VOLUME V

THE COLLECTED SCIENTIFIC PAPERS OF PAUL A. SAMUELSON

Edited by Kate Crowley

• (C A

THE MIT PRESS Cambridge, Massachusetts, and London, England CONTENTS

Volume V

Author's Preface xi

Editor's Preface xii

Part I. Economic Theory 293. "Bergsonian Welfare Economics," in Economic Welfare and the Eco- nomics of Soviet Socialism: Essays in Honor of Abram Bergson, Steven Rosefielde (ed.). Cambridge: Cambridge University Press, 1981, 223-266. 3 294. "Reaffirming the Existence of 'Reasonable' Bergson-Samuelson So- cial Welfare Functions," Economica, vol. 44, February 1977, 81-88. 47 295. "When It Is Ethically Optimal to Allocate Money Income in Stipu- lated Fractional Shares," in Natural Resources, Uncertainty, and General Equilibrium Systems: Essays in Memory of Rafael Lusky, Alan S. Bunder and Philip Friedman (eds.). New York: Academic Press, 1977, 175-195. 55 296. "A Chapter in the History of Ramsey's Optimal Feasible Taxation and Optimal Public Utility Prices," in Economic Essays in Honour of J0rgen H. Getting, Svend Andersen, Karsten Larsen, P. Norre- gaard Rusmussen, and J. Vibe-Pedersen (eds.). Copenhagen: Danish Economic Association, 1982, 157-181. 76 297. "Pseudo-Maximization to the Rescue of Derived Factor Demand of a Competitive Industry," in Breadth and Depth in Economics: Fritz Machlup—The Man and His Ideas, Jacob S. Dreyer (ed.). Lexing- ton, Mass.: D. C. Heath, A Lexington Book, 1978, 87-118. 101 298. "St. Petersburg Paradoxes: Defanged, Dissected and Historically Described," Journal of Economic Literature, vol. 15, no. 1, March 1977, 24-55. 133 Contents

299. "Second Thoughts on Analytical Income Comparisons," Economic Journal, vol. 94, June 1984, 267-278. 165 300. "Unattainability of Integrability and Definiteness Conditions in the General Case of Demand for Money and Goods," with Ryuzo Sato, American Economic Review, vol. 74, no. 4, September 1984, 588- 604. 177 301. "Balanced Growth Equilibrium in the General Multi-Class Saving Model," Quantitative Wirtschaftsforschung: Wilhelm Krelle zum 60. Geburstag, Horst Albach, Ernst Helmstadter, and Rudolf Henn (eds.). Tubingen: J. C. B. Mohr, 1977, 569-577. 194 302. "Paul Douglas's Measurement of Production Functions and Marginal Productivities," The Journal of Political Economy, vol. 87, no. 5, part 1, October 1979, 923-939. 203 303. "Rigorous Observational Positivism: Klein's Envelope Aggregation; Thermodynamics and Economic Isomorphisms," in Global Econo- metrics: Essays in Honor of Lawrence R. Klein, F. Gerard Adams and Bert G. Hickman (eds.). Cambridge, Mass.: The MIT Press, 1983, 1-38. 220

Part II. Marx, Keynes, and Schumpeter 304. "1983: Marx, Keynes and Schumpeter," Eastern Economic Journal, vol. 9, no. 3, July-September 1983, 166-180. 261 305. "The Keynes Centenary," The Economist, 25 June 1983, 19-21. 275 306. "The House That Keynes Built," The New York Times, 29 May 1983. 279 307. "Succumbing to Keynesianism," Challenge, January-February 1985, 4-11. 283 308. "Comment [on Axel Leijonhufvud's 'What Would Keynes Have Thought of Rational Expectation?']," in Keynes and the Modern World, David Worswick and James Trevithick (eds.). Cambridge: Cambridge University Press, 1983, 212-221. 291 309. "Schumpeter as an Economic Theorist," in Schumpeterian Econom- ics, Helmut Frisch (ed.). London: Praeger, 1982, 1-27. 301 310. "Schumpeter's Capitalism, Socialism and Democracy," in Schumpe- ter's Vision: Capitalism, Socialism and Democracy After 40 Years, Arnold Heertje (ed.). London: Praeger, 1981, 1-21. 328 311. Foreword to Marx's Economics: Origin and Development, by Al- exander Balinky, Lexington, Mass.: D. C. Heath, 1970, xi-xii. 349 312. "The Normative and Positivistic Inferiority of Marx's Values Para- digm," Southern Economic Journal, vol. 49, no. 1, July 1982, 11- 18. 351 313. "Marx Without Matrices: Understanding the Rate of Profit," in Marxism.) Central Planning, and the Soviet Economy: Economic Essays in Honor of Alexander Erlich, Padma Desai (ed.). Cam- bridge, Mass.: The MIT Press, 1983, 3-18. 359 314. "Durable Capital Inputs: Conditions for Price Ratios to be Invariant to Profit-Rate Changes," Zeitschriftfur Nationalokonomie, vol. 43, no. 1, 1983, 1-20. 375

