by Roger Koppl
One of our all-time greats, Paul Samuelson, has passed. We should mourn the passing of a great mind and fellow human being. He influenced so many economists so deeply that it easy to underestimate his influence. Barkley Rosser makes the key point at Econospeak. “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.” Barkley adds the interesting comment that Samuelson “himself was generally personally aware of the flaws and limits of many of his own ideas” whereas the “sons of Samuelson” have been “more simplistic.”
At Marginal Revolution, Tyler Cowan reminds us of two examples of Samuelson’s pervasive influence, namely, his “seminal piece on public goods” and his wonderful 1965 “Proof that Properly Anticipated Prices Fluctuate Randomly.” More examples can be culled from the Wall Street Journal’s list of appreciations of Samuelson to which Tyler links.
On this blog, Mario Rizzo recognized Samuelson’s influence, but struck a “discordant note.” Mario says Samuelson helped push economists to overinvest in math and underinvest in philosophy.
Back at Econospeak “Peter H.” scoffs at an anonoymous posters suggestion that Mises has been more influentail than Samuelson. It is easy to see why he would scoff. The case for Mises over Samuelson might be stronger than Peter H. imagines, however, as Pete Boettke suggests at The Austrian Economists. Recognizing, of course, that Samuelson “shaped the establishment in a way that few ever do,” Boettke notes how much the recent history of economics is about “recapturing insights that Mises-Hayek possessed.” Pete makes the interesting suggestion that “Samuelson will be remembered in the same way as Sir William Petty is remembered, not as Adam Smith is remembered.”
Assessing Mises’ legacy is always a problem in part because of the confusion and contention surrounding his name in the US. 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. Lionnel 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. Machlup also gave us the elasticities approach to exchange rates and the Bellagio group. 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.
Colander, Holt, and Rosser show that, basically, complexity economics is pushing out the old orthodoxy of Samuelson’s neoclassical synthesis. The complexity revolution in economics brings in all sorts of “Austrian,” and therefore Misesian, arguments, especially as developed by Hayek. Most of the profession today recognizes that Mises got it right on socialist calculation. His contributions to that debate led to Hayek’s knowledge papers. Today, economists regularly cite Hayek on knowledge and prices as signals.
All in all, then, it might prove true in the end 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 deep grooves. But the legacy of Mises may in the end be more important and more enduring.