Abba P. Lerner ^People

Throughout his life he was sympathetic to socialist arguments and frequently made the case for planned economies. Indeed, his text The Economics of Control: Principles of Welfare Economics (1944) has been referred to as a handbook for plan-ning and managing a socialist economy.Lerner demonstrated how high employment rates can contribute to inflation(supply fails to meet high demand, causing prices to rise), and he created a method of grading monopoly power that became known as the Lerner Index. Later in the 20th century, Lerner proposed a highly theoretical remedy for stagflation (a condition of high inflation and high unemployment) through what he called a Market Anti- Inflation Plan. The plan would have rationed the right of firms to raise their effective prices (calculated as the sum of wages and the price of goods or services), and it would have allowed firms to trade those rights. While more elegant than straightforwardprice controls, the rationing plan alsoillustrated Lerner's occasional weakness for the- oretical over practicaleconomic applications.Although Lerner never received the Sveriges Riksbank's Nobel Memorial Prize in Economic Sciences, he has been recognized as one of the greatest economists of his era. Fundamental economic concepts, theorems and rules were derived and/or fur- thered by Lerner's work throughout his academic career.