How Influential Economists Shaped American History

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American economic history was shaped by two kinds of economists: thinkers whose ideas American lawmakers adopted, and economists who held American office and put those ideas into practice. Adam Smith and David Ricardo supplied the case for open markets and trade that informed US commercial policy. John Maynard Keynes gave Washington the rationale for using federal spending against recessions, and Milton Friedman supplied the counterargument that money supply, not fiscal stimulus, drives inflation. More recent figures, from Janet Yellen at the Federal Reserve and Treasury to Abhijit Banerjee and Esther Duflo with their field experiments, changed how policy is made and tested. Several of the most influential names were not American at all. Their ideas crossed the Atlantic and became part of how the United States taxes, trades, regulates and fights downturns.

1. Adam Smith (1723 to 1790)

Adam Smith was a Scottish moral philosopher who became a political economist during the Scottish Enlightenment. His two major books reflect that background: “The Theory of Moral Sentiments” (1759), about how people form moral judgments, and “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776), usually shortened to “The Wealth of Nations.” The second became one of the founding texts of economics, which is why Smith is often called the father of modern economics.

“The Wealth of Nations” appeared the same year the American colonies declared independence, and its central target was the same system the colonists were rebelling against. Mercantilism treated national wealth as a stock of gold and silver to be accumulated through tariffs, export subsidies and tightly controlled colonial trade. Smith argued that wealth comes from productive labor, the division of labor and voluntary exchange, and that protectionism and gold hoarding made nations poorer. Britain’s restrictions on colonial commerce were a direct example of what he criticized.

The book circulated among the American founding generation, and its arguments framed early debates about the new country’s economy. Alexander Hamilton’s 1791 Report on Manufactures engaged with Smith’s ideas even as Hamilton argued that a young nation needed some protection for its industries. That tension between Smith’s free-trade logic and the case for protecting domestic producers has run through American tariff politics ever since, from 19th-century tariff fights to modern trade disputes.

Smith’s legacy is also partly unknown: near the end of his life he had most of his manuscripts destroyed, so the full scope of his later work never reached the public.

2. David Ricardo (1772 to 1823)

Ricardo came to economics from the trading floor rather than the lecture hall. Born into a Portuguese Jewish family, he joined his father at the London Stock Exchange at 14 and became wealthy speculating in securities and real estate. He read “The Wealth of Nations” in 1799, though nearly a decade passed before he published his first economics article.

His 1815 “Essay on the Influence of a Low Price of Corn on the Profits of Stock” argued for repealing Britain’s Corn Laws, the tariffs that kept grain prices high and benefited landowners. He followed it with “On the Principles of Political Economy and Taxation” (1817) and entered Parliament in 1819.

Ricardo’s most durable idea is comparative advantage. A country benefits from specializing in what it produces at the lowest relative cost and trading for the rest, even if it could produce everything more efficiently than its partners. His famous illustration used England and Portugal trading cloth and wine. This principle extended Smith’s case against protectionism and remains the core theoretical argument for free trade. When US policymakers defend trade agreements, they are making a Ricardian argument whether they cite him or not.

Ricardo also showed how landlords could capture a growing share of national income through rising rents while laborers and capitalists lost ground, a transfer he argued did not benefit society. His analysis of how income divides among land, labor and capital shaped later thinking on distribution and taxation.

3. Alfred Marshall (1842 to 1924)

Marshall was born in London and originally planned to join the clergy, but his success at Cambridge pulled him into academic life. He is often the least recognized name on lists like this because he did not champion a radical theory. His influence came from method: he applied rigorous mathematics to economics and helped move the field from moral philosophy toward something closer to a science.

Despite that emphasis on mathematics, Marshall wanted his work to be readable. “The Economics of Industry” (1879) became a widely used curriculum text in England. He then spent nearly ten years on “Principles of Economics” (1890), his most important book. In it he brought supply and demand curves, marginal utility and marginal production costs together into one coherent model.

Every American student who has drawn intersecting supply and demand curves in an introductory course is using Marshall’s framework. It also connects him directly to the next figure on this list: Marshall personally funded a Cambridge lectureship for John Maynard Keynes, and Keynes built much of his early work on Marshall’s curves.

