Richard Stone (1913-1991)

Terry Barker

Introduction

Richard Stone was an applied economist and econometrician of great distinction, who is regarded as the father of the international system of national accounts (SNA). He was awarded the Nobel Prize in Economics in 1984 in recognition of his ‘fundamental contributions to the development of national accounts’ that ‘greatly improved the basis for empirical economic analysis’. His work combines theory and data, and he emphasised that the essential feature of economics as a discipline is it should be grounded in both. The national accounts in their modern systematic form are the basis of the empirical modelling, testing, and understanding of Keynesian macroeconomics.

Stone is an economist in the Cambridge tradition in that his work developed the theories of John Maynard Keynes, Richard Kahn, and Nicholas Kaldor by building and estimating macroeconomic models. He was based in Cambridge throughout most of his professional life. He was the first Director of the Cambridge Department of Applied Economics (DAE), 1945-1955, the PD. Leake Professor of Finance and Accounting, 1955-1980, founder

Professor T. Barker (h)

Honorary Professor, School of Environmental Sciences, University of East Anglia and Senior Department Fellow, Department of Land Economy,

University of Cambridge, UK e-mail: This email address is being protected from spam bots, you need Javascript enabled to view it

© The Editor(s) (if applicable) and The Author(s) 2017

R.A. Cord (ed.), The Palgrave Companion to Cambridge Economics,

DOI 10.1057/978-1-137-41233-1_37

of the Cambridge Growth Project (CGP) with Alan Brown in I960, and Honorary President of Cambridge Econometrics,¹ 1979—1991.

His Life^{[1] [2]}

John Richard Nicholas Stone was born in England on 30 August 1913, and died on 6 December 1991. He was educated at Westminster School, 19261930, and Gonville and Caius College, Cambridge, 1930-1935, initially studying law, before switching to economics in his second year, graduating with a First in 1935. He was an undergraduate at a time when the ideas underlying The General Theory were being discussed and formulated. His supervisors were Richard Kahn at King’s for two terms, then J.W.F. Rowe of Pembroke, and in his last year Gerald Shove of King’s. He eventually became a Fellow of King’s College in 1945. One of his lecturers was Keynes when he was developing the draft of what became The General Theory. He was invited by Keynes to join the Political Economy Club and presented a paper on effective demand versus production frictions. He remarked that, ‘Of my teachers, the two best on the theoretical side were Richard Kahn and Joan Robinson, but without doubt the greatest influence on me came from Colin Clark, who at the time was teaching statistics to economists in Cambridge’ (Stone quoted in Pesaran 1991: 88). Clark became a good friend, one of many over the years, and as well as teaching he was working on estimates of the UK national accounts, with his major book on the topic published in 1937.

After university, Stone started his career in the City of London working for Heath and Company, an insurance broker at Lloyds, 1936-1939. Outside the office, on the suggestion of Colin Clark, he took over, with his first wife, Winifred Mary Jenkins, the production and editing of an economic commentary Trends, which appeared in the monthly Industry Illustrated [2, 4, 7].^[3] He divorced his first wife in 1940 and married Feodora Leontinoff in 1941. When the Second World War started, Stone was recruited to work in government in the Ministry for Economic Warfare and later in the Cabinet Office. He settled in Cambridge after the war but his second wife fell ill and died in 1956. He married Giovanna Croft-Murray in 1961. They had earlier co-authored the book Social Accounting and Economic Models [67] published in 1959. Giovanna continued to support him in his work, and their home on Millington Road, Cambridge, was a haven for scholarship, good living, and lively conversation. After his death, she prepared for publication his final set of lectures, the magnificent Some British Empiricists in the Social Sciences, 1650-1900, published by Cambridge University Press in 1997 [198].

One incident in 1940 would have established Stone’s reputation as a statistician worth knowing. After he was given the job of recording shipping imports of neutral countries, he recounts:

[T]he only ships worth recording were tankers. One knew their speed and capacity and they carried a limited range of products of great importance in war time ... We filled in my tanker index day by day and it became clear that Italy, which had not yet entered the war, was a big importer. Suddenly, in the second half of May a dramatic change took place. The Italian tankers, which up to then had been moving in a predictable way, changed course and began to steer north or south. They must be making for the nearest neutral ports, we thought ... We had to guess which port each ship was making for but we knew their speeds and decided by the end of May that they would all have reached their chosen destination by 10 June. On that day we thought that Italy would declare war ... The Italophile section of the Foreign Office refused to believe me and I was reprimanded for my presumption. Unfounded suspicions, they said. Italy was a delightful country and a firm friend. What if it imported a lot of oil; it was a Catholic country and needed a lot of paraffin for altar candles. However, Italy did declare war on the day we had foreseen (Stone quoted in Pesaran 1991: 91).

• [1] Cambridge Econometrics is a successor company to one founded in 1976 by members of the CGP toprovide a commercial service based on the application of the Project’s economic model. It is now ownedby the Cambridge Trust for New Thinking in Economics, founded in 2005; see www.camecon.com.
• [2] His life and contributions are documented and appreciated in the many sources consulted for thisreview; see Johansen (1985), Deaton (1987, 1993), Pesaran (1991), Pasinetti (1992), Pyatt (1992),Goodwin (1995), Pesaran and Harcourt (2000), Weale (2004), and Baranzini and Marangoni (2015).
• [3] All references to Stone’s work are shown in square brackets, for example, as [1], where the number, here1, refers to the chronological list in Pesaran (1991: 112-123).