The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword
• Part I: Can Capitalism Survive?
• Introduction
• Chapter 1: Can Capitalism Survive?
• Part II: The Philosophy of Freedom
• Introduction
• Chapter 1: The Case For Economic Freedom
• Chapter 2: The Libertarian Philosophy
• Chapter 3: Who’s to Blame?
• Chapter 4: Paradise In Posey County
• Part III: On the Nature of Economics
• Introduction
• Chapter 1: Adam Smith: 1776-1976
• Chapter 2: Christian Economics: Myth Or Reality?
• Chapter 3: College Economics: Is It Subversive of Capitalism?
• Part IV: On the Business System
• Introduction
• Chapter 1: Profits
• Chapter 2: The Businessman
• Part V: On Labor Markets
• Introduction
• Chapter 1: The Labor Monopoly
• Part VI: On Money and Inflation
• Introduction
• Chapter 1: The Long-run Economic Outlook
• Chapter 2: Alleged Causes of Inflation: Corporate Monopolies
• Part VII: On the Problems of Cities
• Introduction
• Chapter 1: The Problems of Cities
• Part VIII: On Education
• Introduction
• Chapter 1: Financing Higher Education In the United States
• Chapter 2: The Promise of the College
• Part IX: On What to Do
• Introduction
• Chapter 1: The Businessman and the Defense of Capitalism
• Chapter 2: Reflections On the Election of 1964
• Chapter 3: The Foundation For Economic Education: Success Or Failure?

CHAPTER 3

College Economics: Is It Subversive of Capitalism?

So that you will not be left in suspense, let me tell you immediately that the amount of subversion that takes place in college economics courses is probably much less than you may have imagined. The reasons for this are many; two of the most important are as follows:

(1)  In general, the level of teaching in economics (and particularly in the introductory course, which is the only formal course in economics taken by most American students—if they take even that) is generally of such poor quality that the students are neither subverted nor enlightened—primarily, they are bored!

(2)  The second reason that less subversion by the left takes place in American college courses in economics than you may have imagined is that the student in these courses is exposed to less purely leftist economics than you may have imagined. But don’t be too encouraged by this. Where the student does encounter the true economic nonsense of the left is in his courses in literature, history, political science, social psychology, sociology (one of the worst offenders), and philosophy. The degree of certainty of this exposure to economic nonsense becomes almost absolute if he goes on to study to be a minister, a priest, or a rabbi.

I intend to concentrate on the introductory course, not only because it is the one taken by the largest number of students, but also because it reflects as well what happens in almost all of the advanced courses that follow it. Obviously I will be painting with a broad brush, and my comments will not be a description of each and every introductory course in economics in America nor of each and every teacher of such a course.

Let me begin by describing the organization of the typical introductory course in economics at an American university. (I might note that this description would apply equally well to the introductory course in almost any discipline or subject in the university.)

The director of the course will be a middle-level member of the department who has already been marked as a nonproducer; i.e., as a man who is not likely to bring fame to the department by his creative scholarship (or by what passes for it in most of the social sciences). His staff will consist largely of the several dozen graduate students and young instructors in economics who have not been able to secure research grants for the year; supplemented by a few regular members of the department who are told that they must teach in the introductory course at least once every fourth term; supplemented in turn by lectures delivered on occasion by some of the Big Names in the department—whose lectures must be fitted into their schedules of shorter or longer stays in Washington, D.C., at the U.N., or in Thailand.

Two or three times each week, the thousand or so students will gather in the largest auditorium on campus to hear lectures delivered by the director or one of his peripatetic stars; once or twice each week the students will meet in small quiz sessions, led by the young graduate students, who have nothing to gain by doing the job well and everything to lose if they spend so much time on their teaching as to fall behind in their graduate courses or their research for the doctoral dissertation. I speak from several years of direct personal experience in this role.

