Sunday, December 13, 2009

Was The Late Paul A. Samuelson "The Foremost Academic Economist Of The Twentieth Century"?

The New York Times online obituary section has just posted the death of Paul A. Samuelson at his home in Belmont, MA at the age of 94. The first sentence of the obit labels him "the foremost academic economist of the twentieth century." Whether he was or not, the death of this recipient of the second Sveriges Riksbank Prize in Economic Science in Memory of Alfred Nobel back in 1970 is of one who was unquestionably an enormously influential, whose real influence has somewhat slipped into the background in recent years as attention to many others has surged forward. Often when he has been thought of or mentioned, it has been in criticism by many from many different sides, as he is seen as the father of the postward neoclassical synthesis, promulgated most influentially in his textbook, whose 19th edition (now done by Nordhaus) has just come out with many changes from what it used to be (many not for the better), although the deeper intellectual influence has been his Ph.D. thesis, published in 1947 as _The Foundations of Economic Analysis_, with his publishing career dating all the way back to 1937, on many topics. His influence is so great in so many areas that the key papers by him that lie behind the standard textbook accounts in many areas do not even bother to cite them.

I have been critical of Samuelson myself, and gave him quite a hard time the first time I met him in person 38 years ago. However, starting with that encounter, I must confess that while he may be the ultimate origin of much that is misguided in deeply entrenched conventional economic thought, he himself was generally personally aware of the flaws and limits of many of his own ideas, even as near the end he insisted on reasserting some of them more strongly than ever. However, I would say that the greater sins have been by simplifying followers of his, the "sons of Samuelson," who have been more responsible for codifying and spreading and enforcing the more simplistic versions of what he posited. The man himself was more complicated and self-aware than many gave him credit for , and he is indeed the last of the giant economic thinkers whose professionally active roots go back clearly into the Great Depression.


Anonymous said...

Not even close, but nice thing to say! Hayek, Friedman, and Mises are much more influential.

Peter H said...

Mises is more influential than Paul Samuelson!? You're pretty funny, anonymous.

Roger Koppl said...

The case for Mises over Samuelson might be stronger than you imagine, Peter H. Mises is always a problem in part because of the rivers of zaniness coming from some of his most ardent American admirers. Back in Vienna, however, he had a amazing group around him including Hayek, Morgenstrern, Haberler, and Machlup. Recall that the two star students from Bohm-Bawerk's seminar, Schumpeter and Mises, were great rivals.

Robbins visited the Mises group and absorbed the Austrian view. His Essay was recognized as "Austrian" at the time. Machlup is rightly famous as a defender of marginalism and one of the architects of post-war orthodoxy in microeconomics. Haberler gave us the Production frontier and the opportunity cost approach to comparative advantage. And then, of course, there is Hayek whose influence continues to grow.

Barkley has written a terrific book with David Colander and Ric Holt arguing that, basically, complexity is pushing out the old orthodoxy. I think that's about right and the complexity revolution brings in all sorts of "Austrian" stuff, especially in connection with Hayek, who was pretty much a follower of Mises.

It was Mises who put the socialist calculation argument together, which leads to Hayek's knowledge papers. Today, we all cite Hayek on knowledge and prices as signals. And lots of work is built on that foundation.

All in all, then, it might prove true in, say, 50 years that practicing economists will own more to Mises (via his "Circle") than to Samuelson. I do not suggest, of course, that Samuelson will fade altogether. He left deeeep grooves of course. But the legacy of Mises may in the end be more important and more enduring.

PCE said...

Roger Kopl above writes: "complexity is pushing out the old orthodoxy."
What is the old orthodoxy that is being pushed out? DSGE ? As far as I can see, DSGE still reigns in
academic macro. I am not sure that other approaches are supplanting it, although Steve Keen is making a go of things.

Roger Koppl said...


It is true that mainstream macro has resisted the complexity revolution so far. I think this fact has much to do with the monopsony power of central banks and other government entities in the market for macroeconomic models. I argue that things will be changing soon in this draft manuscript:

BTW: As more or less laissez faire type, I don't really like the "New Interventionist Economics" whose entry into the mainstream I am predicting.

Paul Davidson said...

