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 His Foundations of Economic Analysis was used in many graduate courses until it was superseded by more complex and extensive mathematical economics produced by his students and their students.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.
The interesting thing for me is that when a man so influences the course of economics as Samuelson did those who enter the discipline after him are largely (though not entirely) those who like the kind of intellectual constructs, methods, attitudes he promoted – those who have a comparative advantage in this sort of thing. So in a way the whole phenomenon is self-congratulatory. “That Samuelson was great. He made economics into something I am really good at.” Selection bias at work.
The problem for Samuelson’s theoretical contributions is that one cannot easily point to any way in which economics is better rather than just different because of them. But even the differences are in a self-referential world. It is not as if because of his contributions we put a man on the moon or cured venereal disease.
What he did accomplish was a kind of methodological exclusivism. Economists more and more looked down on the “literary economists” who came before them. An idea plainly in Adam Smith became a “new idea” because someone was able to oversimplify it and put in mathematics. Economists overestimated their contributions to knowledge because they confused knowledge about the world with refinements in theory. The fact that Keynes and Hayek became so relevant (once again) to current events and policy made clear, I believe, that refinements of theory were of limited value in understanding the world.
He also contributed to the arrogance of economics vis a vis the other social sciences. Economists of many stripes laugh when the word “sociology” is mentioned (although I would admit that sometimes sociologists didn’t help matters).
So, all in all, Paul Samuelson’s influence on economics was something I could have lived very well indeed without.
UPDATE: I was rather startled to read in today’s Financial Times that prior to Samuelson economics was simply “scattered thoughts.” (Note that the print edition uses the term “scattered thoughts” in its headline while the web edition does not.) I was also surprised to learn that Samuelson “received a rigorous mathematical grounding in classical economics from Frank Knight, Jacob Viner…” I guess the distinction between rigorous logic and rigorous mathematics is lost on the Financial Times writer. Are there any equations in Knight’s work?
UPDATE 2: Paul Krugman apparently thinks that the caliber of criticism of Samuelson’s work is very low. This is what he culled from comments on his eulogy. He should read ThinkMarkets.
Addendum: I previously posted on a very recent article by Paul Samuelson.