Paul Samuelson:AMERICA DIVIDES its economists into two camps: the monetarists hailing from the University of Chicago; and the Keynesian-leaning economists from the colleges on the Pacific and Atlantic coasts. Paul Samuelson, who has died aged 94, launched a Nobel prize-winning career spanning eight decades as a member of the fraternity on the shores of Lake Michigan, but spent most of his career on the east coast at the Massachusetts Institute of Technology (MIT).
Although Samuelson was seen as firmly rooted in the Keynesian camp, both traditions featured in his work. His views were forged in the desperate conditions in which America found itself in 1932, the year he wandered into an economics lecture at Chicago University as a 17-year-old; he was suspicious of policy-makers not from the same hard school. While professing great admiration for Ben Bernanke, chairman of the Federal Reserve, he said he could not know what it was like to live through really tough times.
Samuelson was also the founder of modern mathematical economics, and work showing that businesses and consumers act rationally to make the most of any situation was later developed and refined at the Chicago school. For a generation of undergraduate students, however, Samuelson was simply the author of the bestselling economics textbook of all time – Economics: An Introductory Analysis– which has sold four million copies in 40 languages since 1948. His pivotal role in postwar economics was honoured by the Swedish Academy, which made him the second winner of the Nobel prize for economics in 1970.
Despite the rigorous use of mathematics, Samuelson always recognised the difference between what economists learned in the classroom and the insights they developed on the streets – a lesson being relearned following the inability of economists to spot the warning signs of the current crisis.
Paul Anthony Samuelson was born in the steel town of Gary, Indiana. His father was a pharmacist, and Samuelson described his family as “upwardly mobile Jewish immigrants” from Poland.
The family moved to Chicago in the 1920s, and after graduating in 1935 Samuelson moved to Harvard, where he studied under Joseph Schumpeter, Alvin Hansen and Wassily Leontief. Seen as something of a prodigy, he was appointed assistant professor of economics at MIT in 1940 and became a full professor seven years later. Samuelson saw a rigorous use of mathematics as a way of confronting the fallacies in economics. Economists, he noted, “were like highly trained athletes who never ran a race”.
A lifelong Democrat, Samuelson gave the newly elected John F Kennedy a 40-minute seminar on economics on a beach at the family’s retreat at Hyannis Port in Massachusetts. Kennedy, who had defeated Richard Nixon on a balanced-budget ticket, was taken aback to find his teacher suggesting that he should seek to boost the US economy through a Keynesian cut in taxes. He went on to advise Kennedy’s successor, Lyndon Johnson, and coined the term “stagflation” at a seminar called by Gerald Ford in 1974.
Samuelson continued to work long after he officially retired in 1985, and remained an active member of the economics department at MIT. He was awarded a National Medal of Science, America’s top science honour, in 1996.
His wife of 28 years, Risha, survives him, as do four sons and two daughters from his first marriage, to Marion, who died in 1978.
Paul Anthony Samuelson: born May 15th, 1915; died December 13th, 2009