Paul Samuelson 1915-2009

How will Paul Samuelson be remembered? This is the positive side of the story, the glowing record of  the Nobel Laureate and author of the most widely read textbook in modern times.

History may be kind to Samuelson. He had the good fortune to surf three waves that carried all before them, for a time. The waves were the General Theory of Keynes, the Big Government welfare state and Mathematics. To capture the mood of the Keynesian revolution he recycled a famous response to the French Revolution “Bliss was it in that dawn to be alive, But to be young was very heaven! …”.

It is likely that critical scholarship will be less kind. He may be remembered as the man who thought that the Soviet economy was robust and rapidly overhauling the US. The man who was relaxed and comfortable with Keynesian stimulation of the economy. The man who thought that the Austrians are rubbish. I think he was wrong on all three counts.

An essay topic “Compare and contrast the outcomes of the French and Keynesian revolutions”.

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11 Responses to Paul Samuelson 1915-2009

  1. James Farrell says:

    The second and third charges are correct, Rafe, and are to Samuelson’s credit.

    The first charge is irresponsibly misleading. I explained why at considerable length the last time you made it, but that evidently didn’t have much impact. I can’t say I’m surprised, and I won’t make the effort again.

  2. Richard Green says:

    I can make Rafe’s response for him

    “Can we at least all agree that the Soviet union was a failure?”.

    He’s very fond of that variety of rhetorical crutch!

    On a more serious note, I think Samuelson was intellectually honest and was making genuine efforts to support the expansion of understanding of economic phenomena rather than advancing an agenda. This is very important! But I fear that much of the neoclassical synthesis that he popularised, and much of his important work is rather useless in the end. It doesn’t lead to ideological conclusions (like both Austrians and left wing heterodoxy usually believe). It can lead to any conclusion one wants (something being discussed over in the Utility post).
    I think his textbook, however popular, may have had a poor legacy. Important concepts (like uncertainty) that were not initially formalised slipped through the cracks. They weren’t formalised because it was difficult to do so. This is understandable, but they were then forgotten because economics concepts were taught through formalism solely, rather than subsequent and a test of intuitive understanding. Samuelson may have been known these concepts well, but his textbook style spawned generations of economists who missed them.

  3. James, you had better give us the link to your previous response so I can have another look at it!

    Richard, what is your point about the Soviet union?

  4. James Farrell says:

    Richard is referring to your tactic of dodging a challenge by posing your own question on a related topic where you feel you’re on safer ground.

    Another tactic is just to ignore the challenge, which is what you did in the Samuelson = soviet apologist case. It was on JQ’s blog a couple of years ago in a thread about Austrian economics or Popper or both. Since you didn’t respond at the time, the onus isn’t on me to dig it up.

  5. Thanks James, we all like to operate on safe ground and I have found people remarkably unwilling to answer some of the questions that I have asked in the past.
    With the best will in the world I have often been too busy to follow all the threads that I have been involved in at various times.
    I don’t think I would have accused Samuelson of being a soviet apologist (depending which aspect of the soviet experience we are talking about), merely that he completely misread the play on the soviet economy.

  6. Edward Mariyani-Squire says:

    For those interested souls, here is the Ghost of Farrell Past:

    James Farrell September 20th, 2006 at 00:54 | #43
    Samuelson, the man who wrote year after year, up to the fall of the wall, that the Soviet economy was strong and overhauling the US?

    Fiddlesticks. What Samuelson did, year after year, was to explain that long run estimates of US growth and in particular Soviet growth were so uncertain that a very wide range of outcomes could occur. Overhauling the US was one possibility. In the 1967 edition I have on my shelf he says

    Over the whole period since World War II, the percentage growth rate of the Soviet Economy almost certainly exceeded the American growth rate. But in the 1960s the Soviet growth rate may well have fallen behind the American (and it has certainly fallen below those of West Germany, Japan, Italy and France). Furthermore many experts believe that it is easier initially for an economy that starts frrom a lower level of productiveity to achieve a high percentage growth ratethe unused opportunities for imitating Western technology are likely to diminish. Hence it may be unwise to extrapolate past growth rates in the Soviet Union into the distant future.

    I dont know whether Samuelson was still drawing on the best available information in 1989, but the claim that Soviet growth exceeded US growth in the 1960s accords with the figures (4.9% versus 3.8) in Kornais magnum opus The Soshalist System, which is not exactly an apologia for soshalist planning.

