Moses Abramovitz

Moses Abramovitz (January 1, 1912 – December 1, 2000) was an 20th-century American economist and a professor. He was born and raised in Brooklyn, New York. He studied at a local elementary and high school. Abramovitz was an honorable student. His hard work in school paid off when he was accepted into Harvard University. Where he completed his bachelor's degree summa cum laude in economics. He went into Harvard with a thought of becoming a lawyer. He took criminal justice classes as well as economics, however, he was interested more in economics than criminal justice. He was able to learn and connect economics to the world he was living in. After completing his Bachelor's in Economics, he earned a doctorate at Columbia University in 1939.^[1] In 1985, he was awarded honorary doctorate from University of Uppasala in Sweden. After that, in 1991, he was invited to become a fellow of the prestigious Accademia Nazionale dei Lincei in Rome. Where he was awarded another doctrate at University of Ancona in Italy, in 1992. Dr. Abramovitz died at Stanford University on December 1, 2000, at the age of 88. He was suffering with gastroenterological.

Moses Abramovitz was known to be a funny personality, modest and least ego-involved scholars in economics. Among his family and friends, he was known as Moe. He was married to Carrie Glasser in 1937. She was a well-known painter and sculptor. Carrie was also in Brooklyn, New York. They were classmates in Columbia University, where they fell in love and got married in 1937. They both had a son together named Joel. Carrie died at the Stanford hospital on October 19, 1999, at the age of 86.^[2]

Moses Abramovitz started his career at Harvard University. Where he was a lecturer during the mid 1930s. After he finished his doctorate at Columbia University, he joined the National Bureau of Economic Research in New York, where he began his investigation of inventory investment cycles. After that, during World War II, Abramovitz serviced on the War Production Board and in the Office of Strategic Services as chief of the European industry and trade section. In 1945 and 1946, he was economic adviser to the United States representative on the Allied Reparations Commission.^[3] He also was one of the founding faculty of the Department of Economics at Stanford University, which he joined in the fall of 1948, where he taught for almost 30 years.^[4] During 1962-63 he served as adviser to the secretary general of the Organization of Economics Cooperation and Development in Paris. He then became the chair of the organization from 1963 to 1965 and from 1971 to 1974. Over the course of his career Abramovitz made many pioneering empirical to macroeconomics and long-term growth. Abramovitz’s article entitled Catching up, Forging Ahead and Falling Behind was published in 1986 Academic journal and it is the second most cited among all the papers published by the Journal of Economic History.

Theories

Catch-up Growth

Moses Abramovitz's theory, known as the Catch-Up Growth Hypothesis, attempted to explain what caused Western Europe's Golden Era of economic growth from 1948 until 1972. The Catch-Up Growth Hypothesis essentially stated that the key to the economic growth experienced by Western Europe was their ability to import and implement technology from the United States. The growth rate of a developing country is going to be higher than the growth rate of a developed country because the diminishing return of the developing countries is much lower than the developed countries. If a country is trying to be industrialized, they can only be better off. They will grow much faster than the countries that are already industrialized. In the process they are creating more jobs, and more capital, which leads economy total revenue increasing at an increasing rate.^[5]

Limitation to Catch-up Growth

Moses Abramovitz does not grantee that the poor countries will catch-up to the developed countries, because the poor countries might fail to adopt to the technology, attract capital and participate in global market. If a country cannot adopt to the technology they are being offered, they will be able to generate more capital which will lead to failure of the catch-up process. Also if the poor country is not building relationships globally with developed countries, again they will fail. Building relationship with developed countries is extremely important because those are the countries that will purchase most of your capital. If the poor country sell more capital, they will grow. If they start to grow, they will catch-up.^[6]

The Role of Inventories in Business Cycles

During his time at the National Bureau of Economics Research, Dr. Abramovitz researched the role of inventories on the business cycles. A business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It experience could be good, such as boom and expansion in the economy, or bad, such as recession or depression. Dr. Abramovitz expressed his opinion on the role the inventory places on these business cycles in his paper "The Role of Inventories in Business Cycles." He stated that, inventory can play a negative role if there is a lag in the production of the inventory. The lag can occur because of the following several reasons:

1. Different goods which need to be produced to create one whole product. For example, to manufacture a car we need several different kinds of goods. If there is a lag any of those goods, it will slow down the production of the car. Which would mean the market is not meeting the demand of the buyers, which would lead to less revenue generated by the market.
2. Raw material purchased from domestic manufacturers or dealers, which lag by a few months. For example, to make fabric we must have many different types of raw material. Such as cotton, nylon, wool, polyester and many more. If the domestic manufacturers or dealers are unable to produce the raw material on time, again, the market will take a hit because they will not meet the demand.
3. Raw material purchased from distant sources or on long-term contracts. When domestic manufacturers and dealers cannot produce enough the nation has to reach out to other nations for the raw material. However, it takes much longer. Which, again, leads the market short on the products consumers want to purchase.
4. Finished goods made to order which are closely tied to output. Lets say the raw material was received on time and goods were produced and were made available to purchase on time. But what if the inventory is not enough? Then we would have to produce more, which will again require us to start from scratch. In the mean time the market does not have any goods to sell, which again result in a shortage.^[7]

Aggregate inventories of wholesalers and retailers also appear to have lagged behind sales by about six months. and close study reveal that the lag of total distributors stocks reflects great differences in the ability of merchants in different trades to keep the rate at which they receive goods in line with the rate at which they can dispose of the,. It must be expected, therefore, that the ability of some merchants to adjust inventories to sales is so limited as to produce a long lag of stocks behind sales or even an inverse relationship between sales and inventories. If these several lags are worked out a nation can stop the negative effect of inventories on the national market.

Publications

Selected publications in chronological order:

• Abramovitz, Moses (1939). Price theory for a changing economy
• Abramovitz, Moses (1948). Role of inventories in business cycles
• Abramovitz, Moses (1950). Inventories and business cycles
• Abramovitz, Moses; Eliasberg, V. (1954). The trend of public employment in Great Britain
• Abramovitz, Moses (1956). Resource and output trends in the US since 1870
• Abramovitz, Moses (1959). The welfare interpretation of secular trends in national income and product
• Abramovitz, Moses (1959). The allocation of economic resources: essays in honor of Bernard Francis Haley. Stanford, California: Stanford University Press. OCLC 287348. 
• Abramovitz, Moses (1959), "The welfare interpretation of secular trends in national income and product", in Abramovitz, Moses et al., The allocation of economic resources: essays in honor of Bernard Francis Haley, Stanford, California: Stanford University Press, OCLC 490147128.  CS1 maint: Explicit use of et al. (link)
• Abramovitz, Moses (1961). The nature and significance of kuznets cycles
• Abramovitz, Moses (1964). Evidences of long swings in aggregate construction since the Civil War
• Abramovitz, Moses (1968). The passing of kuznets cycles
• Abramovitz, Moses (1973); David, Paul. Reinterpreting economic growth: parables and realities
• Abramovitz, Moses (1979). Rapid growth potential and its realization
• Abramovitz, Moses (1979). Economic growth and its discontents
• Abramovitz, Moses (1986). Catching up, forging ahead and falling behind
• Abramovitz, Moses (1993). Thinking about growth and other essays
• The search for the sources of growth: areas of ignorance, old and new
• Abramovitz, Moses; David, Paul (1996). Convergence and deferred catch up
• Abramovitz, Moses (1999). What economists don't know about growth

References

External links

• Abramovitz' memoirs