Paul A. Samuelson
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Perhaps more than anyone else, Paul A. Samuelson has personified mainstream economics in the second half of the twentieth century. The writer of the most successful principles textbook ever (1948), Paul Samuelson has been not unjustly considered the incarnation of the economics "establishment" - and as a result, has been both lauded and vilified for virtually everything right and wrong about it.

Samuelson's most famous piece of work, Foundations of Economic Analysis (1947), one of the grand tomes that helped revive Neoclassical economics and launched the era of the mathematization of economics. Samuelson was one of the progenitors of the Paretian revival in microeconomics and the Neo-Keynesian Synthesis in macroeconomics during the post-war period.

The wunderkind of the Harvard generation of 1930s, where he studied under Schumpeter and Leontief had a prodigious grasp of economic theory which has since become legendary (an unconfirmed anecdote has it that at the end of Samuelson's dissertation defense, Schumpeter turned to Leontief and asked, "Well, Wassily, have we passed?"). Paul Samuelson moved on to M.I.T. where he built one of the century's most powerful economics departments around himself. He was soon joined by R.M. Solow who was to be come Samuelson's sometime co-writer and partner-in-crime.

Samuelson's specific contributions to economics have been far too many to be listed here - being among the most prolific writers in economics. Samuelson's signature method of economic theory, illustrated in his Foundations (1947), seems to follow two rules which can also been said to characterize much of Neoclassical economics since: with every economic problem (1) reduce the number of variables and keep only a minumum set of simple economic relations; (2) if possible, rewrite it as a constrained optimization problem.

In microeconomics, he is responsible for the theory of revealed preference (1938, 1947). This and his related efforts on the question of utility measurement and integrability (1937, 1950) opened the way for future developments by Debreu, Georgescu-Roegen and Uzawa. He also introduced the use of comparative statics and dynamics through his "correspondence principle" (1947) which was applied fruitfully in his contributions to the dynamic stability of general equilibrium (1941, 1944). He also developed what are now called "Bergson-Samuelson social welfare functions" (1947, 1950, 1956) and, no less famously, Samuelson is responsible for the harnessing of "public goods" into Neoclassical theory (1954, 1955, 1958).

Samuelson was also instrumental in establishing the modern theory of theory of production. His Foundations (1947) are responsible for the envelope theorem and the full characterization of the cost function. He also made important contributions to the theory of technical progress (1972). His work on the theory of capital is also well known, if contentious. He demonstrated one of the first remarkable "Non-Substitution" theorems (1951) and, in his famous paper with Solow (1953), initiated the analysis of dynamic Leontief systems. This work was famously reiterated in his famous 1958 volume on linear programming with Robert Dorfman and Robert Solow, wherein we also find a clear introduction to the "turnpike" conjecture of linear von Neumann systems. Samuelson was also Joan Robinson's main adversary in the Cambridge Capital Controversy - introducing the "surrogate" production function (1962), and then subsequently (and graciously) relenting (1966).

In international trade theory, he is responsible for the Stolper-Samuelson Theorem and, independently of Lerner, the Factor Price Equalization theorem (1948, 1949, 1953) as well as (finally) resolving the age-old "transfer problem" relating terms of trade and capital flows a well as the Marxian transformation problem (1971) and other issues in Classical economics (1957, 1978).

In macroeconomics, Samuelson's multiplier-accelerator macrodynamic model (1939) is justly famous, as is his presentation of the Phillips Curve (1960) to the world. He is also famous for popularizing Allais's "overlapping generations" model which has since found many applications in macroeconomics and monetary theory. In many ways, his work on speculative prices (1965) effectively anticipates the efficient markets hypothesis in finance theory. His work on diversification (1967) and the "lifetime portfolio" (1969) is also well known.

Paul Samuelson's many contributions to Neoclassical economic theory were recognized with a Nobel Memorial prize in 1970.


flag The U.S. Economy: The Last 50 Years and the Next 50 Years
as author at  MIT World Series: Nobel Laureate Speakers,
together with: Franco Modigliani, Robert M. Solow,