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The following article on the ten most important economists of the twentieth
century was published in this morning's Canberra Times (December 21).
Economics being ultimately about influencing the political decision making
process, the criterion used to frame the list was based on their influence
over policy. It is no more than a personal statement but I am curious
whether any other such lists have been developed, both in terms of the
economists selected and the criterion used to judge who should be included. The Ten Most
Influential Economists of the Twentieth Century
Who were the century's most important economists? The following presents my
own selection of the ten economists of the past hundred years who have had
the greatest influence on policy.
1. John Maynard Keynes is far and away this century's most influential
economist, but in saying this it should not be thought I believe that
influence as having been for the good. Until the publication of his General
Theory in 1936 it was well understood that public spending dragged an
economy down rather than propping it up. It will be well into the next
century before his destructive influence will have finally disappeared.
2. Friedrich von Hayek is the economist of choice for those nations who
have
lived under communism these past fifty years. His name today is virtually
unknown in the West, but within those economies trying to resurrect free
markets, his is the guidance most frequently sought. His Road to Serfdom is
beloved by anyone who treasures political freedom.
3. Ludwig von Mises took the fight up to the socialist dogmas of the early
twentieth century and showed on paper that no economy could ever solve the
problem of allocating resources without a price mechanism, free markets and
private property. Who doesn't know it now? He knew it eighty years ago.
4. Milton Friedman has been the single most important advocate of free
markets in the late twentieth century. He was also instrumental in turning
the attention of governments away from Keynesian policies, which had
created
massive worldwide inflation, towards the need for monetary disciplines and
a
balanced budget. Much of what sounds like the mantra of the economics
profession today Friedman had advocated almost on his own in the early
years
of the post-War period.
5. Arthur Pigou is in many ways my favourite. A conscientious objector
during World War I, he nevertheless spent his summers as an ambulance
driver
on the Western Front. He also wrote the Economics of Welfare which provided
the basic framework in which to consider how best to deal with harmful side
effects ("externalities") to the production process. Most of the solutions
to greenhouse problems developed by economists today are based on his
original work.
6. Paul Samuelson makes the list twice over. His Foundations of Economic
Analysis changed the study of economics from a subject based on words into
a
discipline where without mathematical ability one is entirely lost. But
even
had he not written his Foundations, his first year text, simply titled
Economics, is easily the most influential of our time, having educated
three
generations in Keynesian sophistries whose baneful effects are indelibly
imprinted on the profession.
7. John Kenneth Galbraith wrote popular works on economics which had a
massive influence in their time. His basic line was that wage and price
controls are an absolute necessity if an economy is to be run at full
employment with low inflation. More countries than one ended up adopting
such controls whose only effects were to prolong inflation and lower
employment. His books still make entertaining reading; just don't follow
the
advice.
8. John Hicks was a prolific writer on a wide variety of subjects but his
lasting claim to fame is based on a 1937 article, "Mr Keynes and the
Classics", in which he developed an apparatus taught to every aspiring
economist. These IS-LM curves show how playing around with aggregate demand
can supposedly affect the level of economic activity. It is still how
almost
every economist is taught to think.
9. Bill Phillips invented the Phillips curve, a device for relating the
growth in prices to the growth in unemployment. Debates over policy
stemming
from this original model have been legion. To this day the Phillips curve
sits at the core of discussions over the proper conduct of monetary and
interest rate policies.
10. Robert Lucas is famed for developing the theory of "rational
expectations" which explains how anticipation of the effects of government
policy can prevent that policy from doing what it was intended to do. It is
one of the standard ways used to explain why Keynesian policies never work
in practice.
It has been a long century and these have been the economists whose names
have mattered. Aside from ethnic and religious conflict, no controversies
are as intense as those over how economies work. Wars and revolutions have
been fought over nothing other than the architecture of the economic
system.
Passionate differences over economic matters are never ending.
Economists attempt to provide satisfying answers to the age old questions
of
how to organise production, who should receive how much of what is
produced,
and what should be the basis of this division.
A century from now the names will be different, but what may be said with
certainty is this: the issues will be much the same as those we are dealing
with today.
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