Leonid Vitalievich Kantorovich
Leonid Kantorovich shared the 1975 Nobel Prize with Tjalling Koopmans “for their contributions to the theory of optimum allocation of resources.” Kantarovich was born and died in Russia and did all his professional work there. His first major breakthrough came in 1938 when he was consulting with the Soviet government’s Laboratory of the Plywood Trust. Asked to devise a technique for distributing raw materials to maximize output, Kantorovich saw that the problem was a mathematical one: to maximize a linear function subject to many constraints. The technique he developed is now known as linear programming.
In The Mathematical Method of Production Planning and Organization (1939), Kantorovich showed that all problems of economic allocation can be seen as maximizing a function subject to constraints. Across the world, John Hicks in Britain and Paul Samuelson in the United States were reaching the same conclusion at around the same time. Kantorovich, like Samuelson, showed that certain coefficients in the equations could be regarded as the prices of each input.
Kantorovich’s best-known book is The Best Uses of Economic Resources, in which he developed some of the points made in his 1939 book. He showed that even centrally planned economies have to be concerned with using prices to allocate resources. He also made the point that socialist economies have to be concerned about trade-offs between present and future—and therefore should use interest rates just as capitalist ones do. Unfortunately, as hayek has shown, the only way to use prices is to have a price system—that is, markets and private property.
Besides receiving the Nobel Prize, Kantorovich was awarded the Soviet government’s Lenin Prize in 1965 and the Order of Lenin in 1967. From 1944 to 1960, Kantorovich was a professor at the University of Leningrad. In 1960 he became director of mathematical economic methods at the Siberian Division of the Soviet Academy of Sciences. In 1971 he was appointed laboratory chief of the Institute of National Economic Management in Moscow.
About the Author
David R. Henderson is the editor of The Concise Encyclopedia of Economics. He is also an emeritus professor of economics with the Naval Postgraduate School and a research fellow with the Hoover Institution at Stanford University. He earned his Ph.D. in economics at UCLA.