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In Memoriam Björn Thalberg ASSRU Newsletter July 15, 2013 Vol. 3, # 1 Algorithmic SocialASSRU Sciences Newsletter Date Research September Unit15, 2012 (ASSRU) Vol. 2, # 1 Björn Thalberg (1924-2013) In Memoriam ‘The appearance,’ writes [Thalberg], ‘of yet another study dealing with Keynes’ General Theory does not, of course, make the air electric with expectancy.’ This, I fear is true, but in this slender volume Mr Thalberg has given us a very neat and interesting account of an aspect of the Keynesian system.’ Amartya Sen, Review of A Keynesian Model Extended by Explicit Demand and Supply Functions for Investment Goods by B.Thalberg, EJ, Vol. 73, Mar., 1963. Björn Thalberg belonged to the interregnum – I trace a development of his macrodynamics, from the enlightened generation of economists of the the Haavelmo-inspired ‘Mod K’ of the early Golden Quarter Century of Keynesian 1960s, to the Extensions of the Goodwin Model, of Economics and its policy successes: 1947 – the mid-1960s, to, finally, the ‘stabilization’ phase 1972. The generation that had a complete determined by forging the above two rich Oodwin Model mastery of the ‘four’ (actually six) defining formalizations to a framework which generalized classics of the age of the neoclassical synthesis: Phillips’ EJ contributions of 1954 & 1957. Value and Capital by John Hicks, the On the way, explicit considerations of delivery Foundations of Economic Analysis by Paul lags and order-book timings (from the Corfu Samuelson , Money, Interest and Prices by Conference to ‘Mod K’), ‘time-to-build’ and the Don Patinkin and Roy Allen’s ‘trilogy’ on important supply considerations in both Mathematical Analysis for Economists, consumption and investment goods productions, Macro-Economic Theory and Mathematical intractable nonlinearites tamed by simulations, at Economics. least pro tempore, and finally, those transparent This mastery was built on the foundations of policy themes that Phillips embodied in the what I have come to call the ‘Oslo Tradition’* – MONIAC, were all part of the classy lectures on that which was built on the outstanding advanced macroeconomics we were privileged to pioneering works by Ragnar Frisch, Trygve follow, in our graduate studies in the department Haavelmo and, later, Leif Johansen, to which of economics at the University of Lund. adding the name of Jan Tinbergen, Bent Hansen and Herman Wold was only natural, at least as far as Thalberg’s own intellectual building blocks were concerned. These were unusually solid foundations and students of my generation, who did not foresee the demise of the neoclassical synthesis, were privileged to be taught – particularly in macroeconomics – the concepts and tools that were not only considered necessary for disciplined thinking , but also absolutely essential for an enlightened approach to active economic policy. Thalberg’s own interests in, and fundamental contributions to, Macrodynamics, Methods of mathematics in macroeconomics, Econometrics, Computationally underpinned simulations and Nonlinear endogenous business cycle theory The ASSRU Logo were the result of his intellectual – direct and From L to R (Clockwise): indirect - inspirations from the teachings and Turing, Simon, Brouwer, Goodwin, Sraffa & Keynes The four Professors during Velupillai’s years, in the writings of Ragnar Frisch, Trygve Haavelmo, late 1970s, in Lund: Richard Goodwin, Roy Allen and A.W.Phillips *Thalberg is reluctant to call this ‘tradition’ a ‘school’ in Ingemar Ståhl, Bo Södersten, Björn Thalberg (in his stabilization policy incarnation) most the sense in which one refers to the ‘Stockholm School’, & Bengt Höglund directly, and indirectly from his mastery of the is unfortunately in terms of a reference to a specious classics by Wicksell and Keynes. characterization attempted by Björn Hansson in his seriously deficient study, based on his deeply flawed Because he was such a humble, old fashioned Cambridge doctoral dissertation. He, and others, who (in all its good and decent senses), scholar- indulge in referring to a ‘Stockholm School’ forget that gentleman, because he – like Schumpeter – the two important contributions to the monetary theory, never referred to his own work during the being forged by Wicksell’s younger followers, led by lectures I had the pleasure and privilege of Lindahl and Myrdal of a senior generation and attending, it was only with some effort that I continued by Hammarskjöld, Lundberg, Alf Johansson, came to realize how masterly his knowledge of Ingvar Svennilsson and Bent Hansen of a younger generation, were NOT part of this group: Ohlin & the General Theory was (as amply testified by Palander, who added the appellation ‘Stockholm’ Sen’s above sensitive and characteristically (against the explicit protests of the