How 13 Influential Economists Changed America’s History
1. Adam Smith (1723-1790)
Adam Smith was a Scottish philosopher who became a political economist in the midst of the Scottish Enlightenment. Widely considered “The Father of Economics,” his book An Inquiry into the Nature and Causes of the Wealth of Nations is arguably the most influential book in the field’s history. Former British Prime Minister Margaret Thatcher was rumored to have kept a copy in her handbag. He is best known for “The Theory of Moral Sentiments” (1759) and “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776). The latter, usually referred to as “The Wealth of Nations,” is one of the earliest and most famous treatises on industry and commerce and one of the major contributors to the modern academic discipline of economics.
Smith entered the University of Glasgow at the age of 15 and studied moral philosophy. His original interest in Christianity evolved into more of a Deist stance (although this has been challenged).
Smith’s arguments against mercantilism and in favor of free trade were a stark challenge to much of the protectionism, tariffs, and gold-hoarding that prevailed in the mid-18th century.12 Today, he’s often called “the father of modern economics.” In a world gone global, imagine how much slower life would be if free, open trade were not encouraged and if hoarding of hard assets (mercantilism) were the norm. Economic life would be fairly bleak.
At the end of his life, Smith had most of his manuscripts destroyed, and while some survived, the world never learned the extent of his final thoughts and theories. Smith’s ideas are now so widely accepted in economics that it is difficult to understand how revolutionary they were at their inception. For example, he saw the division of labor as the key driver of productivity, which was in turn driven by competition.
While he was skeptical of the virtues of self-interest, he did maintain that in a market system, the so-called “invisible hand” would tend to direct the pursuit of selfish ends toward the common good. He also touched on the cornerstone notions of supply and demand, the tendency of markets to move toward equilibrium, and the labor theory of value. For many economists Smith is the OG — his hugely influential work remains among the foundational works of capitalism and our understanding of how it functions.
2. David Ricardo (1772-1823)
David Ricardo was a British political economist and Member of Parliament who picked up where Adam Smith left off. He supplemented Smith’s notion that the value of a product was closely related to the amount of labor that went into producing it by highlighting the importance of other factors, such as the difficulty of the labor involved and the tools required to do the work. However, he broke with Smith on the question of central banking and instead argued that central banks could benefit economies. A large family could have contributed to Ricardo’s drive; he was the third child of 17 children from a Portuguese Jewish family. His contributions to the study of economics came from a more hands-on background than Adam Smith’s. Ricardo joined his father to work on the London Stock Exchange at the age of 14 and quickly became successful at speculating in stocks and real estate. After reading Smith’s “The Wealth of Nations” in 1799, he took an interest in economics, although his first economics article was published nearly 10 years later.
Ricardo became a member of the British Parliament, representing a borough of Ireland in 1819. His greatest work, “An Essay on the Influence of a Low Price of Corn on the Profits of Stock” (1815), argued to repeal the corn laws at the time to better spread the wealth, and he followed it with “Principles of Political Economy and Taxation” (1817).
Ricardo was best known for the belief that nations should specialize for the greater good. He was also vocal in carrying forward the argument against protectionism, but he may have made his greatest mark on rents, taxation, wages, and profits by showing that landlords seizing wealth at the expense of laborers was not beneficial for society.
His most famous idea is a theory of international trade exploring comparative advantage — the situations in which goods can be made at a lower opportunity cost than in other countries. He argued that countries should maximize production in industries where they have certain advantages — say, a large supply of a given natural resource — and trade for the other things they need, famously illustrating his theory with an example of the trade of cloth and wine between England and Portugal.
This argument has been refined, critiqued, and reinterpreted over the last two centuries. Nevertheless, the basic idea — that trade is generally good even when the two countries involved are not very similar — is widely accepted.
Ricardo is one of the shorter-lived of the great economists, dying at age 51 in 1823.
3. Alfred Marshall (1842–1924)
Marshall was born in London, and while he originally wanted to be in the clergy, his success at Cambridge led him into academia. Marshall may be the least recognized of the great economists, as he did not champion any radical theories. However, he is credited with attempting to apply rigorous mathematics to economics to turn economics into more of a science than a philosophy.
Despite his emphasis on math, Marshall strove to make his work accessible to regular people; his “Economics of Industry” (1879) became widely used in England as a curriculum. He also spent almost 10 years working on the more scientific “Principles of Economics” (1890), which proved to be his most important work. He is most credited with perpetuating supply and demand curves, marginal utility, and marginal production costs into a unified model.
4. Karl Marx (1818-1883)
The father of communism was a philosopher, economist, journalist, historian, and revolutionary. In his economic thinking — crowned in print by his magnum opus, Capital: A Critique of Political Economy — Marx focused primarily on capitalist economies.
He wrote around 10,000 pages on economics but, as a result of his often haphazard working methods and unfinished projects, only a fraction of his ideas have survived on paper.
