Alvin Hansen
Alvin Harvey Hansen (1887-1975), once referred to as "the American Keynes", brought the 1930s Keynesian economics revolution to the United States. A professor of economics at Harvard, he was a prolific writer who also played an important role in the creation of the Council of Economic Advisors and the Social Security System.
Hansen was born in Viborg, South Dakota, on Aug. 23, 1887. He graduated from Yankton College in South Dakota in 1910, and worked several years as an educator before returning to school for graduate studies in economics. He completed his doctorate at the University of Wisconsin-Madison in 1918, and then taught at Brown University until his appointment at the University of Minnesota in 1923. His major works in this period were in the neoclassical economics tradition.
In 1937 he was appointed Professor of Political Economy at Harvard University. He was the first of the older generation of economists there attracted to Keynes's economic theory. Hansen's seminar on fiscal policy created a generation of graduate students, such as Paul Samuelson and James Tobin, who would further develop and popularize Keynesian economics. Hansen's 1941 book, Fiscal Policy and Business Cycles, was the first major work in the United States to entirely support Keynes's analysis of the causes of the Great Depression. Hansen used that analysis to argue for Keynesian deficit spending.
Hansen’s best known contribution to economics was his development of the IS-LM model, also known as the Hicks-Hansen synthesis. The framework graphically represents investment-savings (IS) and the liquidity-money supply (LM), and can be used to illustrate how fiscal and monetary policies can be employed to alter national income.
Hansen's 1938 book Full Recovery or Stagnation was based on a small portion of John Maynard Keynes's The General Theory of Employment, Interest and Money, and was an extended argument that there would be long-term employment stagnation without government demand-side intervention. Ultimately, economic stagnation theories became more associated with Hansen than with Keynes.
Hansen frequently testified before Congress, his fiscal policy notably advocating against the use of unemployment as the main weapon for controlling inflation. He thought that instead price inflation could be managed by timely changes in tax rates and money supply, and by effective wage and price controls. He also advocated fiscal and other stimulus to ward off the stagnation that he thought was endemic to mature industrialized economies.
During the Roosevelt and Truman presidencies Hansen was influential in shaping policy, as a member of numerous government commissions and as consultant to the Federal Reserve Board, the United States Department of the Treasury and the National Resources Planning Board. In 1935, he helped create the U.S. social security system and, in 1946, he assisted in the drafting of the Full Employment Act which, among other things, created the Council of Economic Advisors. Hansen also served as Vice President of the American Statistical Association and President of the American Economics Association.
References
Primary sources
- Alvin Hansen, "Economic Progress and Declining Population Growth," American Economic Review (29) March (1939). online at JSTOR.
http://www.bookrags.com/biography/alvin-hansen/
- Alvin Hansen, Fiscal Policy and Business Cycles (1941)
Secondary sources
- Quarterly Journal of Economics vol 90 # 1 (1976) pp 1-37, online at JSTOR and/or in most college libraries.
- "Alvin Hansen on Economic Progress and Declining Population Growth" in Population and Development Review, Vol. 30, 2004
Miller, John E. "From South Dakota Farm to Harvard Seminar: Alvin H. Hansen, America's Prophet of Keynesianism" Historian (2002) 64(3-4): 603-622. Issn: 0018-2370
- Rosenof, Theodore. Economics in the Long Run: New Deal Theorists and Their Legacies, 1933-1993 (1997)
Seligman, Ben B., Main Currents in Modern Economics, 1962.