Critical Notes on “Economics” by Paul Samuelson

This widely acclaimed textbook has made its contribution to the instruction of many economists throughout the world. But, along with its indisputable advantages, there are also evident shortcomings. Consequently, the textbook, published by McGraw-Hill/Irwin (USA) in 2005, deserves a critical review.

Incorrect Information

“All your life – from cradle to grave and beyond – you will run up against the brutal truths of economics” (p. 3). Definitely, a treatise on the real world’s problems is the wrong place for mythological speculations. Leave reincarnation, judgment day, and other fairy tales to a cabal of transnational priests and their faithful shareholders.

“The whole area of the Internet, from e-commerce to e-mail, was not found even in science fiction literature 20 years ago” (p. 114). Oh, please, don’t mess with writers, whose creative imagination has made up even such fanciful vehicles as flying carpet and time machine. But outside the world of fantasy, the harsh reality of life also provided working prototypes of the Internet. For example, the U.S. Department of Defense’s APRANET started to operate in 1969. This network was mentioned on page 327, but without its time-line.

“A large ship in the mid-nineteenth century could carry 2000 tons of goods, while the largest supertankers today carry over 1 million tons of oil” (p. 117). Surely, it would be great to have vessels with this astonishing carrying capacity. Unfortunately, the largest supertankers today carry only 550,000 tons of oil at a maximum. Therefore, the above-mentioned figure is just another instance of wishful thinking.

“It is called a “monopolist”, from the Greek words mono for “one”and polist for“seller” (p. 168). First of all, there is no Greek word mono. They say, monos. Secondly, its etymology should be written in the original form μόνος. Because accurate researchers work in this way.

“…massive military spending and an arsenal of almost 100,000 nuclear warheads”(p. 218). Even in full swing of the Cold War, the world’s arsenal of nuclear warheads was around 60,000 units and never approached the figure, quoted by the authors.

“Top entertainers or athletes can now give a single performance that reaches a billion people via television and recordings — something that was not possible just a few years ago” (p. 252). Well, this is a quite erroneous conclusion. Since the advent of movie industry, gramophone records, and radio broadcasting at the beginning of the twentieth century, mass culture emerged as a global phenomenon. Feodor Chaliapin, Jack Dempsey, Greta Garbo, and other celebrities became household names around the world long before the launch of high-definition television or broadband connection.

“…a default on a few billion dollars’ worth of Russian junk bonds shake the world market in 1997…” (p. 284). This financial crisis in Russia took place in 1998. Another mistake, concerning the country, is on page 594, where its former president Vladimir Putin wrongly named as Alexander Putin. The main reason for such errors is that the authors, as a rule, used books and articles in English. They simply neglected information in other languages. No wonder that their knowledge about foreign countries is often superficial.

“…fiber-optic lines can carry 10,000 simultaneous conversations that required 10,000 paired copper-wire lines in an earlier period” (p.560). At present, fiber-optic lines can transmit 20,000 times more information than copper-wire lines. Theoretical limit of fiber-optic lines’ transmitting capacity is 350,000 times bigger than theoretical limit of copper-wire lines’ transmitting capacity. The science of economics requires unerring precision. Once again, the authors failed to meet this criterion.

“A useful example of the failure to solve the principal-agent problem is found in Soviet book publication” (p. 592). The Soviet Union was one of the few countries with black market for books. Free education, advanced science, and culture gave rise to millions of avid readers. Besides, various kinds of vulgar entertainment, like striptease bars or soap operas, were almost non-existent there.   That is why, books served as effective means of instruction and amusement. Roman law textbooks, bilingual dictionaries, detective stories, and some other publications were in great demand. Poor supply with certain books in the USSR was not caused by differences in their size, number of pages, or words, as Samuelson and Nordhaus argued.

Ignored Ideas and Personalities

Economics is not a monopoly, held by Anglophone scholars. But the authors evidently tried to convince us to the contrary. They almost exclusively cited English-speaking economists, especially British-American ones. Even when other cultures were allowed, their presence was usually restricted to folklore sayings: “A picture is worth a thousand words. Chinese Proverb” (p. 18) or “A Spanish toast to a friend wishes “health, wealth, and the time to enjoy them” (p. 88).

An American economist of the Russian origin Wassily Leontief (1906-1999), who developed the input-output economics (incidentally, this theory stemmed from the Soviet planned economy), was not even mentioned. A notable contribution to the research on business cycles, made by a Soviet economist Nikolay Kondratyev (1892-1938), was also passed over in silence. An Argentinian economist Raul Prebisch (1901-1986), who conducted a detailed study of the economic development of Latin America, was totally ignored too.

Some controversial issues were apologetically appraised. Among them are activities of the World Bank, the International Monetary Fund, central banks, etc. The authors didn’t condescend to refer to a large number of experts, who regard these institutions with criticism. Notable alarmists Lyndon Larousch (USA) and Mikhail Khazin (Russia) should have been cited for the sake of scholarly impartiality. Famous Soviet political scientist Georgi Arbatov wrote in New York Times on 7 May 1992 that IMF officials “love expropriating other people’s money, imposing undemocratic and alien rules of economic and political conduct and stifling economic freedom.” Certain high-ranking politicians also share this anxiety. Hungary Prime Minister Viktor Orban said on 30 August 2010 that “It is not in our interest to sign economic policy agreements with the IMF, as that unnecessarily limits the room of manoeuvre of …the Hungarian government, Hungarian parliament and lawmakers.”

In their effort to be politically correct, the authors practiced too much positive discrimination. For instance, the overwhelming majority of political leaders, businesspeople, and economists have been men. Like it or not. But the authors preferred illusions to the sober reality. They constantly misused a principle “ladies first” in the field, where personal likings are irrelevant. Here just a few quotations out of other numerous examples. “When Farmer Smith sells a homogenous product like wheat, she sells to a large pool of buyers at the market price of $3 per bushel” (p.148). “Consider someone who goes to a little-known school. She knows that she will be largely judged by the quality of her schooling credentials” (p.259). “Suppose you are the economic adviser to President Mary James, who has just been elected” (p.654).

Throughout the textbook a concept of marginal utility was approvingly described. But the opposite standpoint wasn’t elaborated. Considerable number of economists argue that the marginal utility is reliably applicable only to absolute necessities like water and food. Another misrepresented topic is the part that military conflicts play in economic growth. “The role of wartime spending in economic expansions is one of the most direct and persuasive examples of the functioning of the multiplier model” (p. 495). How they elegantly covered up the predatory nature of the war, didn’t they? Forcible conquest of new markets, plundering cultural artifacts, drug traffic sponsored by aggressors, and other crimes is the real motivating force behind invaders. The authors also exaggerated greatly economic problems of the former Soviet bloc. “Moreover, the East German growth tended to emphasize production of intermediate goods and commodities of little value to consumers” (p. 592). The eventual collapse of the Warsaw Pact was mainly caused by ethnic conflicts, enemy propaganda, traitors, and other non-economical factors. Small countries, like Cuba and North Korea, still live under socialism because they adhere to its principles. The USA didn’t break up during the Great Depression in the thirties or the energy crisis in the seventies, because its rulers effectively suppressed any dissenting movements, which might have been subversive. As for the quality of goods produced in socialist countries, let me tell you about my personal experience. In my childhood, I played with high-quality toy railways made in East Germany, wore excellent Romanian clothes, took balmy Vietnamese medicines, etc. Under the Soviet rule, it was easier to buy caviar than to get a pair of jeans.Of course, shortcomings were also present. Cars, high-grade pianos, foreign trips, and so forth were in great demand. But it is apparently not enough to knock out a superpower.

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