Marschak was born in Kiev, Russia on 23 July 1898 and died in Los Angeles on 27 July 1977.

He had one of the most adventurous biographies of an economist in the twentieth century (Arrow 1979; Hagemann 1997; Radner 1984). At the age of 19 Marschak became Secretary of Labour in a revolutionary government of the Terek Republic in the Northern Caucasus (Marschak 1971).

Marschak’s professional career extended over 58 years and across three countries: Weimar Germany (1919-33), the United Kingdom (1933-38) and the United States. He got his PhD from the University of Heidelberg in 1922. His thesis on the quantity equation (Marschak 1924b) indicated already his lifelong interest in monetary macro­economics. Marschak later was open to an independent reception of Keynes’s theory, as reflected in his Chicago lectures Income, Employment and the Price Level (Marschak 1951), and his two outstanding PhD students, Franco Modigliani and Don Patinkin, who both made substantial contributions to modern macroeconomics.

In his first major publication Marschak (1924a) critically investigates Mises’s thesis of the impossibility of economic calculation in the socialist commonwealth because there is no price formation in free markets. Marschak objects to Mises empirically that in capitalist economies with an increasing number of cartels and trusts the requirements of price formation on free markets are not fulfilled, and theoretically that this growing number of trusts shows that the advantages of monopolistic calculation exist mainly in the economic calculation for goods of higher order and in the sphere of dynamics, that is, those two areas which are particularly affected by Mises’s scepticism. Marschak’s analysis, which Arrow (1979: 502) classifies as one of his “papers with the greatest per­manent interest”, has much in common with Schumpeter’s view on the subject and links up well with his later theory of teams (Marschak and Radner 1972), which provided a powerful tool for the analysis of the relative informational efficiencies of decentralized price expectations and emphasized the importance of communications and its limits in the transmission of information.

In the wake of a longer visit to Italy Marschak (1924c) gave one of the first well- informed analyses of Italian fascism, which also reveals the comprehensive socio­economic training he had received with his teachers Emil Lederer and Alfred Weber at Heidelberg. This is also brought to the fore in joint studies with Lederer on the role of the new middle classes which they regarded as critical for a greater stability of democracy.

From 1924 to 1926 Marschak worked as an economic journalist in the editorial staff of the leading liberal newspaper Frankfurter Zeitung, and from 1926 to 1928 on the staff of the Research Centre for Economic Policy, sponsored by the German trade unions and the Social-democratic parliamentary group of the Reichstag in Berlin. There, in 1927, he married Marianne Berta Kamnitzer with whom he had two children: Angela (Ann Jernberg), who became a psychotherapist, and Thomas, who became a long-time professor at the Haas School of Business at the University of California in Berkeley.

From 1928 to 1930 Marschak worked as a research supervisor for a parliamentary commission on exporting industries in the department on business cycles founded by Adolph Lowe at the Kiel Institute for World Economics. During that period he became increasingly interested in the new econometric movement. In Kiel he also wrote his habil- itation thesis Elasticity of Demand (1931) which Marschak submitted to the University of Heidelberg. There he became Privatdozent on 22 February 1930, a position from which he was dismissed for his ‘non-Aryan descent’ by the Nazis on 20 April 1933.

Marschak also played a major role among the minority group of German economists arguing strongly against a deflationary wage policy as the central element of economic policy in the Great Depression (Hagemann 1999). In particular Marschak (1930) was a differentiated defender of the purchasing power argument emphasizing that a real­location of purchasing power owing to wage reductions (increases) is associated with a change in the structural composition of production and that the goods consumed by workers are subjected to the law of mass production to a higher degree than those goods consumed by capitalists.

The Nazis’ rise to power caused Marschak’s second emigration in March 1933. In autumn 1933 he became Chichele Lecturer in Economics at All Souls College in Oxford. In 1935 Marschak was appointed Reader of Statistics, and became the founding Director of the Oxford Institute of Statistics (OIS) which was financially supported by the Rockefeller Foundation. In September 1936 the OIS hosted the famous conference of the Econometric Society where Hicks (1937) first presented his IS-LM model. Marschak had become a charter member of the Econometric Society in 1931, and was appreciated by Frisch and Tinbergen alike as a leading young scholar in this field. During his British period Marschak was involved in studies on the mobility of labour, and published his article “Money and the theory of assets” (1938), which was the first out of a series on the theory of portfolio choice influencing later work by Harry Markowitz and James Tobin. Marschak’s later attempts to clarify the concept of liquidity show the importance of acquisition of new information for economic behaviour. The roots of his interest on these issues date back to the early experiences Marschak made with substitutes of money in the revolutionary and hyperinflationary period in the Northern Caucasus (Marschak 1971: 31-2, 48-9).

Marschak, who had gone to the United States with a one-year fellowship by the Rockefeller Foundation in December 1938, did not return to Britain after the outbreak of World War II. In September 1939 he was appointed Professor at the New School for Social Research as the successor of Gerhard Colm who had joined the Roosevelt administration. In New York Marschak organized a seminar on econometrics and mathematical economics on behalf of the National Bureau of Economic Research which was a kind of prelude to the Chicago period “that brought out his leadership qualities in full strength” (Koopmans 1978: XI). In January 1943 Marschak became professor at the University of Chicago and director of the Cowles Commission for Research in Economics.

