Finding New Wine In Old Bottles: What Historians Must Do When Leontief Coefficients are no Longer the Designated Drivers of Economics

In 1951, Nobel Laureate Wassily Leontief put his finger on what was wrong with economics. It had remained a “deductive system resting upon a static set of premises,†when what was needed was an economics that would “combine economic facts and theory.†The new economics would be called “interindustry†or “input-output†analysis (Leontief 1966, p. 14). According to Leontief it is easy to “compute the complete table of input requirements at any given level of output, provided we know its input ratios.†These input ratios could be calculated from “engineering data on process design and operating procedure†(ibid., pp. 24–26). For Leontief and, I suspect, a large number of economists in 1951, the technological facts dependent only on the chemical and physical laws of nature—what I shall call “Leontief coefficients†—were indisputable. It would take so many units of coke to produce a ton of pig iron whether or not there was a human being alive on earth to witness that transformation. The Leontief coefficients were the bedrock of subsequent economic analysis. They were analogous to what the philosopher John R. Searle has termed “brute facts†(Searle 1995, p. 27).