Nassily Leontief, the German economist was one of the most famous economists who contributed a great deal to the discipline of economics. He made his precious contributions to economics during the twentieth century. He won the Nobel Prize in 1973 for doing a special research on the quantitative economics which is known as the ‘Input-Output Analysis’. The input-output analysis is influenced to a great extent by the Marxian and Walrasian analysis of general equilibrium through the interaction of the industries. The whole analysis is actually derived from the multi-sectoral approach followed by the Kiel School. The input-output analysis has enjoyed quite an important place in economical analysis for the past half century.
Personal Life and Educational Career
Wassily Leontief was born in an erudite family on 5th August 1905. His father Wassily w. Leontief was a professor of economics and belonged to the wealthy dynasty of the old-believer merchants of St. Petersburg. His mother Genya Becker also hailed from a wealthy Jewish family. At the age of fifteen Leontief junior moved to the University of Leningrad in 1921. At the age of nineteen he obtained his Master’s Degree in economics from the university. He was actively involved in politics campaigning for freedom of speech and academic sovereignty and as a consequence was detained by Cheka several times. Cheka thought he was laid up but ultimately it was proved to wrong and he finally received his PhD degree from the University of Berlin in 1928. His dissertation paper for which he earned his PhD degree was on ‘Circular Flows in Economics’.
Professional Life of Leontief
He embarked on his professional career with the University of Kiel where he worked at the Institute of World Economics till 1930. His research topic in that institute was the derivation of statistical demand and supply curves. From there he moved on to assist the Ministry of Railroads in China as an advisor. Leontief went ahead to be associated with the National Bureau of Economic Research in United States in 1931. Moreover, during the World War II he served as the consultant at the Office of Strategic Services. During 1946 Leotief was anointed the professor of economics in Harvard University. There he set up the Harvard Economic Research Project in 1948 and hold the position of the Director till 1973. He chaired the Harvard society of Fellows from 1965 as well. This was not all and he again went to work with the New York University in 1975 and established and directed the Institute for Economic Analysis.
Contribution to Economics
Leontief is basically associated with the development of the linear activity model of General equilibrium and the application of input-output analysis which generates from it. He has made contributions in other areas of economics as well, which includes International Trade where he composed the famous Leontief paradox. He was also one of the first economists to establish the composite commodity theorem. His input-output analysis gave rise to his 1941 classic, 'Structure of American Industry'. Leontief followed up this work with a series of papers on input-output economics (gathered in 1966). Input-output was innovative and triggered large-scale empirical reasearch work. It has been used for economic planning in the Western, Socialist and Third World countries.
Leontief won the Nobel Prize in Economics for his contribution in input-output tables. Input-output tables analyze the linear production system which played a major role in the development of modern Neo-Walrasian Theory. With the input-output table; one can estimate the alteration in demand for inputs resulting from a change in production of the final product. The model also revived the Classical Ricardian Theory.
Leontief's contributions to the discipline of economics were not confined to input-output. His 1936 article on 'Composite Commodities' made him, the father well known microeconomic theorem. His reviews of Keynes's General Theory were significant stepping stones to the Neo-Keynesian synthesis's emphasis on fixed nominal wages in deciphering Keynes's Theory. His 1933 article on the analysis of international trade is very important today and his 1946 contribution on the wage contract bordered what is now an application of the principal-agent model before that term was coined. One of his most stunning contributions has been his 1953 finding that Americans were exporting labor-intensive instead of capital- intensive goods: the "Leontief Paradox”, which brought into focus the validity of the conventional factor-proportions theory of international trade.
Major Works of Wassily Leontif
Wassily Leontif has written innumerable books through out his life. Some of them are:
The Use of Indifference Curves in the Analysis of Foreign Trade
Input-Output Economics, 1951, Scientific American.
The Fundamental Assumption of Mr. Keynes's Monetary Theory of Unemployment
The Problem of Quality and Quantity in Economics
Input-Output Analysis
Structure of World Production: Outline of a simple input-output formulation