Table of contents 
 

  Paul Anthony Samuelson 2

  Milton Friedman 5

  Two Views of the Proper Role of Government in the Economy 7

  Translation 8

 

  

  Paul Anthony Samuelson

 

  Biography

  Samuelson was born in Gary, Indiana, on May 15, 1915, to Frank Samuelson, a pharmacist, and the former Ella Lipton Jewish immigrants from Poland. In 1923 Samuelson moved to Chicago. He studied at the University of Chicago and received his Bachelor of Arts degree there in 1935. He then completed his Master of Arts degree in 1936, and his Doctor of Philosophy in 1941 at Harvard University. As a graduate student at Harvard, Samuelson studied economics under Joseph Schumpeter, Wassily Leontief, Gottfried Haberler, and the "American Keynes" Alvin Hansen. Samuelson comes from a family of well-known economists, including brother Robert Summers, sister-in-law Anita Summers, and nephew Larry Summers.

  During his seven decades as an economist, Samuelson's professional positions included:

• Assistant Professor of Economics at M.I.T, 1940, Associate Professor, 1944.
• Member of the Radiation Laboratory 1944-1945.
• Professor of International Economic Relations (part-time) at the Fletcher School of Law and Diplomacy in 1945.
• Guggenheim Fellowship from 1948 to 1949
• Professor of Economics at M.I.T. beginning in 1947.

  Samuelson died after a brief illness on December 13, 2009, at the age of 94. His death was announced by the Massachusetts Institute of Technology. James M. Poterba, an economics professor at MIT and the president of the National Bureau of Economic Research, commented that Samuelson "leaves an immense legacy, as a researcher and a teacher, as one of the giants on whose shoulders every contemporary economist stands".

  Impact

  Samuelson is considered to be one of the founders of neo-Keynesian economics and a seminal figure in the development of neoclassical economics. In awarding him the Nobel Memorial Prize in Economic Sciences the committee stated:

  More than any other contemporary economist, Samuelson has helped to raise the general analytical and methodological level in economic science. He has simply rewritten considerable parts of economic theory. He has also shown the fundamental unity of both the problems and analytical techniques in economics, partly by a systematic application of the methodology of maximization for a broad set of problems. This means that Samuelson's contributions range over a large number of different fields.

  He was also essential in creating the Neoclassical synthesis, which incorporated Keynesian and neoclassical principles and still dominates current mainstream economics. In 2003, Samuelson was one of the 10 Nobel Prize winning economists signing the Economists' statement opposing the Bush tax cuts. 
 

    Thermodynamics and economics

  Samuelson was one of the first economists to generalize and apply mathematical methods developed for the study of thermodynamics to economics. As a graduate student at Harvard, he was the sole protégé of the polymath Edwin Bidwell Wilson, who had himself been a student of Yale physicist Willard Gibbs. Gibbs, the founder of chemical thermodynamics, was also mentor to American economist Irving Fisher and he influenced them both in their ideas on the equilibrium of economic systems.

  Samuelson also published one of the first papers on nonlinear dynamics in economic analysis. Samuelson's 1947 magnum opus Foundations of Economic Analysis (Enlarged ed. 1983), from his doctoral dissertation, is based on the classical thermodynamic methods of  American thermodynamicist Willard Gibbs, specifically Gibbs' 1876 paper On the Equilibrium of Heterogeneous Substances.

  In 1947, based on the Le Chatelier principle of thermodynamics, a principle taught to Samuelson by Wilson in lecture, he established the method of comparative statics in economics. This method explains the changes in the equilibrium solution of a constrained maximization problem (economic or thermodynamic) when one of the constraints is marginally tightened or relaxed. The Le Chatelier principle was developed by French chemist Henri Louis le Chatelier, who is notable for being one of the first to translate Gibbs' equilibrium papers (in French, 1899). Samuelson's use of the Le Chatelier principle has proven to be a very powerful tool and found widespread use in modern economics.

  Publications

  There are 388 papers to date in Samuelson's Collected Scientific Papers. Stanley Fischer writes that taken together they are unique in their verve, breadth of economic and general knowledge, mastery of setting, and generosity of allusions to predecessors.

  Samuelson is also author (and since 1985 co-author) of an influential principles textbook, Economics, first published in 1948, now in its 19th edition. The book has been translated into forty-one languages and sold over four million copies; it is considered the best-selling economics textbook in history.

  Samuelson is co-editor of Inside the Economist's Mind: Conversations with Eminent Economists (Blackwell Publishing, 2007), along with William A. Barnett, a collection of candid interviews with top economists of the 20th century.

