A childhood in revolutionary Petrograd
Wassily Wassilyevich Leontief was born on August 5, 1905, in Munich, where his Russian parents were living at the time. For most of his life he gave his birth year as 1906 and St. Petersburg as his birthplace, and the Nobel Foundation later added a note that more recent information places his birth in Munich in 1905. Whatever the paperwork, St. Petersburg was home. His father, also named Wassily, was a professor of economics there, from a family of Russian Old Believer merchants who had lived in the city since 1741. His mother, Zlata, later known as Evgenia or Genya, née Becker, came from a wealthy Jewish family in Odessa.
The boy grew up as the old empire collapsed. In his Nobel autobiography he listed a few indelible memories: the whole country plunged into mourning on the day Leo Tolstoy died, stray bullets whistling past during the first days of the February Revolution of 1917, and Lenin addressing a mass meeting from a high platform in front of the Winter Palace. In 1921, at fifteen, he entered the university in what had become Petrograd, studying philosophy, sociology and finally economics, and in 1925, at nineteen, he received the degree of Learned Economist, roughly a master’s degree.
Arrested, then allowed to leave
Leontief did not keep his head down. He sided with campaigners for academic autonomy and freedom of speech and supported the sociologist Pitirim Sorokin, and as a result he was detained several times by the Cheka, the Soviet secret police. In 1925 he was allowed to leave the country, in large part because the authorities believed he was dying of a sarcoma, a diagnosis that later proved false.
He went to Berlin, where he studied under Werner Sombart and Ladislaus Bortkiewicz and earned his doctorate in 1928 with a dissertation called Die Wirtschaft als Kreislauf, “The Economy as a Circular Flow”. The title already contained his life’s theme: an economy is not a set of separate markets but a loop in which every industry’s output becomes another’s input. From 1927 to 1930 he worked at the Institute for the World Economy at the University of Kiel, studying how to derive demand and supply curves from statistics, and in 1929 he spent a year in China as an adviser to the Ministry of Railroads.
Building a map of the American economy
In 1931 Leontief moved to New York to work at the National Bureau of Economic Research, and in 1932 he joined the economics department at Harvard, where he would teach for more than forty years. The same year he married Estelle Marks, a poet. He had decided, he wrote, that looking at one market at a time could never explain how a whole economic system works, and in 1931 he set out to build a theory of the entire system that could be filled in with real numbers.
The idea was not new on paper. The French economist Léon Walras had written down the equations of a whole interlocking economy in 1874, but no one had ever tried to put numbers into them. Leontief made bold simplifying assumptions, above all that each industry uses its inputs in fixed proportions, and then went looking for data that government statistics did not yet collect. A modest Harvard research grant let him hire graduate students to compile how much each industry bought from every other. Solving the resulting equations was a problem in an age before computers. A mechanical calculating machine built by Charles Wilbur at MIT could solve nine simultaneous equations in three or four hours, so Leontief squeezed his first model into nine sectors. His first input-output papers appeared in 1936 and 1937, and his book The Structure of American Economy, 1919–1929 followed in 1941.
What an input-output table shows
An input-output table is a grid. Each row shows where one industry’s output goes: to other industries as raw materials and parts, and to final buyers such as households, government and exports. Each column shows what an industry must buy to make its product. From the grid Leontief calculated “technical coefficients”, the amount of each input needed for one unit of output, and then worked out the full chain reaction of any change. If people buy more cars, carmakers need more steel, glass and electricity; the steel mills in turn need more coal and power; the power stations need more fuel, and so on through the whole economy. His method adds up all those rounds at once.
Leontief was among the first economists to use computers for this. He used a large mechanical calculator from 1935 and Harvard’s Mark I from 1943, and by 1949, with data from the Bureau of Labor Statistics and the Harvard Mark II, he divided the US economy into about 500 sectors, one of the first significant uses of a computer for mathematical modelling. He also used his tables to test trade theory, finding in 1953 that the United States, rich in capital, seemed to export goods that used relatively more labour, a puzzle still taught as the Leontief paradox.
A tool used by every kind of government
When the Royal Swedish Academy of Sciences awarded him the 1973 prize in economic sciences, it called him the sole and unchallenged creator of the input-output technique and noted that it was used for forecasting and planning in very different economic systems, from market economies to centrally planned ones. It proved especially useful for large, sudden changes such as military mobilisation, for tracing how cost and price increases spread through the economy, and, in a newer extension, for following pollution and waste back to the industries that produce them.
