WORLD FAMOUS ECONOMISTS AND THEIR CONTRIBUTIONS - ANTOINE AUGUSTIN COURNOT

ANTOINE AUGUSTIN COURNOT

               

                1801-1877

·       Antoine Augustin Cournot was a French philosopher and mathematician who 

     also contributed to the development of economics theory.

·  Cournot was the first economist who, with competent knowledge of both subjects, endeavoured to apply mathematics to the treatment of economics. His main work in economics is Recherches sur les principes mathématiques de la théorie des richesses (1838; Researches into the Mathematical Principles of the Theory of Wealth).

·    His primary concern was the analysis of partial market equilibrium, which he based on the assumption that participants in the process of exchange are either producers or merchants whose goal is the maximization of profit. He therefore ignored the concept of utility.

·     His most important contributions were his discussions of :

Ø  supply-and-demand functions and

Ø  of the establishment of equilibrium under conditions of monopoly, duopoly, and perfect competition;

Ø  his analysis of the shifting of taxes, which he treated as changes in the cost of production; and

Ø  his discussion of problems of international trade.

· Cournot was the first economist to define and draw a demand curve to illustrate the relationship between price of and demand for a given item. He proceeded to show that the profit-maximizing output for a producer is reached when the marginal cost (the cost of producing one additional unit) equals the marginal revenue (the revenue realized from selling one additional unit).

·      This work was lost until its rediscovery by Joan Robinson almost a century later. Moreover, Cournot introduced the idea of elasticity of demand, though he did not use that phrase.

·    Cournot believed that economists must utilize the tools of mathematics only to establish probable limits and to express less stable facts in more absolute terms. He further held that the practical uses of mathematics in economics do not necessarily involve strict numerical precision.

·    Today, Cournot's work is recognized in econometrics. He was also a teacher of political economy and mathematics to Auguste Walras, who was the father of Léon Walras.

·      Cournot and Auguste Walras persuaded Léon Walras to try political economics. Cournot is also credited to be one of the sources of inspiration for Léon Walras and his equilibrium theory.

·     In the field of economics he is best known for his work in the field of oligopoly theory—Cournot competition which is named after him.

SOME OF HIS FAMOUS QUOTES

·    Those skilled in mathematical analysis know that its object is not simply to calculate numbers, but that it is also employed to find the relations between magnitudes which cannot be expressed in numbers and between functions whose law is not capable of algebraic expression.

·     The employment of mathematical symbols is perfectly natural when the relations between magnitudes are under discussion; and even if they are not rigorously necessary, it would hardly be reasonable to reject them, because they are not equally familiar to all readers and because they have sometimes been wrongly used, if they are able to facilitate the exposition of problems, to render it more concise, to open the way to more extended developments, and to avoid the digressions of vague argumentation.

·    Anyone who understands algebraic notation, reads at a glance in an equation results reached arithmetically only with great labour and pains.

·      In the act of exchange, as in the transmission of power by machinery, there is friction to be overcome, losses which must be borne, and limits which cannot be exceeded.

·      So far we have studies how, for each commodity by itself, the law of demand in connection with the conditions of production of that commodity, determines the price of it and regulates the incomes of its producers. We considered as given and invariable the prices of other commodities and the incomes of other producers; but, in reality the economic system is a whole of which the parts are connected and react on each other. An increase in the incomes of the producers of commodity A will affect the demand for commodities Band C, etc., and the incomes of their producers and, by its reaction will involve a change in the demand for A. It seems, therefore, as if, for a complete and rigorous solution of the problems relative to some parts of the economic system, it were indispensable to take the entire system into consideration. But this would surpass the powers of mathematical analysis and of our practical methods of calculation, even if the values of all the constants could be assigned to them numerically.

WORLD FAMOUS ECONOMISTS AND THEIR CONTRIBUTIONS - JOHN FORBES NASH Jr.

JOHN FORBES NASH, JR.

           1928–2015

·     John Forbes Nash Jr. was an American mathematician who made fundamental contributions to game theory, differential geometry, and the study of partial differential equations.

·    Nash's work has provided insight into the factors that govern chance and 

    decision-making inside complex systems found in everyday life.

·  His theories are widely used in economics. Serving as a Senior Research Mathematician at Princeton University during the latter part of his life, he shared the 1994 Nobel Memorial Prize in Economic Sciences with game theorists Reinhard Selten and John Harsanyi.

·   In 2015, he also shared the Abel Prize with Louis Nirenberg for his work on nonlinear partial differential equations.

