PAUL SAMUELSON: A LETTER TO THE ECONOMIST (December 24, 2009)
Paul Samuelson’s death marks the end of an era in economics (“Paul Samuelson,” December 19, 2009). His “neoclassical synthesis” of Keynesian and classical economic ideas led to his Nobel Prize in 1970. The synthesis was predicated on his conviction that mathematics could be a useful tool in economics. Whence his fascination with physics, as well. “Though regarded as America’s leading standard-bearer for Keynesian economics,” as you put it, “he called himself a ‘cafeteria Keynesian,’ just picking the bits he liked.” Which bits, though? Those that could be easily turned into mathematical expressions, of course. And this predilection of his is very much in question now. The best example of a bit of Keynes’s ideas that could not be translated into mathematics is the notion of “animal spirits,” which requires a closer tie between economics and psychology rather than physics. Thus the Great Recession spells the end of the neoclassical synthesis that led economists astray by relying too heavily on Samuelson’s mathematical tools. For mathematics is not a good tool for studying irrational behavior.