The Book’s Reception

Reviewers were generally enthusiastic about Foundations, seeing it as a very important contribution to economic theory. This may be because most of them were young—few of the older generation would have been able to follow the book's arguments in detail.^y The mathematical appendices were welcomed as providing much-needed teaching materials, and the book

y.

Celebrating the fiftieth anniversary of Foundations, Samuelson described Hicks’s book as “an expository tour de force of great originality, which built up a readership for the problems Foundations grappled with and for the explosion of mathematical economics that soon came.”⁷⁷ However, few reviewers saw the relationship in this way.

Even more critically, William Baumol noted that the book lacked a theo­retical unity, some chapters amounting to “collections of his miscellaneous thoughts and brilliant analytical sorties lumped together on the basis of some tenuously established common characteristic.”⁷⁹ That was a well-justi­fied criticism of the chapters on dynamics and the business cycle with which many reviewers were disappointed.^80,2 Three major problems were identified. Discussions of dynamics rested on very special assumptions, meaning that there could be no confidence in the results; they focused on the mathematics, with very little economic content; and no attention was paid to expectations. The point was also made that Samuelson’s methods were incomplete, in that he did not discuss methods for quantifying the theory.

Unlike Value and Capital, Foundations could be interpreted in many ways. For example, Foundations came to be associated with a neoclassical orthodoxy

(25). Samuelson’s fellow students in this list were Stigler (at Chicago), and Metzler and Stolper (both at Harvard).

2. In contrast, Lloyd Metzler (1948b, p. 906), who had used similar methods, considered the treatment of dynamics as the most important part of the book. based on optimization and calculus-based methods, but there was another side to the book. Following Wilson's advice, Samuelson had paid much attention to the analysis of finite changes, and he denied that aggregates could be analyzed in terms of maximization—points picked up by some reviewers.⁸¹ His friend Metzler, with whom he had had extensive discussions of dynamics before the book's publication, stressed Samuelson's departure from traditional theory, going so far as to claim that Samuelson believed that “most of the important economic problems” could not “be reduced to simple problems of maximization.”⁸² A mathematician assessed the book as contain­ing “an implicit basic critique of economic theory” in that “much economic theory turns out to be banal or meaningless when stripped of its vague liter­ary formulation.”⁸³

Though Samuelson attached importance to the Le Chatelier Principle, this was not something that impressed his reviewers, whether economists or mathematicians. The only reviewer to mention it did so in a footnote, point­ing out that Samuelson had gotten a minus sign wrong.⁸⁴ The reason was presumably that, though the Le Chatelier Principle had been an important step for Samuelson, it was not a necessary step; it was sufficient to begin with results on optimality conditions and the Correspondence Principle.

It is arguable that the rival to Foundations of Economic Analysis was von Neumann and Morgenstern's The Theory of Games and Economic Behavior. Where Samuelson, following Wilson, sought to base economic theory on tra­ditional mathematics, finding the same mathematical structures in physics and economics, making it possible to use the same mathematical techniques, von Neumann and Morgenstern believed that it was necessary to turn to more modern mathematics, different from that used in physics. As was explained in chapter 16, this volume, Samuelson saw optimization as lying beneath much of their work. Unfortunately, given his early interest in interactions between small numbers of individuals, evidence for which is found in one of the essays he wrote for Chamberlin (see chapter 6, this volume) The Theory of Games and Economic Behavior appeared too late to be taken into account in Foundations. Haberler wrote to Morgenstern suggesting that von Neumann might wish to review Foundations. However, when he received the request, von Neumann, though admitting he was tempted, declined. He found the book “very interesting and very detailed,” but to review it conscientiously would require more work than he was able to undertake.

[T]he whole subject off the use of mathematical methods in economics is one which I wouldn't like to deal with in print except after a very careful study of the corpora delicti and of my corresponding formula­tions. The methodological questions which are involved are very deli­cate and it is very easy with respect to them to sin by overstatement as well as understatement.⁸⁵

Foundations cemented Samuelson's reputation as one of the world's leading mathematical economists, and its publication played a major role in chang­ing the way economics was undertaken.