4. John Maynard Keynes (1883 to 1946)

Keynes is remembered for arguing that governments should use spending and monetary policy to soften recessions, depressions and booms. During World War I he worked on credit arrangements between Britain and its allies and represented Britain at the Versailles peace negotiations.

He was nearly bankrupted by the 1929 stock market crash but rebuilt his fortune. In 1936, with the Great Depression still underway, he published “The General Theory of Employment, Interest and Money.” Its argument was that an economy could remain stuck with high unemployment because total demand was too low, and that government spending could fill the gap by supporting consumption and investment. The book is widely regarded as the beginning of modern macroeconomics.

Keynes’s influence on the United States was enormous. His thinking provided theoretical support for deficit-financed government spending during downturns and shaped how American economists and officials approached the postwar economy. The Employment Act of 1946 committed the federal government to promoting maximum employment, production and purchasing power, a goal consistent with Keynesian thinking. Keynes also led the British delegation at the 1944 Bretton Woods conference in New Hampshire, which created the International Monetary Fund and the World Bank and set up the postwar monetary system centered on the US dollar.

Keynes taught and collaborated with a circle of younger Cambridge economists, including Richard Kahn, James Meade, Austin Robinson, Joan Robinson and Piero Sraffa, who carried his ideas further.

Keynes and Friedman

Keynes and Milton Friedman are usually presented as opposites. Keynes saw active government spending as a tool for stabilizing the economy; Friedman distrusted government intervention and argued that markets work best with a limited state and a stable money supply. Much of American economic debate since the 1960s can be read as an argument between these two positions.

5. Milton Friedman (1912 to 2006)

Friedman was born to Jewish immigrants from Austria-Hungary. After degrees at Rutgers and the University of Chicago, he worked for New Deal programs, Franklin D. Roosevelt’s response to the Great Depression. He supported the New Deal in broad terms but opposed most government programs and price controls.

Friedman became the leading voice of laissez-faire economics in the 20th century and the best-known figure of the Chicago school. “Capitalism and Freedom” (1962) argued for minimizing the government’s role in markets and linked economic freedom to political freedom. He believed that introducing capitalism into totalitarian countries would improve living standards and expand political liberty. His writing circulated underground during the Cold War, and he argued for economies taxing consumption rather than income or wealth.

His most consequential technical work was on money. With Anna Schwartz, he wrote “A Monetary History of the United States, 1867-1960” (1963), which argued that the Federal Reserve’s failure to prevent a collapse in the money supply turned a downturn into the Great Depression. That reinterpretation shifted blame from markets to monetary policy. Friedman insisted that inflation is driven by growth in the money supply, a view at the center of monetarism. He won the Nobel Memorial Prize in Economic Sciences in 1976.

Friedman also championed floating exchange rates, with currencies valued by markets rather than pegged to gold. His views are often summed up as “money is worth what people think it is worth,” and he is credited with the concept behind modern currency markets. After the United States ended dollar convertibility to gold in 1971 and the Bretton Woods system broke down, floating exchange rates became the norm among major currencies.

His reach extended beyond American borders. A 1988 speech in San Francisco to Chinese students and scholars, in which he held up Hong Kong as the best example of laissez-faire policy, has been described as an influence on China’s subsequent economic reforms.

6 and 7. Abhijit Banerjee (b. 1961) and Esther Duflo (b. 1972)

Banerjee, born in Mumbai to two economics professors, earned a PhD at Harvard and now teaches at MIT, where he met the French-born economist Esther Duflo, who became his wife. In 2003 the two co-founded the Poverty Action Lab with Sendhil Mullainathan.

Their contribution is methodological. Instead of relying on mathematical models or observational data, the lab uses randomized controlled trials to measure whether a policy works, applying them to government spending on teaching materials, vaccinations and other programs. In one study of universal basic income, poor Kenyan villages received different types of unconditional cash payments while others served as a control group, so researchers could isolate the effect of the money.

Banerjee and Duflo won the 2019 Nobel Prize in Economics, shared with Michael Kremer of the University of Chicago. Their approach has changed how policymakers ask questions: the test is whether a program measurably changes outcomes, not whether it fits a theory. The lab also funds research on the American health care system through its US Health Care Delivery Initiative.

