Ótimo artigo/entrevista com o Solow, um grande economista e co-fundador do depto de economia do MIT.
He doesn’t use e-mail—yet his name is inextricably linked with technological progress. An avid sailor who never strays far from shore, Robert Solow is one of the most adventurous minds in economics, but worked in the same university office overlooking Boston’s Charles River for more than half a century.
A self-styled solver of puzzles, who eschews grandiose ideas, Solow developed a landmark model that fundamentally changed research on how economies develop and grow. Now Professor Emeritus at the Massachusetts Institute of Technology (MIT), Solow won the Nobel Prize in economics in 1987 for his seminal contributions to growth theory.
“Here is a scholar whose work has left an indelible imprint on his discipline,” said Princeton professor Alan Blinder. “Not just a model, mind you, but even a residual bears his name!” (Blinder, 1989).
Child of the Depression
We meet on one of those beautiful, crisp, sunny New England days that are the last gasp of fall before winter sets in. He is a lanky man, with a warm smile. Solow’s room in the MIT economics department also has a view of the Boston skyline; it’s an office he had occupied for the better part of 60 years, and that he relinquished a few weeks later. “This is the only full-time academic job I’ve ever had. So I’m not a bird of passage; I settled here.”
As an assistant professor he would never have merited such a magnificent office, he hastens to inform me, but when the economics department moved into its new building in 1952, Solow, who had been on the faculty for only a couple of years, was already a close friend and colleague of the late Paul Samuelson, one of the most important economic theoreticians of the 20th century. It was understood that he had to have the office next to Samuelson—who, of course, had to have the best office in the department.
Born in New York in 1924, Solow has lived through both the Great Depression and the Great Recession. The son of a furrier who traded with the Soviet Union, he grew up in Brooklyn. The events of the Depression left an indelible imprint on the minds of many future pioneers in economics, and Solow was no exception. “I was very much aware, even as a kid, that something bad had happened and that it was called the Depression. And it meant that there were a lot of people out of work and a lot of people were poor and hungry, and that stuck with me. It was an important thing in my life and probably has a lot to do with attitudes I have, even now.”
After his arrival on a scholarship to Harvard at the age of 16, his interest in the underlying factors behind social upheaval led him to study sociology and anthropology, together with some elementary economics (and some not-so-elementary economic tomes, such as in Wassily Leontief’s just-published Structure of the American Economy). But the attack on Pearl Harbor in December 1941 prompted him to drop his studies and sign up immediately as a private in the U.S. Army. Had he waited to graduate, he could have enlisted as an officer, but “defeating Nazism was simply the most important thing to do at that time,” he said. He joined a signals intelligence unit (he knew both Morse code and German) and saw active duty in North Africa and Italy.
As soon as he got back home, he married his sweetheart, economic historian Barbara Lewis, to whom Solow has been married for more than 65 years.
On his return to Harvard in 1945, Solow decided—at Lewis’s suggestion—to study economics, becoming Leontief’s pupil, research assistant, and, eventually, lifelong friend. He credits Leontief with his transformation from graduate student to professional economist. As his tutor, Leontief would assign Solow a paper to read each week for discussion during their next meeting.
In those days, economics was not very mathematical, and Solow lacked college-level mathematics, but he got sick of being given only nontechnical papers—one can hear the indignation and determination in his voice: “I wasn’t going to allow that to happen, read the second-rate papers because I couldn’t read the first-rate articles.” So he enrolled in the necessary mathematics courses in calculus and linear algebra.
It was a fortuitous decision. Not only did it earn him an assistant professorship at MIT (to teach probability and statistics), it also meant that Solow was able to speak the same language as Samuelson and to keep up with him intellectually—a feat he likens to “running as hard as you can, all the time.” Samuelson, in turn, described Solow as the “consummate economist’s economist.”
They were colleagues and friends for the next 60 years, and whenever Solow was offered a position at another university, he would stipulate that he would move only if Samuelson’s office were moved alongside his. This never quite worked out, and was one of the reasons both men ended up spending their careers at MIT.
Reconstruction and decolonization
Post–World War II reconstruction in industrialized countries and economic development in newly independent colonies meant that growth theory was the topic for economists in the 1950s. Before Solow’s contribution, the field did exist, but it was a somber one. Seminal papers by Roy Harrod in 1939 and Evsey Domar from 1946 onward had postulated that steady long-run growth was a possible but an exceedingly unlikely outcome that teetered on a knife edge in the standard macroeconomic models of the time. For steady growth to prevail, the economy’s saving rate had to match exactly the product of the capital output ratio and the rate of growth of the labor force.
But in the Harrod-Domar growth model, these three variables—the saving rate, the capital-output ratio, and labor force growth—were fixed and exogenous—given by assumptions on preferences, technology, and demographics, respectively. There was no reason for the required equality to hold, and if it did not, the model predicted that the economy would be subject to ever-increasing fluctuations.
Solow came into this debate with two valuable insights. First, despite the 1890s recession, Great Depression, and World War II, Solow thought it was historically untenable that the main characteristic of capitalist economies should be explosive volatility (either growing without bound or shrinking out of existence) rather than stable growth (with occasional crises). Nor did he accept predictions that a higher saving rate would lead to increased long-run growth.
Second, of the outside influences of the Harrod-Domar model, Solow’s attention was naturally drawn to his research specialty: the production side. This choice made his reputation. In his 1956 “A Contribution to the Theory of Economic Growth,” Solow showed that relaxing the production technology to allow a flexible capital-output ratio made steady-state growth not only possible, but a natural outcome. Growth theory could rid itself of reliance on finely balanced configurations. And as all students of economics now know, the long-run growth rate in Solow’s model is independent of the saving rate.
He did not stop there. Not satisfied with the prospect of much spilling of ink by growth theorists following his 1956 article, Solow further shook up empiricists with his “Technical Change and the Aggregate Production Function” in 1957. He used his theoretical model to decompose the sources of growth among capital, labor, and technological progress. And he showed that technological change, rather than capital accumulation, was the main driver of long-run growth. This “technical change residual”—so called because it is the part of growth that cannot be explained by identifiable factors such as capital accumulation or labor force growth—would forever bear his name.
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