PRAGOTI

Paul Samuelson, one of the greatest economists of the last century, died yesterday.

Samuelson's Foundations of Economic Analysis was one of the starting points of modern neoclassical economics, presenting a sparkling mathematical synthesis of ideas that had so far existed in scattered and often obscure forms. Apart from making key contributions to international trade theory, finance and many other areas of economics, Paul Samuelson was also one of the leading figures of the 'neoclassical synthesis' that tried to make Keynes' economics coexist with neoclassical theory. To those who saw Keynesian economics as a starting point for a new kind of economics, the neoclassical synthesis was a counter-revolution. The neglect of foundational issues in that synthesis may have made it easier for the descendants of the pre-Keynesian orthodoxy to have made a comeback the the last few decades. But in his time Samuelson played an important role in popularizing Keynesian ideas and ensuring their dominance in academia and public policy.

Over his life, Samuelson had many debates with more heterodox economists. He was one of the key participants in the Cambridge capital controversies (so called because the contending sides were from MIT in Cambridge,USA and the Cambridge University, UK). That round was won by Samuelson's opponents and the neoclassical economists had to accept that one-good models of production did not generalize in ways they thought they would. Samuelson also took a keen interest in the so-called transformation problem in Marxist economics, which tries to understand the relationship between labour values and prices of production. It is representative of Samuelson's wit that he remarked that the transformation problem was very easy to solve: one writes down the labour values on the blackboard, rubs them out, and then writes out the prices of production! As it turns out, there is actually no better general way to tackle the transformation problem.

In losing Samuelson, the profession of economics has lost one of its giants.