    The point is, as both Samuelson and Kornai know perfectly well, that a high GDP growth in itself means nothing if high and indeed increasing investment rates are necessary to sustain it. Far less does high growth imply that people are satisfied either as consumers or as political beings.

    I defy any fair minded person to read Samuelsons chapter on alternative economic systems and find there an endorsement of central planning. Certainly the Soviet censors didnt think so, since they removed
    the entire section on growth from the Russian edition.

    Rafe, I would have thought you would have been aware of James’ comments at the time because you copied and pasted them on the The Austrian Economists blog.

  7. Thanks Edward, actually I found them at the same location but have been spending time in the health system lately due to a broken bone in my foot.

    I don’t think I ever accused Samuelson of being a fan of central planning, just way out in his reading of the economic prospects of the Soviet system. The question is, how can you get that so wrong when you are supposed to be a competent economist?

    This may help to get a handle on the way his thoughts evolved. It is a review of the some key topics in the Samuelson textbooks starting from the beginning.

    http://www.markskousen.com/article.php?id=1124

    Central Planning and Soviet Growth

    In very early editions, Samuelson expressed skepticism of socialist entral planning: “Our mixed free enterprise system … with all its faults, has given the world a century of progress such as an actual socialized order–might find it impossible to equal” (1:604; 4:782). But with the fifth edition (1961), although expressing some skepticism statistics, he stated that economists “seem to agree that her recent growth rates have been considerably greater than ours as a percentage per year,” though less than West Germany, Japan, Italy and France. (5:829). The fifth through eleventh editions showed a graph indicating the gap between the United States and the USSR narrowing and possibly even disappearing (for example, 5:830). The twelfth edition replaced the graph with a table declaring that between 1928 and 1983, the Soviet Union had grown at a remarkable 4.9 percent annual growth rate, higher than did the United States, the United Kingdom, or even Germany and Japan (12:776). By the thirteenth edition (1989), Samuelson and Nordhaus declared, “the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive” (13:837). Samuelson and Nordhaus were not alone in their optimistic: views about Soviet central planning; other popular textbooks were also generous in their descriptions of economic life under communism prior to the collapse of the Soviet Union.7

    By the next edition, the fourteenth, published during the demise of the Soviet Union, Samuelson and Nordhaus dropped the word “thrive” and placed question marks next to the Soviet statistics, adding “the Soviet data are questioned by many experts” (14:389). The fifteenth edition (1995) has no chart at all, declaring Soviet Communism “the failed model” (15:714-8). To their credit, Samuelson and Nordhaus (15:737) were willing to admit that they and other textbook writers failed to anticipate the collapse of communism: “In the 1980s and 1990s, country after country threw off the shackles of communism and stifling central planning–not because the textbooks convinced them to do so but because they used their own eyes and saw how the market-oriented countries of the West prospered while the command economies of the East collapsed.”

  8. James Farrell says:

    Thnaks for taking the trouble, Edward. JQ’s site wasa down, and I didn’t think of googling. It’s illuminating to discover that Rafe was too busy to answer my comment (despite ‘the best will in the world’), but not too busy to copy and paste the whole discussion on another website and beg the site’s author to come and bash me up.

  9. Where is your sense of humour James? I thought it would be good to have more international visitors to Troppo.

    I can’t remember why I let the issue drop three years ago, possibly because I decided to run with a discussion with John Q on the philosophy of science.

    My point was that Samuelson dropped the ball on reading the Soviet economy. Someone at the Austrian Economists suggested that this came from looking at macro indicators, gross production figures. When Kruschev announced that he was going to bury the west, he was (possibly) not talking about military conquest but the production of things like steel, concrete, oil, etc. They may have produced a lot of tonnage but it was not used efficiently. Remember the story about the nail factory where they found that the production target (by weight) was easier to reach if they made bigger, blunter nails, so they eventually produced wedges that were only good for recycling.

    Without suggesting that Samuelson was any kind of Soviet sympathiser you also need to remember that the truth about conditions in Russia were systematically mis-reported by generations of western communists and fellow travellers, including eminent historians like Manning Clarke. This meant that people like the Quadrant crowd made themselves very unpopular in leftwing circles, merely by telling the truth.

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  11. James Farrell says:

    I never realised that Samuelson relied on Manning Clarke for information about the performance of centrally planned economies. I suppose Kornai did too.

    But you’re right, Rafe. Your contributions are pure buffoonery, and I should just enjoy them in that spirit.

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