• Media type: Report; E-Book
  • Title: Lange's 1938 model: dynamics and the "Optimum propensity to consume"
  • Contributor: Assous, Michael [Author]; Lampa, Roberto [Author]
  • Published: Durham, NC: Duke University, Center for the History of Political Economy (CHOPE), 2014
  • Language: English
  • Keywords: Lange ; marginal propensity to save ; Kalecki ; Marxian theory of the business cycle ; non-linearity
  • Origination:
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  • Description: Oskar Lange's 1938 article "The Rate of Interest and the Optimum Propensity to Consume", is usually associated with the original IS-LM approach of the late 1930s. However, Lange's article was not only an attempt to illuminate Keynes's main innovations but the first part of a wide project that included the development of a theory of economic evolution. This paper aims at showing that Lange's article can help illuminating critical aspects of this project: in particular, Lange's idea that a synthesis between Kaldor's and Kalecki's theories and that of Schumpeter, might have been possible and that it represented (in intentions) a "modern" and consistent reconstruction of the Marxist theory of the business cycle. Section 1 clarifies Lange's early reflection on dynamics. Section 2 centers on Lange's 1938 static model and indicates the effects of a change of saving on investment. Section 3 suggests a dynamic reconstruction from which are addressed important arguments raised by Lange in a series of papers written between 1934 and 1942.
  • Access State: Open Access