Reflections of Eminent Economists

Reflections of Eminent Economists

Edited by Michael Szenberg and Lall Ramrattan

In this collection of autobiographical essays, 26 prominent scholars detail their professional development, while offering insight into their lives and philosophies. With candor and humor they relate how they came to the field of economics, as well as how their views have evolved over the years.

Chapter 17: Trains of Thought

Harry M. Markowitz

Subjects: economics and finance, economic psychology, history of economic thought


299 theories, what I would now refer to as models, sometimes mistakenly thought to be inevitable universal laws. Consider the ball once more. What do we mean that it will fall down if I release it? Which way is down if I stand in Australia? Or in space a thousand miles from the earth? The ‘universal truth’ which was observed over and over – as any eighteenth- or nineteenth-century physicist would tell you – is that the ball attracts, and is attracted to, each other object by a force which is proportional to the product of their mass and inversely proportional to the square of their distance. But this universal law of gravity did not hold universally. In particular it failed to accurately explain the path of the planet Mercury. Einstein’s general theory of relativity presents a quite different model of phenomena which the older Newtonian model failed to explain as well as phenomena which the latter has succeeded in explaining. But, as Hume tells us, the fact that the theory of relativity had succeeded in all instances in the past does not prove that it will continue to do so in the future; and, as Einstein himself said, in this case we would have to seek a new theory. For a statement of this view, amply illustrated, see Einstein and Infeld, The Evolution of Physics. Some readers may feel that Hume’s views may be true in principle, but of little applicability to economics or finance. But if the reader has attended...

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