Interestingly, no one thinks of John maynard Keynes as an aCADEMIC ECONOMIST -- SINCE HE WOULD CERTAINLY BE THE MOST INFLUENTIAL ONE IF HE WAS AN ACADEMIC. The fact that he was at Cambridge from the early 1900s till his death -- except for a few years at the Treasury during bot hworld wars, and also the Editor of THE ECONOMIC JOURNAL -- does not seem to impress people that Keynes was an Academic-- the most influential academic of the 20 th century.

Paul Davidson

Paul Davidson said...


The fact that he was at Cambridge from the early 1900s till his death -- except for a few years at the Treasury during both world wars, and also the Editor of THE ECONOMIC JOURNAL -- does not seem to impress people that Keynes was an Academic-- the most influential academic of the 20 th century.

Paul Davidson said...

Regarding this I find the comments in economics principals by David Warsh to be pretty spot on. He says that in terms of policy, Keynes was the most influential, in terms of views of citizens, Friedman was the most influential, and in terms of pure theory, Arrow was the most influential. However, for economics itself as a whole, Samuelson was the most influential.

I would note my own last sentence from the first paragraph of my post. Samuelson's influence, for better or worse, and not all of it has been good by any means in many ways, is so deep that one does not even notice it half the time. In very many fields he is like the structure behind the walls that one does not even refer to because it has been in place for so long and is so widely accepted. From the Principles level to much higher (although not in game theory), he is like the building itself.

Now Roger makes a lot of good points, and certainly the influence of the Vienna Circle more broadly has been on the rise more recently, as well as providing substantial parts of the background in a Samuelsonian way that is also often not realized by others to be from there (such as the ubiquitous use of the opportunity cost concept, including by Samuelson himself, who enshrined it in his textbook as the supreme measure of cost).

However, if one gets more narrowly to Mises and Hayek, I think it is hard to make the case for them alone. Hayek, of course, has been very important regarding the information problem, although the people who moved that one forward most prominently more recently were both Samuelson students, namely Akerlof and Stiglitz.

There is of course the old argument about the socialist calculation debate, and many vigorously anti-Samuelson Austrians argue that he was slow to realize the fallibility of the Soviet model and how it "did not work," and so on, as analyzed by Mises and Hayek. In the paper he published in JEBO on Hayek at the beginning of this year (first paper of the year in the journal), Samuelson went to great lengths to give Hayek credit for his analysis of the problems of the Soviet model, declaring him to have been "right" on that (although Samuelson then went on to repeat his old critique of Hayek's "slippery slope" argument from The Road to Serfdom).

However, to defend Samuelson partly, I would note that in some strict sense, Mises and Hayek were wrong. The model Mises criticized was indeed totally unworkable, a pure communism without money, which was briefly tried during the War Communism period in the USSR, but then was rapidly abandoned and never tried again, except I gather briefly in Cambodia under Pol Pot. So, Mises was right in that sense, but the Soviets figured it out quickly, and indeed, the Soviet Union did succeed in industrializing and defeating Hitler and so on and so forth.

So, what about its collapse? Does this not prove them right? Well, sort of. My own view is that indeed the Soviets fell behind the market capitalist US, but it was more for reasons of poor quality of goods and a lack of technological innovativeness, which did reflect problems of command central socialist planning. But it was not because of massive inefficiencies due to central planning of the sort Mises and Hayek wrote about, although it was certainly annoying for citizens to have to stand in so many lines all the time. But after WW II, one did not find people starving to death or being homeless or unclothed or even unemployed in the old Soviet bloc, even if their shoes were crummy and they did not always have fresh fruit or vegetables or the latest high quality consumer goods. In the end it was not economic collapse that did them in but a political collapse, the revolt of the satellite states and republics against Russian domination. The economic collapse came after the political collapse, not before.

Roger Koppl said...


I am shocked, shocked that you would question holy writ on socialism from Mises and Hayek.

Jokes aside, I think they did address all, or at least many, intermediate forms including various ideas of "market socialism." Mises 1924 book (translated as "Socialism") is pretty amazing in this regard. IMHO he rather clearly says that full-on capitalism will outperform these intermediate forms but did *not* say they must and will collapse of their own weight. If that's a fair reading, the history of the USSR is fits Mises theory pretty well.

brian said...