Under the directorship of Marschak (1943-49) and Koopmans, the Cowles Commission soon became the world centre of the ‘econometric revolution’ in econom­ics (Christ 1994). The statistical estimation of systems of simultaneous equations, as explored in the pioneering contributions by Haavelmo (1943), Mann and Wald (1943) and Marschak and Andrews (1944), as well as the probability approach in econometrics (Haavelmo 1944), soon became the trademark of the Cowles Commission. Marschak attracted a remarkable staff of researchers of whom many later received the Nobel Prize. During this period he was elected Vice President (1944-45) and President (1946-47) of the Econometric Society and Vice President of the American Statistical Association, and later (1967) became Distinguished Fellow of the American Economic Association. When in 1955 Tobin took over the directorship of the Cowles Commission, now renamed the Cowles Foundation and shifted to Yale, Marschak also left Chicago and became professor at Yale. From there he moved in 1960 to his final destination, the University of California at Los Angeles, where he was from 1965 until his retirement in 1971, also Director of the Western Management Science Institute.

Marschak’s work since 1950 focused on economic decision-making in the face of uncertainty and the economic value and the costs of information (see volumes I and II of Marschak 1974, Radner 1984). Inspired by John von Neumann and Oskar Morgenstern’s development of game theory, Marschak introduced the concept of a “team” into economics which he later elaborated with Roy Radner into an Economic Theory of Teams (Marschak and Radner 1972). The theory of teams provided a power­ful tool for the analysis of the relative informational efficiencies of decentralized price mechanisms. It thus links up well with his first scientific contribution on the socialist calculation debate. Just as Koopmans has pointed out that Marschak “was a citizen of the World” who “remained very Russian and very Jewish throughout these changes” (1978: X), we thus can identify in Marschak’s concern with the value and theory of money and of decision-making under uncertainty by individuals, institutions and policy­makers a remarkable element of path-dependency and continuity throughout his whole professional life.

Harald Hagemann

See also:

Kenneth Joseph Arrow (I); Econometrics (III); Adolph Lowe (I); Ludwig Heinrich von Mises (I); Don Patinkin (I).

References and further reading

Arrow, K.J. (1979), ‘Marschak, Jacob’, in D.L. Sills (ed.), International Encyclopedia of the Social Sciences, Vol. 18: Biographical Supplement, New York and London: Macmillan, pp. 500-507.

Christ, C. (1994), ‘The Cowles Commission’s contributions to econometrics at Chicago, 1939-1955’, Journal of Economic Literature, 32 (1), 30-59.

Haavelmo, T. (1943), ‘The statistical implications of a system of simultaneous equations’, Econometrica, 11 (1), 1-12.

Haavelmo, T. (1944), ‘The probability approach in econometrics’, Econometrica, 12 (1), 1-115.

Hagemann, H. (1997), ‘Jacob Marschak (1998-1977)’, in R. Blomert, H.U. Esslinger and N. Giovannini (eds), Heidelberger Sozial- und Staatswissenschaften. Das Institut fur Sozial- und Staatswissenschaften zwischen 1918 und 1958, Marburg: Metropolis, pp. 219-54.

Hagemann, H. (1999), ‘The analysis of wages and unemployment revisited: Keynes and economic “activists” in pre-Hitler Germany’, in L.L. Pasinetti and B. Schefold (eds), The Impact of Keynes on Economics in the 20th Century, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 117-30.

Hicks, J.R. (1937), ‘Mr. Keynes and the “Classics”: a suggested interpretation’, Econometrica, 5 (2), 147-59. Koopmans, T.C. (1978), ‘Jacob Marschak, 1898-1977’, American Economic Review, 68 (2), IX-XI.

Mann, H.B. and A. Wald (1943), ‘On the statistical treatment of linear stochastic difference equations’, Econometrica, 11 (2), 173-220.

Marschak, J. (1924a), ‘Wirtschaftsrechnung und Gemeinwirtschaft. Zur Mises’schen These von der Unmoglichkeit sozialistischer Wirtschaftsrechnung’, Archiv fur Sozialwissenschaft und Sozialpolitik, 51, 501-20.

Marschak, J. (1924b), ‘Die Verkehrsgleichung’, Archiv fur Sozialwissenschaft und Sozialpolitik, 52, 344 84. Marschak, J. (1924c), ‘Der korporative und der hierarchische Gedanke im Fascismus I + II’, Archiv fur Sozialwissenschaft und Sozialpolitik, 52, 695-72, 53, 81-140.

Marschak, J. (1930), ‘Das Kaufkraft-Argument in der Lohnpolitik’, Magazin der Wirtschaft, 6 (11), 1443-7. Marschak, J. (1931), Elastizitat der Nachfrage, Tubingen: J.C.B. Mohr.

Marschak, J. (1938), ‘Money and the theory of assets’, Econometrica, 6 (4), 311-25.

Marschak, J. (1951), Income, Employment and the Price Level, New York: Sentry Press.

Marschak, J. (1971), ‘Recollections of Kiew and the Northern Caucasus, 1917-18’, an interview conducted by Richard A. Pierce, University of California, Regional Oral History Office, Bancroft Library, Berkeley, CA.

Marschak, J. (1974), Economic Information, Decision, and Prediction. Selected Essays, 3 vols, Dordrecht and Boston, MA: Reidel.

Marschak, J. and W.H. Andrews (1944), ‘Random simultaneous equations and the theory of production’, Econometrica, 12 (3 and 4), 143-205.

Marschak, J. and R. Radner (1972), Economic Theory of Teams, New Haven, CT: Yale University Press.

Radner, R. (1984), ‘On Marschak’, in H.W. Spiegel and W.J. Samuels (eds), Contemporary Economists in Perspective, Greenwich, CT and London: JAI Press, pp. 443-60.