Samuelson’s Debt to Chicago

The University of Chicago was very important for Samuelson’s development as an economist. It was there that he decided to become an economist and that the way to do economics properly was to learn as much mathematics as he could.

In the field of economics I have made many discoveries quite indepen­dently (I think), only to find that somebody else had already arrived at similar results.

The significance of this lies in its being written at the time and not, like most of his recollections, many years later. It is consistent with his later claim to be “much of an autodidact in mathematics,” despite admitting to taking six mathematics courses at Chicago, one at the University of Wisconsin- Madison, and auditing several more at Harvard.⁵⁸ The diary entry exhibits a pattern found in many of his later self-appraisals. Ostensibly it is modest, for he is arguing that he found nothing new, and that simultaneous discovery is universal. However, given that he is comparing his discoveries as a teenage undergraduate with the discovery of calculus by both Leibniz and Newton, he is being anything but modest.

However, for all that he liked to see himself as self-taught, it was impor­tant for him to be able to say that he had been taught under the ancien regime in economics. He repeatedly claimed the authority of someone who can remember a past that others know only as history.

Sophie Tucker, the nightclub singer, used to say: “I've been rich. I've been poor. Believe me, rich is better.” I can say: “Having been brain­washed by Jesuits with a lower case ‘j', I've known nineteenth century economics and mid-twentieth century economics. Believe me, later is better in this case.”⁶⁰

To use the metaphor quoted earlier, there was an advantage to having been a jackass.

Viner's graduate course in economic theory was undoubtedly important to Samuelson, both as an exposure to more rigorous economics than he had previously encountered and because his performance in it became legend­ary. However, the economist he repeatedly cited as having been important to him was Knight, his “boyhood idol” and “god,” by whom he had been “bewitched” and with whom he had been “besotted.” He has said he read everything Knight had ever written, a claim he makes of no one else.⁶¹ In stressing his former allegiance to Knight, Samuelson was establishing his authority to oppose the Chicago School of Friedman, Director, and Stigler, which traced its roots back to Knight. He had once been an insider and understood the basis on which their ideas rested.ⁿ

However, despite these reasons for Samuelson to emphasize his closeness to Knight and his subsequent distance, he would appear to have owed much to his teacher. It is easy to see how Knight's wit and skepticism would have been attractive to Samuelson, who developed some of the same characteris­tics.

Samuelson turned against Knight's politics, and in turning to mathemat­ics and operationalism, he rejected important tenets of Knight's economics. He saw a much bigger role for science than Knight had countenanced. And yet Knight had exposed him to many of the ideas with which he was to grapple over the coming decade and a half. In the second edition of his text­book he acknowledged Knight's influence on the way he conceived the eco­nomic process and the way he defined economics.⁶² Possibly more important, much of Samuelson's subsequent work can be seen as engaging with issues raised in Knight's writings. Samuelson's work on consumer theory, dynam­ics, and welfare economics tackled issues about which Knight had written in The Ethics of Competition and Other Essays. The approach to welfare econom­ics Samuelson developed in the 1940s directly reflected Knight's view that one could not draw welfare conclusions without making ethical judgments. In following up Knight's emphasis on ethics, his view that there was more to life than economic value, and that real-world agents were not necessarily rational, Samuelson was picking up on aspects of Knight's thought that were “safe” because they were not taken up by subsequent generations of Chicago economists.

n. His position was analogous to that of free-market economists, such as Ronald Coase and James Buchanan, who emphasize that they were once socialists, until they saw the light.

Samuelson’s relation to Knight over the fifteen years after he left Chicago was to be a complex one. He rejected much of what Knight stood for, eventu­ally becoming so critical of him that Knight complained Samuelson seemed to consider it his duty to belittle him.'’ At the same time, he never stopped engaging with Knightian themes, often explicitly. Knight had left more of a mark on him than he realized, even though when he left Chicago and acquired new mentors, his work moved in new directions.

o. Referring to one of Samuelson’s writings, Knight wrote, “It starts off with a long dialogue between Samuelson and me in which the main point on S’s part seems to be to make disagreements where there are none, or in general to offer criticisms without content, and occasionally to throw in a slur, which he perhaps thinks are witticisms, (but I don’t see how this is possible).... I am by no means the only one who has noticed, on various occasions, over the years, that Samuelson does not miss a chance, or a chance to make a chance, to get such ‘criticisms’ of me into print. He evidently thinks it part of his duty to the profession and the cause to belittle me and destroy what standing I may have as an economist.” F. H. Knight, October 28, 1950, Letter to David McCord Wright, PASP 78 (Wright).