Part III. International Economics 315. "A Corrected Version of Hume's Equilibrating Mechanism for In- ternational Trade," in Flexible Exchange Rates and the Balance of Payments: Essays in Memory of Egon Sohmen, John S. Chipman and Charles P. Kindleberger (eds.). Amsterdam: North-Holland, 1980, 141-158. 397

VI Contents

316. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," with Rudiger Dornbusch and Stanley Fischer, American Economic Review, vol. 67, no. 5, Decem- ber 1977, 823-839. 415 317. "Heckscher-Ohlin Trade Theory with a Continuum of Goods," with Rudiger Dornbusch and Stanley Fischer, The Quarterly Journal of Economics, vol. 95, no. 2, September 1980, 203-224. 432 318. "Summing Up on the Australian Case for Protection," The Quarterly Journal of Economics, vol. 96, no. 1, February 1981, 147-160. 454 319. "Justice to the Australians," The Quarterly Journal of Economics, vol. 96, no. 1, February 1981, 169-170. 468 320. "Interest Rate Equalization and Nonequalization by Trade in Leon- tief-Sraffa Models," Journal of International Economics, vol. 8, 1978, 21-27. 470 321. "Free Trade's Intertemporal Pareto-Optimality," Journal of Inter- national Economics, vol. 8, 1978, 147-149. 477 322. "Analytics of Free-Trade or, Protectionist Response by America to Japan's Growth Spurt," in Economic Policy and Development: New Perspectives, Toshio Shishido and Ryuzo Sato (eds.). Dover, Mass.: Auburn House, 1985, 3-18. 480 323. "Japan and the World at the Century's End," NEXT Magazine, August 1984, 4-15. (Original English version provided for translation into Japanese.) 496 324. "To Protect Manufacturing?" Zeitschrift fur die gesamte Staatswis- senschaft (Journal of Institutional and Theoretical Economics), Band 137, Heft 3, September 1981, 407-414. 510 325. "America's Interest in International Trade," in New England Mer- chants Company, Inc., 1979 Annual, 4-5. 518 326. "The Future of American Industry in a Changing Economy," The Journalist, Fall 1984, 3-5, 19. 520

Part IV. Stochastic Theory 327. "Stochastic Land Valuation: Total Return as Martingale Implying Price Changes—A Negatively Correlated Walk," speech given 19 January 1984, University of California, San Diego. 527 328. "Paul Cootner's Reconciliation of Economic Law with Chance," in Financial Economics: Essays in Honor of Paul Cootner, William F. Sharpe and Cathryn M. Cootner (eds.). Englewood Cliffs, N.J.: Prentice-Hall, 1982, 101-117. 537 329. "Why We Should Not Make Mean Log of Wealth Big though Years to Act Are Long," Journal of Banking and Finance, vol. 3, 1979, 305-307. 554 330. "Economics of Futures Contracts in Basic Macroeconomic Indexes: An Economist's Appraisal," Futures: Policy and Prospects for a Dynamic Market. Washington, D.C.: National Journal, 1983, 43-44. 557 331. "Hanging in There," Newsweek, 13 February 1978, 80. 559 332. "Coping Sensibly," Newsweek, 6 March 1978, 88. 560 333. "Gold and Common Stocks," Newsweek, 21 August 1978, 65. 561 334. "Time to Sell," Newsweek, 11 December 1978, 90. 562 335. "No-Fuss Canny Investing," Newsweek, 4 February 1980, 68. 563 336. "Crackpot Investing," Newsweek, 26 January 1981, 67. 564 337. "Canny Investing," McGraw-Hill Economics Newsletter, Spring 1981. 565

vii Contents

338. Foreword to On the Factorial Approach to Index Number Problems, Consumption Analysis and Orthogonal Decomposition of National Income: A Summary, by K. S. Banerjee. College Park, Md.: World Academy of Development and Cooperation, Special Studies Publi- cation, no. 2, 1985, ii-iv. 570

