Monday, December 14, 2009

A Verbal Analysis of Paul Samuelson's Influence on Economics

By Mario Rizzo

Paul Samuelson has died at the age of 94. There is already a big New York Times obituary lauding his many contributions and more will inevitably follow. Many economists will want to use this occasion to demonstrate how much they appreciate economics as a science and how this appreciation transcends ideological divides. This will reassure them that all is well in the queen of the social sciences.

Of course, I’d like to strike a discordant note. I did not know the man personally. He may have been a very good person indeed. I can only think about him as an economist who had an enormous influence on the character of economics in the second half of the twentieth century.

So many people learned economics from his Principles text. Although I was a college student during the heyday of his text, my teachers never used it. Many people learned about the tradeoff between equity (=income equality) and efficiency from him (although he did not invent the idea). I didn’t accept his simplification of equity. Many people learned that the Soviet economy was simply one in which a different point on the equity tradeoff “was chosen” – although here too he believed the Soviets would one day exceed us in output. He believed their statistics. I never believed these claims.

He did not understand the Austrian critique of the rationality of socialist economic calculation. On more than one occasion he made fun of the Austrians. I didn’t share his sense of humor.

But what he is loved most for, by many professional economists, is his contribution to formalizing and mathematizing economic theory. His Foundations of Economic Analysis was used in many graduate courses until it was superseded by more complex and extensive mathematical economics produced by his students and their students.

Was this for the good? I don’t want to go over that territory in any detail. I believe that economics would be far better with more philosophy and less mathematics. I believe that the profession has, because of the formalistic direction in which it has traveled, more than its share of idiot savants.

Read the rest at ThinkMarkets.

1 comment:

  1. OK - I'm going to show my own bias here because I think Prof Rizzo and many of the commenters at ThinkMarkets are way too kind to old PS. As usual, Richard Eberling makes the most astute comments about Samuelson. Here's my favorite part:

    "He was one of the intellectual godfathers of those who tried to introduce the social engineering mindset during the Kennedy “New Frontier”days — that generation of the “best and the brightest” that gave us, finally, both the Vietnam War, the Great Society, and Stagflation."

    And these mini-me Samuelsons are largely responsible for the continuing boom/bust economic crises. One of which we are currently suffering. Its past time to dump Samuelsons ideas into the dust-bin of history.