·     John Nash is the only one to be awarded both the Nobel Memorial Prize in Economic Sciences and the Abel Prize

·  In 1959, Nash began showing clear signs of mental illness, and spent several years at psychiatric hospitals being treated for paranoid schizophrenia. After 1970, his condition slowly improved, allowing him to return to academic work by the mid-1980s.

·  His struggles with his illness and his recovery became the basis for Sylvia Nasar's biography, A Beautiful Mind, as well as a film of the same name starring Russell Crowe as Nash

·     Nash earned a Ph.D. degree in 1950 with a 28-page dissertation on non-cooperative games. The thesis, written under the supervision of doctoral advisor Albert W. Tucker, contained the definition and properties of the Nash equilibrium. A crucial concept in non-cooperative games, it won Nash the Nobel Memorial Prize in Economic Sciences in 1994

·    Whereas the groundbreaking game theory academic work of the Nobel laureate influenced so many fields including politics (electoral and legislative rules), sports (soccer penalty kicks, football run/pass balance), and international relations (nuclear deterrence), it left an indelible mark in the field of economics, completely changing how economists think about how individuals and economic agents behave by considering how they respond to the behavior and incentives of other individuals.

SOME OF HIS FAMOUS QUOTES

·         I knew it was good work, but you cannot know how much something will be appreciated in the future. You don't have that crystal ball.

·         “You don't have to be a mathematician to have a feel for numbers”

·       [W]hen I started thinking irrationally, I imagined myself as really on a Number 1 level. I was the most important person of the world.

·   People are always selling the idea that people with mental illness are suffering. I think madness can be an escape. If things are not so good, you maybe want to imagine something better.

·     Somebody suggested that I was a prodigy. Another time it was suggested that I should be called “bug brains,” because I had ideas, but they were sort of buggy or not perfectly sound… To some extent, sanity is a form of conformity. And to some extent, people who are insane are non-conformists…

·      “I've always believed in numbers and the equations and logics that lead to reason. But after a lifetime of such pursuits, I ask, "What truly is logic? Who decides reason?" My quest has taken me through the physical, the metaphysical, the delusional -- and back. And I have made the most important discovery of my career, the most important discovery of my life: It is only in the mysterious equations of love that any logic or reasons can be found”

WORLD FAMOUS ECONOMISTS AND THEIR CONTRIBUTIONS - PAUL ANTHONY SAMUELSON

PAUL ANTHONY SAMUELSON 

1915 –  2009 

·   Paul Anthony Samuelson was an American economist and the first American to win the Nobel Memorial Prize in Economic Sciences.

·       The Swedish Royal Academies stated, when awarding the prize in 1970, that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory".

·    Economic historian Randall E. Parker calls him the "Father of Modern Economics", and The New York Times considered him to be the "foremost academic economist of the 20th century"

·       Samuelson was likely the most influential economist of the later 20th century. In 1996, when he was awarded the National Medal of Science, considered America's top science honor, President Bill Clinton commended Samuelson for his "fundamental contributions to economic science" for over 60 years.

·  Samuelson considered Mathematics to be the natural language for economists and contributed significantly to the mathematical foundations of economics with his book Foundations of Economic Analysis.

·   Samuelson's book Foundations of Economic Analysis (1946) is considered his magnum opus. It is derived from his doctoral dissertation, and was inspired by the classical thermodynamic methods.

·  He was author of the best-selling economics textbook of all time Economics: An Introductory Analysis first published in 1948. It was the second American textbook to explain the principles of Keynesian economics and how to think about economics, and the first one to be successful

·       As professor of economics at the Massachusetts Institute of Technology, Samuelson worked in many fields, including:

Ø  Consumer theory, where he pioneered the revealed preference approach, which is a method by which one can discern a consumer's utility function, by observing their behavior. Rather than postulate a utility function or a preference ordering, Samuelson imposed conditions directly on the choices made by individuals – their preferences as revealed by their choices.

Ø  Welfare economics, in which he popularised the Lindahl–Bowen–Samuelson conditions (criteria for deciding whether an action will improve welfare) and demonstrated in 1950 the insufficiency of a national-income index to reveal which of two social options was uniformly outside the other's (feasible) possibility function

Ø  Capital theory, where he is known for 1958 consumption loans model and a variety of turnpike theorems and involved in Cambridge capital controversy.

Ø      Finance theory, in which he is known for the efficient-market hypothesis.

Ø   Public finance theory, in which he is particularly known for his work on determining the optimal allocation of resources in the presence of both public goods and private goods.

