Abba P. Lerner

Abba P. Lerner
Born	28 October 1903 Bessarabia, Russian Empire
Died	27 October 1982 (aged 78) Tallahassee, Florida
Nationality	Moldovan-British-American
Field	Economics
School or tradition	Post-Keynesian economics
Alma mater	London School of Economics
Influences	Friedrich Hayek, John Maynard Keynes, Paul Samuelson, Oskar R. Lange

Abraham (Abba) Ptachya Lerner (28 October 1903 – 27 October 1982) was a Russian-born British economist. Lerner was born on 28 October 1903 in Bessarabia (Russian Empire).^[1] He grew up in a Jewish family, which emigrated to Great Britain when Lerner was three years old. Lerner grew up in London's East End, and from age sixteen, he worked as a machinist, a teacher in Hebrew schools, and as an entrepreneur.

He entered the London School of Economics in 1929 where he would study under Friedrich Hayek. A six-month stay at Cambridge in 1934–1935 brought him into contact with John Maynard Keynes. In 1937, Lerner emigrated to the United States. While in the United States, Lerner befriended his intellectual opponents Milton Friedman and Barry Goldwater.^[2][3]

Although Lerner never received The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, he has been recognized as one of the greatest economists of his era.^[4] Fundamental economic "concepts, theorems and rules" were derived and/or furthered by Lerner's work throughout his academic career.

Activities

• Lerner developed a model of market socialism, which featured decentralised market pricing proportional to marginal social cost,^[5][6][7] and, in so doing, contributed to the Lange–Lerner–Taylor theorem.^[8]
• Lerner contributed to the idea of a social dividend by incorporating it into Lange's original model of socialism, where the social dividend would be distributed to each citizen as a lump-sum payment.^[9]
• The use of fiscal policy and monetary policy as the twin tools of Keynesian economics is credited to Lerner by historians such as David Colander.^[10]
• The Lerner symmetry theorem states that an import tariff can have the same effects as an export tax.^[11][12]
• The Lerner Index measures potential monopoly power as mark-up of price over marginal cost divided by price or equivalently the negative inverse of demand elasticity.^[13]
• Lerner improved a formula of Alfred Marshall, which is known since as the Marshall–Lerner condition.^[14]
• Lerner improved the calculations made by Wilhelm Launhardt on the effect of terms of trade.
• Lerner developed the concept of distributive efficiency, which argued that economic equality will produce the greatest probable total utility with a given amount of wealth.^[15]
• Based on effective demand principle and chartalism, Lerner developed functional finance, a theory of purposeful financing (and funding) to meet explicit goals, including full employment, no taxation designed solely to fund expenditure or finance investment, and low inflation.^[16]
• Lerner (1951) developed the concept of the NAIRU (before Friedman and Phelps). He termed it "low full employment" and contrasted it with "high full employment," the maximum employment achievable by implementing functional finance.^[17]
• The Lerner–Samuelson theorem goes back to Lerner.^[18][19]

Personal life

Lerner married Alice Sendak in 1930; they had twin children, Marion and Lionel, in 1932. At some point their marriage ended and Lerner ended up remarrying to Daliah Goldfarb at the age of 57.

References

1. "Abraham Psachia Lerner, Assistant Lecturer in Economics", The London Gazette, 8 November 1935.
2. Odekon, Mehmet (2011). Booms and Busts: An Encyclopedia of Economic History from the First Stock Market Crash of 1792 to the Current Global Economic Crisis. Armonk, NY: Sharpe. ISBN 9780765682246.
3. Colander, David (December 1984), "Was Keynes a Keynesian or a Lernerian?", Journal of Economic Literature 22: 1571–79, argues for the influence of Lerner's interpretation Keynes in "textbook" Keynesianism.
4. Scitovsky, Tibor (1984). "Lerner's Contribution to Economics". Journal of Economic Literature: 1547–1571.
5. Abba P. Lerner, 1938. "Theory and Practice in Socialist Economics". Review of Economic Studies, 6(1), pp. 71–75.
      • _____, 1934. "Economic Theory and Socialist Economy," Review of Economic Studies, 2(1), pp. 51–61.
      • _____, 1936. "A Note on Socialist Economics", Review of Economic Studies, 4(1), pp. 72–76.
      • _____, 1937. "Statics and Dynamics in Socialist Economics," Economic Journal, 47(186), pp. 253–270.
      • _____, 1944, The Economics of Control, Macmillan. (J.E. Meade article book-review extract.)
6. Tadeusz Kowalik (2008), "Lange, Oskar Ryszard (1904–1965)," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
7. Tibor Scitovsky, ([1987] 2008). "Lerner, Abba Ptachya (1905–1982)," The New Palgrave Dictionary of Economics, 2nd Edition. Preview link.
8. Raaj Kumar Sah and Joseph E. Stiglitz, 1985. "Human Fallibility and Economic Organization", American Economic Review, 75(2), pp. 292–297.
9. Who framed 'social dividend'?, by Van Tier, Walter. March 2002. USBIG Conference, CUNY.
10. "What eventually became known as textbook Keynesian policies were in many ways Lerner's interpretations of Keynes's policies, especially those expounded in The Economics of Control (1944) and later in The Economics of Employment (1951)...Textbook expositions of Keynesian policy naturally gravitated to the black and white 'Lernerian' policy of Functional Finance rather than the grayer Keynesian policies. Thus, the vision that monetary and fiscal policy should be used as a balance wheel, which forms a key element in the textbook policy revolution, deserves to be called Lernerian rather than Keynesian." (Colander 1984, p. 1573)
11. Abba P. Lerner, 1936. "The Symmetry Between Import and Export Taxes", Economica, N.S., 3(11), pp. 306–313.
12. Jagdish N. Bhagwati, Arvind Panagariya, and T. N. Srinivasan, 1998 Lectures on International Trade, 2nd Edition, MIT Press. Description and ch. 12, sect. 12–6, Lerner Symmetry Theorem, scrollable preview, pp. 215–19.
13. Abba P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," Review of Economic Studies, 1(3), pp. 157–175.
14. • Abba P. Lerner, 1944, The Economics of Control, Macmillan.
       • _____, 1952. "Factor Prices and International Trade," Economica, N.S., 19(73), pp. 1–15.
15. • Abba P. Lerner, 1944, The Economics of Control, Macmillan, ch. 3.
       • _____, 1978. "Utilitarian Marginalism (Nozick, Rawls, Justice, and Welfare)," Eastern Economic Journal, 4(1), pp. 51–65.
16. Abba P. Lerner, 1943. "Functional Finance and the Federal Debt," Social Research, 10(1), pp. 38–51.
17. Abba P. Lerner, 1951, Economics of Employment, ch. 14. McGraw-Hill. Review extract.
18. Abba P. Lerner, 1952. "Factor Prices and International Trade," Economica, N.S., 19(73), pp. 1–15.
19. Murray C. Kemp, 2008. International Trade Theory: A Critical Review, Routledge, pp. xiv–xvii. Description.

External links

• http://www.wisdomsupreme.com/dictionary/abba-lerner.php
• http://www.newschool.edu/nssr/het/profiles/lerner.htm
• Abba Ptachya Lerner (1905–1982). The Concise Encyclopedia of Economics. Library of Economics and Liberty (2nd ed.) (Liberty Fund). 2008.
• http://www.levy.org/pubs/wp272.pdf
• http://books.nap.edu/openbook.php?record_id=4547&page=208