  List of publications

• 1947, Enlarged ed. 1983. Foundations of Economic Analysis, Harvard University Press.
• 1948. Economics: An Introductory Analysis McGraw–Hill, ISBN 0-07-074741-5 ; with William D. Nordhaus (since 1985), McGraw–Hill, 18th ed., 2004. ISBN 0-07-287205-5
• 1952. "Economic Theory and Mathematics — An Appraisal," American Economic Review, 42(2), pp. 56-66 (press +).
• 1954. Paul A. Samuelson (1954). "The Pure Theory of Public Expenditure". Review of Economics and Statistics (The MIT Press) 36 (4): 387–389. doi:10.2307/1925895
• 1958. Linear Programming and Economic Analysis with Robert Dorfman and Robert M. Solow, McGraw–Hill
• 1966-86. The Collected Scientific Papers of Paul A. Samuelson, MIT Press. Article-preview links below by scrolling to CONTENTS.
• 1966. Volume I 1937–mid-1964.Previews.
• 1966. Volume II 1937–mid-1964. Previews.
• 1972. Volume III mid-1964–1970. Previews.
• 1977. Volume IV 1971–76.
• 1986. Volume V 1977–1985. Previews.
• In preparation, Volumes VI and VII 1986–2009.
• 2007. Inside the Economist's Mind: Conversations with Eminent Economists with William A. Barnett, Blackwell Publishing, ISBN 1405159170

 

  

  Milton Friedman

 

  Biography

  Friedman was born in Brooklyn, New York, to recent Jewish immigrants Jenő Friedman and Sára Landau from Beregszász in Hungary (now Berehove, part of Ukraine), both of whom worked as dry goods merchants. Shortly after Milton's birth, the family relocated to Rahway, New Jersey. A talented student, Friedman graduated from Rahway High School in 1928, just before his 16th birthday.^[12]

  Friedman graduated from Rutgers University in New Jersey, where he specialized in mathematics and initially intended to become an actuary. During his time at Rutgers, Friedman became influenced by two economics professors, Arthur F. Burns and Homer Jones, who convinced him that modern economics could help end the Great Depression. Friedman did graduate work at the University of Chicago, earning an M.A. in 1933. He was strongly influenced by Jacob Viner, Frank Knight, and Henry Simons. It was at Chicago that Friedman met his future wife, economist Rose Director. During 1933–34 he had a fellowship at Columbia University, where he studied statistics with renowned statistician and economist Harold Hotelling. He was back in Chicago for 1934–35, spending the year working as a research assistant for Henry Schultz, who was then working on Theory and Measurement of Demand.

  Public service

  During 1935, he began work for the National Resources Committee, which was then working on a large consumer budget survey. Ideas from this project later became a part of his Theory of the Consumption Function. Friedman began employment with the National Bureau of Economic Research during autumn 1937 to assist Simon Kuznets in his work on professional income. This work resulted in their jointly authored publication Incomes from Independent Professional Practice, which introduced the concepts of permanent and transitory income. The book hypothesizes that professional licensing artificially restricts the supply of services and raises prices.

  During 1940, Friedman was appointed an assistant professor teaching Economics at the University of Wisconsin–Madison, but encountered antisemitism in the Economics department and decided to return to government service. 

  Academic career

  During 1943, Friedman joined the Division of War Research at Columbia University (headed by W. Allen Wallis and Harold Hotelling), where he spent the rest of the war years working as a mathematical statistician, focusing on problems of weapons design, military tactics, and metallurgical experiments. Then during 1945, Friedman submitted Incomes from Independent Professional Practice (co-authored with Kuznets) to Columbia as his doctoral dissertation. The university awarded him a Ph.D. during 1946.

  During 1946, Friedman accepted an offer to teach economic theory at the University of Chicago (a position opened by departure of his former professor Jacob Viner to Princeton University). Friedman would work for the University of Chicago for the next 30 years. There he helped build an intellectual community that produced a number of Nobel Prize winners, known collectively as the Chicago School of Economics.

  In 1976 Friedman won the Nobel Memorial Prize in Economics "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy

  Scholarly contributions

  Friedman was best known for reviving interest in the money supply as a determinant of the nominal value of output, that is, thequantity theory of money. Monetarism is the set of views associated with modern quantity theory. He co-authored, with Anna Schwartz, A Monetary History of the United States (1963), which was an examination of the role of the money supply and economic activity in U.S. history. A striking conclusion of their research was one regarding the role of money supply fluctuations as contributing to economic fluctuations.

  Friedman was the main proponent of the monetarist school of economics. He maintained that there is a close and stable association between price inflation and the money supply, mainly that price inflation should be regulated with monetary deflation and price deflation with monetary inflation. He famously quipped that price deflation can be fought by "dropping money out of a helicopter."

  Friedman was also known for his work on the consumption function, the permanent income hypothesis (1957), which Friedman himself referred to as his best scientific work.

 

  

  Two Views of the Proper Role of Government in the Economy

 

  Paul Samuelson and Milton Friedman are two of America's most distinguished economists. In recognition of their achievements, Samuelson was awarded the Nobel Prize in Economics in 1970 and Friedman in 1976. Both spent most of their professional lives on the faculty of major universities (Samuelson at the Massachusetts Institute of Technology, and Friedman at the University of Chicago).

  Classical economists in the tradition of Adam Smith had long recognized the need for government to provide goods and services that would not or could not be provided by the private sector (like national defense). But they urged that this participation be kept to a minimum.

  But Samuelson argued that too many of the problems the classical economists wanted to leave to the marketplace were not subject to its influence. These externalities, affecting things like public health, education, and environmental pollution, were not subject to the laws of supply and demand.

  Milton Friedman sees things differently. Like the classical economists of old, he regards supply and demand as the most powerful and potentially beneficial economic forces. The best that government can do to help the economy, in Friedman's view, is to keep its hands off business and allow the market to "do its thing."