Paul Samuelson was the greatest economic theorist of the 20th century. If we see Leon Walras, with his general equilibrium theory, as the Newton of economics – which I think Samuelson did – then Samuelson was its Einstein. In his Foundations of Economic Analysis in 1947, he laid out the fundamental mathematics that underlay the ideal market economy. For the rest of his life he made theoretical breakthroughs in a range of fields within economics.
Till the end of his life he was, above all, a theorist, and, being no ideologue, prepared to go where theory took him. In 2004, at the age of 89, he published a paper in international trade theory demonstrating mathematically that “technical Chinese progress in goods that America previously had competitive advantage in can, ceteris paribus, lower permanently per capita U.S. real income.” Economists for whom free trade was a matter of faith were unable to deny Samuelson’s math, and had to resort to insisting that he had stumbled upon a special case with slight real world relevance, but when a theorist appeals to fact he has already lost the argument.
It is, of course, possible, that what Samuelson had done was find a flaw in trade theory that had considerable real world relevance. After all, it was the same Samuelson who earlier in his career had laid out the mathematics of the factor-price equalization theorem. And was it not possible that equalization could happen by one’s country’s wage falling as the other country’s rose?
So talented was Samuelson that, as we know, he also wrote the first mass circulation economics textbook in introductory economics. First edition 1948 to 19th edition today. In between, I was privileged to co-author with Samuelson the Instructor’s Manual for the 4th edition in 1958. It’s been downhill for me ever since. He was a wonderful person to work with. I still treasure a memo he sent me signed “Paul.”
Was Samuelson a “progressive” who deserves to be celebrated here? Absolutely. He was a Keynesian when Keynes was dismissed as a dangerous liberal by the American establishment When stagflation made Keynesian no longer good enough, Samuelson called himself a post-Keynesian. He never bought into monetarism or rational expectations nor supply-side economics. He deplored the increasing maldistribution of income and wealth.
To the economist who could justify anything in the name of efficiency, Samuelson had a simple answer: “My belief is that any good cause is worse some inefficiency.” If all mainstream economists would admit to that, the world would be a better place
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