GERRIT GORTER
The present study of economics did not, of course, come out of thin air. Although thinkers in classical Greece already reflected on what we now call economics, it was largely in the eighteenth century that systematic thought on the subject began.
Two conceptual tools—the economic cycle and the idea of the invisible hand—date from that century and are still in use today, both in academic research and in education.
This site contains twenty-five portraits of important economists. Each offers a biographical sketch together with an indication of his (and, in one case, her) significance for the development of economic thought. They claim no more than to provide a first introduction to the lives and works of these pioneers.
These articles originally appeared in Dutch in the Tijdschrift voor het Economisch Onderwijs and were published on the website of Gerrit Gorter. The English translations are by Folkert Gorter.
Index
François Quesnay
Adam Smith
Thomas Robert Malthus
Jean-Baptiste Say
David Ricardo
Antoine Augustin Cournot
John Stuart Mill
Karl Marx
Walras
Carl Menger
Alfred Marshall
Vilfredo Pareto Eugen von Böhm-Bawerk
Knut Wicksell
Max Weber
Irving Fisher
Sam de Wolff
John Maynard Keynes
Joseph Alois Schumpeter
Joan Robinson
Jan Tinbergen
John Hicks
John Kenneth Galbraith
Milton Friedman
Paul Samuelson
Paul Samuelson
U.S.A. 1915–2009
Every now and then, a German word finds its way into American English, such as kindergarten and wunderkind. The latter term is often used in reference to Paul Anthony Samuelson. Born in 1915 to American Jewish parents, Samuelson was portrayed as brilliant from an early age — a quality Samuelson himself was also quite convinced of. Biographical sketches frequently attribute to him a certain arrogance and a fair amount of vanity. The resistance he occasionally provoked even cost him a job once.
For many economists, Samuelson is above all the man behind the textbook — the most successful textbook of all time; not just in economics, but in any field. Right after the Second World War, economics students “often had that glassy-eyed look,” as Samuelson put it — a result of the outdated textbooks they were required to study. He began writing a new textbook and, within a few years (“my tennis suffered”), it was ready for publication. Economics was published in 1948, and in 2003, the first edition was reissued as a historical curiosity. By then, the book had gone through seventeen editions and sold over four million copies — leaving earlier textbooks, such as those by John Stuart Mill and Alfred Marshall, in the shade, to put it mildly. Financially, Samuelson no longer had anything to worry about. The book, incidentally, is still being updated and published — now in collaboration with William D. Nordhaus.
Samuelson was born in Gary, Indiana, but soon moved with his parents to Chicago. Initially, he was drawn to mathematics, but after taking a course in economics, he realized how the two fields could be combined. He wasted no time: in 1947, he published his dissertation, Foundations of Economic Analysis. Anyone who so much as leafs through this book will understand why it caused quite a stir. There is hardly a page without matrices, first derivatives, or integrals. Marshall’s remark — that mathematics might be useful for sharpening one’s thinking, but should then be forgotten — rang true for many. Now, half a century later, an economics education without a solid dose of mathematics is unthinkable — due in no small part to Samuelson’s groundbreaking dissertation.
Thirty-two years old, a successful textbook, a brilliant dissertation, and the John Bates Clark Medal for promising young economists — all the hallmarks of a wunderkind. Samuelson was in full stride and heading straight for the Nobel Prize — which he indeed received, in 1970. What were Samuelson’s most important contributions to economics? There are few topics he didn’t engage with. We’ll briefly touch on two major ones: Keynesian macroeconomics and the theory of international trade.
Even before the Second World War, Samuelson developed the elegant multiplier–accelerator model, which made it possible to simulate a business cycle in an exceptionally simple way. Through his aforementioned textbook, students were introduced for the first time to the consumption function, the paradox of thrift (the idea that increased saving, by reducing effective demand, can ultimately lead to lower overall savings), and expansionary fiscal policy — the use of taxes and government spending to stimulate the economy. He advised presidents such as Kennedy and Johnson, consistently taking balanced positions: not just tax cuts, but also increases in government spending; not just fiscal policy, but monetary policy as well.
In the theory of international trade, his name is associated with the so-called factor price equalization theorem. This theory holds that even in a world with limited or no mobility of production factors, the returns to those factors tend to converge. If, for example, all our milk were to come from Poland, the wages of Polish dairy farmers would eventually rise, while those of Dutch farmers would decline.
Keynesianism in the style of Samuelson began to lose credibility as early as the 1960s, when it became clear that the economy was not as easy to steer as previously thought. In the 1970s, when the economy faced a combination of stagnation and inflation — stagflation — Keynesian theory seemed to be dying a quiet death. The simultaneous occurrence of these two phenomena is, after all, difficult to reconcile with a Keynesian framework. For a moment, it seemed that the macroeconomic supply-and-demand model (introduced in the twelfth edition of Economics) might save Keynesianism — but by the 1980s, the lead had clearly passed to Milton Friedman’s monetarism.