The Two Books

There is a seeming paradox in Samuelson’s having produced two very differ­ent books within a short space of time: Foundations of Economic Analysis, the technical work on economic theory, and Economics: An Introductory Analysis, a textbook so elementary that at times he wrote of being embarrassed by it.

him the expertise he needed to write the textbook he would probably have been unable to write in 1940.

Yet, he did not reject Wilson in favor of Hansen, even if he did end up espousing policy positions that Wilson, who favored “sound” finance, could not support (perhaps Samuelson’s distancing himself from Keynes for over a decade was in part influenced by Wilson). The heart of Foundations may have been written by 1940, but turning it into a book took place while he was working on wartime problems. As is the case with Adam Smith’s two great books, The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations, we have to presume that he considered Foundations and Economics complementary.^[79]^ The reconciliation involves not just the gap between micro and macro that Samuelson postulated in Foundations, but a skepticism toward direct application of abstract theory that he had learned from Wilson and that Hansen exemplified: Hansen was the nontechnical economist who needed to be taught the implications of his own theory, but who nonetheless reached judgments on economic policy that Samuelson respected and took very seriously.

Samuelson was clearly not an “institutionalist” economist in the sense in which that term was used in the 1920s and 1930s—he was too much infected with mathematical economics and with Keynesian ideas for that— but some of his work, aided and abetted by both Wilson and Hansen, had institutionalist features. In reviewing Foundations, Samuelson’s friend Lloyd Metzler commented that Samuelson was cynical about the modern theory of the consumer that he had helped to rewrite.^[80] It is hardly surprising, therefore, that when he wrote about real-world companies and markets in his textbook, he offered a perspective that was informed by the empirical work undertaken during the New Deal, on which his wartime work at the NRPB had drawn so heavily. Samuelson represents a strand in American Keynesianism that was different from the “monetary Walrasianism” that sought to integrate the theory of income determination with optimizing models of consumers and businesses.

In the period covered by this volume, it is appropriate to speak of Samuelson being close to one or two in a series of mentors, the most impor­tant among whom were Knight, Wilson, and Hansen. However, though he followed their ideas closely—perhaps more closely than one might imme­diately realize—he was learning rapidly to take positions independent of theirs. As he never tired of saying, he was full of self-confidence, so when an idea came to him, he would follow it up, engaging in discussions with people other than his mentors. Interested in population dynamics, one of Wilson's concerns, he entered into extended discussions with Lotka, branching out in new directions. Though it was Wilson who taught him mathematical sta­tistics, he engaged with many statisticians and econometricians whom his graduate students, with his support, brought to MIT in the early 1940s. Hansen provided him with the entrance into wartime Washington, an oppor­tunity Samuelson pursued vigorously, discussing fiscal policy with the main economists responsible for applying Keynesian ideas in government.

As an undergraduate at Chicago, Samuelson had made friends with sev­eral of the graduate students, and when these were added to his friends from Harvard, Samuelson's address book contained a high proportion of the best economists of his generation. With the opportunities provided by war, when economists were in great demand in government, and then by the postwar boom in universities resulting from the GI Bill and its commitment to sub­sidizing the education of returning veterans, this generation could prog­ress rapidly; Samuelson was at its center, knowing virtually everyone and respected by many. Samuelson never tired of celebrating the achievements of his friends, notably the cohort of graduate students who, he claimed, did as much as their teachers to create Harvard's golden age. He was generous to a fault in crediting his friends with ideas, minimizing his own role. His friends valued his talents, illustrated by the lectures in mathematical economics he gave for them, and they could see the importance of the methods he was using more clearly than could some of their teachers. His friends may have helped Samuelson see that Foundations could be successful without the need to add the hundred pages of additional verbal explanation that Wilson had wanted him to provide so that nonmathematical economists could understand it.

His closest friend chose not to participate in all of this, except through him. Marion was unambitious for herself, but guided her husband through an important decade, persuading him to move to MIT and later to remain there and to decline an offer from Chicago. She had also been closely involved in his academic work, in the theory of protection, population dynam­ics, and, crucially, the writing of Foundations. Above all, she gave him the home he needed. Samuelson's lifelong friend and colleague, Robert Solow, has remarked that, when he hears people respond to the difference between the two books by suggesting that if Samuelson wrote Foundations, Marion must have been the one who wrote Economics, he responds, “You've got that the wrong way round: it was Paul who wrote Economics, and Marion wrote Foundations.” Though made in jest, there is a serious element in that remark, for her role in Foundations was substantial. In contrast, Economics was in part the product of the MIT economics department and in part the product of his wartime experiences. By that time, Marion was less involved in his academic work, increasingly occupied with their growing family.