Assignments are made in a textbook, chosen usually from the list of “in” books—Samuelson, Reynolds, Bach, McConnell, etc. I might note that a really popular textbook can bring a Samuelson (say) as much money as Keynes made in speculating on the international money market, if not as much as Ricardo made in speculating in government consols at the time of the Battle of Waterloo. Students are also given assignments in workbooks, computing demand elasticities or deflationary gaps (why seldom an inflationary gap, I wonder?). A readings book presenting a range of views on questions of public policy is a very common adjunct to the course, but is rarely at the heart of the course.

Every few weeks, students will be given a common, objective examination, patterned after the workbook problems and exercises. These exams will be machine scored; the scores will be scaled, and each quiz section instructor will be given a suggested grade scale for his students. At the end of the term, each student will receive a grade and the mighty struggle to push back the walls of ignorance will be at an end. If Karl Marx himself were director of such a course, it would still produce more glassy-eyed boredom than red-eyed subversion.

Let me now go on to the second of my statements, to my assertion that, by and large, the economists in American colleges and universities are not all-out socialists or even unwavering critics of the market system.

Let me quote first a selection from Samuelson’s textbook:

If I hadn’t told you, to whom would you have ascribed those two paragraphs? Mises, Hayek, Friedman? But the paragraphs actually come from the book used by more students in America and around the world than any other book in the history of the teaching of economics.

Ah, you say, but in other selections Samuelson reveals his true colors. Yes, it is true; Samuelson does say much with which I disagree and with which most of you disagree. But, in common with almost all professional economists, including the best of the socialists, he does recognize the critical and necessary role of the marketplace, with an excellent, explicit development of subjective, marginalist value theory.

In a current study of mine on the impact of minimum wage laws on the Negro, I have found much good sense in the work of Samuelson and of Yale’s own Lloyd Reynolds. The typical well-meaning minister or civil rights worker may urge the Negro to demand a $2.00-an-hour minimum wage—but not the typical economist.

George Stigler once wrote an article in which he argued that the study of economic theory tends to push the student in the direction of the market system, that it has a built-in-conservative bias.49 From my own observations, I would tend to agree, much as I dislike agreeing with Stigler behind his back.

Please don’t misunderstand me; I am not trying to persuade you to accept Paul Samuelson or Lloyd Reynolds or George Leland Bach or the other high priests of the introductory course into membership in the Yale Conservative Club—a suggestion that any one of the three would find decidedly amusing. Although I find much to admire and agree with in their works, I also find much with which I disagree.

But I still insist that, in spite of his faults as we would see them, the professional economist around the world (whether on this side or the other side of the iron curtain) is not our greatest enemy. Our greatest enemy is he who (whether of good intent or evil) is totally oblivious to the fact that there is a process at work in the economic affairs of man, that effects are related to causes, and that this process is a great datum of human experience. One of the brothers in Dostoevsky’s classic says to the other, “There is no God and hence everything is possible.” His modern counterpart says, at least by implication, “There is no Economics and hence everything is possible.” Again, this is not a statement commonly made by economists, although John Kenneth Galbraith comes close to saying this in his recent writings. Perhaps Galbraith is the only economist of wisdom in America today—or perhaps (as I think more likely) Galbraith is not really an economist at all, but rather a man of letters. And men of letters, by and large, when they turn to subjects in economics, tend to produce nonsense. Thus George Bernard Shaw, self-appointed economist for the early Fabians, in his preface to Major Barbara, eliminates poverty everywhere with one stroke of his pen. “The thing can be done easily enough,” he says, “in spite of the demonstrations to the contrary made by the economists.”

Here is our real enemy, and in the struggle against him, the typical professional economist may as often be with us as against us. If he has sometimes led students into what we believe to be error, at least he has also given them basic awareness of the economic process—the beginning of economic wisdom. As always, if we who are now called “conservatives” are losing, it is because of our own weaknesses and imperfections and not because we are undone by a vicious and entrenched and invincible enemy. Let us look to our own inadequacies, not to the sins of the Paul Samuelsons, if we want to understand the mess we are in and what we can do to correct it.

PART IV

ON THE BUSINESS SYSTEM

[48. ]Paul Samuelson, Economics, 6th ed., pp. 37-38.

[49. ]George Stigler, “The Politics of Political Economics,” in Essays in the History of Economics (Chicago, 1965), pp. 51-65.