3 - The foundations of Samuelson's dynamics

Summary

The origins of a work like Samuelson's Foundations of Economic Analysis (1947) are of some interest, beyond a search for precursors, for the light they can shed on problems that the work raises; some problems of the later literature that grew out of the work are otherwise obscure without a reader's comprehension of the context of the original contribution. The Foundations, which set out the issues of statics and dynamics and equilibrium in economic theory, creates some special concerns. For example, the theory of stability of economic equilibria appears to have been generated by that work, but the line of such work had thinned out by the late 1950s. In terms created by the philosopher Imre Lakatos, the sequence of papers on the stability of a competitive equilibrium might be considered a scientific research program that was progressive during the 1940s and early 1950s, but degenerated after that time. If so, then a reexamination of the prehardened state of the program, before Samuelson's Foundations, might suggest the reasons for the degeneration. Alternatively, certain features of the theory set out in the Foundations, particularly its mathematical structure, have shaped the ways in which economists and their audiences have interpreted experience or created the terms and observations of that experience itself. Is unemployment an equilibrium or disequilibrium phenomenon? This question has implications for policy as well as cognition, but the associations of “equilibrium” and “instability” are, for modern economists, the associations and ways of experiencing that are consistent with the mathematical theory laid out in the Foundations.