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It's even more interesting that a big amount of economists Samuelson mentions are directly or indirectly connected to the Austrian School in particulal or market-process economics economics in general.

Bohm-Bawerk, Clark, Wicksell, Menger, Wicksteed, Davenport and Knight. (And maybe someone with more knowledge can add some others on that list.)

Hayek's major works were published in the 30s and 40s. Phooey.

Yes, Mises could have won in the late 1920s or early 1930s... unfortunately, nothing in this little game would give me hope that Kirzner or Alchian or Demsetz would have succeeded at a later time. Thus, it's a moot point. I strongly suspect that an early award in Economics would have not changed the path-dependency of the profession conditional on what happened in the late 1940s (i.e. Samuelson's Foundations and Hick's neoclassical synthesis.)

Or did he mean that *Richard* von Mises would have gotten the Prize for his contributions to economic methods?

I think that list is very complete. I thought "Is Canaan there?" and sure enough...

I think Samuelson's opinion of Mises can be found further down the footnote:
"The listing I have given compliments the taste of the Swedish Royal Academy of Sciences, being a compromise between:
(1) what I with hindsight judge to be true scientific merit, and
(2) what would likely have been recognized as merit by conscientious but fallible committees"

Then again I don't know what Samuelson thought of Mises' theory of money and credit. Having read a bit of his Foundations, I was always under the impression that "mental gymnastics of a peculiarly depraved type" referred to Mises and his stance on methodology. Probably also the part of a "dash of bad psychology" etc how he characterized his predecessors.

Given that Samuelson also has a money demand function in that book, I would be not surprised that he actually had read the theory of money and credit.

And, what do you think it says about Mises's stature as an economic thinker if even Samuelson signaled that he would have been honored with the Nobel Prize for his contributions to economic science?

To me, this cuts to the heart of an important contemporary issue. I often see Austrian proponents claim that the school's leading lights were unduly ignored or marginalised only through the ignorance of their ideas. [Note: Less so on CP than other sites!] While it's certainly true that Austrian tenets were eclipsed by Keynesian and (later) Monetarist ideas for much of the 20th century, it smacks of intellectual laziness to suggest that this was only due to reasons of political expediency or subterfuge... which, unfortunately, tends to often be the case. (E.g. Some of you may recall David Friedman addressing a related issue re Murray Rothbard and his father recently: http://bit.ly/rmYUj8.)

Why do I say this? Well, because certain Austrian ideas did find immediate and lasting currency with "mainstream" economists precisely because they were persuasive. Here's another passage by Samuelson from a 1995 paper (http://bit.ly/q5S4WB):

[My] generation were brought up witnessing the great debate between von Mises and Lerner-Lange concerning the feasibility of socialist rational pricing to produce Utopia. (That was a reprise of earlier Pareto-Barone-Wieser-Taylor debates.) Many contemporaries believed Lerner-Lange triumphed in the debate. I came to believe that Friedrich Hayek was the true victor.

Under static conditions where all is known or knowable (to whom?), whatever optimal states laissez-faire might occasion, so could some computer solution or some algorithms of play the game of competition also achieve. But in the real world all is changing, even in the time it takes me to write this sentence. Hayek has been persuasive -- not in Whig ideology or in declaring that moderate reform of laissez-faire leads inevitably down the road to totalitarian socialism but -- in arguing that experience suggests that only with heavy dependence on market pricing mechanisms can there be realized quasi-efficient and quasi-progressive organization of societies involving humans as Darwinian history has bequeathed them[...]

Seeing as I've tried to cover this particular topic previously (http://bit.ly/r3zYV5), I might as well end off now as I did then:

[...]Finding some redeeming feature in your intellectual opponents isn't a pre-requisite for being a serious thinker, but at least it means you aren't an empty ideologue. By the same token, Hayek, Keynes, Samuelson, or anyone else for that matter, didn't need to be right about everything to contribute many profound insights to economic thought.

It is ideas that matter, not the people behind them.

