John Hicks was an English economist, Nobel Laureate in Economics in 1972, recognized for his contributions to Microeconomics (a Walrasian general equilibrium model) and Macroeconomics (the IS-LM model).
John Hicks (1904-1989) was born in Leamington Spa, United Kingdom. He began studying Mathematics at the University of Oxford and later moved on to the study of Economics and Philosophy. In 1930 he began teaching classes at the London School of Economics (LSE). In 1935 he moved to the University of Cambridge. During the period 1938-1946 he was at the University of Manchester and finally returned to Oxford, where he would remain until his retirement.
Throughout his life he was awarded doctorates honoris causa for his various contributions and in 1972 he received, together with Kenneth J. Arrow, the Nobel Prize in Economics. The award was received for his contributions to the analysis of welfare theory and general equilibrium theory.
Contributions to Microeconomics
His first major book was "The Theory of Wages" . There he explained the determination of wages in competitive markets based on the concept of marginal labor productivity. He spoke about unions and the regulation of wages in a framework of wealth distribution and economic progress.
Hicks was the first author to write about general equilibrium in English in a systematic and coherent way in the book "Value and Capital" . In this way he spread the ideas of León Walras written in French and those of Vilfrido Pareto written in Italian. This neowalrasian theory of general equilibrium, perfected by Arrow-Debreu, is the one that is taught and learned today in the classroom.
Also in "Value and Capital" , Hicks developed the theory of consumption from the concept of marginal utility and presented Slustsky's results regarding the income effect and the substitution effect. Finally, Hicks was one of the main promoters of economic analysis based on comparative statics and efficiency criteria (Pareto optimality).
Contributions to the Macroeconomics
Despite Hicks's important achievements in the field of Microeconomics, he is known primarily for developing a model of general equilibrium that adapted the "General Theory" by John Maynard Keynes.
In your article "Mr. Keynes and the Classics " Hicks analyzed the goods-services market and the money market. Based on this, he would create the IS-LM model, a model that is taught in the initial Macroeconomics courses for its simplicity and its ability to evaluate different economic policies (fiscal and monetary) that represent the classic case and the Keynesian case in an economy. closed. The Mundell-Fleming model would extend the IS-LM model, applying it to an open economy.
The model made it possible to conclude - under certain assumptions - the Keynesian thesis that advocated expansionary fiscal policy in times of crisis where monetary policy proved to have no effect on output. However, for the most faithful Keynesians, this model distorted the thinking of their teacher.
Contributions to the analysis of cycles and economic growth
In his book "Contribution to the Theory of the Trade Cycle" , Hicks shows the extent to which business cycles can be explained in terms of the accelerator and the Keynesian multiplier. Hicks approaches the business cycle as a problem of an expanding economy, that is, fluctuations with an upward trend.
Finally, in his books "Capital and Growth" and "Capital and Time" , Hicks exposes his own version of a model of economic growth with two sectors, where the most important thing is the accumulation of capital. However, depending on the type of dynamic adopted, equilibrium will or will not be achieved.
The impact of Hicks in the 20th century
In this article we have reviewed some of the main contributions of the famous economist Sir John Hicks. This synthesis is not intended to underestimate his copious economic work, but rather to invite readers to learn more about this English author.
His books and articles on different topics of Microeconomics, Macroeconomics, Economic history, economic growth and economic policy show that Hicks was a great connoisseur of the different branches of economics. Due to his great expository capacity and the enormous repercussion that his analysis has had, some have affirmed that Hicks is the most important economist of the 20th century.