https://medium.com/@jimfarmelant/oskar-lange-free-sharing-and-the-coasean-logic-of-socialized-consumption-a568b1d8cfd7 ( https://medium.com/@jimfarmelant/oskar-lange-free-sharing-and-the-coasean-logic-of-socialized-consumption-a568b1d8cfd7 )
In debates over socialist economic organization, Oskar Lange is typically remembered for his role in the Socialist Calculation Debate and for defending market socialism against the Austrian critique. Less attention has been paid to Lange’s reflections on Marx’s “second phase of communism,” particularly his discussion of free sharing as a rational mode of distribution. Yet this neglected aspect of Lange’s work anticipates later developments in economic theory — most notably Ronald Coase’s analysis of transaction costs — and offers a powerful framework for understanding the gradual expansion of socialized consumption within advanced economies.¹ In On the Economic Theory of Socialism , Lange addresses the familiar objection that Marx’s vision of distribution “according to need” is hopelessly utopian. He responds by observing that for many commodities, demand becomes highly inelastic once a modest threshold is reached. Below a certain price level and above a certain income level, consumers treat such goods as if they were free. Further reductions in price do not meaningfully increase consumption, because the underlying want is already saturated. Lange’s examples are deliberately prosaic: salt, bread, heating fuel, soap. Even if their price fell to zero, well-off consumers would not consume appreciably more of them.² The implication is significant. For goods whose demand is naturally self-limiting, the price system ceases to perform any meaningful allocative function once saturation is reached. In such cases, distributing these goods through free sharing is not economically irrational. It merely acknowledges an empirical fact about consumption behavior. The allocative decision has already been made by physiology, habit, and social norms, rather than by marginal calculation. Lange is careful to emphasize that free sharing does not eliminate the need for cost accounting. Resources must still be allocated efficiently, production must still be optimized, and trade-offs must still be confronted. What changes is not the logic of production, but the logic of distribution. The costs of freely shared goods are socialized through taxation, just as they already are for public education, public health services, parks, and other collective goods in capitalist societies.³ Free sharing thus defines a socialized sector of consumption embedded within an otherwise price-regulated economy. Lange’s broader claim is evolutionary rather than revolutionary. As social wealth increases, the domain of free sharing can expand. More goods reach saturation levels at low cost; more needs can be met without reliance on price rationing. Over time, the price system may retreat to the margins, governing only luxury goods and qualitative differentiation, while the prime necessities of life are provided unconditionally. In this way, Marx’s second phase of communism is not a sudden rupture, but the gradual extension of tendencies already present within modern economies.⁴ What Lange does not explicitly articulate — but what later economic theory helps clarify — is why this expansion of free sharing is not merely morally attractive, but economically rational. Here Ronald Coase’s concept of transaction costs becomes essential. In his 1937 essay The Nature of the Firm , Coase posed a deceptively simple question: why do firms exist at all in a market economy? If markets are efficient, why are so many transactions removed from the price system and organized instead through administrative command? Coase’s answer was that using markets is itself costly; search, information, bargaining, enforcement, and adjustment all impose real burdens that can exceed the costs of internal coordination.⁵ Firms arise precisely because, under many conditions, internal administrative organization can reduce the transaction costs inherent in market exchange.⁶ Although Coase did not frame his argument in explicitly socialist terms, his analysis has direct implications for Lange’s theory of free sharing. Distributing goods through prices is not costless. It requires billing systems, payment enforcement, monitoring of consumption, and continual recalculation of marginal trade-offs that may no longer matter once demand is saturated. When the allocative function of prices is weak or redundant, the transaction costs of maintaining price-based distribution can exceed its benefits. >From this perspective, free sharing is not an abandonment of economic >rationality but a response to it. Where prices no longer convey useful >information, and where consumption does not respond meaningfully to price >variation, abandoning the price system can reduce administrative and social >costs. Lange’s socialized consumption sector thus mirrors Coase’s firm: both >represent zones where planning replaces markets because it minimizes >transaction costs.⁷ This connection is historically suggestive. When Coase wrote The Nature of the Firm , he was closely associated with Abba Lerner and was deeply engaged with the socialist calculation debate; his early work sought to reconcile the successes of Soviet planning with neoclassical economics.⁸ More recently, scholars (including the author’s own working paper “Ronald Coase Transaction Costs and Socialist Planning: Toward a Marxian Synthesis” ) have argued that Coase’s insights can fruitfully be integrated within a Marxian framework of planning precisely because transaction costs are the costs of engaging in economic calculation itself.⁹ Seen in this light, Lange’s discussion of free sharing anticipates a Coasean logic of socialization. The question is not whether markets or planning are categorically superior, but under what conditions each minimizes social cost. As wealth increases, technologies improve, and basic needs become easier to satisfy, the balance may shift systematically away from price-mediated distribution and toward unconditional provision. This perspective also helps explain the historical trajectory of modern welfare states, where healthcare, education, sanitation, and infrastructure have increasingly been removed from direct market allocation. It suggests that the expansion of socialized consumption is not merely a political concession to egalitarian ideals, but a structural response to changing economic conditions. Moreover, if Coase’s logic can illuminate how institutional coordination operates under capitalism, then insights from a companion paper (“Coase, Metabolic Rift, and the Limits of Institutional Coordination”) show why ecological crises cannot be fully managed by market or internal firm coordination under capitalism — a point that further strengthens arguments for democratic, ecological planning outside pure market constraints.¹⁰ Lange’s reflections thus remain highly relevant. They point toward a conception of socialism not as the abolition of economic rationality, but as its extension beyond the limits of the price system. When combined with Coase’s insights and extended within a Marxian ecological critique, they suggest that the future of economic organization lies not in choosing between markets and planning, but in understanding where each ceases to be worth its cost. ----- Notes ----- * Oskar Lange, On the Economic Theory of Socialism , ed. Benjamin E. Lippincott (Minneapolis: University of Minnesota Press, 1938). * Lange, On the Economic Theory of Socialism , 86–89. * Ibid., 90–92. * Karl Marx, Critique of the Gotha Programme (1875), in Marx–Engels Collected Works , vol. 24. * Ronald H. Coase, “The Nature of the Firm,” Economica 4, no. 16 (1937): 386–405. * Coase later reflected that a large part of economic activity is designed to accomplish what high transaction costs would otherwise prevent or to reduce them. * On transaction costs as the costs of using the price mechanism for calculation, see Rosolino Candela, “Transaction Costs Are the Costs of Engaging in Economic Calculation,” EconLib (2020). * See Steven G. Medema, The Hesitant Hand: Mill, Sidgwick, and the Evolution of the Theory of Market Failure (Princeton: Princeton University Press, 2009), chap. 6. * Ronald Coase Transaction Costs and Socialist Planning: Toward a Marxian Synthesis (working paper, Academia.edu). ( https://www.academia.edu/146045030/Ronald_Coase_Transaction_Costs_and_Socialist_Planning_Toward_a_Marxian_Synthesis ) * Coase, Metabolic Rift, and the Limits of Institutional Coordination (working paper, Academia.edu); . ( https://www.academia.edu/146044842/Coase_Metabolic_Rift_and_the_Limits_of_Institutional_Coordination ) Jim Farmelant http://independent.academia.edu/JimFarmelant https://substack.com/@jimfarmelant899387 http:// www.foxymath.com ( http://www.foxymath.com ) Learn or Review Basic Math -=-=-=-=-=-=-=-=-=-=-=- Groups.io Links: You receive all messages sent to this group. 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