Where's Wieser?

Adolfo,

You're guys are alive now and would not have won in the period prior to when the prize was established. Sorry.

Roger,

Doubt PAS meant Richard.

To those who think PAS was poorly read, no.

Greg,

Wieser? No.

" what do you think it says about Mises's stature as an economic thinker if even Samuelson signaled that he would have been honored with the Nobel Prize for his contributions to economic science"

Personally, Mises does not rise in my estimation because Samuelson included him in his pre-Nobel list. Samuelson, on the other hand, does.

In terms of that earlier period of the 20th century, I think Greg is right about Wieser logically being on such a list.

He was considered to have been the formulator of "opportunity cost" as the value of the alternative product forgone (indeed, the Italian economist, Maffeo Pantaleoni called it "Wieser's Law" in his book, "Pure Economics" [1889].) (The term "opportunity cost" was coined by David Green in the early 1890s.)

And in "Natural Value" [1889] he worked out one "solution" to the problem of "imputation" (the attributing to the factors of production their respective contributions to the value of the finished product) based upon the "new" concept of marginal utility, and a good ten years before John Bates Clark's more widely accepted conception of "marginal product."

So, it is likely that if a Nobel Committee for economics had bee around in the early decades of the 20th century, Wieser would have been a strong candidate.

Richard Ebeling

As for Mises, while none of Mises' works had been translated into English by 1930 (Samuelson's "cut-off" date), the fact was that on the European continent he was considered one of the most important and influential economists.

He had obtained this stature because of his "The Theory of Money and Credit," which was considered one of the first and successful developments of the demand for money along marginalist lines, and his theory of banking, credit, and the business cycle was widely recognized and accepted as an original development building on Wicksell's work.

And by 1930, Mises' writings on the "impossibility" of socialist central planning was generally accepted as having set the terms of the debate in the context of which all writings on comparative economic systems had to operate -- whether one agreed with him or not.

And his essays on economic intervention as a "third way" between socialism and capitalism that were collected in 1929 in "Critique of Interventionism," were likewise considered to have challenged the rationales and justifications for government regulation of prices and production.

It is not with much exaggeration to say that in the interwar period (1918-1939), Mises' stature and recognition in European economics was equivalent to the "name recognition" and respectability of Milton Friedman in American economics after the 1960s.

Without a doubt, making him worthy of a Nobel Prize in Economics in the eyes of his peers in that earlier period, if there had been one -- even among those holding views different than his own.

Richard Ebeling

Yes Richard, that is what I want everyone to realize. Mises in his lifetime was considered a leading economic thinker. He was not considered crazy nor was he unknown.

Crazy and unknown people do not get named the Distinguished Fellow of the AEA, do not win things like highest medal for scientific achievement from their native country, and they don't get listed by Paul Samuelson on a list of economists worthy of the Nobel Prize in Economics.

Mises (and Hayek) may have been unpopular due to his methodological position and his ideological stance, but he was not dismissed and ignored.

We should be inspired by his professional success, not only his courage to buck the prevailing trend.

Right on Richard and Pete. Mises greatly influenced post-war orthodoxy in economics, in part through his influence on Machlup and Robbins. By the 1970s or so that orthodoxy had gone so far from Austro-type subjectivism that Austrian economists felt rightly alienated from the mainstream. But the Misesian influence on mainstream economics was still there, I think.

Barkley: I didn't think I needed to put a smiley face in my comment. My bad.

I'm sure Samuelson meant well, but that's a weird digression to indulge in when writing an obituary.

If Carl Menger can get onto the list, why not Richard von Mises? They were both running private seminars on mathematics and probability theory. Mathematical economics was born in the Menger symposium, one of the best examples of unintended conesequences (Carl was the son of Karl).

Rafe Champion, you got it the other way round with the son and the father.

Whoops. Karl was the son of Carl. I thought Samuelson might have left out Carl Menger because his major work was done long before 1901.

