This paper investigates Oskar Lange's 1938 article, "The Rate of Interest and the Optimum Propensity to Consume", with the intention of providing a thorough interpretation of this rather obscure work. We explore in depth Lange's theory of interest and its relationship with both Keynes' General Theory (1936) and Hicks' synthesis (1937), developing two graphical models that show the non-linearity of Lange's investment function as well as the consequentiality of his equilibrium solution. Through an unedited manuscript, we also reconstruct Lange's beliefs about the chronic sub-optimality of the capitalist economy and his scientific endorsement of the socialist economy. We conclude that the purposes of Lange's article predate and are independent of the General Theory. They consisted of a theoretical generalization and analysis of institutional data, intended to separate economic theory from the tacit assumption of a capitalist economy.

This paper investigates the evolution of Venezuela's political and economic scenario over the last 15 years. I explore in depth both the achievements and the unsolved problems of the Venezuelan demand-led growth model. Recalling Kalecki's analysis of underdevelopment, I highlight Venezuela's problems that depend on the constraining role played by the existing institutions. I conclude that the real challenge consists of a deep institutional change, possibly along the lines portrayed in the 2007 constitutional referendum.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. licence. www.econstor.eu If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated AcknowledgementsWe thank the participants of the Workshop « Crises, business cycle theories & economic policy" 2011 (Fondation des Treilles). Michaël Assous has benefited from support from the CNRS (GREDEG) and Duke University. AbstractOskar 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. On the other hand, it might also be remarked that Mabel Timlin (1942) made an attempt to dynamize what she had defined as the "Keynes-Lange" system. Her method mainly consisted of developing a "system of shifting equilibrium" to determine how a monetary shock was likely to induce a transformation in Lange's set of structural functions, which were supposed to embed the "psychological-institutional complex" of the economy. Resorting to Lange's diagrammatic representation, Timlin showed how expectations in both the goods and the financial market became critical elements with respect to the dynamics of the economy. Furthermore, by extending Lange's analysis to the "long-run", she was finally able...