Robert Solow died 10 days ago. He was 99. His passing was barely noticed globally and probably not at all in India.

This is not surprising. The best economists, by which I mean the ones who change the way we think about economic phenomena, rarely excite anyone, and often not even their own community.

For instance, hardly anyone knows about Richard Stone. But he gave the world its modern national accounting framework. For his pains he was awarded the ‘Nobel’ in 1984.

Or, until they made a film about John Nash — I don’t know why — relatively few economists had heard of him. But he changed the way we think about strategies. The Nash equilibrium is now a central, taken for granted pillar of modern microeconomics.

There are many others. And what they have in common, intellectually, is that they make paradigm shifts but go unrecognised because their work doesn’t appeal to politicians. It’s ridiculous but that’s how it is.

John Maynard Keynes became great only because his theory appealed to politicians. He legitimised their need to spend public money for political gain. It was as simple as that. The issue shifted from whether to spend — the balanced budget thing — to how much to spend. Solow, however, meant little to politicians.

He was amongst the most acute minds that economics ever saw. Indeed, it’s to him that we owe practically everything we understand about the sources of growth. His insights have been hugely helpful in America streets ahead of other countries.

Four of his Ph.D students, George Akerlof, Joseph Stiglitz, Peter Diamond, and William Nordhaus, have received Nobels. In military terms, he was one of the most highly decorated economists of our time. His doctoral guide at Harvard was Wassily Leontief who showed in the early 1950s that the US was actually exporting labour intensive goods even though it was a capital abundant country.

Explaining growth

Until Solow came along economic growth wasn’t a much studied subject and, moreover, it was seen as a function of only capital and labour. But Solow said technology was the most important contributor to increases in output per worker, or productivity.

He calculated that about 80 per cent of the growth in US output per worker was attributable to technical progress! No one has disproved that yet.

China has discovered this after the US cut it off from technology a couple of years ago. It has an abundance of both capital and labour but is now wondering what to do with it all without the help of US technology. This is perfectly consistent with what Solow had said, which was that without technological progress an economy will grow but at a ‘steady state’. We can expect the Chinese economy to stagnate until it breaks the technology constraints.

It wasn’t just growth theory that engaged Solow. Linear programming was one of his major interests. His book with Paul Samuelson and Robert Dorfman is a classic. Linear programming is about optimising something under constraints. Roughly, how fast can you go over a speed breaker in an overloaded vehicle?

Solow, like Barry Jarman, the Australian wicket keeper who lived under the shadow of Wally Grout, was also less visible than Paul Samuelson. Oddly enough, there was an Australian economist, Trevor Swan, who in a manner of speaking, was the junior partner to Solow even though he had said exactly what Solow said, that too in the same year.

Swan developed the same theory in faraway Australia, and which is why economics has honoured him by calling the growth model the Solow-Swan model. Swan died in 1989 and never got the Nobel. He should have.

The Solow-Swan model predicted that if savings rates in developing countries came nearer to the rates in developed countries, their growth rates would also converge. East Asian growth after 1970 proved this.

Three other economists later added human capital to the model. Capital wouldn’t flow to countries where human capital was dodgy, they said.

As it happens this is the problem India is starting to face. If China has a technology problem, we have a skills problem.

I should conclude this ode to under-appreciated economists on a personal note. Back in 1990 I went to call on Paul Samuelson. Halfway through, a student opened the door and said “Hi Paul, can I leave this book with you? It’s for Bob”.

He left the book on a table by the door. Bob, when I asked Samuelson, turned out to be Robert Solow. His room was next door.

I am still kicking myself for not having had the sense to call on him as well.

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