http://online.wsj.com/article/SB20001424052748704869304574595823818190240.html

“Macroeconomics — even with all of our computers and with all of our information — is not an exact science and is incapable of being an exact science. It can be better or it can be worse, but there isn’t guaranteed predictability in these matters.”

“Well, I would say a mathematical searchlight –”

From: The Atlantic – June 09 – Interview with PSA

Further, despite the recent popularity of Keynesian policy, I don’t think Keynes or Samuleson (does anyone talk about his academic work any more?) will long be considered helpful in the policy arena. Perhaps current events will prove me wrong. Yet, despite what the silly voices in the press say, I think it’s almost impossible that government intervention will stimulate the economy.

I think Schumpeter’s thinking much more will show how economies flourish . Entrepreneurs will innovate and create the new markets that will deliver the rising tide.

As Smith observed, in simple traditional societies, everyone was equal and everyone was poor. In modern societies, if people are left to their own inventiveness, there will be great inequality, but substantially less poverty.

Okay, I’m rambling.

Samuleson was wrong about macroeconomic policy and I think future events will emphasize how wrong he and others of his ilk are.

RIP

Very interesting, Richard.

Educated in the twilight of the first generation of the Austrian School giants — Bohm-Bawerk and Wieser — he absorbed much of their teaching, but rejected their conceptions of the economic process because of his early enthusiasm over the mathematical elegance of Walras’ interdependent system of general equilibrium.

But he could not escape from his Austrian roots, which dominated his conception of the entrepreneur (which he absorbed from Wieser to a great extent) or the idea of the market as a dynamic causal process constantly kept moving and changing due to innovation (even as he denied the relevancy of “causality” instead of “mutual determination” of equilibrium states).

In some of his remarks about Schumpeter, Samuelson had at times a tone of pity and contempt for the great thinker who praised the new era of mathematical economics but who just could not do any real math himself, in spite of how much he did his math homework.

Samuelson may have been the master (at his time) of the mathematical technique, but Schumpeter (for whatever failings critics may wish to find in him) was the true interdisciplinary scholar who knew not only virtually the entire history of economics, but was a widely read student of history and sociology.

Samuelson may have shined as the star of “new wave” of mathematical economics, but Schumpeter was the old world renaissance man of “vision” of the process of “creative destruction.” But how do you mathematically model the mental process of innovative entrepreneurship without reducing it to a mechanical form that drains it of its core element of unpredictable imagination?

But at a time in the history of economics when Scientism (the misplaced application of methods of the natural sciences to the problems of the social sciences, including economics) continues to hold sway over the minds of too many economists, Samuelson is praised as a great figure who helped to make economics a “real science,” while Schumpeter lingers as a shadowy figure at the edges of economic thinking who seemed to be saying something “interesting” but which remains “non-operational” because it seems mathematically intractable.

Richard Ebeling

It is likely that critical scholarship will be less kind. He may be remembered as the man who thought that the Soviet economy was robust and rapidly overhauling the US. The man who was relaxed and comfortable with Keynesian stimulation of the economy. The man who thought that von Mises was rubbish.

http://clubtroppo.com.au/2009/12/15/paul-samuelson-1915-2009/

True, the contributions of Schumpeter and Samuelson were very different. Schumpeter was more of a tool user (tools of earlier Austrians), Samuelson was more of a tool maker. But that does not make Samuelson’s contributions less significant.