Samuelson's Textbook Economics example essay topic

... observing their purchasing behavior. This theory provided an important tool of observable behavior for economist to analyze consumption theory. The equilibrium theory developed by Samuelson studied the interaction between all prices and quantities in an economic system. Under this theory Samuelson demonstrated that free trade is superior to protection by tariffs. Even though it is a known fact that foreign trade causes redistribution within countries, it is more beneficial for individuals benefiting from free trade to completely compensate those who lose in international trade. This method is more beneficial to all involved than the use of tariffs which raise the price of the product and reduce the rewards for international trade.

Traditional thinking regarding capital theory was that there must be an application of an aggregate stock of capital to determine the capital goods of a society. Samuelson, working with Robert Solow, developed a logical capital theory. This theory is based on the assumption that all capital goods in a society can be equated to a sum of money. (web) INFLUENCES The influence of Paul Samuelson can be pinpointed to one man. In his economics textbook, Economics: An Introductory Analysis, he teaches his economic philosophy based on the theories of economist John Maynard Keynes. Samuelson's textbook is said to be the most influential presentation of the Neoclassical / Keynesian synthesis.

Keynes lived from June 5, 1883 to April 21, 1946. He was a British economist, journalist, and financier, best known for his revolutionary economic theories (Keynesian economics) on the causes of unemployment and level of national income. Samuelson makes his mathematical formulations in the context of neo-Keynesian economic theory. Another influence of Samuelson is his own life. He lived through significant events such as the depression and World War II. During these years, economic conditions varied from one extreme to another.

Because Samuelson lived during these times his work centers on these types of issues. Whom did Paul Samuelson influence? Millions of college undergraduates study economics using Samuelson's textbook Economics: An Introductory Analysis. Since its first edition in 1948, Economics has sold more than 4 million copies and has been translated into 41 languages.

It is the most successful economics textbook ever written. A lot of policy is still being made and a lot of journalism written by people who learned economics from Paul Samuelson. He has set the style for several generations of economists during the last decades. An individual Samuelson influenced was Joseph E. Stiglitz, who he was a mentor to.

Stiglitz is said to be the most prominent economic theorist of this generation. He is a professor at Stanford University, and is the chief economist and senior vice president at the World Bank. He was also an economic Advisor to President Bill Clinton. He uses mathematics and computer models to simulate economic behavior. Stiglitz studied under and highly respected Paul Samuelson for his work in economics and mathematics. Samuelson also influenced presidents of the United States.

He served as an advisor to Presidents John F. Kennedy and Lyndon B. Johnson. Samuelson has had a lasting effect on the economy and political leaders of this century. SIGNIFICANT CRITICISMS It is believed that in the area of microeconomics Samuelson's development of diagrams of supply and demand, or cost curves set the disciplines standard. However, in the area of macroeconomics, there are some criticisms of Samuelson's theories. One of these critics is Professor Mark Skousen of Rollins College in Winter Park, Florida.

Professor Skousen believes that Samuelson created a false sense that there is a unified way of thinking on how economies work. Skousen states that in Samuelson's book, "Economics" he was introducing John Maynard Keynes' beliefs about economics that advocate the need for active government and skepticism about market outcomes. Skousen believes that people are denied the opportunity to be exposed to the trends of privatization and supply-side economics that have significantly boosted economic activity in other nations. Skousen's strongest criticisms of Samuelson are about Samuelson's belief that the Soviet's economy was proof that a Socialist command economy can function and thrive. Shortly after that statement, the Berlin Wall was torn down and the Soviets economy collapsed.

Skousen's other strong criticism is in regard to Samuelson's "paradox of thrift" that states that excessive savings could cause recession or worse. (Skousen, p. 11) COMPASSION / IMPACTSamuelson's influence was felt all over the world. Indeed, his textbooks have sold more than a million copies and have been translated into French, German, Italian, Hungarian, Polish, Korean, Portuguese, Spanish and Arabic. 'The book's emphasis on different themes has changed with the changing of the nation's economic problems,' wrote Business Week in 1959' (Anonymous bio. html). The first edition was dominated by the end-of-the-war worry that widespread unemployment would return while later editions put growing stress on fiscal and monetary controls over inflation. In the later editions Samuelson has worked toward what he calls a 'neoclassical synthesis' of ancient and modern economic findings.

In short, his synthesis is that nations today can successfully control either depression or inflation by fiscal and monetary policies. It is the feeling of some economists that Samuelson's book is really his greatest contribution. It has gone a long way toward giving the world a common economic language' (Anonymous, bio. html). Some of Samuelson's students and fellow theorists who joined him in his theories were Joan Robinson of Cambridge University who was a colleague and student of Keynes, as well as J.R. Hicks of Oxford who was not only substantially influenced but also made significant contributions to the Keynesian theory. Samuelson had a global impact in that he communicated with many politicians including President Kennedy. In one report to Kennedy, Professor Samuelson made certain minimal policy recommendations 'that need to be pushed hard even if the current recession turns out to be one that can be reversed by next summer at the latest.

' He urged that there be strong support of pledged expenditure programs, including such things as increasing defense expenditures and foreign aid on a basis of merit and need. He also recommended pushing educational programs, high priority for urban renewal and health and welfare programs, highest priority on improving unemployment compensation, acceleration of useful public works and highway construction programs, help for depressed areas programs, and natural resource development projects (Anonymous bio. html). Because of Samuelson's Keynesian viewpoint on the aspect of taxation, and his unique beliefs on the theory of equilibrium in economic theory, it is obvious that his outlooks as far as taxation were concerned were at distinct odds with those of the classicists. Samuelson would favor an equilibrium tax, feeling that 'all things being equal' that equal taxation for the masses would be the most fair way to tax the people. The Keynesian theories were well thought out but unfortunately, have not withstood the true test of time. While the theory exists well on paper, it just does not work out to be as balanced in the actuality; therefore, the tax policies are not realistic and are not a valid theory to support.

Bibliography

Love well. Play it again: Paul Samuelson and the Spending Multiplier [online]. Available: web at web Paul A., Foundations of Economic Analysis, Enlarged Edition, Harvard University Press, Cambridge, Massachusetts, August 1983.
Samuelson, Paul A. and William D. Nord haus, Economics, 16th Edition, University Press, Cambridge, Massachusetts, December 1997.
Soros, George. "The capitalist threat". The Atlantic Monthly, (1997): February, pp.