Well, of course a hoot would have been having Ludwig and Richard getting it simultanously, although that would probably not be any worse than say the Polanyi brothers getting it simultanously, much less the oddity of Hayek and Myrdal actually getting it together.

What strikes me as especially interesting about the list is that all these early 20th century economists were more profound, more scholarly, and probably of more lasting influence than contemporary Nobel laureates (Williamson is probably the most worthy laureate after 2000, but he is certainly not in the same category as Mises, Wicksell, Knight etc.)

Nice call Barkley, what about the Mengers, father and son, sharing?

Any other nominations for parent/child combinations?

Let me throw down the gauntlet on this trashing of Hayek & Myrdal getting the Nobel at the same time. The were both important monetary / trade cycle theorists working in the Wicksell tradition, and tackling the expectations & intertemporal equilibrium construct problems in that tradition.

If Erik Lindahl were alive, he'd have rightly shared the Nobel with Hayek & Myrdal.

Hayek was awarded the Nobel for this work on monetary economics / coordination & discoordination economic -- and so was Myrdal.

On top of that was "other stuff" -- Myrdal significantly tackled the U.S. race mess that Hayek never engaged, and hardly acknowledged. Bully for Myrdal. Time & resources & interests are limited. So what if that some of these guys did research wasn't on the same topic.


Barkley wrote,

"the oddity of Hayek and Myrdal actually getting it together."

I have no evidence for it, but my gut tells me Hayek had problems with sharing the Nobel with Myrdal for other reason than differences over politics -- Hayek had a high tolerance for different points of view and didn't let it get in the way of personal relationships.

Before 1944, Hayek even keep his political views completely out of the discussion in his classes and seminars. (He says that before 1944 he doesn't think anyone in his classes or seminars could have known his political views from his discussions of economic theory.)

My sense is that Hayek didn't think that Myrdal's work was in the same class as his own, and he didn't feel he got the reception and respect and understanding that he should have gotten from Myrdal.

Those are impression, reading between the lines and not based on any solid direct textual evidence.

Take it for what its worth.

Hayek and Myrdal won the Nobel Prize for:

"their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena."

Greg,

As I understand (remember) from that time, it was Myrdal who was really "bent out of shape" at having to share the prize with Hayek.

Myrdal believed that he deserved it on his own (including the full prize money), and not as a joint award with Hayek, who he disagreed with on both monetary theory and political philosophy.

Equally "bent out of shape" at that time at Hayek getting the prize was Wassily Leontief, who even publicly stated that Hayek had never written anything of importance on socialist planning!

(Hayek, of course, replied indirectly when shortly after he wrote a critique of input-output analysis as offering no solution to the problem of government planning.)

I might add that in the context of the 1930s, Myrdal was one of Sweden's leading monetary theorists. His book on "Monetary Equilibrium," which first was published (in German) in an anthology that Hayek edited in 1933 and then in an enlarged revised form in 1939 in English, was a extremely serious work written as an "eminent criticism" of some of Wicksell's ideas.

And Erik Lindahl was a masterful monetary and capital theorist, the flavor of which may be tasted in his "Studies in Money and Capital" (1939), comprising several essays written on monetary, capital and business cycle themes. during the late 1920s and 1930s.

Also, by the way, in 1954, Lindahl published a highly insightful two-part article on the limits, contradictions, and unrealism of Keynes' economic system in "The Economic Record" (an Australian economics journal). Unfortunately, to my knowledge, it has not been reprinted anywhere.

If I may be permitted, I discuss Myrdal and Lindahl in one of the chapters in my book, "Political Economy, Public Policy, and Monetary Economics" (Routledge, 2010), in which I compare the contributions of some of the Austrian and Swedish economists during the interwar period on period and plan analysis, expectations, and economic fluctuations.

Richard Ebeling

Richard,

Right. Myrdal was a completely low rent act -- and utterly political -- in his post Nobel public insults of Hayek.

(What is it with these lefties, anyway?)

