Wednesday, June 14, 2017

Is Paul Samuelson the Einstein of Economics?

David Gordon writes:
In an article that appeared in the Wall Street Journal, May 20-21, 2017 under the pretentious title “An Einstein for the Dismal Science,” Eric Maskin made extravagant claims for the significance of Paul Samuelson. For Maskin, himself a Nobel laureate in economics, Samuelson was one of the three “most important creative economists of the 20th century” (The other two were Kenneth Arrow and John Maynard Keynes.)
Maskin explains several of Samuelson’s theories, but for him Samuelson’s main importance lies in making economics mathematical. Some economists resisted his call, but “he won his war with the profession. Almost any theoretical article in an economics journal today bristles with mathematical formulas. And nearly every proposition makes an assertion that, in principle, could be refuted empirically.”
Maskin will have it no other way. He does not explain, though, why mathematical model-building combined with empirical testing is the sole legitimate way to proceed in economic theory. Maskin notes that it is sometimes possible to use mathematics to expose an error in verbal arguments; he fails to point out that through ordinary language, mistaken mathematical assumptions can be identified. Samuelson’s procedures may dominate academic economics today, but the Austrian economics of Mises and Rothbard has nothing to fear from Samuelson and his followers. Maskin is on the side of the big battalions; but Mises and Rothbard valued truth more than professional success.
This is the real Einstein of economics:

Ludwig von Mises
This is what Mises wrote about mathematical economics:
In the courses of the mathematical economists [students] are fed formulas describing hypothetical states of equilibrium in which there is no longer any action. They easily conclude that these equations are of no use whatever for the comprehension
of economic activities.


  1. I'm so mean and tactless, I even make fun of the dead.

    Bob Roddis Grosse Pointe Farms, Michigan April 21, 2010

    Samuelson: Iggle biggle wiggle schmiggle mish mosh goo.

    Public: What did you say? That makes no sense at all.

    Samuelson: Look buddy, I know MATH!

    Public: Well then, I guess what you said must make sense. I guess.

  2. This old article came to mind.

  3. "As far as the laws of mathematics refer to reality, they are not certain; as far as they are certain, they do not refer to reality.
    ~Albert Einstein

  4. I know I'm a naive and ignorant non - economist, but after all these years, I STILL don't get how government spending can be a positive component of GDP. For that matter, I don't get the "personal expenditures" part either. Maybe GDP should stand for "Great Dissipation of Product". Oh, but there's a FORMULA for it. That's different. Never mind.

  5. Calling Mises the real Einstein of economics is inaccurate. First there is much research indicating that Einstein was wrong about gravity and the speed of light. Second Einstein was a celebrity and his theories are mainstream. Mises certainly had no celebrity aspect and while I sure you could point out mistakes made by Mises you would not contend that his main arguments/theories are wrong.

    Also, Einstein’s Relativity theories rely heavily on mathematical conclusions. As you have illustrated Mises was not reliant on math.

  6. When Maskin describes Samuelson as "one of the three 'most important creative economists'", are we to understand that as being comparable to "creative accounting"? That would make perfect sense.