By Jeff Harding.
Paul Samuelson died yesterday at the age of 94 as I am sure you have heard. He was very successful in his field, having won a Nobel in economics and his economics textbook, Economics: An Introductory Analysis, sold over 4 million copies. I used his textbook in Econ 101.
His contribution to economics was to make it a science, much as physics, by bringing mathematical analysis as the prime means of empirical research and as a means to the truth. He even applied the law of thermodynamics to the study of economic equilibrium. He was very influential and mentored many of today’s economic leaders, including his nephew, Larry Summers, and Ben Bernanke.
There is one problem with his work: he was wrong. He did more to undermine the study of economics as a means to truth than anyone else. His textbook penetrated the globe and still is representative of the predominate school of economics. He was a Keynesian, or Neo-Keynesian, who believed that you could accurately predict human behavior and originate economic technocratic policies through “science.” It gave rise to econometrics and the influence of schools like MIT which perpetuate these fallacies.
It is a shame that instead of following Mises and Hayek, the world went Samuelson’s way. Samuelson never “won” the debate over epistemology with Hayek or Mises because, as far as I know, he never knew of or addressed the significance of these issues. Now we are reaping the rewards of the limits of mathematical analysis as the generations of economists in charge of business and government policy have blindly followed this false science.
As a tribute to Hayek, I urge you to read his Nobel acceptance speech on the limits of so-called science as it applies to the social sciences. It is a devastating rebuke of Samuelson’s econometrics.
Great speech by Hayek. This makes me think of my own philosophical/theoretical evolution. I don’t recall hearing of Hayek, Mises or the Austrian School when I was an undergrad in the late seventies, early eighties. Milton Friedman got some notice, but my econ profs mostly dismissed him as a crank with some borderline dangerous ideas. It wasn’t until after I got on the ‘net that I was really exposed to libertarian thought. I was intrigued from the start, but my brainwashed mind tried to keep it out. Little by little some ideas stuck. I’m still learnin’.
Seems like the current economic crisis would be the final repudiation of technocratic economics. Unfortunately the central-planners have grabbed even more power. Who knows, maybe when they’ve FUBARed the country once and for all, saner thinking will have a chance.
Lloyd,
Congratulations on your intellectual journey. It takes a lot of effort and a critical mind to do what you’ve done and are doing. I very much appreciate this comment.