While Keynes and Friedman were more influential policy wise,the diversity of subjects that Samuelson has made important contributions has made him the most important academic economist. Think about some of the contributions that Samuelson made: Revealed preference and marginal productivity, history of economic thought (including Marxian economics), Production/Capital theory, Linear Programming, Growth models (including OG), International Trade, Finance, Welfare Economics, among others.

TheTrucker said...

The USSR went to hell in a hand basket when the Price of oil declined. They had little else to trade. Reagan's saber rattling did not make the wall come down.

media said...

samuelson also had a paper in AER as i imagine is known around 2000+ which actualy was supporting the seattle consensus (shut it down) in which he pointed out his stolper-samuelson theorem could not be applied to 'free trade' policy (because it assumed ideal cases, like 0% unemploymwetnt, which is something krugman overlooked).

i didn't like his paper on EMH since it was tautological (like what it was based on---the birkhoff/von neumann ergodic theorems---'assume a gaussian, and then it turns out its normal'). interestingly, while seen as pro-capitalism, the EMH basically says you don't need FIRE. buy some darts, look for the (measure zero) dollar on the sidewalk (Zhang).

from 60 to 80 he seemed to have some pretty good ideas. i think its that text from the 40's/50's he's known for. couldn't read it--probably need 'fluxions' from newton to get it. said...


Well, the "market socialism" that M-H addressed was a peculiar form a la Barone and Lange, in which a central planner would use market forces in conjunction with central planning, that in the end would still determine what would happen. The actually existing market socialisms have generally dispensed with command central planning and had some sort of public ownership coinciding with markets, more or less. Yugoslavia was the canoncial example, with its republic, Slovenia doing better than any other part of the old socialist world, until Yugoslavia blew up, but Slovenia was still the first to get not only into the EU but into the Euroland, and still has a higher real per capita income than any other part, except possibly the former East Germany. These systems can be subject to the soft budget constraint, as Kornai argued for Hungary, but one sees some that do pretty well, such as current China, not to mention the partly there with its about 50% state ownership of the means of production, the actually existing postwar Austria, which M and H sneered at so much, but which had one of the best macro performances in that period of any country in the world (with its quasi-corporatism), and is pretty high up in world rankings on real per capita GDP, not to mention many other indicators.

Regarding the deeper argument, I think M and H spent too much time going on about how proper prices could not be formed because of the lack of incentives and the lousy inormation available. Well, as long as there were capitalist markets elsewhere, there was always some anchoring information about some commodities, especially those traded internationally, like oil. More important were the incentive issues, which I think were at the base of the deterioration of quality of goods as well as the lack of technological progressiveness, although over time the information problems became severe, partly due to rent seeking and corruption, with the example of the non-existent cotton processing plant in Uzbekistan a telling example (thought to be there by GOSPLAN, money was spent to build it, only to have Soviet satellites observe that it was not actually there).


Among ideas that Samuelson initiated that were not simply "formalizations" of already long argued or suspected ideas (a charge made by some over on the Austrian Economists blog), would include laying out the conditions for a pure public good and also the introduction and use of the overlapping generations model, although he was preceded in French by Allais on that one. It may be that his currently most cited paper is the one on OLG from 1958 (almost nobody cites Allais as almost nobody knows about it or has read it).


There was more going on than just oil price movements, but I agree that they were very important, and some such as Gaidar in Russia have recently been arguing for their significant role. I agree that those pushing the significance of Reagan's star wars program (the damned thing still does not work very well), not to mention his "tear down the wall," are largely delusional regarding what really went down.


Samuelson did not assume a Gaussian in his 1965 paper. That has been a misinterpretation of it, along with the idea that he "proved" ratex. He proved randomness of "properly anticipated prices," but that is not necessarily identical to ratex in cases with skewness and fat tails and other such stuff, which in fact he explicitly allowed for. It should be remembered, that even if it was the "sons of Samuelson" who pushed ratex, he always sneered at and made fund of the doctrine. Regarding his own theorem, in the paper itself he noted that it was "so general" that it became essentially untestable empirically, and thus, to use his own language,"vacuous."

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