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The American economist and 1987 Nobel laureate Robert Merton Solow was born on August 23, 1924, in Brooklyn, New York. Several years after his birth, economics, in the United States and globally, launched a great leap forward after the stock market crash of 1929 had created the Great Depression that attracted able minds to the study of economics rather than physics or biology. After Solow returned from army service in Europe during World War II (1939-1945), he joined in this movement under the mentorship of the economist Wassily Leontief (1906-1999) at Harvard. Such has been Solow’s originality, wisdom, and energy that his imprint can be found in diverse corners of microeconomics, macroeconomics, and welfare policy.
The awarding to Solow of the Nobel Prize and the American Economic Association’s prestigious John Bates Clark Medal (1961) presumably traces primarily to his seminal 1956 growth model that breathed new life into the earlier pioneering attempts of Paul H. Douglas (1892-1976) to explain statistically the growth of a society’s real output in terms of its historical profiles of labor and of capital inputs. Because both of these time series were so positively correlated in trend, Douglas’s linear-log regressions had been hopelessly ill-conditioned. At Massachusetts Institute of Technology (MIT), where Solow became an assistant professor in 1949 and remained until retiring as institute professor emeritus in 1995, he cut the Gordian knot by introducing into the statistical analysis independent information on market-factor shares. His principal finding was the hypothesis that much of historic gain in outputs was not plausibly connected with “deepening of the Capital/Labor ratio.” Instead, an “exogenous residual” of Schumpeter-like technical innovation shifted upward “total factor productivity” to an important degree. A simplest Cobb-Douglas-Hicks example, k la Solow, would be Q = (1.03)tL 75K 25. It is fitting that Solow as a Harvard student in Schumpeter’s last lectures put the (1.03)t Schumpeterian parameter of innovation into growth theory, with emphasis upon rate of growth in total-factors productivity.
Fruitful tools of new mathematics—Dantzig linear programming, Kuhn-Tucker nonlinear programming, Bellman stochastic programming—came into wide use among economists after World War II, and Solow’s diverse bibliography illustrates his role as a pioneer. Besides Solow’s depth, his width is exemplified by his many analyses of post-Hotelling exhaustible resources. Besides putting his pen where his heart is, at Resources for the Future (a nonprofit organization focusing on the economic and social dimensions of environmental, energy, and natural 4dtource issues) and similar organizations, Solow has put his shoulder to the wheels of conservation economics.
President John F. Kennedy’s Council of Economic Advisers—Walter Heller (1915-1987), James Tobin (1918-2002), and Kermit Gordon 987(1916-1976)—and staff members Kenneth Arrow, Arthur Okun, and Solow set the high water mark for fruitful academic contributions to public policy in the early 1960s. In addition, Solow’s facile pen over the years has reviewed contemporary debates in the public press, and he has expressed criticism of prominent economists, including John Kenneth Galbraith (1908-2006) and Milton Friedman. But his was never an in-your-face attack. Those to the right and the left of Solow generally respected his genial argumentation.
Solow’s colleague at MIT and fellow Nobel laureate Paul Samuelson has dubbed Solow the Enrico Fermi (1901-1954) of economics. Fermi was both a great physicist-theorist and a great physicist-experimentalist; Solow has been both a creator of new theoretical economics and also one who subjected basic economic relations to statistical testing. Without his mathematical doodlings, Solow could not have been one of the wisest in the circle of Tobin, Arrow, and Franco Modigliani (1918-2003). Without his native DNA and mentors (Leontief, Talcott Parsons, Richard Goodwin, Abraham Wald), Solow would not have generated the wisdoms that were uniquely his.
Bibliography:
- Denison, Edward F. 1962. The Sources of Economic Growth in the United States and the Alternatives Before Us.
- Supplementary Paper no. 13. New York: Committee for Economic Development.
- Easterly, William, and Ross Levine. 2001. It’s Not Factor Accumulation. World Bank Economic Review 15 (2): 177–219.
- Jorgenson, Dale W., and Zvi Griliches. 1967. The Explanation of Productivity Change. Review of Economic Studies 34 (2): 249–280.
- Klenow, Peter J., and Andrés Rodríguez-Clare. 1997. The Neoclassical Revival in Growth Economics: Has It Gone Too Far? NBER Macroeconomics Annual 12: 13–103.
- Pritchett, Lant. 2001. Where Has All the Education Gone? World Bank Economic Review 15 (3): 367–391.
- Solow, Robert M. 1957. Technical Change and the Aggregate Production Function. Review of Economics and Statistics 39: 312–320.
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