C H A P T E R T W E N T Y The Stabilization of Price Theory In 1955, Paul Samuelson introduced the term “neoclassical synthesis” into his textbook: We shall again and again meet in later chapters what is called the “neoclassical synthesis" | CHAPTER TWENTY The Stabilization of Price Theory 1920-1955 Roger E. Backhouse The Neoclassical Synthesis in Historical Perspective In 1955 Paul Samuelson introduced the term neoclassical synthesis into his textbook We shall again and again meet in later chapters what is called the neoclassical synthesis. According to this if modern economics does its task so well that unemployment and inflation are substantially banished from democratic societies then its importance will wither away and the traditional economics whose concern is the wise allocation of fully employed resources will really come into its own -almost for the first time. Samuelson 1955 p. 11 In this passage Samuelson draws a contrast between the Keynesian theory of income determination described simply as modern economics and traditional microeconomics. Samuelson s rhetoric concerning the neoclassical synthesis made it clear that it was one of the central points if not the central point that he wanted his readers to learn. Readers were told that it was important to insist on it p. 659 . Nations were everywhere discovering that it worked p. 624 and problems of international economics could be solved if the world mastered it p. 676 . He even expressed gratitude that the Russians had not discovered it p. 733 . The aspect of the neoclassical synthesis that has received most attention is the implied relationship between macroeconomics and microeconomics and Samuelson s role in propagating the Keynesian revolution. Like Alfred Marshall The Stabilization of Price Theory 1920-1955 309 before him Samuelson clearly wanted to establish the scientific credentials of economics and one way to do this was to emphasize consensus within the profession and continuity with the past. This explains his frequent use of adjectives such as traditional and classical. It is in this vein that he claimed that neoclassical economics namely the combination of whatever is valuable in the older economics and modern theories of .