He expanded on the labor theory of value in ways that went beyond the ideas of Ricardo and Smith, and his explorations of the concept would later fuel its replacement. He argued that some of the problems then affecting capitalism — like the concentration of wealth, low wages, major recessions following booms, and terrible workplace conditions — were features rather than bugs in the system.
Some of his ideas, such as his takes on the business cycle, have been revised and are seen as useful descriptors of how capitalism functions, even if card-carrying Marxist economists are currently in low demand.
5. John Maynard Keynes (1883-1946)
Historians sometimes refer to John Maynard Keynes as the “giant economist.” The six-foot-six Brit accepted a lectureship at Cambridge that was personally funded by Alfred Marshall, whose supply and demand curves were the basis for much of Keynes’ work. He is particularly remembered for advocating government spending and monetary policy to mitigate the adverse effects of economic recessions, depressions, and booms.
It is impossible to talk about modern capitalist economics without discussing John Maynard Keynes. Active during the Great Depression, he sought to explain what had gone wrong with the global economy and how to address it. As a result, the “Keynesian Revolution” in economics would be credited with helping to end the depression and driving the decades-long post-war boom.
Keynes turned economics on its head when he argued that aggregate demand — the whole of spending on goods and services in a society — was the primary force that moved an economy. Before Keynes, most economists worried about supply, with the idea that increasing supply would lower prices and stimulate demand as goods became cheaper. He argued that in some cases (particularly rapid shocks, like the Great Depression), this wouldn’t happen. In those moments, the government could step in and create demand through increased spending.
Famously, he focused almost exclusively on short-run economics. He illustrated his concerns for the short-term when he reminded us, “In the long run, we are all dead.”
Some of these ideas were already floating around, but Keynes coalesced them into one general theory of how the economy works. While interpretations of that theory vary, his influence on mainstream economics endures. The current economic orthodoxy rests on a fusion of ideas from the Keynesian school and the neoclassical school, the latter placing a high value on modeling how rational, well-informed individuals inside a market system will try to maximize their gains and minimize their losses.
During World War I, Keynes worked on the credit terms between Britain and its allies and was a representative at the peace treaty signed in Versailles.
Keynes was almost bankrupted by the stock market crash of 1929, but he was able to rebuild his fortune. In 1936, Keynes wrote his seminal work, the “General Theory of Employment, Interest and Money,” which advocated government intervention to promote consumption and investment; it also pushed to alleviate the global Great Depression that was raging at the time. This work has been deemed the launch of modern macroeconomics.
Friedman and Keynes
John Keynes’ work is often considered antithetical to the laissez-faire philosophy promoted by economists like Milton Friedman. While Keynes advocated government spending as a form of economic stimulus, Friedman opposed government interventions.
6. Milton Friedman (1912-2006)
Milton Friedman was the last of four children born to Jewish immigrants from Austria-Hungary. After getting his Bachelor of Arts degree at Rutgers and his Master’s at the University of Chicago, he went to work for the New Deal, a series of programs designed by U.S. President Franklin D. Roosevelt to provide relief and recovery from the effects of the Great Depression. While Friedman was in favor of the New Deal overall, he was opposed to most government programs and price controls.
Compared to Keynes, Milton Friedman was more of a laissez-faire economist. He advocated minimizing the role of government in a free market. These ideas formed the basis of his book “Capitalism and Freedom” (1962). He is perhaps best known for promoting free markets and is credited with the concept of modern currency markets, unregulated and unpegged to precious metals standards (reflecting a mantra of “money is worth what people think it is worth”).
Friedman’s works were even circulated underground during the Cold War and were the basis for consumption-tax-based economies rather than an income tax or wealth tax-based one.
Friedman believed that introducing capitalism to totalitarian countries would lead to the betterment of society and increased political freedom. A winner of the Nobel Memorial Prize in Economic Sciences in 1976, he was adamant about the link between money supply and inflation. His speech in 1988 to Chinese students and scholars in San Francisco, in which he referred to Hong Kong as the best example of laissez-faire policies, was deemed a direct influence on China’s ensuing economic reforms.
7. Abhijit Banerjee and 8. and Esther Duflo
Abhjijit Banerjee was born in Mumbai to a family of economists. Both his parents were professors in Calcutta, and he received his own economics education in India before obtaining his Ph.D. from Harvard University. He now teaches at MIT, where he met his future wife, the French-born economist Esther Duflo In 2003 they co-founded the Poverty Action Lab with Sendhil Mullainathan.
The Poverty Action Lab is most famous for its experimental approach to developmental economics. Rather than relying on mathematical models or observational data, Banerjee and Duflo created randomized trials to determine the effectiveness of government spending on teaching materials, vaccinations, and other policies.
For example, they measured the effects of a Universal Basic Income by giving unconditional payments to residents of poor Kenyan villages. Different villages received different types of payments, and some were selected as a control group. By measuring the economic improvements after those payments, the economists could accurately measure the effects of UBI as effectively as doctors conducting a drug trial.
