Lange, Mises, and Praxeology: The Retreat from Marxism

Rothbard’s text is a single-author scholarly essay/chapter in the history of economic thought and methodology. Its scope is focused: it rereads the Mises-Lange socialist-calculation controversy through Oskar Lange’s late Political Economy, arguing that Lange’s final theoretical position retreated from Marxism toward Misesian praxeology. The irony is that Lange, once Mises’s socialist antagonist, came to rely on the very logic of purposive action that underpinned Mises’s anti-socialist case.

In his final, posthumous work, designed as the first of a multi-volume treatise on economics, Oskar Lange devoted a great deal of time to the painful acknowledgement that economics must encompass praxeology as well as Marxism.

The essay’s structure is cumulative. Rothbard first defines Mises’s central contribution as praxeology, the general logic of human action, and then shows Lange adopting its vocabulary: ends, means, scarcity, rationality, and economic calculation. Lange’s discussion of capitalist enterprise is especially important for Rothbard because it grants that monetary calculation and profit-seeking made rational economic conduct explicit. Rothbard’s first conceptual move is to treat this concession as more than terminology: Marxian economics has admitted a transhistorical layer of economic reasoning.

In this way, Lange agrees with Mises that the economic principle is itself embedded in the wider praxeological principles of general human action.

Rothbard then turns from concepts to method. Lange, he argues, accepts that economic laws can be logically deduced from broad principles of rational action rather than derived only from institutional history. This is the most Misesian element of Lange’s late work.

In this way, Lange accepts the essential deductive Misesian methodology for economic theory: beginning with broadly general praxeological principles as axioms and from these elaborating necessary laws by logical deduction.

Yet Lange repeatedly draws back from the implication. If economics is effectively praxeology, then Marxism loses its claim to be the foundational science of historically specific economic formations. Lange therefore widens praxeology to include decision theory, operations research, programming, input-output analysis, and cybernetics. Rothbard reads this as an evasion: it shifts from the formal logic of choice toward technological manipulation of means for given ends, preserving room for Marxist categories without clarifying their theoretical role.

The second major section examines Lange’s account of subjective utility. Rothbard credits Lange with seeing that Austrian utility theory is not hedonistic psychology but ordinal preference and rational choice.

In this praxeological interpretation, the subjectivist trend leaves aside all psychological considerations and transforms itself into a logic of ‘rational choice’ aimed at the maximization of preference.

For Rothbard, this insight is decisive because the Austrians apply marginal utility not only to consumption but also to production, profit, capital, and factor markets. Lange can describe this achievement, but cannot accept the final step: economics as a branch of praxeology.

For if that were really the case, where would that leave Marxism?

This tension governs Rothbard’s critique of Lange’s Marxian objections. Lange complains that Austrian economics begins with Robinson Crusoe and man’s relation to things, rather than with production relations among men. Rothbard replies that abstraction from individual action does not deny social relations; it explains how exchange, prices, and coordination arise. The calculation debate returns here: if rational calculation requires market prices for capital goods, then capitalism is not merely one historical form among others.

But then Lange can hardly be correct in charging that praxeological economics ignores concrete social and economic relations; on the contrary, his real complaint is that from these abstract, universal economic laws may be deduced the very real necessity for market capitalism in order to sustain a rational economy.

The closing sections attack Lange’s residual Marxism as unstable. Institutional material is added without explaining how it functions as theory, while sociology-of-knowledge attacks on Austrian economics as “rentier” thought contradict Lange’s own recognition that Austrians integrated production and consumption. Rothbard’s relevance lies in showing that the socialist-calculation debate was also a debate over the foundations of economics: in Lange’s late work, Marxism survives only by borrowing the logic of rational action from its strongest opponent.