But recall Hayek's 1933 reply to the Swedes. It's clear that Hayek is saying, hey, you aren't getting how to deal with this, and you are off track -- here, try looking at it this way, this how you get back on track.

Hayek is still groping toward his own solution -- and he seemed to hope the Swedes would participate in working towards the solution Hayek saw ahead. Lindahl to an extent already had. It had to be discouraging not to have Myrdal and others as allies in transforming the Wicksell/Austrian monetary tradition into a powerful new paradigm.

In some, I don't have the sense that Hayek ever thought the Swede's really got it, Lindahl to some degree, but not Myrdal.


Greg,

Hmmm. So, I am willing to grant that maybe Wieser would not have been a bad addition to PAS's list, but I think it remains an "oddity" that Hayek and Myrdal got it together, and certainly many thought so at the time (I did).

While the committee mentions their work on monetary theory, that is not what either is best known for today, particularly Myrdal. Yes, they both did deal with the "interpenetration" of phenomena across social science disciplines, but did so very differently. Indeed, it is hard to link together at all their most famous ideas.

So, Hayek is probably most famous for his critique of socialist planning, which is closely linked to his ideas on the economics of information, which is what many think he mostly got it for, particularly his 1945 AER paper. This is even what PAS claims he deserved it for in that piece I published by PAS in JEBO that you dislike so much, Greg.

OTOH, Myrdal never wrote at all on either the socialist planning controversy (unless you think his defense of the Swedish "middle way" policies contributes to that debate, which I do not), nor did he write about the eocnomics of information at all. While his work on racial problems in the US was perhaps his most widely read work in general in the US, I would say that among economists his most influential idea was that of "cumulative causation," not mentioned at all so far in this discussion, and not something that Hayek ever wrote about to the best of my knowledge, although perhaps you can dig something up out of Hayek where he did so, Greg.

And, of course, they were rather at political odds, although most observers at the time thought that this was part of the game the committee was playing, showing everybody how they could play this political balancing act to show how even-handed they were, hah hah hah.

This listing of so many Austrian school economists in the top ranks is corroboration of the argument that in the 1930s, Mises and Hayek at the start of the calculation debate, had every reason to regard themselves as part of the mainstream of economics.

Greg,
When Hayek reviewed "Studies in Money and Capital" in 1939, he emphasized his disappointment that these essays were only, then, appearing in English.

Especially the earlier pieces in the book, where Lindahl remains most "closest" to Wicksell's framework, were the ones that Hayek considered most enlightening.

Hayek's disappointment was that having them available at the end of the 1930s saddened him, since they captured important insights which, by then, others like himself had reached on their own without the useful help they could have had if they had been able to read these essays at a earlier time in their own thinking.

I think I've mentioned, in a a different strand on "Coordination Problem," that in one of these earlier essays Lindahl offers an analysis of what happens if a Wicksellian type cycle begins with full employment in the consumer goods sectors, but unemployment in the investment goods sectors; or unemployment in the consumer goods sectors, and full employment in the investment goods sectors; or unemployment in both consumer goods and investment goods sectors.

In other words, Lindahl dealt with the situations that Hayek's critics accused him of "ignoring" by assuming "full employment" from the start.

Richard Ebeling

Just a quick word to note that Myrdal's *Monetary Equilibrium* is an excellent if ultimately imperfect book. The work of Wicksell and the later Swedes is indispensable for understanding interwar monetary theory, not to mention good monetary theory in general.

In case it hasnt been mentioned yet, LVM was honored as AEA Distinguisged Fellow in 1969, and this correlates well with Nobels. Tullock is an unwelcome exception. Ed

Hayek' ideas on prices as signals -- and his insight that formal constructs failed to capture this phenomena, arose first -- explicitly -- in his 1929 monetary/trade cycle work. Hayek's ideas on the interdependence of economic phenomena, e.g. his introduction of dated goods and ithe intertemporal equilibrium construction, were developed in thinking about business cycles.

