oskara Lange ci Austriacy byli jak wielka tłusta mysz, która nie spodziewa się tego, że zaraz wpadnie w kocie pazury.

Oskar Lange, New Deal, FDR. PT 2: When the US were about to became a socialist society — how the fight for general equilibrium was won

 

On January 30, 1934, President Franklin Delano Roosevelt issued another executive order, with which he secured the transfer of a huge amount of publicly owned gold from the Federal Reserve Board to the Treasury Department. Coins were minted and additional banknotes were printed for a small fraction of the equivalent of the gold reserve to infuse the government with cash, badly needed to cover unemployment benefits and some other urgent government expenses. On the other hand, the increase in money supply which stimulated demand (by unleashing the purchasing power of the public sector), was mainly due to the introduction of new series of treasury bonds.

Buying treasury bonds the rich paid something like a tribute to the rest of society but at the same time these securities served as the capital investment for them. With one hundred percent gold backing for the currency and issued by the government bonds, confidence in the Roosevelt’s administration skyrocketed. The President and his ministers used the extraordinary income thus generated to launch programs of social and economic reforms, carried out by federal agencies established for this purpose, from the scratch. They also funded huge public investments throughout the country.

Source of the picture: Small stack of assorted U.S. coins on two one hundred dollar bills. Free for private use. Commercial use allowed.

https://www.quoteinspector.com/images/money/money-qi06/

The President and his secretaries politely but very firmly suggested to the capitalists how to take an active part in the fight against the Great Depression. This is probably related to the Rockefeller family funding scholarships for a group of exceptionally promising economists from abroad, including OskarLange.

Docent Dr. Lange left for the Western countries in 1934 as a noted specialist in the field of economic statistics. He was to spend the next 15 years there

He went first to Britain and then to the United States, as scholarship-holder and later a lecturer. He gained an additional degree in economic science needed to became professor at an United States university. In the second half of the year 1936 he returned to Krakow to the Department of Statistics of the Jagellonian University to share his new experience and knowledge with Polish students and scholars. He condemned the sanation regime which subjugated his home country but was interested in better future for the Polish people. He hoped his contribution would help to overcome the Great Depression there.

On July 1^st, 1938 he was appointed to the professorship at Departament of Economics in University of Chicago

An international group of prominent economists and mathematicians was assembled there to prepare a sort of socio-economic Manhattan Project. Tjalling Koopmans, Jacob Marschak, Kenneth Arrow, Herbert Simon, Stanley Reiter and (another Poland born scientist) Leonid Hurwicz were prominent members and directors of the Cowless Commission for Research in Economics which moved to Chicago one year later. The Commission pursued monetary reforms which were soon conducted by President Roosevelt. FDR and his advisors were sure the men of Alfred Cowless can achieve some important goals which could be crucial if the reforms of American capitalism will not produce proper results.

Besides, the Second World War was about to begin

… and Roosevelt as well as his political staff in White House were aware that it will be another possibility to end the Great Depression but United States must be prepared to be equally, even more efficient in the field of armament industry, the war-time resources allocation etc. as the fascist States were. As a result of the gentlemen agreement between Alfred Cowless and President Robert Hutchins three Chicago economics faculty professors: Oskar Lange, Jacob Mosak and Gregg Lewis were given positions also in the Commission. So, the proponents of the general equilibrium were able to pick some of the world’s brightest minds to bring to fruition the realization of the dreams about the full employment welfare state. Some left-wing dreams indeed!

Lange began pioneering research into mathematical economics, or econometrics

At the time only some economic dissertations featured several mathematical equations. Most of them were strongly influenced by personal philosophy of their authors. That was rapidly to change due to the efforts of Oskar Lange as well as his fellow scholar and personal friend, an ingenious mathematician John von Neumann. Both gentlemen spoke fluently German and Neumann used this language to present his views and theories in the circle of his friends. Together they were able to learn a lot of things from each other and the Neumann’s publications were at least published in clear English, because Lange became his advisor in this regard.

As a final result the badly needed instruments for the factual central economic planning were created, ciphered in the poetry of mathematics

By the way, the necessity to make more and more equations to increase the effectiveness of national economy was an incentive to invent the big computing machines. John von Neumann greatly contributed to creating them during the 1940s, establishing thus the IT industry.

Oskar Lange and his Chicago fellows had ideas and the FDR governing team get them work — their main task was to secure the general equilibrium to the national economy of United States

The econometric work had a profound effect on economic analysis and management during Second World War. Their task was to secure the maximally effective war-time economy in the “arsenal of democracy” (Roosevelt’s citation), but later the welfare economics as well. This approach proved to be ingenious and effective, turning US in the superpower of almost unlimited possibilities. Unfortunetaly only for four decades before the neoliberal insanity destroyed all institutions of the partial market socialism created by the political workhorse and martyr FDR.

What Lange worked on and its practical use pointed to his theory of advanced and just society. The market economy and at the same time socialist system which he begun to create since he was 25 years old, was now ready to be launched in the real life

Oskar Lange once likened the prospects of a purely theoretically free market (subjugated in praxis to big business owners) achieving efficiency to the situation of ‘an ape trying to write the Encyclopedia Britannica’. He had no doubt that an economic system that failed to satisfy the basic needs of ordinary people does not deserve any excuse or continuation. He was, since 1936, one of the leading figures in the socialist calculation debate which he won against the Austrian school economist von Hayek in the year 1948, as the world have seen that Lange’s home country Poland recovered from the WW2 economic consequences more succesfully than Western Europe, using the principles of market socialism.

President Roosevelt died from overwork few weeks before the allied victory in Europe. He probably considered an ultimate economic reform – a market socialism in Northern America which he could be able to introduce due to his immense and still growing popularity

Since December 7th, 1941 he took control of a number of the nation's crucial industries, appointing generals and admirals as their new chief executive officers and general managers. He cited his authority as Commander in Chief and the need to maintain an uninterrupted supply of war materials. The State was now responsible for raw materials, amount of produced goods, wages and prices, also dealing with management-labour disputes. It was quite possible that he would take advantage from his personal supra-constitutional powers and his unprecedenced popularity to take some next logic steps in the same direction, calling the socialist socio-economic order the New Democracy or so ...

The next, chosen by FDR as his succesor US President Harry Truman made, however, a moderately successful attempt to define the new American superpower as a moderate left-wing project

He launched some important economic and social development programs like the free education for war veterans or an unexpensive housing for everybody. The federal help for unemployed men and woman and other citizens in extremely heavy troubles was continued. Above all the strong and badly needed in regard to the general economic equilibrium federal institutions for markets regulation and storing the production surpluses were mantained by Truman and few next US Presidents.

The housing skyscrapers and blocs of unexpensive (due to the technical progress and the generous federal refunding) flats in planned communities became one of the landmarks of American cities during the first after-war decades.

These fruits of hard work of indomitable patriot President Roosevelt, not an alleged invisible hand of free market which ceased to exist, in fact, during the late 19th century, made United States of America not only military but also economic superpower for decades to come. Oskar Lange noticed, of course, the fruition of his and his fellow scholars theories but was forced to change his way of life. His home country called him for help and he was, surprisingly, together with a modest Catholic priest, the only man who was able to save Poland.