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Expanding Human Capabilities: Lange’s “Observations” Updated for the 21st Century

Jorge Buzaglo

Abstract

Poland has produced two of the greatest economists of the past century, namely Michał Kalecki and Oskar Lange. Both worked with a wide and penetrating view of the economy and society, more typical of the great classical economists than of those of their own time. During the post-World War II ‘Golden Age of Growth’, while Keynes was the patron saint of economic theory and policy in the industrialised capitalist countries, Kalecki and Lange had a similar influence and role among the developing nations and – perhaps to a lesser extent – in socialist countries. Kalecki’s ‘The problem of financing of economic development’ (Kalecki, 1954), and Lange’s ‘Some observations on input-output analysis’ (Lange, 1957), in particular,deeply influenced the approach to economic and social development of a whole strand of structural economics, both in terms of economic analysis and practical policy. With the end of the Golden Age and the momentous neoliberal reaction then started, they became almost forgotten. The economics of Kalecki, however, has inspired in the last few decades the renaissance of a genuine – albeit still marginal(ised) – form of Keynesianism, the so called ‘post-Keynesianism’ (‘bastard Keynesianism’, as Joan Robinson called it, being the dominant, mainstream form of Keynesianism). Oskar Lange, on the other hand, does not yet seem to have been re-discovered to inspire a similar renaissance of advanced analysis and planning of policies for modern structural change and development. This paper proposes such a re-discovery. The main concern of Lange’s ‘Observations’ is the appropriate intersectoral allocation of investment for efficient output growth. While output growth is still one of the main objectives in most societies, the growth of human capabilities should be an increasingly relevant concern, both in its own right, and in view of the existing ecological constraints. Buzaglo (2014a; b) postulated the existence of an  (aleph) matrix, describing the proportions of the different capabilities necessary for the achievement of every particular capability. The present paper is about introducing capabilities within Lange’s framework of analysis. A Lange-inspired analysis investigates the appropriate structures and properties of capability-enhancing growth paths.

Published on 27 Sep 2016 in Economic Thought Vol 5, No 2, 2016