Biography of John Stone

Early Life and Education

John Richard Nikolaie Stone, an English economist, was born in London. He was the only child of Elsie and Gilbert Stone. His father, a lawyer, aimed to give him a classical education to prepare him for a career in law. However, Stone was not particularly interested in law and was an inattentive student both at Cliveden Place Preparatory School and Westminster School. As a boy, he preferred to construct models of trains and ships instead of focusing on his schoolwork. To his father's disappointment, he abandoned studying law two years after enrolling at Gonville and Caius College, Cambridge University, choosing to specialize in economics in 1931. Stone later mentioned that his interest in economics was sparked by the Great Depression and "born out of youthful ignorance and optimism, believing that if only economists understood more, the world would be a better place." As there were no economists among the faculty at his college, Stone sought weekly consultations with Richard Kahn from King's College, Cambridge University, which was a leading center for economic science at the time. He also studied under Colin Clark, a pioneer in economic statistics, attended lectures by John Maynard Keynes, who was then writing his book "The General Theory of Employment, Interest, and Money," and joined the Political Economy Club that gathered at Keynes' apartment. The intellectual atmosphere of King's College developed Stone's creative abilities, revealed his potential, and determined his career as a scientist. However, in 1935, after graduating from university, Stone did not consider himself sufficiently prepared for research work. Rejecting a research position offered by Gonville and Caius College, he began publishing an economic information bulletin for Lloyd's insurance company in London. Not driven by the desire to pursue a career in business, he did not burden himself with work obligations, leaving him with time for other pursuits.