above younger scholarly review of Thalberg’s elegant yet, generation). I develop these themes in my forthcoming Velupillai & Thalberg at the latter’s home, in Lund, Christmas 1979 sadly neglected, Keynes Booklet). essay, Hammarskjöld, Wigforss & Ohlin. Page 2 ASSRU NL v.3 #1 Thalberg’s fundamental work in macrodynamics was inspired and influenced by the pioneering contributions of his teachers, Frisch & Haavelmo, and his distinguished contemporaries, Goodwin and Phillips – the latter two on nonlinear cycle theory and macroeconomic stabilization policy. Leif Johansen’s influence was of an entirely different ‘dimension’. Thalberg’s last letter to me, in response to my request for a brief note on remembrances of his years at Cambridge, with Goodwin and the Phillips Machine. Festschrift in honour of Thalberg Phillips Stabilization in a Keynes-Goodwin Model Thalberg’s ‘Extension of the Goodwin Model’ ASSRU NL v.3 # 1 Page 3 Leif Johansen, the Correspondence Principle and Frisch’s Decision Models Björn Thalberg’s wonderful lectures on macroeconomics which I had the pleasure and privilege to attend as a graduate student at Lund, in Spring 1972, were seriously underpinned by an appeal to the ‘correspondence principle’. Coming from an applied mathematics background, with emphasis on the mathematical methods of physics – in the Hilbert-Courant tradition – I was astonished to discover that there was such a thing also in economics – knowing, till then, only the famous Niels Bohr version which was formulated to reconcile classical and quantum physics. It was, therefore, quite natural for me to mention the ‘correspondence’ between the two versions, the Bohr and the Hicks-Samuelson formulations, in an appendix to my ‘essay’ for Thalberg’s course. Imagine my surprise, when I received a meticulously annotated ‘essay’ back, with a suggestion that I write up the appendix so that Thalberg could get it published in the Swedish Journal of Economics – which he did, in 1973! Of all my own work, the ones that Thalberg found most satisfying were those that built on the Frischian tradition of decision models, framed so as to facilitate interactions between an economic theoretical modeller and an actual politician, like a Finance Minister*. Thalberg’s almost passionate allegiance to Leif Johansen, as a scholar of impeccable integrity – matching his own – was most elegantly and persuasively evident in his long and thorough survey of his great Norwegian contemporary’s contributions to economics, published in 2000 in the Norsk Økonomisk Tidsskrift. The 157 page document – and this brings the story only till December, 1961 - is meticulously detailed and is also a reflection on the Oslo Tradition in which he and Leif Johansen were schooled. The most impressive feature of this study is the sympathetic, yet wholly objectively argued, endorsement of Leif . Johansen’s vast and varied visions of economics, economic *Hicks, in a letter to me of 23 December, 1983, wrote, theory and applied economics. This is particularly so for Leif regarding what he called my ‘Frischian paper’: ‘The paper you Johansen’s two enduring contributions to macroeconomics – his sent me made me think of Dobb Lindahl and Wigforss (I once had lunch with them together). No doubt Frisch had someone ‘Putty-Clay’ model and the path-breaking monograph on A Mutli- ** in Norway with whom he could have similar relations.’ A Sectoral Study of Economic Growth . reading of this letter gave Thalberg immense pleasure. **Thalberg was careful to attribute the false claim that this The thoroughness is strengthened by detailed quotations even classic study was the pioneering contribution to what came to from Leif Johansen’s Cambridge diaries*** be called CGE modelling, to Lars Begman. I have discussed this, and related false claims, in my detailed simulation paper dedicated to Thalberg (OUP, 2013). CGE modelling, linking the Brouwer fix point theorem to a (Walras)-Arrow-Debreu . equilibrium, was the creation of Uzawa and Scarf (see my forthcoming EPW paper, too). ***The entry for 6/11/1958 gave me particular pleasure: ‘The Department had a visit by A.W. Phillips from London who gave a talk on ‘Buffer stocks and price stabilization. … Kaldor, Joan Robinson, Goodwin and Meade, among others, were present. Kaldor tried to steal the show, J.R was not easy to follow. Goodwin was the one who understands all and was always ready to intervene in a supportive way.’ (My translation from the original Norwegian; italics added). It gave me enormous satisfaction to write my JEBO paper of 1993, linking Goodwin’s classic Growth Cycle with Leif Johansen’s Classical Model of Growth, both published in the Dobb Festschrift. Page 4 ASSRU NL v.3 # 1 Almost exactly forty one years ago, on optimal control & dynamic programming 1st
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