In praise of William Baumol

baumolLet me add a few words about William Baumol (above) who has just passed away at the age of 95, which is very good going. He truly ought to have won the Nobel Prize in Economics. But what I would like to add to the record is what a truly great academic he was to the full extent of the meaning of the word and in the most positive way one can imagine.

It was at the start of my work on Say’s Law back in the 1980s that I came across an article written in 1952 by two of the all time greats of economics, William Baumol and Gary Becker, on “The Classical Monetary Theory: The Outcome of the Discussion”. Whatever you might think from the title, it is about Say’s Law, end to end. And in that article, they craft what has become the modern sophisticated version of Say’s Law which is the division of the concept into Walras’ Law, Say’s Identity and Say’s Equality. I don’t think that’s right, but it was the time of high Keynesianism and it was not worth anyone’s career to criticise Keynes, and so they used someone by name of Lange as the stand-in in an article entirely devoted to showing that the arguments found in The General Theory on Say’s Law were baseless.

While Becker never came back to this issue, Baumol did. In 1977 he published an article on “Say’s (at Least) Eight Laws, or What Say and James Mill May Really Have Meant”. Both articles were important parts of my thesis, and I therefore wrote an article critical of Baumol on his explanation of Say’s Law. My supervisor then said that I should send Baumol a copy before I sent it off for publication which I did. And then – and this is the most surprising thing from an academic point of view – I received an exceptionally nice reply from Baumol to say that he had enjoyed my article but didn’t think I had actually understood him correctly. The details are now completely gone of what and why, and there is no doubt that I do not agree with the Becker and Baumol conclusion, but I also agreed with Baumol that whatever I had been saying was not accurate. So I thanked him for his interest and didn’t even try to publish the article.

But eventually I ended up in a dispute with someone else over Say’s Law and this led to my being invited by the Eastern Economic Journal to lead a symposium. I therefore asked Baumol, along with Mark Blaug and the original person with whom I had been in disagreement, to contribute to this symposium, for which I wrote the opening and closing articles. My opening was titled: On the True Meaning of Say’s Law. And while I have refined some of it, I would stand behind everything I wrote at the time.

Baumol in his contribution added to his own previous work. This is the abstract from his article which I can only find here (but it is actually Baumol’s 1977 article that is attached Say’s (at Least) Eight Laws, or What Say and James Mill May Really Have Meant). This is the abstract:

Part of a Symposium entitled, “Say’s Law Revisited,” this note is dedicated to showing that both Say’s and Ricardo’s concerns about unemployment were deeper than even the Kates article (in this symposium) suggests, that this concern even led Say to advocate a clear Keynesian remedy for unemployment: public works. Correspondingly, the paper shows that Ricardo’s disquiet about joblessness constitutes a good part of his reversal on the role of machinery (i.e., innovation) that so distressed his adherents.

I eventually did meet him personally and the impression that I had had in our correspondence that he was a very kind, good natured and sweet individual, as well as being as sharp and analytical as one might wish, was more than confirmed in the three-quarters of an hour he gave me of his time. And by the time we met, there was no doubt in his mind how opposite to pretty well everything he thought about macroeconomic theory and Say’s Law I am. He was nevertheless everything one could have hoped him to be both as an academic and a human being. I therefore wished to add my own tribute based on my own brief encounters with one of the truly great economists of our time.

One thought on “In praise of William Baumol

Leave a Reply