Wassily Leontief - Nobel Prize Winner in Economics, Birthday and Family

Wassily Wassilyevich Leontief was born on August 5, 1906 in Munich, Germany. Both his parents were Russians. His father, Wassily W. Leontief, a professor of labor economics at the University of St. Petersburg, belonged to an old-believer family living in that city since 1741. He was educated in Germany.

His mother, Genya nee Becker, an art historian, came from a wealthy Jewish family from Odessa. Shortly before his birth, they had traveled to Munich to avail better medical facility, as a result of which, Wassily was born in Munich, not in St. Petersburg, as claimed by many biographers.

Soon after Wassily’s birth, the family moved back to St. Petersburg, where he was baptized at the Spaso-Preobrazhenskaya Kolotyshinskaya Church at the age of three weeks. Initially they lived in his grandfather’s house; but later moved to Krestovskiy Island.

Like most other children, Wassily had his initial education at the local gymnasium. But everything changed with the advent of the February Revolution in 1917. Although his father was able to keep his job, they lost their property and had to move out of their home.

From 1917 to 1919, Wassily studied at home. Thereafter, he was admitted to the 27th Soviet Union Labor School, from where he graduated in 1921, receiving his school leaving diploma at the age of fifteen.

In 1921, Walissy Leontief entered the University of Petersburg, newly renamed as University of Leningrad, with philosophy and sociology. But very soon, economics caught his interest and he gave up philosophy and took up economics in its place.

From the very start of his university years, he began to take interest in his country’s socio-political environment. Lack of intellectual and personal freedom began to worry him and he soon became vocal about it, inviting the wrath of the communist regime.

He was first arrested at the age of fifteen, being caught while nailing anticommunist posters on the wall of a military barrack. For several days, he was placed under solitary confinements. But on his release, he promptly resumed his anticommunist activities, inviting further imprisonments.

In 1924, he received his Learned Economist degree, equivalent to MA degree elsewhere. By then, he had mastered German and French, having read the works of most prominent German and French economists.

In 1925, a growth was detected, possibly on his neck, which the doctors diagnosed as sarcoma. He then applied for permission to travel to Germany. Since the authorities thought that he would die anyway, they allowed him to leave.

In Berlin, his growth was found to be benign. Therefore, he entered the University of Berlin, working for his PhD simultaneously with Ladislaus Bortkiewicz, a well-known economist and statistician from St. Petersburg, and Werner Sombart, a German economist and sociologist.

From the very beginning, Leontief had realized that to be successful in economics, one has to have good grounding in mathematics. While Sombart was a great social scientist, he did not know mathematics, a subject that Leontief studied with Bortkiewicz.

In 1928, Leontief submitted his dissertation entitled, ‘Die Wirtschaft als Kreislauf’ (The Economy as Circular Flow), earning his PhD in 1929. By then, his ideas about input-output analysis, a work that would make him famous one day, had already started forming in his mind.

In 1927, Leontief began his career at the Institut für Weltwirtschaft (Institute for the World Economy) under the University of Kiel. Remaining there until 1930, he worked mostly on the derivation of statistical demand and supply curves.

In 1929, while he was still under the employment of the University of Kiel, he traveled to Nanking, China, at the invitation of the Chinese government, and was employed as an advisor to the Ministry of Railroad. He returned to Germany in the following year, resuming his research work at Kiel.

In 1931, he moved to the United States of America, where he joined the National Bureau of Economic Research, one of the finest organizations working in his field. Here, working from the organization’s New York office, he began his research on the American economy, which had just entered the Great Depression.

Realizing that partial analysis was incapable of explaining the structure and operation of economic systems, he began to formulate a general equilibrium theory that would help in empirical implementation. The papers he published attracted the attention of many economists.

In 1932, he was invited to join the economics department of the Harvard University as an instructor in economics. Before he took up the position, he made sure that the university helped him to develop his ideas on, what later became known as input-output analysis.

As agreed upon, Harvard provided him with a grant of $2,000 as well as a research assistant. With that, he began constructing a table covering 42 American industries for the years 1919 and 1929. It was a tedious work and the figures took him months to compile, after which, they had to perform manual calculations.

In 1933, he was promoted to the post of Assistant Professor. While working on the input-output analysis, he also published a number of papers. For example, in 1933, he published an important article on the analysis of international trade via indifference curves. In 1934, he created his non-linear cobweb model.

In 1935, he became the first social scientist to use a computer. It was, however, not an electronic computer, but a large scale mechanical computing machine. In the same year, he also launched his ‘Price Analysis’ seminar, which would one day help to establish mathematical economics at Harvard.

