Wassily Leontief: A Note

James K. Galbraith

Wassily Leontief was born in St. Petersburg on August 5, 1906 in an economists’ household; his father was a professor of the subject. He studied philosophy, sociology and economics, took a degree from the University of Leningrad in 1925, and moved to Germany, first obtaining a Ph.D. in Berlin and then on to the Institute for World Economics at Kiel from 1927 to 1930, apart from a year planning railroads in China in 1929. He came to the National Bureau of Economic Research – then the center of empirical economic research and business cycle analysis in the United States, in 1931, and on the faculty of economics at Harvard one year later. His great work, The Structure of American Industry, 1919-1929 first appeared in 1941, laying the foundation for input-output analysis. Much of his later career was taken up with the elaboration of this technique, which assumed great importance as a practical tool of planners and development economists, not least in relation to environmental issues and to the issues of war-time industrial mobilization and postwar demobilization, and of arms control.

Leontief was my first professor of economics, in 1971 at Harvard College, where he taught a class that was called, if memory serves, "The Economy of the United States." It was quite unlike any other introduction to the field: no theory, a minimum of matrix mathematics, and for the rest a detailed input-output analysis of the American economy itself. The audience was, perhaps predictably, small. And few appreciated, two years before he won his Nobel Prize, that the elf at the blackboard was one of the great geniuses in the entire history of economics.

I knew, of course. Leontief was my own father’s closest friend in the Harvard Economics Department, in what were not the department’s brightest days. There had been a bitter battle over tenure for a brilliant young radical, Sam Bowles; John Kenneth Galbraith and Wassily Leontief were allies on the losing side. Both were, increasingly, outsiders in their own profession. Around that time, one asked the other how many votes they would each receive, were their own tenured cases reconsidered. Galbraith counted eight for himself; Leontief nine. My father was perplexed about Leontief’s ninth vote; it turned out that he had counted himself. "And why not?" he argued, "I’m a tenured member of this department!"

Leontief’s ambivalent relationship to the larger body of American economists stemmed from the scientific character of his work, which posed a distinct threat to their scientific pretensions. He was a mathematical empiricist, passionate in the pursuit of fact and data, and quite detached from the empty formalism that defines the upper reaches of modern economics. His later writings contained numerous sharp attacks on the poverty of a priori theorizing in economics, on the inattention of economists to the quality of the statistics that they do use in empirical work, on the thinness of the prevailing statistical research techniques, and most of all on the need to invest in adequate collection of data, particularly industrial data, if one is to achieve a better understanding of economic life. None of this was particularly welcome, and certainly few of Leontief’s professional colleagues took up the causes that he so eloquently urged upon them.

The narrow appreciation of Leontief’s genius stemmed partly from the fact that his career was free of professional striving. That he came into the United States at a moment when economists esteemed such work was fortunate; he survived, flourished, won acclaim. But he never campaigned for honors, and so never achieved the tribal position that the scientific importance of his work should have commanded. No student of his was ever granted tenure at Harvard, which he left for New York University after 44 years. His empirical research program has few continuing adherents, and his work while often alluded to is rarely taught in detail in economics curricula in the United States today.

Late in his life, Leontief articulated an eloquent case against the first experiment in free -market liberalization, namely the economic policies of Ronald Reagan in the United States in 1981-2. In testimony before the Joint Economic Committee in early 1982, he painted a devastating, and also amusing, portrait of the prospect of such a program: vast inequality in income and wealth, disruption of industrial production, suffering among the elderly and children, social disorder among the poor. He had a perfectly complete contempt for the idea that "free markets" would by themselves arrange things. In his own words:

The captain is dismissing a large part of his crew and has ordered the sails set so that the canvas would catch the full force of the wind, that is, for the pursuit of the highest possible profits. He has also directed the helmsman to take his hand off the tiller so that, unimpeded by an attempt to steer it, the ship could sail in the direction in which the wind happens to propel it. Most passengers seem to be enjoying the cruise except, of course, the poor, the old and the sick who are being lowered in leaky dinghies overboard. This, the captain explains, has to be done to lighten the load.

But the mood will change, and I think quite soon when everyone hears and feels the rocks scraping the bottom of the vessel. Emergency measures will certainly be taken, but after having been pulled out into deeper water, should we resume experimentation with the same kind of policies based on the same kind of theories that permitted the American economy to reach the stage in which it finds itself today? Let’s hope not. The waters that we are about to enter are much more treacherous than those we were navigating up until now.

I did not see Wassily Leontief in the last decade before his death last month. And so I never heard him speak on events in his native land. But while he no doubt celebrated the end of Soviet rule in Russia, I cannot doubt his scorn for the unstable, naive, disastrous policies that undid the Russian economy in the first post-Soviet decade. It is a terrible shame that he is not with us now, remade into a young man once again, to help restore a sensible and realistic policy of balanced industrial and economic development following the neoliberal catastrophe in Russia.

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James K. Galbraith is Professor at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, and Senior Scholar of the Jerome Levy Economics Institute. He is also the Chair of Economists Allied for Arms Reduction, of which Wassily Leontief was a Trustee.