Abba Ptachya Lerner, a
Russian-born British man, who was one of the most excellent economic expositor in the 20th century. Abba was born in Romania and immigrated to
Britain with his parents when he was a child. He was so brilliant to make those
extremely complicated concepts crystal clear. From his perspective, he thought
the market needs high-level freedom which people called ‘Free Markets’. He also
pointed out that the government should not control the price of the goods and
the salaries those enterprises gave because the price system and the employment
of those enterprise are individual and free, they should not be influenced by
the government.
Furthermore, the Lerner’s best know article is “ The Concept of Monopoly
and the Measurement of Monopoly Power.” It clearly showed why setting the price
of good equal to the marginal cost is so important for efficiency. This article
changed the view of government to those monopoly power and enterprises.
However, Abba Lerner also has very sharp mind for analysis, which made
him can follow an argument to its logical conclusion. This made him can do well
in helping the governments’ decision and economic development analysis. For
example, when john maynard keynes gave
a talk at the Federal Reserve Board in Washington, Lerner, who was in the
audience, found Keynes’s view of how the economy worked completely convincing
and challenged Keynes for not carrying his own argument to its logical
conclusion. Keynes denounced Lerner on the spot, but Keynes’s colleague Evsey
Domar, seated beside Lerner, whispered, “He ought to read The
General Theory.” A month later, wrote Lerner, Keynes withdrew his
denunciation.
In conclusion, Abba Lerner was a brilliant guy who made a lot of
contribution to the development of economic.
I'm glad you got this initial post up. Let's see if you can get caught up with the other posts as well.
ReplyDeleteWhen I teach intermediate micro, I do utilize the Lerner Index as a measure of a monopoly power, because it is easy to understand. Marginal cost pricing has gotten increasingly out of vogue in the network economy as many information goods have near zero marginal cost, but substantial up front development costs. Something similar is also true of pharmaceuticals. Nonetheless, Lerner is one of the great economists and somebody whose contribution needs to be acknowledged.