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American period

CAMBRIDGE. "CONCEPTION OF THE METHOD"

In 1931 Wassily Leontief moved to the United States  and became an employee of Wesley Mitchell -  the USA National Bureau of Economic Researches director. In 1932 he married Estelle Marks, a poet, and other year he received the American citizenship. The daughter from this marriage Svetlana is now history of arts professor in University of California. But at the same time the USA National Bureau of Economic Researches did not have trust in Leontief’s young age and gave him but simple tasks that made him bored. The management did not support his attempts to develop his own large-scale researches, and still further, did not allow that. Just then, the well-known Harvard University invited him to join its economics faculty.

HARVARD. HARVARD UNIVERSITY

Although it was not a very favourable offer and he had to pass exams to prove his competence. But the choice became really successful and Harvard became his place of work for the next 47 years.

Into the University Committee on allocation of funds from a Russian staff member comes an application from creation of fundamental scale of inter-branch connections of the USA and elaboration of analytical research.  The Commission members took this idea as an Utopia, but allocated 1400 dollars for recruiting of a staff member. With such budget and staff Leontief went to his major research, gathered unique volume of data about industrial costs, flows of goods, dissemination of incomes, structure of consumption and investments from services, firms, banks. As a result a very accurate portrait of American economy firstly for a yaer and then for a decade was received. That was made for the first time in the world. Leontief created his famous Input-Output tables, enabling correcting of any branch of industry development in a huge country.                 

K. Layman, Doctor of Economics: Quite a long time we worked together as lecturers, and also at his ingenious projects. He was widely known for his innovative ideas, which he had had already in Russia, but at the same time, they remained pure theory that lay dormant for lack of adequate authentic information and computer facilities. In Harvard Leontief started using calculators, first computers and technical innovations.  In the beginning he had only one secretary who put the gathered data into the graphs of a giant table. Finally a system of Input-Output was formed and the book was published in 1941.  

Calculating machines of those times were absolutely primitive. Leontief used a giant mechanical aggregation, which reminded a huge press, which vibrated as an old tractor at work. Everything was covered in oil and the scientist had to protect himself from the oil. 

Meanwhile, back in the USSR some, it turned out, have been closely watching Leontief’s works.  They understood that his experience and methods would be of great use in five years’ plans. Informally and privately, he was advised to come back to the USSR. .  Leontief hesitated for some time, but his father convinced him not to make such a dangerous step. Leontief definitely renounced Soviet citizenship and became an American citizen in 1933.

WASHINGTON. WORKFOR THE GOVERNMENT

Gradually the interest in his theory of “interindustry connections” deepened, particularly in industrial corporations.  After the U.S. entered World War II in 1941, Leontief’s method became a critical part of national war-production planning.  The scientist was offered to head the Russian economic sector of US strategic services, which task was to analyze the potential of Soviet economy, and elaboration of most effective ways to help Russian allies.  The fact that this task was given to a scientist of Russian origin and graduate of Leningrad University is quite logical. Indubitably is as well the fact that Leontief did everything possible during his work in Washington not only full up the lack of some goods in Soviet Union by land-leas supplies, but also to helped rebuilt Soviet economy accordingly to the needs of war time. As a consultant to the U.S. Labor Department, he developed an input-output table for more than 90 economic sectors.

In 1943, Roosevelt phoned Leontief. The President was concerned about total unemployment, which was forecasted as an inevitable result of the post-war industrial conversion. Roosevelt asked to make the objective analysis of the situation and a motivated forecast. Wassily W. Leontief shamed primitive foretellers. Using his input-output method, he showed that: be the military production after war reduced, demand for steel will increase due to inevitable expansion of construction. And it turned out to be the truth.

Cooperation with American government went on after 1945 when Leontief came back to the Harvard University.

BACK TO HARVARD UNIVERSITY

In 1946 his works were financed not only by the governmental bodies but also by different private foundations. The amount of grants was so significant that Leontief  got the opportunity to create Harvard Centre for Economic Research, specialized in perfection of Input Output methodology and Input Output tables elaboration for different public and private bodies both American and foreign. In five years Leontief received the title of Professor and headed Henry Lee department of political economy at Harvard University from 1953 to 1975, and in 1954 became the president of American Economic Association.  All ongoing young scientists worked in the Harvard Centre for Economic Research, where Leontief was the chief. This project was called The Harvard Project, though many of Leontief’s colleagues considered that the using of the ‘brand’ of such a famous University was inappropriate. The Leontief paradox discovery promoted the project. One of Leontief’s finding was termed the Leontief paradox. Indeed, a 1954 article by Leontief showed, using input-output analysis, that U.S. exports were relatively labor-intensive compared to U.S. imports. This was the opposite of what economists expected at the time, given the high level of U.S. wages and the relatively high amount of capital per worker in the United States. Since then, the paradox has been resolved. Economists have shown that in a country that produces more than two goods, the abundance of capital relative to labor does not imply that the capital intensity of its exports should exceed that of its imports.

