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RIP: Economist Paul Samuelson

Paul Samuelson, the first American to win the Nobel Prize in Economics, died at the age of 94 a few day ago. Samuelson was a disciple of the liberal principles of Keynesian economics, a foil to Milton Friedman's conservative, monetarist perspective. He was instrumental to both neo-Keynesian and neoclassical economic development. My lovely lady, an economist of European persuasion, informs me that his 1948 textbook, Economics, is essential reading for any serious student in the field (it is apparently the most widely read economics textbook in the world).

As President Obama and PM Gordon Brown are charged with adhering to Keynesian economics, Samuelson's influence as a Keynesian apostle continues to be profound. Keynes continues to dominate European thinking on economics, though his sympathies for communist-styled big-government and failure to recognize its inherent de-humanizing elements (of which free-market thinkers such as Friedman were keenly aware) have moderated his influence in the U.S. 

Perhaps the greatest contribution of Obama's tenure will be to further disillusion Americans with the social-control, deficit-spending policies of Samuelson's idol. It would be ironic, indeed, if following a conservative Republican who advocated Friedman's economics but often acted in opposition to its principles (No Child Left Behind, Sarbane's-Oxley), a liberal Democrat forced a resurgence of support for Friedman through the extreme (and detrimental) application of Keynesian policies.

Categories > Economy

Discussions - 7 Comments

They called him St. Paul Samuelson, and he may in fact have had more to do with the shaping of modern liberal attitudes among boomers than any other single academic.

A fun bit from the New Yorker (forgive my lack of HTML know-how, the link's in the personal URL field of this comment)

“I call myself a post-Keynesian,” Samuelson replied. “The 1936 Model A Keynesianism is passé. Of course, it doesn’t meant that it wasn’t right for its time.” He recalled attending an event that was held in Cambridge, England, in 1986 to mark the one-hundred-and-fiftieth anniversary of Keynes’s birth. “Everybody was there. And they all stood up and said, ‘I am still a faithful Keynesian. I am still a true believer.’ I was a bit rude. I said, ‘You remind me of a bunch of Nazis saying, I’m still a good Nazi.’ It’s not a theology: it’s a mode of analysis. I think I am a different Keynesian than I was ten years ago.” Samuelson then quoted Keynes himself. “When my information changes, I change my views. Don’t you, Sir?”

I think you have it backwards... Keynes was considerably less of a socialist than Samuelson. Also it would be nice to see a solid answer as to how exactly how No-Child Left Behind or Sarbane's-Oxley are in opposition to Friedman's position. Keynes lived in interesting times, made and lost and made a fortune speculating in the stock market and by quoting Shakespiere to the house of Lords convinced them that Bretton Woods and the end of the gold standard was necessary. In some sense Keynes is to the post-world war II europe and US, what Alexander Hamilton was to the US.

Interestingly enough in searching for criticism of No-Child Left Behind and Keynesianism...I get Bruce Bartlett author of "Reaganomics" and "Imposter: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy." I haven't read this...but in general I agree somewhat with Bartlett's article: "Keynes Was Really a Conservative."

Actually I think Bartlett goes too far...

Money Paragraph:

"Red Russia holds too much which is detestable," he wrote, terming communism "an insult to our intelligence." Communists, Keynes believed, were people who produced evil in the hope that good may come of it. And he had little respect for Marx, calling him "a poor thinker," and Das Kapital "an obsolete economic textbook, which I know to be not only scientifically erroneous but without interest or application for the modern world."

Samuelson on the other hand said: "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."

Keynes as far as I know never doubted the superiority of the British and American system... Keynes never wanted a command economy or believed that such would be favorable.

As James notes Keynes is way too quotable and interesting and influential to reduce simplistically,

Samuelson in truth was intelligent enough to really sort of stand on his own...while few people would agree with me that he wasn't Keynesian I simply mean to say that he was his own person and much more of a blackboard mathmatically inclined and less intuitive thinker than Keynes.

In fact Keynes I think would put more emphasis upon Rhetoric, Literature, Law in part because his view of human nature conflicts with a more mathmatical rational choice theory. Being over-quatitative about fine-tunning is ridiculous, government (made up of individuals) can't act that precisely. Prices are sticky and adjustments and fluctuations can be disruptive and as a matter of policy should be minimized. This require time at least in part because individuals are locked into fixed-price contracts(except for fancy UCC contracts) and not inflation-adjusted ones, which is in part why monetary restriction is contractionary.

The quote from the New Yorker in James's comment contains an absurd historical error, stating that Keynes's 150th birthday was in 1986, which, if true, would mean he was born in 1836. I think he was born in 1883.

Actually I think Sarbanes Oxley and No Child Left behind and the whole of compassionate conservatism is quite within the general scope of Keynesian British/American liberalism. Sarbanes Oxley may have defects, but I think Keynes would have favored such legistlation before it actually passed, as a matter of policy Keynes favors anything that increases public confidence in markets(provided that it justifiably should, or even perhaps provided that it justifiably should in the short run). The fraud at WorldCom and Enron was devistating for public confidence, and public confidence in the system is perhaps the highest policy goal of Keynesian Capitalist Liberal Democracy. Essentially a level of unemployment slightly or considerably below NAIRU is also a policy objective of KCLD, because 10 percent unemployment is not good(and ironically even worse with the safety blanket) Discouraged unemployed folks become wards of the state which is very bad and increases the political support for communist elements(in a classical 1930's Keynesian view). None of the policy objectives put foward in favor of NCLB are in conflict with Keynesian principles, but none are necessarily his primary focus.

