Paul Samuelson, Awarded Nobel Prize in 1970,

Lecture presented February 6, 1985.

Paul Samuelson was the first American to be awarded the Nobel Prize in Economics. His Foundations of Economic Analysis, which developed a unified field theory of economic activity, prompted the New York Times to call him the “Einstein of economics”.

The Nobel Committee recognized Professor Samuelson “for the scientific work through which he has developed static and dynamic economic theory and actively contributed to raising the level of analysis in economic science.”

Quotes from Paul Samuelson’s February 1985 lecture at Trinity University:

Yes, 1932 was a great time to be born as an economist. The sleeping beauty of political economy was waiting for the enlivening kiss of new methods, new paradigms, new hired hands, and new problems. Science is a parasite: the greater the patient population the better the advance in physiology and pathology; and out of pathology arises therapy. The year 1932 was the trough of the great depression, and from its rotten soil was belatedly begot the new subject that today we call macroeconomics.

I made a deal of money in the late 1940s on the bull side, ignoring Satchel Paige’s advice to Lot’s wife, “Never look back.” Rather I would advocate Samuelson’s Law: “Always look back. You may learn something from your residuals. Usually one’s forecasts are not so good as one remembers them; the difference may be instructive.” The dictum “If you must forecast, forecast often,” is neither a joke nor a confession of impotence. It is a recognition of the primacy of brute fact over pretty theory. That part of the future that cannot be related to the present’s past is precisely what science cannot hope to capture.

Repeatedly I have denied the great-man or great-work notion of science. Every drop helps, the old farmer said, as he spat into the pond. One does the best one can on the most pressing problem that presents. And, if after you have done so, your next moves are down a trajectory of diminishing returns, then still it is optimal to follow the rule of doing the best that there is to do. Besides, at any time a Schumpeterian innovation or Darwinian mutation may occur to you, plucking the violin string of increasing return.

Scientists are as avaricious and competitive as Smithian businessmen. The coin they seek is not apples, nuts, and yachts; nor is it coin itself, or power as that term is ordinarily used. Scholars seek fame. The fame they seek…is fame with their peers – the other scientists whom they respect and whose respect they strive for.

Additional resources on Paul Samuelson are available at the Nobel web site.

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