Leontief was tough in judgments and never staid indifferent to eccentricity of American political leaders. Also he has never become a 100 per cent American, able to cover his real feelings with a usual smile.  He was thankful for the country, which enabled him with conditions for his scientific work, but everywhere he lived, he surrounded himself with object from the Motherland he left.  Actually, Wassily Leontief did not actively establish contacts with Russian emigrants as well. He got bored in their company playing politics and recalling old offences. The emigrants considered the Leontiefs almost communists for their assistance to the Soviet Union during the War. 

VISIT TO THE USSR

The increasing of interest to the Input-Output methodology was connected to the political “warming” and establishment of Soviet mathematical economics. Research in the field of inter-branch development started in the Institute of Electronic Conducting machines, Scientific-research Economic Institute at the State Plan of USSR, Laboratory of mathematic and statistics methodology implementation at the Academy of Science. Academician V.Nemchinov headed the group of enthusiasts of inter-branch analysis. It was he who organized Leontief’s first invitation to the USSR in 1959. 

Here we will give the floor to one of the students of Moscow University of World Economy and International relations: a small and inconvenient hall in a temporary building of the institute, occupying the old house in China passage, was filled up to the full. Except of the fact of a foreigner’s lecture and the fame of Leontief’s name, people were attracted by the fact that he was Russian and was going to talk Russian. Leontief quickly won the attention of the audience in which the youth was the majority, telling about the sense and future of his methodology skillfully and simply. He generously answered all the questions the youth asked about, and, probably, was satisfied with the meeting.”  Also Leontief took part in the State Plan meeting, Institute of economics of the AS and the Central Statistics department. His conversations with the heads of these institutions strengthened the positions of mathematical economics in Soviet Science, connected with the names of such scientists as: V.Nemchinov, L.Kantorovich, V.Novozhilov, N.Fedorenko. All in all the authority of Leontief spread at the scientists more of less free from the ideology. Though, from the other side, after the end of “warming” the fact of acquaintance with the emigrant-scientist could have a negative meaning. 

Actually, if any of the Western scientists was taken tolerant by the Soviet government, it was Leontief. Being an intellectual, and quite witty, he highly diplomatically, though with a tune of irony answered some questions.  So, when he was asked what his most colorful memories of Russia were, he name the revolutions of February and October, as well as the meeting as the Winter Palace were Lenin held a speech. Most obviously, Leontief   did not dissemble, as these events changed his life completely, and Lenin’s speech could move the young person by its open appeal fro violence.  

But those, who asked, “took the answer as complimentary, and he did not start arguing with them. Although in the introductory world to the collection of his works, Leontief avoided any polite words to the Soviet regime, recalling only his Russia:  "The possibility to express opinion in the language in which I listened to the lectures and passed exams being a student 70 years ago in the building of old commerts- collegium of Peter the Great, gives me deep personal satisfaction” 

VISIT TO CUBA

As the Input-Output methodology conquered the world, Leontief was getting convinced in the relative character of his discoveries.  As the model was build from the criteria of the Western society.  His was a bit Acquainted with the Soviet, Romanian, Polish models, but preferred to start the serious analysis from a more private but closer (from the geographical point of view) example- from Cuba.

As Leontief wrote in his “Cuban notes” (1969): "The transfer from the capitalist to the socialist systems we felt right at the moment we entered a Cuban airline’s aircraft. There were: serious and not smiling guides, creaking armchairs, somewhere with shabby facing. And two newspapers available for reading: French and Spanish Publications of Central Communist Committee of Cuba.   Creaking armchairs and gloomy guides were not the most pleasant memories, but later telling about his visit to Cuba Leontief describes both positive and negative sides of his journey with maximum objectiveness. And actually, it appears to be more negative facts in that story.  Two years later his visit to Cuba, Leontief publishes another article, titled “The Catastrophe of Cuban Socialism” (1971).

