Lange’s Central Planning Agency and Walras’s Concept of State Entrepreneur: The Illusion of Continuity
It is widely recognized that Oskar Lange developed his theory of market socialism based on Léon Walras’s general equilibrium theory. This connection has led some scholars to argue that there is a continuity between Walras’s “scientific socialism” and Lange’s socialism, and even to describe Walras as a precursor to market socialism. This paper challenges that view by showing that there is a fundamental theoretical and normative discontinuity between the two. The idea of continuity is usually based on the claim that Lange made Walras’s tâtonnement process operational by introducing a central planning authority. However, this interpretation is based on a misreading of Walras’s original texts. In Walras’s pure economics, price adjustment is not controlled by any authority: prices are “cried”by any market participant, and all agents take prices as given. The well-known idea of a “Walrasian auctioneer” is therefore not part of Walras’s theory, but a later interpretation. Importantly, this misunderstanding does not come from Lange himself. Lange read Walras carefully and described the tâtonnement process without using the idea of an auctioneer. His central planning board should therefore be understood not as a direct extension of Walras, but as his own institutional reconstruction of how price adjustment could work. The difference becomes clearer when we look at Walras’s social and applied economics. Walras’s scientific socialism is expressed through the concept of the state entrepreneur. The state manages natural monopolies and prevents monopoly profits, but it does not take part in setting prices. In contrast, Lange gives a central authority the role of setting and adjusting prices, turning the tâtonnement process into an institutional procedure. By comparing Walras’s state entrepreneur with Lange’s central planning board, this paper shows that the key difference lies in where economic authority is located and, more fundamentally, in their different ideas of the State. Walras’s State remains limited and largely residual—a kind of “black box” that takes on non-market functions but stays outside the process of price formation. Lange’s State, by contrast, is an active authority that organizes and directs economic coordination. The apparent continuity between the two therefore hides a deep theoretical and normative break.
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Keywords: Walras; Lange; Market Socialism; Scientific Socialism; State Entrepreneur; General Equilibrium; Auctioneer; Tâtonnement
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