partly from Encyclopedia Britannica
Sir John R. Hicks, in full Sir John Richard Hicks, (born April 8, 1904, Leamington Spa, Warwickshire, England—died May 20, 1989, Blockley, Gloucestershire), English economist who made pioneering contributions to general economic equilibrium theory and, in 1972, shared (with Kenneth J. Arrow) the Nobel Prize for Economics. He was knighted in 1964.
Hicks was educated at Clifton College (1917–1922) and at Balliol College, Oxford (1922–1926), and was financed by mathematical scholarships. During his school days and in his first year at Oxford, he specialised in mathematics but also had interests in literature and history. In 1923, he moved to Philosophy, Politics and Economics, the “new school” that was just being started at Oxford. He graduated with second-class honors and, as he stated, “no adequate qualification in any of the subjects” that he had studied.
From 1926 to 1935, Hicks lectured at the London School of Economics and Political Science. He started as a labour economist and did descriptive work on industrial relations but gradually, he moved over to the analytical side, where his mathematics background returned to the fore. Hicks’s influences included Lionel Robbins and such associates as Friedrich von Hayek, R.G.D. Allen, Nicholas Kaldor, Abba Lerner and Ursula Webb, the last of whom, in 1935, became his wife.
From 1935 to 1938, he lectured at Cambridge where he was also a fellow of Gonville & Caius College. He was occupied mainly in writing Value and Capital, which was based on his earlier work in London. From 1938 to 1946, he was Professor at the University of Manchester. There, he did his main work on welfare economics, with its application to social accounting.
In 1946, he returned to Oxford, first as a research fellow of Nuffield College (1946–1952) then as Drummond Professor of Political Economy (1952–1965) and finally as a research fellow of All Souls College (1965–1971), where he continued writing after his retirement.
Hicks made major contributions to many areas of 20th-century economics; four, in particular, stand out. First, he showed that, contrary to what Karl Marx had believed, labour-saving technological progress does not necessarily reduce labour’s share of the income. Second, in his 1937 paper Mr Keynes and the Classics he devised a diagram—the IS-LM diagram—that graphically depicts John M. Keynes’s conclusion that an economy can be in equilibrium with less-than-full employment. Third, through his book Value and Capital (1939), Hicks showed that much of what economists believe about value theory (the theory about why goods have value) can be reached without the assumption that utility is measurable. Fourth, he came up with a way to judge the impact of changes in government policy. He proposed a compensation test that could compare the losses for the losers with the gains for the winners. If those who gain could, in principle, compensate those who lose—even if they do not actually and directly compensate them—then, claimed Hicks, the change in policy would be efficient.
1937, “Mr. Keynes and the ‘Classics.’” Econometrica 5 (April): 147–159.
1939, “The Foundations of Welfare Economics.” Economic Journal 49 (December): 696–712.
1939, Value and Capital. Oxford: Clarendon Press.
1940, “The Valuation of the Social Income.” Economica 7 (May): 105–124.
1965. Capital and Growth. Oxford: Clarendon Press.
1973, Capital and Time: A Neo-Austrian Theory. Oxford: Clarendon Press.
1974, The Crisis in Keynesian Economics. Oxford: Basil Blackwell.