chapter
20 Pages

Introduction

A very good case can be made for the notion that E.E. Slutsky is the most famous and influential of all Russian/Ukrainian/Soviet economists, even better known than N.D. Kondratiev, L.V. Kantorovich or M.I. Tugan-Baranovsky. There are various eponymous concepts named in his honour such as the Slutsky equation, the Slutsky diamond, the Slutsky matrix, Slutsky’s Theorem and the Slutsky (or Slutsky-Yule) effect, and a journals literature search conducted on his name for the years 1980-95 yielded 79 articles directly using some aspect of Slutsky’s work. These articles have titles such as ‘The Slutsky Matrix and Homogeneity in Intertemporal Consumer Theory’ (Caputo, 1994), ‘A MonteCarlo Test of Slutsky Symmetry’ (Theil et al., 1985), ‘The Slutsky Equation for Club Goods per Member’ (Adams, 1984) and ‘In Quest of the Slutsky Diamond’ (Grandville, 1989). Moreover, many microeconomics textbooks contain prominent mention of Slutsky’s contribution to the theory of consumer behaviour, most notably the Slutsky equation, christened by John Hicks the ‘Fundamental Equation of Value Theory’ (Hicks, 1946, 309). As an indication of its significance, The Times newspaper, reporting in 1972 on Hicks receiving the Nobel Prize for Economics, declared that his early work had developed ‘concepts in the theory of value built on the writings during the First World War of the Russian economist Slutsky’ (Choate, 1972, 8). Slutsky’s work is thus an integral part of contemporary mainstream economics and econometrics, a claim that cannot really be made by any other Soviet economist, perhaps even by any other Russian or Ukrainian economist. And uniquely for any Russian economist (perhaps even for any economist), he made an ongoing appearance in the British Medical Journal, where it was debated whether an apparent circa-septennial rhythm in ear growth was due to the real properties of the human body, or was a statistical artifact resulting from the manner in which the data had been processed (Campbell, 1997, 978). Even so, it is a little surprising that so few of Slutsky’s academic papers have until very recently been translated into English, his fame as a twentieth-century economist in the West resting (until very recently) on only two articles. One was first published in Italian and focused on consumer behaviour (Slutsky, 1915), the second was published first in Russian and concerned business cycle analysis (Slutsky, 1927). However, as will be seen from this book, Slutsky’s interests

actually ranged far wider than is usually acknowledged in the contemporary economics or econometrics literature. Hence labels such as ‘economist’ or ‘mathematical statistician’ may not be completely adequate to cover the full scope of his contributions, although ‘mathematical statistician’ is closer to the empirical truth (in percentage weight of his published work) than ‘economist’. One historian of econometrics described Slutsky as ‘a Russian economist . . . whose publication record was more heavily weighted towards statistical work of an experimental and theoretical kind’ (Morgan, 1990, 79-80, fn.5). Another reviewer described him as ‘not only a mathematician and statistician of rare creativity but also an economic theorist of the first order’ (Fels, 1962, 611). The former suggested that Slutsky’s 1927 article on the random causes of business cycles was so important because it involved the application of a crucial experiment. It might also be seen to have recast an existing question in a totally new light, through the application of hitherto un-utilised methods, something that Slutsky often accomplished in his work in whatever field it was conducted. As a measure of his originality, in a survey conducted in 1990, Slutsky was voted the seventh most respected economist of the entire twentieth century by graduate students of economics (Coleman, 1992, 80). Mark Blaug proudly included him in a book presenting a list of 100 great economists before Keynes (Blaug, 1986, 230-1). The Western economist who initially did the most to propagate Slutsky’s work on consumer behaviour was R.G.D. Allen. He published two articles discussing Slutsky’s work, one in Review of Economic Studies (Allen, 1936), and one in Econometrica (Allen, 1950). Paul Samuelson recollected about Slutsky that:

Until 1936 all I knew of him was his work in statistics . . . His 1915 masterpiece died stillborn because of World War I and its Italian language form. . . . We were told that Slutsky was in concentration camps during Stalin’s day and was unreachable. . . . Probably Allen’s 1936 RES piece told me of 1915 Slutsky.