Bertil Ohlin: A Centennial Celebration (1899-1999) (review)

To celebrate the centennial of Bertil Ohlin's birth year, a conference was held at the Stockholm School of Economics in October 1999. This book contains recollections of Ohlin by his three children and a former colleague, as well as papers presented at the conference by a distinguished group of economists. It is a fitting memorial to the Swedish Nobel Prize winner known to all international trade economists as the junior founder of the Heckscher-Ohlin theory of trade, presented in textbooks as the mainstream explanation of trade flows. The twenty-two chapters appear in five parts devoted to "the man," "the early Bertil Ohlin," "the macroeconomics of Bertil Ohlin," "the Heckscher-Ohlin theory of trade," and "the Heckscher-Ohlin theory and economic history." The authors include economists able to comment on Ohlin's voluminous writings available only in Swedish (his newspaper articles alone numbered over twenty-three hundred); trade economists such as Paul Samuelson and Ronald Jones, who transformed the Heckscher-Ohlin theory into the Heckscher-Ohlin-Samuelson theory, and Paul Krugman, who modeled trade based on economies of scale, an important subsidiary reason for trade, according to Ohlin; and economic historians who test the validity of the Heckscher-Ohlin model by examining trade and its effect on factor prices in Ohlin's time and before. In addition to Samuelson, another Nobel Prize winner, Robert Mundell, contributed a chapter on the famous debate between Keynes and Ohlin on the secondary burden of the transfer represented by the reparations imposed on Germany by the Allies after World War I. Mundell adjudicates in favor of Ohlin (1929), while trying to understand why Keynes could have been so mistaken.

In the Bertil Ohlin symposium that appeared in HOPE in the fall of 1978, Ohlin's pioneering work in macroeconomics was highlighted with the translation of his 1933 article "On the Formulation of Monetary Theory," followed by comments by Otto Steiger, Hans Brems, Don Patinkin, and William P. Yohe. These authors engaged in a lively debate on whether what Ohlin (1937) was the first to dub the "Stockholm School" anticipated Keynes's General Theory and the advocacy of expansionist policies during the Great Depression. Further light on this debate is shed by chapters in this book by Swedish economists. Benny Carlson and Lars Jonung carefully trace Ohlin's evolving views as expressed in numerous newspaper articles between 1926 and 1935. Although Ohlin advocated countercyclical public works expenditure, and justified it on the basis of the multiplier approach, Carlson and Jonung stress how cautious (if not conservative) his views were at the beginning of this period, and how much he was influenced by Keynes's ideas after 1932. Björn Hansson believes that whereas the leitmotif of the Stockholm school was the development of a dynamic method of analysis, Ohlin mixed up ex ante and ex post concepts as developed by Gunnar Myrdal, and did not contribute significantly to the development of the dynamic method. He did, however, point to the possibility of autonomous changes in consumption demand. In assessing the founding of the Stockholm school and examining Ohlin's work for the Committee on Unemployment, Eskil Wadensjö notes that in 1932 Ohlin did not see the Stockholm school and Keynes as two separate schools, but stressed the similarities between Swedish and most British economists. Svante Nycander's chapter points to the fact that, beginning in the 1930s, Ohlin devoted most of his time and energies to politics, as a rising star and eventually leader of the Liberal Party. This may explain why his macroeconomics was not more fully elaborated and did not achieve the international recognition that he claimed it deserved.

Ohlin's work in macroeconomics was not even mentioned by the Swedish Royal Academy of Sciences (1978) in their official announcement of the award of the Nobel Prize in Economic Sciences to him and to Professor James...