8. Nouriel Roubini (b. 1958)

Roubini was born in Istanbul to an Iranian Jewish family, calls himself a “global nomad,” earned a PhD at Harvard and teaches at NYU’s Stern School of Business.

Beyond research, Roubini has worked on policy at the World Bank and the International Monetary Fund and served on the White House Council of Economic Advisers during the Clinton administration, as well as at the Treasury Department.

He is best known for warning about the housing crash before it happened. In 2006, presenting to the IMF, he argued that the US real estate bubble would burst and push the economy into a major recession. The warning earned him the nickname “Dr. Doom,” and the Great Recession that followed made his reputation.

9. Hernando de Soto (b. 1941)

De Soto was born in Peru but spent most of his childhood in Europe after a military coup there. He returned to Peru in 1979 and in 1981 founded the Institute for Liberty and Democracy (ILD), a think tank influenced by Friedrich Hayek and Milton Friedman.

Funded largely by international development agencies, the ILD promoted free-market legislation aimed at Peru’s informal economy, particularly the lack of formal property titles and dispute arbitration for the poor. De Soto’s argument was that people in developing countries hold large amounts of assets they cannot use as collateral or trade because they lack legal title. He became the architect of Peru’s neoliberal reforms.

His connection to American history runs through US foreign economic policy. His work informed the Washington Consensus, the set of market-oriented policies promoted by Washington-based institutions for developing economies, and supported the case for NAFTA. Presidents Ronald Reagan and Bill Clinton both acknowledged his contributions. The ILD has lost popularity in Peru, but de Soto has kept arguing for free-market reform across the Western Hemisphere.

10. Janet Yellen (b. 1946)

Yellen was born in Brooklyn in 1946, earned her bachelor’s in economics at Brown and her MA and PhD at Yale. Much of her research focused on labor markets and the effects of government policy. Her views are broadly Keynesian: she has favored economic stimulus and a moderate stance on inflation, while also supporting reforms to some government entitlement programs.

Her career is the clearest example on this list of an economist holding the levers of American policy directly. She joined the Federal Reserve Board of Governors in 1994, chaired the White House Council of Economic Advisers, and later returned to the Fed as president of the San Francisco Fed and then vice chair. She chaired the Federal Reserve from 2014 to 2018, the first woman in that role. In 2021 President Biden appointed her Treasury Secretary, also a first for a woman, and she served until 2025. Leading both institutions gave her influence over monetary and fiscal policy.

Economists Who Ran American Policy

The thinkers above supplied ideas; two Fed chairs show how the Keynes and Friedman debate played out in practice.

Paul Volcker chaired the Federal Reserve from 1979 to 1987. Facing double-digit inflation, he raised interest rates sharply and focused on restraining money growth, an approach consistent with Friedman’s view that inflation is a monetary problem. The policy contributed to a severe recession in the early 1980s, and inflation fell substantially over the following years.

Ben Bernanke chaired the Fed from 2006 to 2014. His academic work had built on Friedman and Schwartz’s study of the Great Depression and examined how bank failures deepen downturns. During the 2008 crisis he led the Fed through emergency lending and large-scale asset purchases intended to prevent a repeat of the 1930s. He shared the 2022 Nobel Prize in Economics with Douglas Diamond and Philip Dybvig for research on banks and financial crises.

Who Is the Most Influential Economist in History?

Adam Smith is the name most often given. His case for free markets and against mercantilism founded the discipline, and nearly every later economist on this list either built on his framework or argued against parts of it. For American policy in the 20th century specifically, Keynes and Friedman have the strongest claim: one supplied the rationale for active fiscal policy and the other for rules-based monetary policy and smaller government.

The Bottom Line

Readers trying to understand US trade, tax and recession policy can trace most current arguments back to a handful of economists. Smith and Ricardo shaped the case for open trade, while Keynes and Friedman framed the long contest between active federal spending and rules-based monetary policy. Officials such as Volcker, Bernanke and Yellen then tested those ideas from inside the Federal Reserve and Treasury.