Two important economists with roots in the Ninth District died in recent
monthsMancur Olson from North Dakota and Theodore Schultz from South
Dakota. Olson was chair and principal investigator at the Center on Institutional
Reform and the Informal Sector, and distinguished professor of economics
at the University of Maryland at College Park at the time of his death,
and Schultz was professor of economics and Charles L. Hutchinson distinguished
service professor at the University of Chicago. As a tribute, The
Region invited two economists familiar with their work to share
their thoughts about Olson and Schultz.
By James M. Buchanan
Advisory General Director
Center for Study of Public Choice and 1986 Nobel Laureate
George Mason University
I met Mancur Olson in 1963 when he participated in a small conference
that Gordon Tullock and I organized in Charlottesvillea conference
from which the Public Choice Society eventually emerged. At that time,
Mancur was among the few social scientists who were beginning to apply
rigorous analysis to nonmarket activity. He later gave me some credit
for having encouraged him to settle on The Logic of Collective Action for the title of his first book. Years later, Mancur Olson was the first
to refer to my work and that of my colleagues as the "Virginia school,"
to distinguish it, properly so, from the "Chicago school" and other strands
of normative discourse in political economy.
Mancur Olson was, perhaps above all else,
an enthusiast for basic ideas. The realm of academic discourse
was, for Mancur, always an exciting place, provided that we resisted
temptations to pursue intellectualized puzzles and that we kept
the ultimate practical relevance of ideas in mind.
Mancur Olson was perhaps more influential
in political science than any other of his economist peers. Both
of his major works, The Logic of Collective Action (1964) and The Rise and Decline of Nations (1982),
exerted effects well beyond those confined to any narrowly bound
discipline. His forthcoming book, Capitalism, Socialism,
and Dictatorship, which must now appear posthumously, can
be predicted to have comparable impact.
To those who knew him, Mancur Olson seemed
always to be a very "busy" person, rushing hither and yon. But,
also, he seemed always willing to engage directly in analytical
discussion, with an attitude that conveyed the conviction that
the ideas of others than his own also mattered.
How can the rise and decline of nations be
explained? Anyone who seeks an answer will necessarily encounter
Olson's thesis on the critical importance of institutional structure,
as imbedded in historya thesis that is, itself, informed
by the logic of collective action. Mancur Olson had a rare ability
to take highly abstract but ultimately simple ideas and to apply
these ideas to the reality of economic and political development.
Economics threatens to become a dull and boring discipline in
the years after the dialectic of the Cold War. Mancur Olson's
death removes yet another spark. Who is there left to seek out
the large ideas, and, in so doing, to generate spillover benefits
to so many?
Theodore W. Schultz
1979 Nobel Laureate
By Vernon W. Ruttan
College of Agricultural, Food, and Environmental Sciences
University of Minnesota
Theodore W. Schultz dominated the field of agricultural economics for
half a century beginning in the mid-1930s. He became a major source of
the most creative ideas in the field of economics for several decades
beginning in the mid-1950s. He received the Nobel Prize in economics in
The path that led from a South Dakota farm
to a Nobel Award in 1979 was not easy. Schultz has written:
I learned during my youth how hard it was for farm families to stay
solvent. Farm product prices fell abruptly by more than half. Banks
went bankrupt and many farmers suffered foreclosures.
My schooling was disrupted by the shortage
of labor during World War I. It meant foregoing high school. I
managed to enter college in 1924 and was permitted to complete
my college work in three years.
While head of the Department of Economics and
Sociology at Iowa State University, he brought together a group
of brilliant young scholars who placed the department at Iowa State
at the forefront of their discipline. He insisted that agricultural
economics must be grounded in economic theory. His seminal paper
on "The Theory of the Firm and Farm Management Research" (1939)
forced the field of farm management into the modern era. Two books
published in the 1940s, Redirecting Farm Policy (1943)
and Agriculture in an Unstable Economy (1945) demonstrated
the fallacy of the conventional wisdom that depressions were "farm
lead and farm fed." He demonstrated conclusively that instability
in the agricultural economy was generated primarily by the failure
of macroeconomic policy.
During World War II he organized and edited
a series of reports on wartime food strategy. One of these reports,
prepared by a younger colleague (Ozwald Brownlee, who later became
a member of the University of Minnesota Economics Department), argued
that in its nutritional value margarine "compared favorably with
butter." The report became the focus of considerable political controversy
in Iowa. The "margarine incident" precipitated Schultz's move to
the University of Chicago and to the departure from Iowa of many
of the young faculty that he had assembled at Iowa State.
Schultz's most influential contribution in the
field of economic development was a small book, Transforming
Traditional Agriculture (1964). His insistence that even
poor farmers in poor countries are decision-makers who make the
best with the resources at hand became known as the "poor but efficient"
hypothesis. He also insisted that the "high pay off" sources of
growth in agriculture were:
the capacity of the agricultural research system to provide new technical
the capacity of the industrial system to develop, produce and market
the technical inputs employed in agriculture,
the investment in education that enhanced the capacity of farmers
to use modern inputs effectively and to adjust to market forces.
In his later work Schultz placed primary emphasis on productivity
effects of education, particularly the education of women, as a source
of economic growth.