Wassily Leontief: Input - Output and Economic Planning

Leontief Biography and Paradox, Leontief Economics Model

Wassily Leontief is associated in the minds of most economists with one thing only-the development of the input-output system, the first empirical implementation of a general equilib­rium model of the economy. This is a project to which he has devoted nearly all his professional life-nearly fifty years altogether-and its success can be measured in the widespread use made of input-output by governments and business. However, Leontief's contribution to economics is to be found not merely in his development of input-output but also in his conception of the subject as a practical, problem-solving discipline grounded in the collection and processing of actual data and the use of simplified but applicable analytical tools. The development of input-output is one positive expression of this distinctive view of economics which Leontief has consistently espoused throughout his lifetime; the same approach also finds expressions as we shall see, in his distaste for the dominant trends in contemporary economics.

Wassily Leontief was born in St. Peterburg in 1906, the son of a university professor. Academically he was something of a prodigy, being admitted to Leningrad University at the age of 15. His early studies were done against the background of the 1917 Bolshevik revolution, the civil war which occupied the next three years, and the period of slow economic recovery in Russia in the early 1920s. During this time Leontief was a socialist of independent views, which differed from those of the Bolsheviks, and he spent some of this period in prison. In 1925, after a serious illness, he left the USSR for Berlin.
In Berlin he worked with the economic historian Werner Sombart and the statistician Ladislaus von Bortkiewicz, until in 1928 he moved to the Institute of World Economics at Kiel. A chance conversation in a cafe with a party of Chinese visitors led to an offer of employment as adviser to the Minister of Railways in China. Leontief accepted and spent a year there planning the railway network. This required him to travel widely throughout the country collecting data, for which purpose he often had to devise ingenious methods. He was to return to China over forty years later and his earlier experience there gave him a useful yardstick for evaluating the success of the Communist regime.
In 1931, shortly after his return to Kiel, Leontief-who by this time had published several articles in German academic periodicals - received an invitation to join the National Bureau of Economic Research in New York. After a brief and not wholly satisfactory stay there, he moved in the same year to the Economics Department at Harvard. He accepted on condition that he receive financial support for a research project. The money was made available, although the project was not enthusiastically received by his future colleagues, and this marked the start of Leontief's life-long research on input-output models. His associ­ation with Harvard was nearly as long. Apart from a brief interruption for the war years he remained there until 1975, and it was while at Harvard that Leontief received the Nobel prize for economics in 1973. In 1975, however, he moved to the Institute of Economic Research, a research institute created for him at New York University. Leontief's decision to move was prompted by dissatisfaction with what he regarded as Harvard's excessive concentration on orthodox theoretical economics, to the exclu­sion both of practical work and of radical approaches. When he left the department at Harvard, the University chose not to reappoint an economist working in the input-output field.

At the Institute for Economic Research Leontief continues to work on input-output models, devoting much of his time to a model of the world economy developed originally for the United Nations. He has also been deeply engaged in the recent debate over the desirability of some form of national economic planning in the United States.

Leontief's major publications are readily accessible. His first major study on input-output The Structure of the American Economy 1919-29 was republished in an amended version cover­ing the years 1919-39 in 1951 and reissued in 1976 (Leontief, 1951). A larger collective work on the same theme, edited by Leontief, was first published in 1953 (Leontief, 1953). Leontief published a set of later essays on input-output in 1966 (1966a), and his collected essays on economics were made available in two volumes in 1966 and 1977 (1966b, 1977a). His model of the world economy was also published in 1977 (1977b). These works have been extensively translated. In addition, Leontief has written widely on the development of economics, on economic policy, on the arts, and on his visits to Japan, China and Cuba. These last articles are particularly recommended as offering an insight into Leontief's thinking which may elude those who are acquainted only with his technical economic writings (1969, 1970 and 1973).