30 September 2022. https://cepr.org/voxeu/columns/axel-leijonhufvud-life-among-econ-1933-2022
Axel Leijonhufvud, who passed away in May 2022, was one of the most creative macroeconomists of his generation. This column, written by a long-time friend and colleague, outlines the development of his thought, including his work on Keynes and Keynesian economics; his enthusiasm for agent-based modelling; his insistence that good macroeconomists needs to understand the past before they can understand the present or the future; his view that modern macroeconomics is a degenerative research programme that took a wrong turn in the 1950s; and his many contributions to policy discussions on VoxEU during the Global Financial Crisis and the ensuing Great Recession.
“Editor’s Note: Since many of our younger readers are, with the idealism so characteristic of contemporary youth, planning to launch themselves on a career of good deeds by going to live and work among the Econ, the editor felt that it would be desirable to invite an Econologist of some experience to write an account of this little-known tribe.” (Leijonhufvud 1973b).
This opening quote appeared as an introductory footnote in what is perhaps one of Axel Leijonhufvud’s best known articles: a spoof anthropological study of the tribe of the Econ, packed with insightful observations from an “Econologist” who, writing in 1973, was “exiled nearly a decade ago to one of the outlying Econ villages (UCLA) and since then has not only been continuously resident there but has even managed to get himself named an elder (under what pretenses – other than the growth of a grey beard – the editor has been unable to determine)” (Leijonhufvud 1973b).
Axel Leijonhufvud studied political science as an undergraduate in Lund, Sweden, and economics at the PhD level at Northwestern University in the US, where he fell under the spell of Franco Modigliani, who taught there for a two-year period from 1960 to 1962 before moving to MIT. But although Axel was influenced by Modigliani, his interpretation of Keynes was original.
I first came across Axel’s writing as an undergraduate student at the University of Manchester where we were taught from his doctoral dissertation, published in the American Economic Review as “Keynes and the Keynesians” (Leijonhufvud 1967) and in book form as Keynesian Economics and the Economics of Keynes (Leijonhufvud 1968). This was transformative work that shot Axel to intellectual rock stardom.
Modigliani was the architect of the idea that the essence of Keynes’ General Theory was the assumption of wage rigidity. In contrast, Axel argued in his dissertation that Keynes’s General Theory (Keynes 1936) had nothing to do with sticky wages and prices, but was instead about inter-temporal coordination failure. Here he is in an interview with Brian Snowdon:
“I stand by my position that the neoclassical synthesis is utterly incorrect in its interpretation of Keynes. The important error that was built into that interpretation has had far-reaching implications” (Snowdon 2004).
Axel was part of a long tradition of independent thinking at the University of California, Los Angeles (UCLA), and he was responsible for recruiting me to the university in 1987. He never accepted mainstream interpretations of macroeconomics and was wary of consensus. And although Axel’s work was non-technical in nature, he recognised the importance of mathematics and was attracted to the formalism of theories in mathematical models.
Axel was a strong supporter of the teaching of economic history as part of the core curriculum, a subject that disappeared as a core subject from many economics departments in the 1980s. UCLA was an exception largely due to Axel’s insistence that a good macroeconomist needs to understand the past before she can understand the present or the future. He was instrumental in bringing Ken Sokoloff to UCLA and in supporting Ken’s successful efforts to attract Naomi Lamoreaux and Jean-Laurent Rosenthal there too.
In 2006, I was privileged to organise a conference in Axel’s honour at UCLA that was later published as a festschrift – Macroeconomics in the Small and the Large (Farmer 2009) – with contributions from his friends and admirers, one of whom, Ned Phelps, was a Nobel laureate and two more, Tom Sargent and Lars Hansen, went on to win the Nobel Memorial Prize in Economics subsequently.