Oskar Lange and Marx’s second phase of Communism

[robbo203]

I'm copying and pasting this from the Socialist Economics FB Group.  It demonstrates just how far removed Lange – a prominent proponent of so called "market socialism" – was from any real understanding of what communusm is about.  Arguably his clear preference for marginal neoclassical economics is what warped his whole reading of what Marx was saying.  The same is true of some individuals on the aforementioned FB group some  of whom maintain that in the first or lower phase of communism, Marx envisaged the retention of commodity production and market prices. It wouldnt be the lower phase of communism if that was actually the case:

 

Oskar Lange on Marx's second phase of communism. From On the Economic Theory of Socialism.

"The idea of distributing goods and services by free sharing sounds utopian, indeed. However, if applied to only a part of commodities free sharing is by no means such economic nonsense as might appear at a first glance. The demand for many commodities becomes, from a certain point on, quite inelastic. If the price of such a commodity is below, and the consumer’s income is above, a certain minimum, the commodity is treated by the consumer as if it were a free good. The commodity is consumed in such quantity that the want it serves to satisfy is perfectly saturated. Take, for instance, salt. Well-to-do people do the same with bread or with heating in winter. They do not stop eating bread at a point where the marginal utility of a slice is equal to the marginal utility of its price, nor do they turn down the heat by virtue of a similar consideration. Or would a decline of the price of soap to zero induce them to be so much more liberal in its use ? Even if the price were zero, the amount of salt, bread, fuel, and soap consumed by well-to-do people would not increase noticeably. With such commodities saturation is reached even at a positive price. If the price is already so low, and incomes so high, that the quantity consumed of those commodities is equal to the saturation amount, free sharing can be used as a method of distribution . Certain services are distributed in this way already in our present society.

"If a part of the commodities and services is distributed by free sharing, the price system needs to be confined only to the rest of them. However, though the demand for the commodities distributed by free sharing is, within limits, a fixed quantity, a cost has to be accounted for in order to be able to find out the best combination of factors and the optimum scale of output in producing them. The money income of the consumers must be reduced by an equivalent of the cost of production of these commodities. This means simply that free sharing provides, so to speak, a “socialized sector” of consumption the cost of which is met by taxation (for the reduction of consumers’ money incomes which has just been mentioned is exactly the taxation to cover the consumption by free sharing). Such a sector exists also in capitalist society, comprising, for instance, free education, free medical service by social insurance, public parks, and all the collective wants in Cassel’s sense (e.g., street lighting). It is quite conceivable that as wealth increases this sector increases, too, and an increasing number of commodities are distributed by free sharing until, finally, all the prime necessaries of life are provided for in this way, the distribution by the price system being confined to better qualities and luxuries. Thus Marx’s second phase of communism may be gradually approached."

 

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