Part V. Classical Economics 339. "Thiinen at Two Hundred," Journal of International Literature, vol. 21, December 1983, 1468-1488. 575 340. "The Canonical Classical Model of Political Economy," Journal of Economic Literature, vol. 16, December 1978, 1415-1434. 598 341. "Noise and Signal in Debates Among Classical Economists: A Re- ply," Journal of International Literature, vol. 18, June 1980, 575- 578. 618 342. "A Modern Theorist's Vindication of Adam Smith," The American Economic Review, vol. 67, no. 1, February 1977, 42-49. 622 343. "Quesnay's 'Tableau Eco'nomique' as a Theorist would Formulate it Today," in Classical and Marxian Political Economy: Essays in Honor of Ronald L. Meek, Ian Bradley and Michael Howard (eds.). New York: St. Martin's Press, 1982, 45-78. 630 344. "Land and the Rate of Interest," in Theory for Economic Efficiency: Essays in Honor of Abba P. Lerner, Harry I. Greenfield, Albert M. Levenson, Wiliam Hamovitch, and Eugene Rotwein (eds.). Cam- bridge, Mass.: The MIT Press, 1979, 167-185. 664 345. "Correcting the Ricardo Error Spotted in Harry Johnson's Maiden Paper," The Quarterly Journal of Economics, vol. 91, no. 4, No- vember 1977, 519-530. 683 Part VI. Mathematical Biology 346. "Maximizing and Biology," Economic Inquiry, vol. 16, April 1978, 171-183. 697 347. "Complete Genetic Models for Altruism, Kin Selection and Like- Gene Selection," Journal of Social and Biological Structures, vol. 6, 1983, 3-15. 710 348. "Modes of Thought in Economics and Biology," The American Eco- nomic Review, vol. 75, no. 2, May 1985, 166-172. 723 349. "Comparison of Linear and Nonlinear Models for Human Population Dynamics," with Joel Yellin, Theoretical Population Biology, vol. 11, no. 1, February 1977, 105-126. . 730 350. "Fischer's 'Reproductive Value' as an Economic Specimen in Mer- ton's Zoo," Transactions of the New York Academy of Sciences, series 2, vol. 39, April 1980, 126-142. 752 351. "Generalizing Fischer's 'Reproductive Value': Linear Differential and Difference Equations of 'Dilute' Biological Systems," Proceed- ings of the National Academy of Sciences USA, vol. 74, no. 11, November 1977, 5189-5192. 769 352. "Generalizing Fischer's 'Reproductive Value': Nonlinear, Homoge- neous, Biparental Systems," Proceedings of the National Academy of Sciences USA, vol. 74, no. 12, December 1977, 5772-5775. 773 353. "Generalizing Fischer's 'Reproductive Value': Overlapping and Non- overlapping Generations with Competing Genotypes," Proceedings of the National Academy of Sciences USA, vol. 75, no. 8, August 1978, 4062-4066. 777 354. "Generalizing Fischer's 'Reproductive Value': 'Incipient' and 'Pen- ultimate' Reproductive-Value Functions When Environment Limits Growth; Linear Approximants for Nonlinear Mendelian Mating Mod- viii Contents

els," Proceedings of the National Academy of Sciences USA, vol. 75, no. 12, December 1978, 6327-6331. 782 Part VII. Biographical and Autobiographical Writings 355. "My Life Philosophy," The American Economist, vol. 27, no. 2, Fall 1983, 5-12. 789 356. "Economics in My Time," in Lives of the Laureates, William Breit and Roger W. Spencer (eds.). Cambridge, Mass.: The MIT Press, 1986, 59-76. 797 357. "Bertil Ohlin, 1899-1979," The Scandinavian Journal of Economics, vol. 83, no. 3, 1981, 355-371. Also appeared in Journal of Interna- tional Economics, vol. 11, 1981, 147-163. 809 358. "Arthur Okun, 1928-1980," Newsweek, 7 April 1980, 67. 826 359. "Lloyd Metzler (April 3, 1913-October 26, 1980)," Memorial Service, Memorial Church, Harvard University, 12 December 1980. 827 360. "Two Nobel Laureates' Theories on Trade," The New York Times, 15 October 1977. j 831 361. "A Nobel for Forecasting," Newsweek, 3 November 1980, 72. 833 362. "1981 Nobel Prize in Economics," Science, vol. 214, 30 October 1981, 520-522. 834 363. "The 1983 Nobel Prize in Economics," Science, vol. 222, 2 December 1983, 987-989. 838 364. "The 1984 Nobel Prize in Economics," Science, vol. 227, January 1985, 20-22. 841 365. Seventieth Birthday Remarks, given 18 May 1985, at Wellesley College Club. 844 366. Introduction to the Enlarged Edition of Foundations of Economic Analysis. Cambridge, Mass.: Harvard University Press, 1983, xv- xxvi. 846 367. Forewords to the Japanese edition of The Collected Scientific Papers of Paul A. Samuelson, vols. 1, 2, 4, 5, 6, 8, 9, M. Shinohara and R. Sato (eds.). Tokyo: Keiso Shobo, 1982. 858 368. Foreword to Theory of Technical Change and Economic Invariance: Application to Lie Groups, by Ryuzo Sato. New York: Academic Press, 1981, xi-xii. 876

