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Lord Samuelson, Dead

In Apotheosis on December 18, 2009 at 11:23 PM

Lord Paul Samuelson, premier American Nobel-prize winner in economics, formerly professor of economics of M.I.T., is dead. Epic loss withstanding, he remains central and dominant in the network of branches stemming up and down the generational family tree in economics. The New York Times offers a rich recounting of his life and times in Paul A. Samuelson, Economist, Dies at 94.

Economics (1948), his introductory textbook on the subject, was once standard required reading for economists having grown up in the post-WWII generation. Subsequently, the book has now been overtaken by Gregory Mankiw’s current version, so it is interesting to read Mankiw’s entry on Samuelson’s passing —

“Like many students of my generation, I started my studies of economics with Paul Samuelson. When I took econ 101 as a freshman at Princeton, Paul’s textbook, then in its 9th or 10th edition, was the assigned reading. I recall the book well, and I give it a lot of credit for fostering my interest in economics.”

Read more here on Mankiw’s Memories of Paul.

Many names, both big and small, today remain just as influenced by Samuelson’s version of economics, including influentials of investment finance like John Bogle of The Vanguard Group, and professors of economic history and labor economics like Bruce Kaufman of Georgia State University.

The Samuelson brand of economics is often described as “neoclassical synthesis,” with the thesis portion representing neoclassical microeconomics, and the antithesis portion representing Keynesian macroeconomics, the offspring being technically robust and theoretically modern.

Importantly, Samuelson himself never wanted to stray to far into empirics. Historian Stanley Brue writing in The Evolution of Economic Thought (1963), sums up Samuelson’s motivations well —

“Samuelson has published numerous, far-ranging articles in the most prestigious economic journals. Many of these articles are highly mathematical, and many are of major interest only to other experts in the field. Samuelson is not an empiricist; indeed he calls himself a generalist interested in expanding theory rather than testing it.”

Mr. Bogle discusses memories of his Samuelson college textbook in this September 26, 2008 interview at Radio Open Source, hosted through The Watson Institute for International Studies at Brown University. In the interview, he fondly recalls a quote from the book comparing Christianity and capitalism. The steeper slide in the most recent 2007:Q4 recession unfolds as they speak.

As Bogle explains —

“I’ll tell you something about capitalism — and I somehow remember this, I don’t know how, from the first edition of Paul Samuelson’s textbook ‘Economics: an Introductory Analysis’ — my first taste of economics at Princeton University in 1951 — and what Paul Samuelson said in his introduction was, ‘The problem with capitalism, like the problem with Christianity, is that it’s never been tried.’”

Listen here to Candid Capitalist: John Bogle.

Dr. Bruce Kaufman introduced a memorable image from Samuelson’s textbook back in summer 2008 to me and my classmates in our History of Economic Thought class. Displaying the production function concept in cartoonized, caricatured form, the image depicted labor inputs, mainly humans, being poored into a machine (what looked to be a meat grinder), only to generate freshly ground economic outputs on the other side, in final phase.

Renaissance quality in Samuelson is characteristic of his style. He represents a person comfortable enough incorporating the style of Mark Twain, the great American political commentator, alongside the rigor of Carl Gauss, the great German statistician predictor, all in the same line of thought. That in mind, however, Samuelson clearly derives himself from a much larger branch in economic lineage, that belonging namely to Lord Keynes from England.

Formatively, Keynes began his studies in mathematics, learning underneath Alfred Marshall, originator of the supply-demand curve device. Both men were firstly mathematicians by training, just as Samuelson, who received a B.A. from Chicago University, a PhD from Harvard University and a professorship from M.I.T., all highly technical, quantatatively-minded academic institutions.

Nassim Taleb, one modern neoclassical synthesizer, writes in Fooled by Randomness (2001), underscoring this point, reminding us that Keynes had original writings foundational in the field of mathematics, namely Treatise on Probability (1921) and later The General Theory (1936). In similar manner, anyone cracking open The Foundations of Economic Analysis (1947) by Samuelson or Economics: An Introductory Analysis (1985) by Samuelson and Nordhaus will sense a rare grasp of modeling and analytical ability embedded in these books that is just as embedded and apparent in Keynes earlier masterpieces.

Further, Samuelson, in generating the multiplier-accelerator and the impetus for exploration in ideas ranging as widely and diverse as Black-Scholes options modeling to efficient-markets theory, firmly qualifies as having established himself on par with economic heavyweights the likes of Leon Walras, the French polymath economist, and the entire marginalist school of progressive mathematicians, including William Jevons, the English economist.

That track record confirmed, Samuelson ought continue to represent a version of trusted, grandiloquent auctioneer in his own right for posterity, a conductor of economic resonance and neutral counsel to leaders the world over.

Knowingly, and/or unknowingly, we are all Samuelsonians.

In a paradoxical, bitterwseet sense we can no longer distinguish politicians by party affiliation alone anymore thanks to Samuelson, that is, one can be declared now a Kennedy Democrat just as easily as an Eisenhower Republican.

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