Etc.

Barkley wrote,

"closely linked to his ideas on the economics of information, which is what many think he mostly got it for,"

Richard, my perhaps faulty memory of the 1939 intro was that Hayek was disappointed that _others_ were onky nowmgetting to se these essays. I'll have to re-read it

Weren't the Swede's publishing in German?

Machlup whote the brief which the Nobel committee used when considering Hayek's nomination -- that gives some sense of what the committee had to go by. The essay is in the volume of essayes edited by Machlup.

Anyone know it the Myrdal brief has been published?

Greg,

I don't know about the brief for Myrdal. Regarding the Swedes, they sometimes wrote in German, particularly when they published articles in the German journals, but also wrote often in Swedish, with Jim Buchanan translating parts of Wicksell from the Swedish into English.

While Hayek was certainly developing his ideas about information earlier, it was the AER paper from 1945 that was reprinted in the AER after Hayek got the prize, and that people like Samuelson identified as particularly embodying his arguments most clearly, including others who would pursue the study of the economics of information later, such as George Akerlof.

Just a quick word to note that Myrdal's Monetary Equilibrium is an excellent if ultimately imperfect book. The work of Wicksell and the later, I believe.

Barkley, the original significant figures learned Hayek information / knowledge problem economics in the 30s & 40s studying with Hayek at the L.S.E., e.g. Hurwicz & Lerner. Lerner's _The Economics of Control_ -- which Hayek praised as a work in "pure theory" (however perverse the concept) -- came out in 1944 and was highly influential.

And most economist first learned of Hayek's ideas on knowledge & information from his 1936/1937 paper "Economics and Knowledge".

Paul Samuelson's personal biography is not of central interest to the history of economic thought in this area. (Samuelson listened to Hayek give his 1945 paper in Schumpeter's Harvard seminar -- but missed the last few paragraphs, which Hayek out of courtesy to Schumpeter cut out. It's not clear that Samuelson understood what he'd just heard -- something reported by Thomas Sowell and many other top economists upon their first reading of the paper. Alchian, who'd already read Lerner, seems to be among the few who immediately understood Hayek's point and its significance for economic science).

Barkley wrote,

"it was the AER paper from 1945 that was reprinted in the AER after Hayek got the prize, and that people like Samuelson identified as particularly embodying his arguments most clearly,"

There are several generation of economists working on "information" economics between Hayek and Akerlof ... and like the "telephone game", there is reason to believe a lot has been lost in translation, arguably the very most important things.

Hayek fairly flatly implies -- correctly -- that people like Arrow & Samuelson failed to "get it" when it came to Hayek's point about the signaling function of prices -- they botched because they could only conceive the point within the framework which Hayek showed could not contain the insight.

And _this_ insight/claim is very explicitly made already in 1929.

In 1929 Samuelson was getting his first pimples. Why should we care that this mere kid wasn't yet reading the macroeconomic books being read by economists of the time?

I would agree that Hurwicz and Lerner got it from Hayek's earlier writings, but except for the mechanism design people following Hurwicz, it was the 1945 article that was most read by later economists interested in information, Akerlof being one, but a very important one, example.

Keynes and Lucas both point to Hayek's identification of the problem of monetary economics / macroeconomics as the significant achievement in Hayek's work -- different scientists have seen different "major contributions" in Hayek's work.

For Hicks, he marks his own personal "revolution" to Hayek's making him think of production taking place in time, with inpits coming before outputs, and Hicks cites this as the starting point of his own original conteibution.

For Harrod, it was Hayek's capital theory dynamics which inspired Harrod's seminal version of modern "neoclassical" capital theory.

Etc.

Historians of thought often cite Hayek's dating of goods and his introduction of the intertemporal equilibrium construct as the standout Hayek contribution.

We know as a facts that most all later day economists don't have much understand at all of how their science has developed over the years, so there is no reason to give much credit to their assumption about what was significant in the course of the many fashion make-overs in their discipline.

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