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History of Political Economy Annual Supplement to Volume 33 (2001) 190-212



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Leontief and the U.S. Bureau of Labor Statistics, 1941–54:
Developing a Framework for Measurement

Martin C. Kohli

[Tables]

In 1953, twelve years after his collaboration with the U.S. Bureau of Labor Statistics began, Wassily Leontief (1953, vii) noted that “the continual cooperative relationship with [the Bureau of Labor Statistics] has benefited our work most decisively,” but he did not elaborate. While Leontief cited the forecasts the Bureau had made during World War II of surprisingly robust postwar demand for steel ([1951] 1986, [1985] 1986), he never provided a comprehensive account of the Bureau's role in the development of input-output analysis.

This left the door open for a number of interpretations. Tjalling Koopmans (1951) described the early work on input-output economics as “initiated, developed, and stimulated largely by Leontief and given statistical expression by measurements and tabulations produced by the Bureau of Labor Statistics,” thus distinguishing between the theoretical work accomplished by Leontief and the presumably atheoretical data gathering done by the Bureau. His account and that of Dorfman (1973) suggested [End Page 190] that the Bureau's relationship with Leontief was significant largely because it supplied the muscle to flesh out his ideas.1

A closer examination will show that the Bureau did more than supply resources. To begin with, the Department of Labor's interest stimulated the development of a theoretical scheme, later known as the open input-output model, which proved to be more useful for policymakers than Leontief's first formulation. The Bureau also made several changes to the framework—the concepts and classifications—underlying the tables. Many economists have little interest in such issues, but Leontief insisted on their importance. He argued that in order to succeed in empirical work, the economist needed to develop “an intricate system of basic definitions, classifications, and rules of measurement” (1958, 105). This essay will show that the Bureau's conceptual changes made possible several significant measurements, thus buttressing Leontief's argument.

After discussing Leontief's pioneering work, conducted during the 1930s, this essay focuses on the period from 1941, when the Bureau began its collaboration with Leontief, until 1954, when the relationship temporarily ended. In the United States the early 1940s were years when the imperative of waging war led to a further expansion, building on the New Deal, of both federal intervention in the economy and of innovations in federal efforts to measure economic activities. Duncan and Shelton (1978) documented several wartime innovations, including the first official estimates of the product-side components of the gross national product. Flavio Comim (this volume) recounts how the need to finance World War II spurred innovations in national accounting in the United Kingdom. This should be no surprise, since, as Theodore Porter (this volume) reminds us, the relationship between state building and development of quantitative methods is centuries old. With the end of the Korean War and the advent of the Eisenhower Administration, Washington reverted to a less activist policy stance, leaving the issue of federal support for input-output tables unresolved, which is where the story told here properly ends.

When the Kennedy Administration took office, the federal government resumed constructing input-output tables on a regular basis. That development had its origins in the events that occurred between 1941 and 1954. The story of the early years of the Bureau-Leontief relationship [End Page 191] raised the issue that would later prove decisive—namely, the interest of the federal budget office in having accurate measurements of national income and product.

Leontief's Tableau Économique for 1919

In 1932, freshly arrived at Harvard after a brief stint with the National Bureau of Economic Research, Leontief began the unusual project of constructing a tableau économique for the United States. He had conceived of this project several years earlier while at the University of Kiel, where he developed a method for estimating supply and demand curves. Unable to resolve what later became known...

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Additional Information

ISSN
1527-1919
Print ISSN
0018-2702
Pages
pp. 190-212
Launched on MUSE
2001-01-01
Open Access
No
Archive Status
Archived 2005
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