Professional Career

Together with his wife, Winifred Mary Jenkins, a former economics student at Cambridge University whom he married in 1936, Stone participated in several economic research projects, including the preparation of a report on differences in consumption and savings structures in family budgets published in 1938. In 1937, the Stones started publishing a monthly economic and business journal called "Trends," which was founded by Colin Clark and transferred to them due to his return to Australia. In this journal, the Stones published economic indicators of employment, production volume, consumption, capital investment, price movements, and foreign trade data. They occasionally included special articles on regional employment or the economic situation in other countries in their publication. When the Second World War broke out in 1939, Stone was invited to work in the Ministry of Economic Warfare and was responsible for maritime transport and oil supply statistics. The following year, he was transferred to the Central Economic Information Service of the Cabinet Office Secretariat for work, along with Keynes and James Meade, on compiling a comprehensive review of the economic and financial situation in Britain.
This work provided Stone with an opportunity to make his most significant contribution to economic science. The British government needed data on the overall volume of funds and resources available to sustain military efforts. By December, Stone and Meade calculated this data, which was published as tables as part of the budget report of the Chancellor of the Exchequer for 1941. The tables included estimates of national income and expenditures for 1938 and 1940, personal (or household) income, expenditures and savings, and net stock accounts that were either directed to or received by the private sector from the government. Stone later referred to these calculations as a step towards what is now known as national income accounts. In the course of his subsequent work in this field during the remaining war years, he carried out increasingly complex calculations of national income, its sources, and its distribution. The system of national accounts was first developed in the 17th century by William Petty and Gregory King in England and Pierre Boisguillebert and Marshal Vauban in France. After World War I, Simon Kuznets and Colin Clark conducted innovative work on national income calculations. Stone's work differed from these two earlier attempts in that it openly incorporated national income into the framework of double-entry bookkeeping, which took into account data on household, private sector, and government income and expenditures, allowing for comparative analysis of activity results in different sectors of the economy and different countries.
Stone's accounting method ensured consistency, as it required equality between income and expenditure. This meant that everything produced had to be consumed and everything consumed had to be produced again. His system of national income calculations based on double-entry bookkeeping provided the empirical side of the Keynesian revolution in macroeconomic theory. His accounts of production, consumption, and accumulation reflected the new Keynesian concepts of aggregate supply, consumption, and investment demand. In fact, Stone's national accounts method paved the way for the construction of econometric models, and the accounts themselves formed the basis for organizing the collection of relevant statistical data and testing their consistency. Stone was always willing to share his experience with other researchers, as he was not the only scientist working on national income calculations. Before World War II and during the war, the governments of the United States and Canada made estimates of national income and expenditure. However, these estimates were based on several different concepts and definitions than those used by Stone. In 1944, Stone was sent to America to assist in establishing a common basis for calculations.
After retiring from government service in 1945, Stone became the director of the reconstituted Department of Applied Economics at Cambridge, where he was appointed Professor of Finance and Accounting in 1955. Continuing his research in the field of national accounts, he developed methods for expressing these accounts in real terms and then used them to construct consistent price and production volume indices. He not only managed to coordinate accounts with analysis using the "expenditure - output" method but also became the first to include financial operations in his system and to build a system of financial balances. In 1945, while visiting the Institute for Advanced Study at Princeton University, Stone prepared a report for the League of Nations on the development of international rules for national income calculations. This report, titled "Measurement of National Income and the Construction of Social Accounts," was published by the United Nations in 1947. Stone's work on the creation of a standardized system of national accounts continued in various variations over the next two decades.
The result was a series of publications and the book "A System of National Accounts," co-authored with Abraham Aldenoff and published by the United Nations in 1968. Stone's system was ultimately adopted by many developed and developing countries. He also developed a system of demographic calculations that reflected factors such as population changes and socioeconomic variables. In 1975, the United Nations published his work "Towards a System of Social and Demographic Statistics."
In addition to his work on national income calculations, Stone made a significant contribution to the study of consumer behavior. Using models developed by Lawrence Klein and Herman Rubin, he predicted that the structure of consumer spending and savings is a function of income levels and relative prices of all goods. In 1945, he wrote the book "The Analysis of Market Demand" and continued his budget research in Cambridge in collaboration with Derrick Rowe, resulting in two volumes titled "The Measurement of Consumers' Expenditure and Behavior in the United Kingdom," published in 1954 and 1966.
Stone's theory of consumer expenditure systems partially stemmed from his research on national income calculations, as improved estimates of what determines consumer expenditures can provide more accurate cost-of-living indices or better measurement of overall price inflation. Both are crucial for studying changes in real national income during periods of relative price changes. Stone's inclination towards developing complex economic models is evident in his group's work, the "Cambridge Growth Project," which created an econometric model of British economic growth, published as "A Programme for Growth" in multiple volumes.
Stone was awarded the Nobel Prize in Economic Sciences for 1984 in recognition of his "pioneering work" and "substantial contribution to the development of economic science." In the presentation speech, Eric Lundberg, a member of the Royal Swedish Academy of Sciences, referred to Stone's developed system of national accounts as "an indispensable tool for cyclical and structural analysis." At the same time, Lundberg stated that "they form a systematic documentary basis on which economic forecasts in the form of national budgets are based."
After retiring from Cambridge University in 1980, Stone continued his collaboration with the university as a member of King's College and Gonville and Caius College.
In 1941, a year after the dissolution of his first marriage, Stone married Theodora Liantinev, a philosopher who was then working as a secretary at the National Institute of Economic and Social Research. She passed away in 1956. Four years later, Stone married Giovanna Croft-Murray. Although she did not have an economic background, she collaborated with him on many of his subsequent works. Stone, who was knighted in 1978, is known as a patron of the arts. He is a connoisseur of fine wines and cigars. Paul Samuelson once described him as a "loner" and an "introverted personality." He and his wife live in Cambridge.
Stone is a member of the Royal Economic Society (of which he was president in 1955) and the International Statistical Institute. He is a foreign member of the American Academy of Arts and Sciences and the American Economic Association. He has been awarded honorary degrees by the universities of Oslo, Brussels, Geneva, Warwick, Paris, and Bristol.

Economy