Wassily Leontief, elfin, dapper and wise, made his yearly appearance on Capitol Hill the other day to offer a characteristically common-sense proposal for halting and inflation he fears could tear the the country apart.
Look at the Germans and Austrians, he said in a Russian accent that that seems to thicken with every year he lives in the United States. They are the only western nations enjoying high empolyment, satisfactory growth and modest price increases. They understand that "business and unions must be treated more or less as public utilities."
So government encourages the two "social partners" to discuss the likely size of each year's economic pie and to strike an agreement over how it will be divided between wages and investment.
Leontief, born in Leningrad nearly 73 years ago, a luminary of Harvard's economics faculty for 44 years, won the Nobel prize in economics for a most elegant mathematical construction. His input-output technique, linking to the flow of resources to final product, is an indispensable fool for planners - corporate, socialist or capitalist - around the globe.
But for all his mathematical sophistication - for years he taught the advanced theory course to Harvard graduate students - Leontief is deeply rooted in the real world. He won his doctorate at the University of Berlin at a time when German inflation was paving the way for Nazism. He left Harvard for New York University four years ago because, he said, the Cambridge department had forsaken its interest in solving real world problems to solve elaborate mathematical puzzles.
At NYU, Leontief directs the Institute for Economic Analysis. It does such things as forecasting the outlook in metals for the Bureau fo Mines and National Science Foundation, sketching global economies in the year 2000 for the United Nations and the like.
In the hearing room of the Joint Economic Committee, Leontief, wearing a blue blazer and gray flannels, rarely addressed the members of Congress directly. Instead, he half turned in his chair toward an audience filled with interns and other students, as if to say, "you are the better hope."
Later, over crab cakes - "You must eat fish in Washington" - he elaborated on his anti-inflation ideas.
The source of inflation was simple. "Each year workers try to get higher real wages," greater command over goods and services. "Why not? But they can't negotiate real wages, only money wages," dollars and cents. "Business gives it to them and then increases prices. There is no end."
Doesn't competition restrain both sides? "There is an absence of competition. We can't return to Dickens" and break up unions. Antitrust law does not inhibit corporations.
"You can't have free competitive markets with modern technology. You can have only so many copper smelters. So you have concentration," a handful of cautious competitiors, the characteristic of industries from aluminum to zinc smelting.
"This is what the Austrians and Germans do." Their experts prepare yearly forecasts of key variables, of what levels of wage increase are consistent with a given amount of price increase, of what investment is needed to reach a target level of growth.
"Then union and business leaders get together and figure out their share of the pie. It's not general talk but specific. There's a lot of logrolling, but they agree. Once they agree, there's no reason to push for higher wages."
This year, prices in both countries are expected to rise only about 3 percent.
Leontief readily acknowledges that Germany is not the United States, to say nothing of a much smaller nation like Austria. The key difference is that American industries and the unions they bargain with are autonomous, sovereign and do not belong to strong central federations. Even so, he thinks the European models are worth a closer look.
Don't presidential guidelines proposing wage and price limits have much the same flavor?
"Guidelines fail because they are not produced by negotiations between business and labor but by government arbitrators. It is really very abstract. It must be more serious."
On this, Leontief left with a jaunty wave of his arm, off to Deauville, France, to instruct the world's port managers on the traffic they can expect. CAPTION: Picture, WASSILY LEONTIEF . . . how to divide the economic pie