In 1936, Wassily Leontief published a paper on ‘composite commodities’, which later formed the basis of microeconomic theorem. In addition, he also published reviews on Keynes's General Theory.

In 1939, he was promoted to the post of Associate Professor. Very soon, as the Second World War broke out, he was appointed a consultant to the Office of Strategic Services, helping the US government to plan for better industrial production, a job he carried on alongside full time teaching.

In 1941, he published the initial results of his work on input-output analysis as ‘Structure of the American Economy, 1919-1929’. Thereafter, he continued developing his theory, working to find out its various applications and while doing so, he began using Mark I, the first large-scale electronic computer, in 1943.

In 1946, Leontief was appointed a full professor at Harvard. In the same year, he published a paper on the wage contract. It outlined what is now called a classical application of the principal-agent model.

In 1948, he founded Harvard Research Project on the Structure of the American Economy with the aim of expanding and refining his input-output models. He became its first director, a position he held till 1973.

For this Research Project, he received grants from the Ford and Rockefeller Foundations and the Air Force. Later, he gave up the Air Force grant because there was a criticism about his input-output theory. For this work, he also received a 650-punch-card computer from I.B.M., known as Mark II.

In 1949, he divided the U.S. economy into 500 sectors, modeling each of them with a linear equation with the help of his computer. Thus, he became one of the first persons to use computers for large scale mathematical modeling.

In 1953, working further on his input-output analysis, he published 'Studies in the Structure of the American Economy'. In the same year, he was named the Henry Lee Professor of Economics, holding the chair until he left Harvard in 1975.

Also in 1953, he noticed that USA, which was abundant in capital, but short in labor, exported more labor-intensive materials such as food grains, thus establishing ‘Leontief Paradox’. In the same year, he published the result of this work as ‘Domestic Production and Foreign Trade: the American capital position re-examined’.

In 1961, he served as a consultant to the United Nations on the economic consequences of disarmament. At home too, he argued that reduction of the defense budget was not only necessary, but also viable. His proposal was accepted by the law-makers, leading to gradual decrease in the defense spending.

In 1965, he became the Chairman of Harvard Society of Fellows. But sometime thereafter, his relation with the university became strained. When in 1969, the Harvard students held a protest, he sided with them.

In 1975, he left Harvard University, disgruntled that too often teachers did not teach and researchers did not research. He had also joined an internal probe, in which he had criticized the economic department for number of reasons such as taking overtly narrow approach in scholarship etc.

On leaving Harvard in 1975, he joined the New York University, where he taught both graduate and undergraduate classes. Concurrently, he continued with his research work, producing seminal works like ‘Essays in Economics, II’ and ‘The Future of the World Economy’, in 1977.

In 1978, he founded of The Institute of Economic Analysis at The New York University, directing the institute till 1991. During this period, he also started expanding his work on input-output analysis, helping other nations to adopt it.

From 1980s, he started co-authoring number of books such as 'Military Spending: Facts and Figures, Worldwide Implications and Future Outlook’ (1983), 'The Future of Non-Fuel Minerals in the U. S. and ‘World Economy' (1983) and ‘The Future Impact of Automation on Workers’ (1986) . In addition, he wrote number of papers on varied topics.

Since late 1980s, Leontief started working with China and Russia. He was, however, more involved with Soviet Russia, guiding the nation during its transition from a centrally planned economy to a market economy.

In 1991, he retired from his position at the New York University; but continued teaching, concurrently co-publishing important papers. The last papers to be published in his name were 'Can Economics be Reconstructed as an Empirical Science?' and 'Money-Flow Computations', both in 1993.

Wassily Leontief is best remembered for his 1941 work, ‘The Structure of the American Economy 1919–1929: An Empirical Application of Equilibrium Analysis’. Based on his input-output analysis, the book derives its value as much from his rich experience and painstaking compilation of data as for his vivid style of writing.

In 1973, Leontief received the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel "for the development of the input-output method and for its application to important economic problems".

He also received many other prestigious awards, such as the Bernhard-Harms Prize from the Institute of World Economics at the University of Kiel (1970), Takemi Memorial Award, Institute of Seizon & Life Sciences, Japan (1991) and Harry Edmonds Award for Life Achievement, International House, New York (1995) etc.

In 1932, Wassily Leontief married Estelle Marks, a poet and an author, known for her memoir ‘Genia and Wassily’. They had one daughter, Svetlana Leontief Alpers, who later became an art historian, professor, writer and critic.

He passed away at the New York University Medical Center on the night of February 5, 1999. He was then 93 years old and was survived by his wife and daughter.