Paul Samuelson

|Peter Boettke|

As you all know by now, Paul Samuelson died yesterday (Sunday) at his home at the age of 94.  Samuelson will get plenty of praise from the economic establishment. Rightfully so, he shaped the establishment in a way that few ever do. And there is no doubt he was a brilliant man --- folklore has it that at his dissertation defense the committee looked at one another and said "Did WE pass?"

Samuelson famously remarked once that he didn't care who wrote the nation's laws, as long as he wrote the nation's economic textbooks.  Which he indeed did.  His Economics became the leading textbook for college freshman, and his Foundations became the leading text for first-year graduate students in economics.

When you scratch the surface of Economics you find Keynesianism at each turn of the page, when you scratch the surface of Foundations you find economics as social physics at each turn of the page.  That Keynesian policies are best served by social physics was Samuelson's true legacy for the economic imagination of multiple generations of economics, policy commentators, and policy makers.  The discipline of economics was transformed from a tool for understanding and social criticism and an instrument for intellectual enlightenment, to a tool for social engineering and an instrument for progressive politics.

John Hicks once wrote that the story of economics in the 1930s was the battle between Hayek and Keynes.  I think Hicks is right, and that this battle continues to this day as witnessed in our current policy debates.  But I think there is a deeper debate that goes at the very project of economics as a scientific discipline. And that battle is the one between Samuelson and Mises, and the fateful choice was the late 1940s.  Rather than following Mises's Human Action, the economics profession went the path of Samuelson's Foundations.  Formalism was intereprted as synonymous with logical rigor, and in the subsequent decade positivistic testing was interpreting as synonymous with empirical analysis.  By the 1960s, formalism and positivism transformed the science of economics so that the Misesian understanding of "theory" and "history" was actually completely dismissed as a relic of a pre-scientific age.

Since then a large part of the great efforts by economists have been directed at recapturing insights that Mises-Hayek possessed already by mid-century --- whether we are talking about cognitive limits of man, the role of property rights (and legal and political institutions in general and behavior related to them), and the microfoundations of all macroeconomic phenomena.  New institutional Economics, New Classical Economics, New Economic History, Experimental and Behavioral Economics, etc. all deviate in significant ways from the scientific and policy project that Samuelson initiated in the late 1940s and which dominated economic thinking from that time until the 1980s.  The Samuelsonian project had to be pecked away at for progress in economic understanding to take place. Yet the 'scientific' allure of the project still remains --- unfortunately even among many of those who pecked away at the Samuelsonian project.  The pretense of knowledge (see Hayek's Nobel) and the claim to the mantle of science (see Rothbard's paper of that title) have a much stronger grip on the minds of economists and intellectuals than what might be reasonably expected in the wake of repeated failures.

Samuelson argued that like all great scientist he was only concerned with the applause of his peers.  And he received great praise in his lifetime and will be celebrated in the short-run in his death.  But I have stated on more than one ocassion that I believe Samuelson will be remembered in the same way as Sir William Petty is remembered, not as Adam Smith is remembered.  His substantive contributions (as oppopsed to form in which he stated arguments) are not immediately obvious to pinpoint.  We must always remember that Samuelson was the great anti-Misesian of 20th century economics, and in my book that translates into a force for anti-economics despite all the scientific accolades, awards, honorary degrees, and reverence by his peers he was granted in his lifetime.

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