I don't know what Bartlett is up to with his book attacking Bush and also defending Keyenes as conservative. In all likelyhood neither are perfectly genuine. Arguably Bush was rather Keynesian...

In terms of macroeconomics when you look at how broad you can go or be with variations of Keynesianism, neo et al it starts to get ridiculous. But if you look at the passage rate on Sarbanes Oxley of No Child Left Behind...

No Child Left Behind: 384-45 in the House and 91-8 in the Senate.
Sarbanes Oxley 423-3 in the House and 99-0 in the Senate.

Three representatives spoke out against Sarbanes Oxley: predictably Ron Paul was one of them!

April 14, 2005

Repeal Sarbanes-Oxley!

Mr. Speaker, I rise to introduce the Due Process and Economic Competitiveness Restoration Act, which repeals Section 404 of the Sarbanes-Oxley Act. Sarbanes-Oxley was rushed into law in the hysterical atmosphere surrounding the Enron and WorldCom bankruptcies, by a Congress more concerned with doing something than doing the right thing. Today, American businesses, workers, and investors are suffering because Congress was so eager to appear “tough on corporate crime.” Sarbanes-Oxley imposes costly new regulations on the financial services industry. These regulations are damaging American capital markets by providing an incentive for small US firms and foreign firms to deregister from US stock exchanges. According to a study by the prestigious Wharton Business School, the number of American companies deregistering from public stock exchanges nearly tripled during the year after Sarbanes-Oxley became law, while the New York Stock Exchange had only 10 new foreign listings in all of 2004."

Now Ron Paul is no Keynesian! A firm Mises-Austrian or whatever the folks are about politically.

By this standard Ron Paul was the only person running for president in any major party that voted against Sarbanes you don't even have to winnow down by seeing who voted for No Child Left Behind(Ron Paul also objected)

McCain voted for both!

Therefore McCain is arguably a Keynesian(bad argument, but it might be the right answer)

It is plausible to me that McCain is the type of conservative that Bartlett claims Keynes arguably is.

Note for the record that Keynesianism is compatible with hawkishness...compatible with Churchill, Bush, Tony Blair, Obama and Gordon Brown.

Ron Paul and the Misesian doctrine is not compatible with most forms of Hawkishness...

For a brief time Reagan united a coallition that wasn't intellectually coherent, that had contradictions and difficulties, but was able to work in the short run...but in the long run we are all dead?

Is it too Keynesian to suggest that present possessory intellectual coherence between Macro and Micro-economics is impossible?(which is why he never quite bothered with the sort of unified math Samuelson pursued?)

While I am on a ranting escapade... why it seems intellectually disingenuous to suggest that the "conservative" answer on free market economics and the "american" answer on politics isn't in accord with the overwhelming majority votes of congress when represented in such an overwhelming fashion. Some on the right believe that we shouldn't listen to Obama but watch his hands, on this count I fail to see how the general advice doesn't extend to all politicians. Yet If there was a LexisNexis of politics that tracked actual votes in congress and ideologically sheperdized various bills it would fail a straight face/poker test to argue that Sarbanes Oxley or No Child Left behind aren't conservative, american and bipartisan. The votes by congress and the signature by a then popular republican president realistically sketch the contours or rational expectations that one could form about the limits of what is conservative in america.

By this test to say that Keynes is conservative requires less jesting than to pick from the politics of the outlier Ron Paul, and declare this to be conservative position.

Essentially this sort of honesty is nothing more than most modern day Keynesians admit when it comes to the supposed huge split between Keynesians and Monetarists. Essentially the majority Keynesian position among all factions is that even if in principle stabilization policy shouldn't be ceded to the monetary authority the difficulty in principle of doing it otherwise, recedes before the fact that is in done so in practice. Thus all Keynesians believe in monetary policy and the role of the Fed.

If a similar test was brought foward on what gets to be counted as conservative these would either have to abandon the principle or concede that they have political views that don't jive with the existance of congress.(unless you mean to focus on rhetoric, and not votes!)

But if the idea doesn't exist in congress such that it is actionable, then it only exists as conservative in speech...if it doesn't boil down to legistlation submitted by republicans and voted on consistently by the same then it isn't conservative so much as dicta(unless the ideas find a way in via the courts, i.e. Posner or Guido...which speaks to the political influence of Coase), and that which passes congress by overwhelmingly margins is most "american" so far as politics exists in the short run.... I suppose this incredible "conservative" ideological disconnect with reality(republican politicians, judges and lawyers) might work in the long run in terms of what should be policy....

But in the long run we are all dead.... RIP Samuelson.

The trouble here is, I suspect, partly semantic. Just as Darwin wasn't a Darwinian, so too can we say that Keynes was not a Keynesian. For the post-war generation, Samuelson defined Keynesianism. Samuelson, however, was smart enough to realize that he was not exactly a follower of Keynes.

Samuelson was, like Keynes, brilliant. The story about Samuelson's PhD orals goes like this: after three grueling hourse of interrogation, the committee turned to him and said, "so, did we pass?"

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