Robert Solow received the Nobel Prize in Economics for
identifying technological change as the chief factor underlying economic
growth. Solow isolated and measured the
effects of capital, labor and technology on the progress of industrial
economics.
The Nobel Committee recognized Professor Solow “for his
contributions to the theory of economic growth.”
Quotes from Robert Solow’s October 1988 lecture at
Soon there will be no
more active economists who remember the 1930s clearly. The generation of economists that was moved
to study economics by the feeling that we desperately needed to understand the
Depression will soon have retired. Most
of today’s younger and middle-aged macroeconomists think of “the business
cycle” as a low-variance, moderately autocorrelated, stationary,
stochastic process taking place around a generally satisfactory trend. That is an altogether different frame of mind
from the one with which I grew up in the profession.
You don’t have to
teach a subject to master its mechanical and technical details. Books will do quite nicely for that. The experience of teaching does, if you take
it seriously, require you to figure out how to explain the subject at hand
clearly; and that is already a higher level of understanding than the
first. But there is a higher level
yet. The second or third time you teach
a course you may realize that you have a feeling for the topic’s shape, its
organizing principles, its message, its relation to
the rest of economics and to real economic life. So it was; I began by teaching about business
cycle theories – Pigou, Robertson, Haberler, Kalecki, Metzler, Hansen,
Samuelson, Hicks, that sort of thing – and I ended up teaching macroeconomics
(and growth).
But I was an onlooker
during the campaign of 1960; no one asked me to serve on one of Kennedy’s task
forces or transition teams. So I was
taken by surprise to get a late-night call from the three members of the
council – Walter Heller, James Tobin, and Kermit Gordon – asking me to take leave
and join the staff. The bait held out to
me, the boy growth-theorist, was that I could be the council’s ivory-tower
economist and spend my time thinking about longer-term policy rather than the
daily hurly-burly. I believed it and I
am sure they believed it. But it took me
about two days in the old
The funny thing is
that I now think that Keynes had the right instinct. It is a better move to look for alternative,
non-Walrasian equilibrium concepts as a foundation for macroeconomic analysis
of modern industrial capitalism. It is
better partly because of the hold that equilibrium analysis has on economists;
and more significantly it is better because it corresponds at least as well to
our intuitions and observations of economic life. Keynes could not make good on his claim to
have produced a consistent notion of “unemployment equilibrium” because he
lacked the analytical tools to do the job.
Those came into economics only much later.
I have the feeling it
is a mistake to think of economics as a Science, with a capital S.
I also find it temperamentally uncongenial, and that may even be the
source of my feeling. Theoretical physicists
nowadays think they are on the verge of what they call, only partially
self-mockingly, “The Theory of Everything.”
There is no Economic Theory of Everything, and attempts to construct one
seem to merge toward a Theory of Nothing.
If you think I am making a sly comment about some tendencies in
contemporary macroeconomics, you are right.
That is perfectly consistent with a strong belief that economics should
try very hard to be scientific with a small s. By that I mean only
that we should think logically and respect fact.
Additional resources on Robert
Solow are available at the Nobel web
site.