The Nobel laureate who tried to optimize central planning with mathematics
In December 1941, during the Siege of Leningrad, Kantorovich walked onto the ice of Lake Ladoga himself, calculating optimal distances between trucks based on ice thickness and air temperature. It was the Road of Life.
The only Soviet Nobel laureate in Economics (1975). In 1939 he laid the foundations of linear programming and proved that 'resolving multipliers' from optimal solutions could serve as objective price signals within a planned economy. A full professor at 22 and a doctor of sciences without dissertation defense at 23. His shadow price theory offered a mathematical basis for decentralized decision-making under central planning, but its conflict with Marxian labor value theory led to decades of rejection by Soviet economic officialdom. In 1960 he founded the Mathematical-Economic Department in Novosibirsk, pursuing the rationalization of the planned economy as his life's work.
Career Timeline
- 1930–1939Professor, Leningrad Institute of Industrial Construction Engineers
- 1934–1960Professor, Leningrad University (appointed at 22)
- 1939–1948Head of Mathematics, Military Engineering-Technical University
- 1948–1960Department head, Institute of Mathematics and Mechanics, Leningrad University
- 1960–1971Founder and head, Mathematical-Economic Department, Siberian Branch, USSR Academy of Sciences
- 1971–1976Institute of National Economy Management, State Committee for Science and Technology
- 1976–1986All-Union Research Institute for Systems Studies (VNIISI)
Related historical events
How a Plywood Factory Gave Birth to Linear Programming (1939)
In 1938, the 26-year-old mathematics professor at Leningrad University received an unexpected request from a plywood trust. The problem: given eight peeling lathes processing five types of raw material, how should each machine be allocated material to maximize total output? Plant managers relied on experience, but Kantorovich sensed this was fundamentally a mathematical problem.
He formulated it as maximizing a linear function (output) of many variables subject to constraints in the form of linear equalities and inequalities, a class of problem for which no general solution method existed. Kantorovich modified Lagrange's method of multipliers to solve it. In doing so, he discovered that the "resolving multipliers" (разрешающие множители) emerging at the optimal solution represented the objective, economically meaningful value of each constrained resource, in other words, optimal prices.
The deeper insight was that the plywood problem was not an isolated case. In his 1939 booklet Mathematical Methods of Organizing and Planning Production, he demonstrated that this mathematical method applied to an enormous range of economic problems: restructuring economic indicators, job assignment, rational use of equipment, cutting-stock problems, optimal use of composite raw materials, construction planning, transport planning, and plant location. Linear programming was born eight years before George Dantzig independently introduced the simplex method in the West.
Yet in 1939 the work attracted almost no attention. Soviet economists saw it as incompatible with the Marxian labor theory of value; mathematicians dismissed it as a mere applied problem. Kantorovich's theory was not internationally rediscovered until the late 1950s.