Early Development of Input–Output Analysis of Energy and Ecologic Systems

In the 1930s, Wassily Leontief was putting the finishing touches on his development of the input-output (IO) matrices of the U.S. economy, just in time for its strategic use in converting our industry to a war footing. His process allowed the direct and indirect demands of industry to be estimated for a given gross national product (GNP). The government stated its concepts of the needs for the items of war in terms of the numbers of airplanes, tanks, guns, explosives, and so forth, for each of the four or five years they expected the war to last. Leontief was able to determine, for this final bill of goods, the flows of steel, aluminum, energy, and such needed from each industry, directly and indirectly [1]. Then these flows were compared with the capital stocks needed in these industries to meet the wartime demands. What they found was that the output of war material and energy plus those of personal consumption was not possible given then-current capacities in any of the major sectors. Two major endeavors were soon undertaken: massive new construction programs in steel production and shipbuilding, including conversion of many industries to the production of military items, for example, the auto companies converting to the production of military vehicles, and the substantial reduction of personal consumption of cars, gasoline, tires, and certain kinds of food. How did he do it?