2 minute read

Beyond the specific subject matter of my previous post, I think that the Paul Samuelson article inadvertently highlights something else of value... especially in the current, polarised economic climate.

Samuelson, of course, was arguably the seminal economist to emerge after the Second World War. A (neo) Keynesian first-and-foremost, he revolutionised the field through the application of a common mathematical language to economic problems (co-opting the approaches found in the physical sciences) and is also held as figurehead of the neoclassical synthesis that came to dominate economic thinking in the latter half of the 20th century.

And, yet, he happily acknowledges a seminal contribution of Friedrich Hayek — whom many would regard to personify something like the antithesis of Samuelsonian economics — in an important economic issue; namely the role of decentralised prices in allowing viable economic calculation.

I keep seeing people pitting the likes of Hayek versus Samuelson/Keynes as if it's some stark choice: All of one and none of the other. Similarly, there's a tendency for people to slavishly (deride) defend their (non-) favoured thinker no matter what cost or subject. Now, of course, it certainly is true that there are some very different prescriptions on things like fiscal policy that are not going to be reconcilable... However, it's beyond counter-productive to overlook the fact that there are also some tremendously important areas of commonality.

While I can't speak for every economics programme out there, I've certainly been exposed to (and influenced by) Hayekian insights in my classes and syllabus. And, let's not forget, that's coming from someone studying in the socialist nightmare that is Scandinavia! Dum dum daaaa....

Part 2 here.

Humour aside, I have to smile wryly at suggestions that someone like Hayek has been unduly ignored and marginalised by mainstream economics. That type of explanation just smacks of laziness and a lack of intellectual integrity. The man won a Nobel Prize for goodness sake! Beyond the narrow field of professional economists, he acted as an inspiration for Margaret Thatcher among numerous others, influencing many of the most powerful political  and business leaders of the last two generations.

Just as Samuelson expresses his admiration of Hayek for pinpointing the value of decentralized prices in unlocking the socialist calculation debate, he can comfortably dismiss some of the latter's other prognostications and positions.[*] Finding some redeeming feature in your intellectual opponents isn't a pre-requisite for being a serious thinker, but at least it means you aren't an empty ideologue. By the same token, Hayek, Keynes, Samuelson, or anyone else for that matter, didn't need to be right about everything to contribute many profound insights to economic thought.

It is ideas that matter, not the people behind them.

[*] In case you missed it, the money passage was: Hayek has been persuasive — not in Whig ideology or in declaring that moderate reform of laissez-faire leads inevitably down the road to totalitarian socialism but — in arguing that experience suggests that only with heavy dependence on market pricing mechanisms can there be realized quasi-efficient and quasi-progressive organization of societies involving humans as Darwinian history has bequeathed them[...]