Input-output became part of official statistics. The United Nations System of National Accounts, the international standard for measuring national economies, brought input-output into its framework in its 1968 edition, and the UN still publishes handbooks that guide statistical offices in compiling supply-and-use and input-output tables. Today those tables are used to estimate how many jobs a new factory or a closed mine will create or destroy across a region, to model the economic impact of disasters and supply-chain disruptions, and, in “environmentally extended” versions descended from Leontief’s own 1970 paper on environmental repercussions, to trace greenhouse gas emissions through global supply chains. His iterative method has even been recognised as an early intellectual forerunner of Google’s PageRank algorithm.
A Harvard teacher with exacting standards
Leontief founded the Harvard Economic Research Project in 1948 and directed it until 1973, and from 1965 he chaired Harvard’s Society of Fellows, presiding over its weekly dinners. He was president of the Econometric Society in 1954 and of the American Economic Association in 1970. Four of his doctoral students later won the Nobel Prize themselves: Paul Samuelson, Robert Solow, Vernon Smith and Thomas Schelling.
He was a persistent critic of his own profession. Harvard’s memorial minute says that all his papers were imbued with one conviction: economics is an empirical, applied subject, and theory is only the first stage until it has been turned into reliable numbers. In his 1970 presidential address, published as “Theoretical Assumptions and Nonobserved Facts”, he complained that too many economists built elaborate models on assumptions they never checked, and he campaigned throughout his life to make better data available.
Jewish roots and an émigré family
Leontief’s Jewish heritage came through his mother, Genya Becker, the daughter of a well-to-do Jewish family from Odessa; his father’s family were Russian Orthodox Old Believers. The sources do not describe him practising Judaism, and he grew up in the secular, cosmopolitan world of the St. Petersburg intelligentsia. He is included in lists of Jewish Nobel laureates on the strength of his mother’s family.
His parents eventually followed him to the United States as émigrés, and his wife Estelle later wrote a memoir, Genia and Wassily, about the family’s life together. The couple had one daughter, Svetlana Alpers, who became a well-known art historian and professor at the University of California, Berkeley. Outside work Leontief loved fly fishing, ballet and fine wines, and for years he spent summers on a farm in West Burke, Vermont, later moving his summer home to Lakeville, Connecticut.
New York and a model of the world
In 1975, on the eve of compulsory retirement at Harvard, Leontief moved to New York University, where he founded and directed the Institute for Economic Analysis. His most ambitious project there, sponsored by the United Nations, was a model of the whole world economy built from fifteen regional input-output tables linked by trade and investment, published as The Future of the World Economy in 1977. He went on to study military spending, the future of mineral resources and, with Faye Duchin, the impact of automation on workers.
Harvard’s memorial notes that in his later decades he grew disenchanted with the gap between textbook portraits of a smoothly working free-exchange economy and the failure of real economies to meet the hopes of most of their workers. He kept researching and publishing until he was past ninety, with more than a hundred titles over seventy years. He died in New York City on February 5, 1999, at the age of 93.
Legacy
Leontief gave economics something it had lacked: a detailed, numerical picture of how a modern economy actually hangs together. Before him, economists could say in general terms that industries depend on one another; after him, a statistician could calculate how much extra coal, steel and labour a given increase in demand would require. That capacity now sits inside national accounts around the world, in regional development planning, in disaster and trade analysis, and in the carbon-footprint calculations that guide climate policy.
His insistence that economic theory must be tested against observed facts has outlived many of the debates of his time. Tufts University’s Global Development and Environment Institute awards an annual Leontief Prize in economics in his honour, and every national input-output table compiled today is a descendant of the nine-sector grid he once squeezed onto a mechanical calculator.
Sources & further reading
Wassily Leontief, Biographical, NobelPrize.org · Press release: The Prize in Economics 1973, NobelPrize.org · Faculty of Arts and Sciences Memorial Minute: Wassily Leontief, Harvard Gazette · Wassily Leontief, Jewish Virtual Library · Handbook on Supply and Use Tables and Input-Output Tables with Extensions and Applications, United Nations · Wassily Leontief, Wikipedia · Researched from the sources above and checked against them. Spotted an error? Tell us.
A life of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.