Frank Ramsey was a Cambridge academic that lived for only 27 years and died in the early weeks of 1930. I just finished reading his biography, written by philosopher Cheryl Misak (Frank Ramsey. A Sheer Excess of Powers, Oxford University Press), and published in 2020. It is a very detailed and well written book, covering both his life and his work (including short invited contributions by specialized scholars, for example Robin Boadway and Partha Dasgupta in economics).
I was
attracted to it because I’ve been teaching Ramsey pricing in Economics Masters’
courses for a long time, and using it in my research on regulation. Ramsey had an
incredible short life, in the last years of which he made important
contributions to philosophy, mathematics and economics. He also had time to get
married, have a lover and lots of friends, two children, and friendly (and also
critically) interact with some of the best minds of his time, including Ludwig Wittgenstein
and Bertrand Russell.
He was a socialist
(although not interested in the Marxist dogma) and also an atheist. His brother,
to whom he was very close, became a progressive Archbishop of Canterbury in the
Anglican Church. He was also an optimist and a pragmatist interested in how
rigorous knowledge could help build a better world.
In
economics, he closely interacted in Cambridge with Keynes, Sraffa and Pigou,
the brightest minds on macroeconomics, Marxist economics and microeconomics
then and probably of the whole XXth century.
The piece of
Ramsey that I’ve been teaching over the years is Ramsey pricing, the
translation to utilities’ regulation of Ramsey taxation. This is an application
of the theory of the second best, which says that when there are constraints in
the use of instruments (not all the tools that we would wish are available),
the policies may be very different from the ones that we should implement when
there are no such constraints. In the case of Ramsey pricing, if subsidies to
cover for firms’ losses are not available through undistortive taxes, then
prices above marginal cost are necessary, in a way that those services with
lower demand elasticity should have higher prices, if the objective is to
minimize inefficiency.
In Economics,
Ramsey also contributed to the theory of saving in a dynamic setting and to the
concept of probability (in dialogue with Keynes). His theory of saving was
later expanded by David Cass (my teacher in Florence in the last years of his
career) and Koopmans, in the Ramsey, Cass, Koopmans model.
Economics
and mathematics were both important in the work of Ramsey. Maths were a crucial
tool to understand economic and social issues and to improve human living
conditions. He was a mathematics professor because he was advised to choose
this subject given his incredible skills, but he was as interested in economics
and philosophy.
Ramsey’s
ideas about utilitarianism and rationality were broader than what his work
suggests, according to the author of the biography. His models reach
conclusions from assumptions addressing important real life issues, to which a
large literature has later contributed taking Ramsey as a reference.
He was an interdisciplinary
genius as his strong links with Keynes, Wittgenstein, Russell, Pigou and Sraffa
suggest. Not only they were important to him, but he was important to them. He
was able to have a strong friendship with some if not all of them and at the
same time criticize them intellectually.
Interdisciplinarity
was not an excuse for Ramsey to lower the intellectual and scientific standards.
In fact, in the case of Ramsey, it was a strategy to set them very high.
I strongly
recommend this biography
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