Ø International economics, where he influenced the development of two important international trade models: the Balassa–Samuelson effect, and the Heckscher–Ohlin model (with the Stolper–Samuelson theorem).

Ø   Macroeconomics, where he popularized the overlapping generations model as a way to analyze economic agents' behavior across multiple periods of time and contributed to formation of the neoclassical synthesis.

Ø   Market economics: Samuelson believed unregulated markets have drawbacks, he stated, "free markets do not stabilise themselves. Zero regulating is vastly suboptimal to rational regulating. Libertarianism is its own worst enemy!"

SOME OF HIS FAMOUS QUOTES

·     “Thousands of important and intelligent men have never been able to grasp the principle of comparative advantage or believe it even after it was explained to them”

·       “Good questions outrank easy answers.”

·      “Sooner or later the Internet will become profitable. It's an old story played before by canals, railroads and automobiles.” 

· “Globalization presumes sustained economic growth. Otherwise, the process loses its economic benefits and political support.”

·         Economics has never been a science - and it is even less now than a few years ago.”

WORLD FAMOUS ECONOMISTS AND THEIR CONTRIBUTIONS - MILTON FRIEDMAN

MILTON FRIEDMAN

      

       1912–2006

·    Milton Friedman was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.

·     With George Stigler and others, Friedman was among the intellectual leaders of the second generation of Chicago price theory, a methodological movement at the University of Chicago's Department of Economics, Law School, and Graduate School of Business from the 1940s onward.

·   Several students and young professors that were recruited or mentored by Friedman at Chicago went on to become leading economists; they include Gary Becker, Robert Fogel, Thomas Sowell, and Robert Lucas, Jr.

·    Friedman's challenges to what he later called "naive Keynesian" theory began with his 1950s reinterpretation of the consumption function.

·      In the 1960s, he became the main advocate opposing Keynesian government policies, and described his approach (along with mainstream economics) as using "Keynesian language and apparatus" yet rejecting its "initial" conclusions.

·  He theorized that there existed a "natural" rate of unemployment, and argued that employment above this rate would cause inflation to accelerate.

·   He argued that the Phillips curve was, in the long run, vertical at the "natural rate" and predicted what would come to be known as stagflation.

·  Friedman promoted an alternative macroeconomic viewpoint known as "monetarism", and argued that a steady, small expansion of the money supply was the preferred policy.

·   His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s. His monetary theory influenced the Federal Reserve's response to the global financial crisis of 2007–08

SOME OF HIS FAMOUS QUOTES

·         There's no such thing as a free lunch.

·        Underlying most arguments against the free market is a lack of belief in freedom itself.

·     If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand.

·       Concentrated power is not rendered harmless by the good intentions of those who create it.

·       Nothing is so permanent as a temporary government program.

·       The government solution to a problem is usually as bad as the problem.

·       Inflation is taxation without legislation.

·    Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.

·      Governments never learn. Only people learn.

·      We have a system that increasingly taxes work and subsidizes nonwork.

WORLD FAMOUS ECONOMISTS AND THEIR CONTRIBUTIONS - JOHN MAYNARD KEYNES

JOHN MAYNARD KEYNES

            1883–1946

·         He was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.

·         He built on and greatly refined earlier work on the causes of business cycles, and is widely considered to be one of the most influential economists of the 20th century and the founder of modern macroeconomics.

·         His ideas are the basis for the school of thought known as Keynesian economics and its various offshoots.

·         In the 1930s, Keynes spearheaded a revolution in economic thinking, challenging the ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands.

·         He instead argued that aggregate demand determined the overall level of economic activity and that inadequate aggregate demand could lead to prolonged periods of high unemployment.

·     Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions.

Keynes had the following ideas :

Ø  The market for goods controls employment and production. The market for work does not.

Ø  It is possible that people become unemployed even if they want to work.

Ø  An increase in savings will not lead to an increase in investment of the same amount. People have the choice between investing their money or saving it.

Ø  An economic system based on money is different from one that is based on the exchange of goods.

Ø  The quantity theory of money is only valid if there is no unemployment.

Ø  In a market economy, investor behavior is governed by what Keynes called the animal spirits of investors.

SOME OF HIS FAMOUS QUOTES

·         “The long run is a misleading guide to current affairs. In the long run we are all dead.”

·    “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”

·       “It is better to be roughly right than precisely wrong.”

·         “The difficulty lies not so much in developing new ideas as in escaping the old ones.”

·         Ideas shape the course of history.

·         If economists could manage to get themselves thought of as humble, competent people on a level with dentists that would be splendid.