Banerjee and Duflo were awarded the Nobel Prize for Economics in 2019, along with the University of Chicago’s Michael Kremer. Through the US Health Care Delivery Initiative (HCDI), the Poverty Action Lab is funding projects to address the US Healthcare System.
9. Nouriel Roubini
Nouriel Roubini was born in Istanbul, Turkey to an Orthodox Jewish Iranian family, which later emigrated to Israel. Since then, he has also lived in Turkey, Italy, and the United States, describing himself as a “global nomad.” He earned his economics B.A. in Milan before earning a PhD. at Harvard University. He now teaches at NYU’s Stern School of Business.
In addition to research, Roubini has also contributed to economic policy-making at institutions like the World Bank and the International Monetary Fund, among others. He also served on the White House Council of Economic Advisors during the Clinton administration, as well as for the Treasury Department.
Roubini is most famous for accurately predicting the 2008 financial crisis. In a 2006 position paper for the IMF, he warned that the real estate bubble would soon crash, causing a major recession. This prophetic warning earned him the nickname “Dr. Doom.”
Roubini is also known for his adverse position on bitcoin, which he has described as “the mother of all scams.” He has also criticized “useless” blockchain technology, at a time when the market was still highly optimistic about distributed ledger offerings.
Nouriel Roubini was nicknamed “Dr. Doom” for his gloomy outlook in 2006, which was later confirmed by the Great Recession.
10. Hernando de Soto
Hernando de Soto was born in Peru, although he spent most of his childhood in Europe following that country’s military coup. He is most famous as the architect of Peru’s neoliberal economic reforms; however, his work has impacted the entire Western hemisphere.
In 1979, de Soto returned to Peru and by 1981, he founded the Institute for Liberty and Democracy, a neoliberal think tank heavily influenced by Friedrich Hayek and Milton Friedman. With generous funding from international development agencies, the ILD promoted free-market policies and legislation to address the country’s informal property relations and arbitration.
While the ILD has lost popularity in Peru, de Soto has continued to argue for free-market reforms throughout the Western hemisphere. His work inspired the Washington Consensus and supported the creation of NAFTA. De Soto’s contributions have been acknowledged by U.S Presidents Ronald Reagan and Bill Clinton.
11. Janet Yellen
Janet Yellen was born in Brooklyn, NY in 1946. She earned her bachelor’s in economics at Brown, before earning an M.A. and Ph.D. at Yale University.
Much of Yellen’s research career was spent studying labor markets and the effects of government policy. She has advocated in favor of a Keynesian economic philosophy, favoring economic stimulus and a moderate position on inflation, while also favoring reforms to certain government entitlements.
In 1994, she was appointed to the Federal Reserve Board of Governors, where served until she became Chair of the Council of Economic Advisors. Since then, she has served several other roles in the Federal Reserve, culminating in the Chair of the Federal Reserve from 2014 to 2018. She was appointed U.S. Treasury Secretary by President Biden in 2021.
12. Paul Samuelson (1915-2009)
Paul Samuelson was an American economist who won the 1970 Nobel Prize in Economics. Samuelson helped establish modern mathematical foundations for economics and wrote the canonical textbook Economics: An Introductory Analysis. His work was instrumental in co-establishing the Neo-Keynesian school of thought, alongside that of John Hicks and Franco Modigliani.
His mathematical approach to economics helped raise the bar for analysis by introducing ways to represent theories and problems. It is similar to how physics textbooks use mathematical formulas to explain how objects move, and it allows for much stronger estimates of how an economy will be affected by change than was previously possible. He also boosted and enhanced the idea of the Phillips curve —the observation that inflation and unemployment rates tend to move in opposite directions.
The Neo-Keynesian school of thought was eventually fused with various neoclassical ideas to become the leading theory of economics today.
13. Amartya Sen (1933-Present)
Amartya Sen is an Indian economist and philosopher. Born in West Bengal, India in 1933, he is currently working at Harvard University. Sen co-created the Capability Approach to economics with philosopher Martha Nussbaum. This method examines not only how money moves in an economy but what the people in that economy can actually do with it. In this way, the idea shifts the focus of economics from resources to people.
To illustrate, consider Sen’s example of two individuals making the same amount of money, but with two different levels of physical ability. While they might be equal in some ways, their society might make them unequal in others — by failing to provide, for example, wheelchair ramps. In a way, Sen’s thinking is about what kind of life a person can hope to live rather than just how much income they report.
This theory is the foundation of the Human Development Index, co-written by Sen and Mahbub ul Ha, which is used by the United Nations to rate countries on characteristics such as life expectancy, education, and standard of living. It takes the central idea of the Capability Approach — that there is more to how well a person is doing than how much they earn — and applies it to the scale of nations.
Who Is the Most Influential Economist in History?
The Scottish writer, thinker, and philosopher Adam Smith is frequently cited as the most influential economist in history. Due to Smith’s pioneering ideas on the free market and his legacy, he is often called the father of modern economics.
The Bottom Line
All of these economists had a profound effect on the world, but only time will tell how they will impact future economic thinking—and where we head next.
7 great economists and how their ideas still affect us today