Tuesday, December 15, 2009

Paul Samuelson Should Be Posthumously Found Guilty of Intellectual "War Crimes" Against Freedom and Prosperity

By Richard Ebeling

Paul Samuelson (to use Jevon’s phrase about Ricardo) helped to shunt economics off on the wrong track.

We should recall the enthusiasm with which he helped to herald the triumph of Keynesian Economics (see his contribution to Seymour Harris’ edited 1947 volume, “The New Economics,” which is a “worshipful” essay in which Samuelson was so happy to be under 30 years of age when “The General Theory” appeared, and therefore mentally open and receptive to the new revelation.)

His “Economics” textbook indoctrinated generations of students into the “failures” of the market that could only be corrected by discretionary fiscal and monetary policy guided by wise and competent economics “doctors” like himself.

He arrogantly insisted on the mathematical formalizing of economics. And though he studied with and personally liked Schumepeter during his student days at Harvard, he spoke in contemptuous terms of poor Schumpeter’s amateurish attempts to learn and do math.

He was one of the intellectual godfathers of those who tried to introduce the social engineering mindset during the Kennedy “New Frontier”days — that generation of the “best and the brightest” that gave us, finally, both the Vietnam War, the Great Society, and Stagflation.

When I took my first economics undergraduate class, I was assigned the 7th edition of Samuelson’s “Economics.” It had that, now, infamous chapter on comparative economic systems in which he extrapolated GNP growth rates for the U.S. and the U.S.S.R. until the the end of the 20th century. And where he projected the Soviets exceeding U.S. GNP by the 1980’s perhaps, but certainly by 2000.

(Not only was his prediction about Soviet GNP wrong, he failed to predict that there would be no Soviet Union by 2000!)

Samuelson epitomized all that went wrong with the mainstream economics profession from the 1930s to the current time.

But as Mario Rizzo has correctly observed, his passing will be used to rationalize the formalistic bias and the interventionist policy views of many in that mainstream of the economics profession.

If there is ever an economics Nuremberg Trials, Samuelson should be posthumously found guilty of intellectual “war crimes” against freedom and prosperity.

(A slightly altered version of this post originally appeared at ThinkMarkets.)

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