Paul Samuelson, RIP - The American Spectator | USA News and Politics
Paul Samuelson, RIP
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The great economist Paul Samuelson passed away yesterday at the age of 94. Samuelson was perhaps the most influential economist of the 20th century, an absolutely towering figure.

The New York Times‘s long obituary is here.

The Wall Street Journal rounded up some remembrances from prominent economists, including:

Robert Hall, Stanford professor, head of the recession dating committee of the National Bureau of Economic Research, MIT PHd:

“Paul Samuelson created modern economics, in that he brought rigorous thinking to a field that had relied on mostly verbal and graphical analysis up to his time. His book, Foundations of Economic Analysis, was a bible to my generation of economists, trained entirely in the then-new Samuelson mode.

And

MIT economist and National Bureau of Economic Research president James Poterba:

There’s just an enormous amount of what every undergraduate learns that we take for granted that Paul played an absolutely critical role in codifying and uncovering. It’s like trying to envision how did people do mechanics before Newton. The rigor that he introduced has defined the discipline.

The Atlantic had a two-part interview with Samuelson in June that I believe is his last interview. In the interview he discusses the ways in which the intellectual history of the current economic downturn bears on his own personal history. Samuelson was one of the great popularizers of Keynesianism during the postwar period, and when Keynesianism went out of vogue in the late 70s and 80s, it was to some extent a personal affront to Samuelson. But living to age 94 has its benefits, and a full 25-30 years after his macroeconomics were left behind by the mainstream, he was claiming victory anew over the likes of Milton Friedman.

In fact, in a January interview with National Perspectives Quarterly, Samuelson sounded triumphant:

And today we see how utterly mistaken was the Milton Friedman notion that a market system can regulate itself. We see how silly the Ronald Reagan slogan was that government is the problem, not the solution. This prevailing ideology of the last few decades has now been reversed.

Everyone understands now, on the contrary, that there can be no solution without government. The Keynesian idea is once again accepted that fiscal policy and deficit spending has a major role to play in guiding a market economy. I wish Friedman were still alive so he could witness how his extremism led to the defeat of his own ideas.

Samuelson’s tone here is understandable, given that for the years of the “Washington Consensus” in economics, he was blamed both for creating the stagflation of the 70s and for misrepresenting Keynes in doing so. Having waited into extreme old age for his vindication, Samuelson wasn’t going to savor it without a little dancing on the graves of his detractors.

In fact Samuelson was always fairly polemic, for a long time maintaining a Newsweek column opposite Milton Friedman in which he often sparred with Friedman and others over politics and the economic outlook. He also included in his seminal economic textbook some rhetoric that does not hold up well. Some examples of statements from various editions of his Economics that seem fairly outrageous today: 

It is a vulgar mistake to think that most people in Eastern Europe are miserable.” [1981]

“What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth…The Soviet model has surely demonstrated that a command economy is capable of mobilizing resources for rapid growth.” [1985]

“[T]he Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and thrive.” [1989]

It’s hard for someone on the right not to drag out quotes like these when talking about Samuelson. And they are worth remembering, because although they sound impossibly misguided now, remember that they were written by the economist who dictated the terms of economic debate for half a century. As extreme and extremely wrong as they were, they reflected mainstream academic thought.

Samuelson’s influence in this regard is hard to overstate. One example of his dominance in economics from my own experience sticks out. I was an economics student at Notre Dame, which, uniquely, features two economics departments. As economic historian Deirdre McCloskey explains it, the reason for splitting the economics faculty into two is that Notre Dame economists, including some Marxists and post-Keynesians, had departed from “Samuelsonian” economics, the mathematical kind prevalent at MIT, far enough that they were no longer regarded as a real economics department by their peers. So the administration created another department to staff with “Samuelsonian” economists and boost the schools’ rankings given by “real” economists. That story is a very rough oversimplification, but the point is that Samuelson, in a tangible sense, defined what academic economics is.

That such a titan of the field could incorporate such profoundly wrong views about socialism and statism into the mainstream is a lesson as valuable as any Samuelson taught in the classroom.

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