Simon Kuznets

Simon Kuznets (1901 - 1985), economist and American statistician of origin Ukrainian and prize winner of the “Nobel Prize” of economy in 1971.

Biography

Born with Kharkiv (then known under its Russian name from " Kharkov" , in current the Ukraine), it leaves in 1922 the Soviet Union incipient for the the United States and continues its studies with the Université Columbia. During its career of academic, he taught at the university of Pennsylvania, Johns Hopkins (Baltimore) and Harvard. In 1971, it receives the “Nobel Prize” of economy for its empirical work in economy of the growth.

Theory of the cycles

The first economic work of Kuznets (of which its thesis of doctorate) relate to the analysis of the time serieses. He claims to identify a cycle from fifteen to twenty years, called thereafter cycle of Kuznets .

Making of a statistical apparatus

Kuznets stuck to making of a statistical apparatus able to collect, treat and interpret a series of economic sizes, i.e. a system of national accounting likely to as a whole provide precise infomations on the economy. Kuznets proposes to retain two large aggregates: on the one hand, a net profit obtained by the operation “final goods intermediate product-goods”, and on the other hand it develops an indicator richness, the “annual growth rate of the national product”, making it possible to compare countries between them.

Theory of growth

One of the most outstanding conclusions of work of Kuznets is the relation between the economic growth and the distribution of income. When a country develops, the inequalities increase initially then they decrease. This relation, named Curve of Kuznets out of U reversed , is explained by the fact why at the beginning a weak share of the population profits from the economic growth.

Then the fruits of the growth extend to the other sectors from the economy. This theory comes from its empirical observations. It observes an increase in the inequalities of the end of the 19th century at the Second world war, then a fall of the inequalities until the Seventies where they set out again with the rise.

However the curve of Kuznets was called into question later on.

The criticism of Keynes

Kuznets is also famous to have tried, by empirical work, to show the weakness of the theory keynesienne of the " psychological law fondamentale". Indeed, he affirms that in the long run (between 1869 and 1938), the share of the American income of households devoted to consumption increases about proportionally with the income. In that he contradicts Keynes, which affirms that " the men tend to increase their consumption as the income believes, but not of a quantity as large as the increase in income " ( general Theory of Employment, the Interest and the Currency , 1936). Consequently according to Kuznets, if the economic agents grow rich, they inevitably do not have a propensity to save higher (fundamental psychological law of Keynes).

The error which Kuznets makes, it is precisely that its research is turned towards aggregate behaviors (on a nation scale), whereas Keynes, explains individual behaviors to him.

Selective bibliography

Secular Movements in Production and Prices , Houghton-Mifflin, Boston and New York, 1930
Length-Term Exchanges in the National Income off the United States off America since 1870" , in Income and Wealth off the United States: Trends and Structure, International Association for Research in Income and Wealth, Income and Wealth, Series II, Bowes & Bowes, Cambridge, 1951

Economic Growth and Income Inequality , The American Economic Review, vol. 45, n° 1, p. 1-28, 1955 Capital

in the American Economy: Its Formation and Financing , Princeton University Near, Princeton, 1961

Modern Economic Growth: Misses, Structure, and Spread , Yale University Close, New Haven, Connecticut, 1966

Economic Growth off Nations: Total Output and Production Structure , Harvard University Near, Cambridge, Massachusetts, 1971

See too

Internal bond

Institutionalism

External bonds

Site of the Nobel Prize

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