Bertil Gotthard Ohlin was a Swedish economist who is credited with revolutionizing global trade. Ohlin was instrumental in laying the groundwork for new reforms aimed at boosting a country’s economy through international and interregional commerce. His extensive research and studies in this area led to the discovery of new trade ideologies. His theory’s primary premise was that every country should export commodities that used a material that was readily available in its location, while importing things that used a factor that was infrequently produced or found in the region. He was awarded the Nobel Prize in Economic Sciences for his extraordinary contribution to ‘International Capital Movements and International Trade.’ He was more socially motivated as a professor, and he took a genuine interest in politics in order to effect change for the welfare of society. He became the leader of the People’s (Liberal) Party after joining it with a liberal position. His wit and magnetism impressed many an economist all around the world. He was known as an agreeable gentleman who was courteous and beautiful.
Childhood and Adolescence
Ohlin was born on April 23, 1899, into an upper-middle-class family in the Swedish village of Klippan, where he shared a big home with his parents and six siblings.
His father maintained a good position in society as a district attorney. Before he started school at the age of seven, his father gave him with some individual tutoring.
He had a natural knack for mathematics, which was his favorite subject in school. He graduated from ‘Halsingborg’ with a baccalaureate degree far early than other youngsters his age.
His parents proposed that he enroll at the ‘University of Lund’ for a degree in mathematics, statistics, and economics because of his aptitude for computations, much to his joy. He studied economics at the university under Professor Smil Sommarin and graduated with the top grade in the class in 1917.
An article in a newspaper that evaluated a book on ‘Economic Aspects of the World War,’ authored by Eli Heckscher, who was then a professor at Stockholm Business School, had a big influence on him.
As a result, he packed his belongings and marched off to study under Heckscher’s tutelage, where he not only gained a wealth of information but also disseminated principles that would address profit-maximizing difficulties in the future.
He earned an M.A. from Harvard University after two years in Stockholm, and then a PhD from Stockholm University in 1924.
Career as a teacher
He applied for and was hired as a professor at the University of Copenhagen in January 1925.
Ohlin spent five years in Copenhagen, where he was significantly influenced by the witty and brilliant Dr. L.V. Birck. He also maintained a close relationship with his pupils at the university.
He submitted a thesis to Harvard for the ‘David Wells Prize’ in 1928, but received notification that the prize had been granted to another economist the same year. They did, however, agree to publish his work in ‘Harvard Economic Studies.’
He finished his book in 1931, ecstatic with the offer. He had started working as a professor at Stockholm School of Business by this time, and he had been named Heckscher’s successor.
International Trade Theorem
He began working on his International Trade Theorem, which became known as the ‘Heckscher-Ohlin model of International Trade,’ once he joined Stockholm as a professor. He proposed a principle with his teacher that focused on commerce between two countries, based primarily on two items and two components of production, such as relative amounts of capital and labor. According to the thesis, countries with ample capital would have to pay greater wages, crushing the economy of the country’s labor-intensive businesses.
It was appropriate for such countries to create abundant items that did not rely much on human labor, such as automobiles and chemicals, while importing goods with a high labor-value.
In contrast, countries with low capital and high labor should produce things that can be acquired widely through labor – such as textiles and simple electronics – and import capital-intensive goods.
Today’s economists, however, point out that such a theory is certain to have consequences, as it implies that the two countries must share the same wants and respond to only two goods.
A Future as an Economist
This hypothesis gained him notoriety, and he was invited to deliver the Marshall Lectures at Cambridge as a guest professor. This gave him the chance to summarize the Swedish Theory, and he ended up drawing parallels with Keynes’ work. He got into a major disagreement with John Maynard Keynes at this point, since he rejected several of Keynes’ beliefs, particularly those relating to the war reparations that Germany had to pay.
Career in Politics
In 1944, he was elected head of the Liberal Party, a post he held for the next 23 years. His career as an economist suffered a setback as a result of this. He couldn’t devote any of his time to investigation because the Liberal Party was the dominant opposition party. As a politician, he was consistently supportive of social changes.
His party was opposed to any sort of nationalization, particularly in Swedish industry, as well as any government influence over economic life.
Ohlin left the parliament in 1970 after the 1968 constitutional revision that abolished the two-chamber system.
He began producing articles and giving talks, as well as conducting additional research on his ‘Monetary Theory’ and ‘Inflation-Protected Taxation.’ Despite his many accomplishments, Bertil Ohlin once admitted that he couldn’t devote enough time to each of the positions he performed as a teacher, researcher, writer, and political leader because he tried too many things at once.
Major Projects of Bertil Gotthard Ohlin
As an economist, he pioneered a number of economic theorems that have now been proven to be ground-breaking. His work, ‘International & Interregional Trade,’ sparked debate over economic principles by emphasizing the importance of labor and money in trade.
In 1929, Ohlin’s monetary theory drew economists from all around the world to see the argument between him and Keynes.
He was a successful political leader for more than two decades. Because of his high caliber, there had been no nationalization of Swedish industry until 1970. Apart from macroeconomics, he emphasized the building of an economic union by bridging social legislation and tax systems in the latter part of his career.
Apart from theorems, Ohlin published a number of articles and studies, including ‘The Equilibrium Rate of Exchange’ in 1921, ‘Tendencies in Swedish Economics’ in 1927, and ‘The German Reparations Problem’ in 1930.
He submitted a study to the League of Nations in 1931 titled “The Cause and Phases of the World Economic Depression.” In 1937, he also released a book called “Mechanisms and Objectives of Exchange Controls.”
In 1956, he and a few other specialists from the ‘International Labour Organization’ prepared the ‘Ohlin Report’ on the ‘Treaty of Rome’ on common markets and the establishment of the ‘European Economic Community.’
Achievements & Awards
In 1977, he and James Meade were jointly awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for “their pathbreaking contribution to the theory of international commerce and international capital flows.”
Personal History and Legacy
On August 3, 1979, he died at the age of 80.
The ‘Stiftelsen Bertil Ohlin’ institute, founded in 1933, continues the research and debate activity begun by Ohlin himself.
Trivia
Ohlin revealed in an interview that his interest in economics began when he was five years old. He enjoyed math and used to calculate the cost of the various sorts of cakes his mother baked when he was younger.