Development and Underdevelopment in the History of Economic Thought

The von Neumann-Earle Connection, or from National Security to the Stable Set

Juan Carvajalino, Université Paris 8, Vincennes-St-Denis

In 1933 Abraham Flexner established the Institute for Advanced Study by founding the School of Mathematics. Two years later, he inaugurated the School of Economics and Politics. By presenting Flexner as a mediator between mathematician John von Neumann and historian Edward Mead Earle, two professors at the Institute, I explore in this paper the connection around 1940 between von Neumann’s mathematical economics and Earle, who headed a seminar on international relations and military history. I claim that Earle’s seminar, where an international community of historians and political and social scientists gathered to study war as a social phenomenon in war preparedness and war contexts, served as a stimulus that contributed from a scholarly point of view to von Neumann’s realization that he could meaningfully apply the mathematical theory of games to economics and social sciences. I further argue that von Neumann’s notion of the stable set, with which he characterized social and economic stability and equilibrium, suitably reflected Earle’s concerns about national security informing his seminar and at the heart of his plea for the establishment of a Grand strategy policy in America. I also suggest that von Neumann’s emphasis on cooperative games supported the conception of society as an organic whole that Earle’s historical tradition defended.

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Keywords: von Neuman, Earle, Flexner, history, matheamtical economics, history