Actually Leontief’s interest to Cuba had a very practical meaning as well. Along with his colleagues he helped in accounting of different parameters of Cuban economy, which later helped in conducting state economic plans. Not excluded is another goal of Leontief’s visits to Cuba.  As a person, being in contact with United States Government, Leontief could possibly execute some unofficial diplomatic tasks, exploring the background for normalization of relationships between Cuba and the United States. And he could also use all his influence in Washington to contribute to this normalization. And, finally, the third aspect of his work bared a general scientific character. By studying Cuban experience, he was willing to elaborate the adequate answers to the challenges which the Western society had faced.  

Of cause, seen by Leontief was really useful and confirmed Leontief’s thesis that neither one country, nor political leader or political system does not obtain the full monopoly for the truth. Although, it is necessary to get to know each other better and exchange best practices and experiences. And the Cuban experience was implemented in the United States with huge amendments. These two countries were too different.  And how suitable are the Cuban models for a larger state with more complicated economic structure.  And then Leontief went to another country, which structure differed a lot from the American one, but was comparable by its economic potential.

VISIT OF CHINA

Leontief’s visit to China was held in 1973, the year, when this great communist empire tore relationship with Soviet Union and in the economic policy was reorientating to the West.  The scientist, no doubt had a great opportunity to compare his new impressions with that, gained 45 years beforehand. His conclusions he expressed in the article “Socialism in China”  (1973), and put a meaningful sub-title: In theory and practice, now promising nothing much than produced, it works. This subtitle defines his attitude to China as very respective. American businessmen, who read Leontief’s works were to understand that it was possible to make business wit Mao and his command.  But what did Leontief think about the economic system of this country from the position of a scientist and not businessman?

In general, he estimated the Chinese economy as the Cuban one, though the Chinese have one huge plus: a large and hardworking population with high discipline. With this powerful recourse along with plan economics it is possible to move mountains.  Although, while estimating the economics of China Leontief concentrates on the differences between moral and material motivation of workers, and on the necessity to choose between the “liberty and the guaranteed bowl of soup”.  Leontief himself did not insist on the choice of liberty as he understood that the necessity to work every day to earn a bowl of soup may easily vanish the value of such thing as freedom of speech, publications, meetings. May be that was the reason why he respected the Chinese model, though paying attention to some of its disadvantages.

VISIT OF JAPAN

Between the visits to Cuba and to China Leontief made a visit to Japan (1970). The reason to that was participation in the international conference against the environment pollution- the problem, which was especially relevant for Japan at those days.  On the conference Leontief made a report: Environmental Impact and Economic Structure”. These themes were touched as well in his other famous article: National Income, Economic Structure and the Environment” (1975), in which, on the base of concrete calculations the answer to the question about who has to pay for the clean air is given. To sum up it is possible to say that Leontief was the first among famous scientist who considered the complex of ecological problems in correlation to general structure of world economy. Due to his work, the discussion of these questions reached another quality level, and became not only the issue for a small amount of scientist, and for those, who are responsible for the future of the world.  

Leontief’s visit to Japan was not limited by the participation in the conference. Here it is not out of place to mention, that during his journeys, Leontief consulted local economists by a range of questions, connected to the Input-Output methodology. But this time he came not as much to teach, but mostly to learn something new. Japan itself left a complicated impression in the scientist’s memories. The success of economy was obvious, and were based, as well on the Leontief’s methodology. Furthermore, local politicians and entrepreneurs thought of Leontief as a “farther of Japanese economic miracle” and were ready to listen to his opinion. 

The input-output method for forecasting, planning, state programmes for social and economic development has been used in 128 countries (France, the Netherlands, Norway, Italy, Japan etc).

Leontief was certainly proud of it, but always emphasized, that he took the greatest professional pride advising the Japanese.  The state management of Japan never directed economy explicitly. They would study statistical data and make indicative plans, and the manufacturers would see their own way in relation to their goods and services. These principles Professor Leontief had been teaching representatives of various countries in Harward and New York, but, perhaps, only Japanese implemented his dry theory in practice. The live sprouts of Leontief’s economic ideas grew up in  kindly soil of Japan.  One should agree, it is really good job to plan something in a country, where the laws and rules are being written to be carried out thoroughly.

Masaaki Kuboniva, Doctor of Economics: It would be impossible to become successful without a reliable effective method of economic analysis and forecast. Implementation of Leontief’ theory met our objective to become one of the most developed countries of the world.

The statesmen of this old land were wise enough not to invent their own way at the hard time, but  turn to the most advanced economic theory. Leontief’s methods made the economic situation transparent, allowed influencing the economic dynamics effectively, directing investment processes, operating conversion, employment. At those times, Leontief created the model of economic - ecological equilibrium.

 

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