Knowledge that Transforms

Journal Article The Scope and Method of Economics Get access O. Lange O. Lange Washington, D.C. Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 13, Issue 1, 1945, Pages 19–32, https://doi.org/10.2307/2296113 Published: 01 April 1945

Abstract The subject of this paper is the solution of a typical economic equation system. The system has the following properties: (1) Goods are produced not only from “ natural factors of production, ” but in the first place from each other. These processes of production may be circular, i.e. good G1 is produced with the aid of good G2, and G2 with the aid of G1. (2) There may be more technically possible processes of production than goods and for this reason “ counting of equations ” is of no avail. The problem is rather to establish which processes will actually be used and which not (being “ unprofitable”).