Lange model

Part of a series on
Socialism
History Outline
Development French Revolution Revolutions of 1848 Socialist calculation debate Socialist economics
Ideas Calculation in kind Collective ownership Cooperative Common ownership Critique of political economy Economic democracy Economic planning Equal liberty Equal opportunity Free association Freed market Industrial democracy Input–output model Internationalism Labour-time calculation Labour voucher Material balance planning Peer‑to‑peer economics Production for use Sharing economy Spontaneism Social dividend Social ownership Socialism in one country Socialist mode of production Soviet democracy Strike action To each according to his contribution/needs Vanguardism Workers' self-management Workplace democracy
Models Communalism Socialist planned economy Decentralized planning Inclusive Democracy OGAS Project Cybersyn Soviet-type Market socialism Lange model Mutualism Socialist market economy Socialist-oriented market Participatory economics
Variants 21st-century African Arab Agrarian Anarchism Authoritarian Blanquism Buddhist Chinese Christian Communism Democratic Democratic road Digital Ethical Ecological Evolutionary Feminist Fourierism Free-market Gandhian Guild Islamic Jewish Laissez-faire Liberal Libertarian Marhaenism Market Marxism Municipal Nationalist Nkrumaism Owenism Popular Reformism Religious Revolutionary Ricardian Saint-Simonianism Scientific Sewer Social democracy State Syndicalism Third World Utopian Yellow Zionist
Intellectuals More Campanella Saint-Simon Buonarroti Saint-Just Owen Fourier Cabet Leroux Sue Blanqui Proudhon Greeley Herzen Bakunin Marx Engels Wallace Lavrov Lassalle Saltykov Chernyshevsky Tolstoy Michel Morris Jones Kropotkin Carpenter Sorel Bellamy Kautsky Wilde Plekhanov Ferrer Dewey Wells Du Bois Gorky Goldman Landauer Berkman Luxemburg Russell Pannekoek Rocker Spengler Keller Pankhurst Volin Lukács Korsch Polanyi Vanzetti Bordiga Serge Gramsci Sacco Day Marcuse James Orwell Montseny Sartre Bookchin Zinn Castoriadis Thompson Chomsky Fotopoulos Newton Wolff Ali Öcalan Hampton Žižek West Hedges Varoufakis Saito
Politicians Gracchi Brothers Mazdak Roux Babeuf Blanc Hong Bebel Bernstein Malatesta Debs Markievicz Connolly Gandhi Liebknecht Blum Martov Trotsky Kerensky Attlee Spiridonova Makhno Tito Nagy Durruti Gerhardsen Erlander Douglas Senghor Allende van der Lubbe Kreisky Mitterrand Nasser Mandela Dubček Manley Palme Che Gorbachev Sanders Lula Corbyn Sankara Chávez Galloway Marcos Sánchez Ocasio-Cortez
Organizations International socialist organizations Socialist parties
Related topics Anarchism Capitalism Communist society Criticism of capitalism Criticism of socialism Economic calculation problem Economic system French Left Left-libertarianism Libertarianism List of socialist economists Market abolitionism Marxist philosophy Nanosocialism Progressivism Socialism and LGBT rights Socialist calculation debate Socialist Party Socialist state Workers' council
Lists Related lists Category By country Socialists Songs
Socialism portal (WikiProject) Communism portal Organized Labour portal
v t e

The Lange model (or Lange–Lerner theorem) is a neoclassical economic model for a hypothetical socialist economy based on public ownership of the means of production and a trial-and-error approach to determining output targets and achieving economic equilibrium and Pareto efficiency. In this model, the state owns non-labor factors of production, and markets allocate final goods and consumer goods. The Lange model states that if all production is performed by a public body such as the state, and there is a functioning price mechanism, this economy will be Pareto-efficient, like a hypothetical market economy under perfect competition. Unlike models of capitalism, the Lange model is based on direct allocation, by directing enterprise managers to set price equal to marginal cost in order to achieve Pareto efficiency. By contrast, in a capitalist economy, private owners seek to maximize profits, while competitive pressures are relied on to indirectly lower the price, this discourages production with high marginal cost and encourages economies of scale.

This model was first proposed by Oskar R. Lange in 1936 during the socialist calculation debate, and was expanded by economists like H. D. Dickinson and Abba P. Lerner. Although Lange and Lerner called it "market socialism", the Lange model is a form of centrally planned economy where a central planning board allocates investment and capital goods, while markets allocate labor and consumer goods. The planning board simulates a market in capital goods by a trial-and-error process first elaborated by Vilfredo Pareto and Léon Walras.^[1] The Lange Model is in practice a type of centrally planned economy and not a type of market socialism.

The Lange model has never been implemented anywhere, not even in Oskar Lange's home country, Poland, where Soviet-type economic planning was imposed after World War II, precluding experimentation with Lange-style economy.^[2] Some parallels might be drawn with the New Economic Mechanism or so-called Goulash Communism in Hungary under Kádár, although this was not a pure Lange-model system.^[3]