On this day in 1915, probably the greatest American economist ever Paul Samuelson was born. He is the man most responsible for establishing Keynesian economics to its place as the fundamental basis of the science. But today, there are real debates as to whether economics is a science. There is no doubt that Samuelson was as scientist, and he did brilliant work in a number of areas, in the end publishing almost 400 papers. But what about the profession?
I think what liberal economists do is science. This is something that Paul Krugman talks about a lot. When new data come along, they alter their theories of the science. But look what happened to the conservative economists in the 1970s. When stagflation (high inflation coupled with high unemployment) happened, they found that economic shocks could throw the economy on tilt. In that case, it was an oil price shock. But instead of building on the Keynesian base that had worked so well to explain the economy up to that point, they threw it out. And what’s worse, they clearly threw it out because they didn’t like the political implications of Keynesian theory. The Keynesians, on the other hand, did use the shocks to build on the existing theory. (Although even they didn’t seem to do that great a job, but at least it was still science.)
Consider Einstein’s theory of Special Relativity. It didn’t cast away Newtonian mechanics. Newtonian mechanics was a special case of relativistic mechanics. That was one of the reasons we could have confidence in the theory. The same goes for quantum mechanics: if you pull out and look at macro-scale phenomena, you see that it becomes good old fashioned classical mechanics. That’s how science works. If you are bopping around from one incompatible theory to another, you aren’t doing science.
To this day, many conservative economists think that people like Samuelson and Keynes were wrong, or worse: a joke. This is despite the fact that Samuelson was hugely important in showing that the neoclassical approach to microeconomics leads to Keynesian macroeconomics. Of course to people who do economics as a science and not mathematical doodling, Paul Samuelson is a towering figure. He also built the MIT economics department, bringing in three really important economists who I’ve actually heard of: Franco Modigliani, Joseph Stiglitz, and Paul Krugman.
Also, he was born in Gary, Indiana:
Happy birthday Paul Samuelson!