Undergraduate Economist

Perspectives of an economics student

Paul Samuelson: The Father of 'Modern Economics' Dies

Posted by Alex M Thomas on December 21st, 2009

All those who have studied economics for the past 50 years or so have heard about Samuelson – Foundations of Economic Analysis, Samuelson-Stopler theorem, Factor-price equalisation theorem, revealed preference theory, Bergson-Samuelson social welfare functions, non-substitution theorem, linear programming in economics, etc. The first one is his 1947 book which dominates economics teaching even today, directly or indirectly. Samuelson transformed economics into some sort of science (pseudo-science, as some call it)-social physics. [For more on this, go here]

Robert Lucas on Samuelson:

“Samuelson was the Julia Child of economics, somehow teaching you the basics and giving you the feeling of becoming an insider in a complex culture all at the same time. I loved the Foundations. Like so many others in my cohort, I internalized its view that if I couldn’t formulate a problem in economic theory mathematically, I didn’t know what I was doing. I came to the position that mathematical analysis is not one of many ways of doing economic theory: It is the only way. Economic theory is mathematical analysis. Everything else is just pictures and talk.” [Marginal Revolution and here]

SCARY!

In his Foundations, he is supposed to have popularised the views of Keynes. In fact, what he popularised is the neo-classical synthesis (IS-LM curves, which were created by Hicks). Hence, what we learn in most macroeconomics texts is not what Keynes said. Post-Keynesian economics is more closer to what Keynes said.

Despite his ‘ideas of good economics’, one needs to appreciate the works he carried out in different areas in economics – macroeconomics, public finance, international trade, consumer theory, capital theory and general equilibrium, etc.

In his initial editions of the Foundations, one could find a few pages devoted to the 1960 capital theory debates. However, with passage of time, the debate was relegated to footnotes. Now, in mainstream textbooks, capital theory is entirely omitted. In fact, Samuelson admitted the problems neoclassical microeconomics and general equilibrium run into because of their notion of capital. [More here]

I end with two questions.
Is mathematics the only way of studying economics and analysing economies? [We mostly use calculus and game theory. Should we employ other kinds of mathematics?]

How reliable are textbooks? It makes learning easy, but probably, a bit too easy.

9 Responses to “Paul Samuelson: The Father of 'Modern Economics' Dies”

  1. Neers Says:

    here you are!

    my vote: mathematics!

  2. sojourner Says:

    ah! here you are :) [and there I am]

    Oh there is voting too?… let me read…

    erm… as a self admitted poor-in-maths-guy and to whom economy stops at ‘cash spent over the counter’, I am not qualified to vote :)

    seen those Zeitgeist videos?

  3. 2009: A Round Up « Undergraduate Economist Says:

    [...] Paul Samuelson: The Father of ‘Modern Economics’ Dies [...]

  4. julia Says:

    Mathematics started out as a language to express economics. Unfortunately it seems to have subsumed the subject. We really need to go back to maths as a symbolic expression of economic concepts and not the end in itself.

  5. Kitu Says:

    We need maths. Sorry to sound all traditional.. But one needs to do maths and use textbooks to get the flavour of the subject and then venture beyond them

  6. Alex M Thomas Says:

    Kitu,

    As Julia said, mathematics should not be seen as an in in itself. I do not argue for an economics that is devoid of math. We need the right math and when we do math, it should be used with full comprehension of the assumptions and limitations of a particular kind (ed-calculus) especially when dealing with social and economic phenomena. Laws of nature of scientists and what we try and capture are very different.

    Good textbooks are written (mostly) by good teachers. But, again when professors solely rely on textbooks for their knowledge, it becomes a problem.

  7. PiterJankovich Says:

    My name is Piter Jankovich. oOnly want to tell, that your blog is really cool
    And want to ask you: is this blog your hobby?
    P.S. Sorry for my bad english

  8. Alex M Thomas Says:

    Hi Piter,

    The blog is more than a hobby. The blog started as a way to communicate with like-minded people and has grown into a space where I can share my opinion, based on my reading.

    Your English is perfectly fine.

  9. Anoop Says:

    Alex,
    In my opinion,mathematics is needed for the precise formulation of the problems.But the main issue, in my opinion,lies with formulating economic problems in the same way of Newtonian mechanics.
    This trend was started by neo-classicals and later much popularized by Samuelson.( I think he based his models on some thermodynamic equations).Anyway, we cannot expect the economic models to perform like the Physical models.Because,Newtonian mechanics(and the subsequent methdologies) basically applies to physical objects,which could be represented in a 3 dimensional space(and time).
    So,we can define the object in space and time,and explain it with the help of a system of equations(And it works pretty well too).But in the case of economics, we do not know the “dimension” of an economic variable.Only thing we can say is that there is a temporal element present.Therefore, the spatial aspect of modelling is completely missing.The best we can do is to analyze the signals from economy,and draw conclusions from it.
    The conventional tools like calculus may not be effective because it were created for a different purpose.Game theory is much suitable for analysis whilst compared to calculus.Fractal Geometry and Chaos theory may be much suited to analyze the behavior of markets(I can’t say much about these topics as I have started reading about them only recently).To conclude,I’ll only say that Mathematics is just a tool,which to be wielded with precision,and to be used only when dire necessity arises.
    Regards
    Anoop

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