Part VIM. Current Economics and Policy 369. "The World Economy at Century's End," in Human Resources, Employment and Development, Volume, 1. The Issues, Shigeto Tsuru (ed.). London,: Macmillan, 1983, 58-77. 881 370. "Evaluating Reaganomics" (Horowitz Lecture), Challenge, Novem- ber-December 1984, 4-12. 901 371. "The U.S. Fiscal Crisis of the 1980s," in Reconstructing the Federal Budget: A Trillion Dollar Quandary, Albert T. Sommers (ed.). New York: Praeger, 1984, 75-86. 909 372. "Myths and Realities about the Crash and Depression," The Journal of Portfolio Managment, vol. 6, no. 1, Fall 1979, 7-10. 921 373. "The Crash of '29: Lessons for '79," Newsday, 28 October 1979. 925 374. "The Role of Profits in a Mixed Economy: Changes in the Perceived Reality" (John Diebold Lecture), in New Challenges to the Role of Profit, Benjamin M. Friedman (ed.). Lexington, Mass.: D. C. Heath, 1978, 13-29. ' 929 375. "The Public Role in the Modern American Economy," in The Amer- ican Economy in Transition, Martin Feldstein (ed.). Cambridge, Mass.: National Bureau of Economic Research, 1980, 665-671. 946

ix Contents

376. "Thoughts on Profit-Sharing," Zeitschrift fur die gesamte Staats- ufissenschaft, Special Issue on Profit-Sharing, A Symposium, Heinz Sauermann and Rudolf Richter.(eds-). Tubingen: J. C. B. Mohr, 1977, 9-18. 953 377. "The Roots of Inflation," in Encyclopaedia Britannica, 1979 Book of the Year. Chicago, 111.: Encyclopaedia Britannica, 1979, 60-64. 963 378. "Recession: Causes and Consequences," with William F. Samuelson, in The Americana Annual 1980, Yearbook of the Encyclopedia Americana. Danbury, Conn.: Grolier, 1980, 25-28. 968 379. "Living with Stagflation," in Collier's Year Book 1980. London: Mac- millan, 1980, 89. 972 380. "Government and Business," in Emerging Issues Affecting U.S. Corporations. Washington, D.C.: The Public Affairs Council, 1977, 99-105. 973 381. "Policy Advising in Economics," Challenge, March-April 1978, 37- 38. 980 382. Foreword to Health Controls Out of Control, by David M. Kinzer. Chicago, 111.: teach'em, 1977, ix-xi. 982 383. "An Economist's View," Environmental Protection Agency Journal, vol. 5, no. 1, January 1979, 4-5, 36. 985 384. "Lofty Aims Alone Cannot Create Efficiency, Growth and Equity," The Japan Economic Journal, 17 June 1980, 20. 992 385. "Inequality of Incomes and Wealth Can Lessen amid Competition," The Japan Economic Journal, 24 June 1980, 24. 995 386. "Afternoon of the Mixed Economy?" Okonomisk Rapport, March 1981. 998 387. "World Economy of the Eighties," speech broadcast over West- deutscher Rundfunk, December 1979. 1002 388. "That Constitutional Budget Amendment—'Tremendous Potential for Harm,'" AEI Economist, The Conference Board Magazine, April 1979, 4-6. 1005

Contents of Volumes I—IV 1009

Acknowledgments 1029

Index 1037