Wednesday, November 6, 2013

Economics - The Dismal Science

          As our society has grown in complexity we have become increasingly dependent upon experts.  The problem with these “experts” is, just how reliable is their advice.  Australian economist G. Barker wrote, “The trouble with economics . . . is essentially that its practitioners and their theories have been elevated to a status which they cannot justify.
To be an economist is, to many people, to be a combination of high priest, guru and soothsayer; it is to possess a passkey to the secrets of the future.”1 Eva Etzioni-Halevy asserted that the economist’s status rests on three factors: that their discipline is widely regarded as a science, their perceived ability to discover laws and forecast future economic trends, and their ability to influence these trends by offering advice.  She quoted H.S. Katz who contended that, “Modern economics claims to be a science.  This is a sham and a fraud.”  Katz further stated, “When it fails to predict future events it does not act like the scientist, disregarding false theories in search of the truth; it acts like the Indian Medicine Man who has failed to make rain.  It equivocates, rationalizes and tries to make minor adjustments.”  2 Modern economics’ claim to scientific validity had its origins in the 19th century.  Its most “successful” advocate was Karl Marx.

            Karl Marx can be described as the father of  “scientific socialism.”  He has had a tremendous impact on modern economic thinking.  Many who do not consider themselves Marxists have accepted his thesis that a planned economy is more productive than a free market system.  Marxism’s strongest appeal lies in its claim to be based on science.  Isaiah Berlin provided this description of Marxism: “Marxism is founded on reason; it claims that its propositions are intelligible, and their truth can be demonstrated to any rational being in possession of the relevant facts.  It offers salvation to all men: anyone can, in principle, see the light, and denies it at his own peril.”3  Put into practice, however, Marxism proved a disappointment.  Rael Jean Isaac, and Erich Isaac point out in their book, The Coercive Utopians, “The more societies have been built on avowedly Marxist lines, the more embarrassing the socialist reality have proved to be.  After the Soviet model's failure could no longer be denied, political pilgrims voyaged to Vietnam, Tanzania, Mozambique, China, Cuba - even Albania - but the Marxist ideal, seemingly detected in each of them for a time, has a way of revealing its hollowness.”4  The repeated failures of Marxism should indicate that there is something wrong with the basic formula.  Igor Shafarevich asserts that the problem is that Marxism is not scientific at all.  “The basic works of Marxism are utterly alien to the most fundamental characteristics of scientific activity - the disinterested striving for truth for its own sake.”5  The German philosopher, Karl Jaspers declared that,  “The style of Marx’s writings is not that of the investigator . . . he does not quote examples or adduce facts which run counter to his own theory.  The whole approach is one of vindication, not investigation, but it is a vindication of something proclaimed as the perfect truth with the conviction not of the scientists but of the believer.”6 This has not prevented the flourishing of the Marxist philosophy, however.

            Irving Kristol has stated, “If you want to study Marxism, with Marxist intellectuals, you go to Paris, or Rome, or London, or some American university campus.”7 In 1994 Milton Friedman asserted, “The fall of the Berlin Wall, the collapse of communism behind the Iron Curtain, and the changing character of China have reduced the defenders of a Marxist-type collectivism to a small hardy band concentrated in Western universities.”8  Friedman was being very conservative with his estimate.  At the time there were than 10,000 self-proclaimed Marxists teaching in American colleges and universities according to the National Association of Scholars, Academic Questions, placement bureau.  Bertell Ollman of New York University, a Marxist theoretician, is the author of Alienation: a Marxist Conception of Man in Capitalist Society.  His text is used in more than 100 American universities.  There are over 500 colleges courses on Marxist philosophy.  Ollman believes that the role of Marxist professors in America "is to make more revolutionaries . . . The revolution will only occur when there are enough of us to make it."9  Ollman boasted that, "a Marxist cultural revolution is taking place today in American universities."10

            This academic environment which had its origins in the early part of the 20th century had an influence on how “experts” viewed Marxist regimes.  One did not need to be a Marxist to have been optimistic about the performance of the Soviet Union.  Economists and experts on the Soviet Union naturally assumed that a planned economy would outperform the chaos of a free market.  Nobel Prize winner Paul Samuelson’s textbook, “Economics” has gone through 15 editions and sold over 4 million copies since 1948.  It has been translated into forty-six languages.  Samuelson has been described as “the dean of America’s liberal economists” and has had a tremendous impact on economic thought and planning through the thousands of his disciples who have gone on to positions of influence in government and academia.  The 7th (1967) edition of his text has a section comparing the economic performance of the Soviet Union and the United States.  His conclusion was that all experts "seem to agree," the Soviet Union's "post World War II growth rates have been considerably greater than ours."            The 1985 edition of his text contained the statement,  ". . .  it would be misleading to dwell on the shortcomings (of the Soviet economy).  Every economy has its contradictions and difficulties with incentives - witness the paradoxes raised by the separation of ownership and control in America. . . . What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth."11 
            In 1981 President Reagan stated, “The West will not contain communism, it will transcend communism.  We will not bother to denounce it, we’ll dismiss it as a sad bizarre chapter in human history whose last pages are even now being written.” A few weeks later Samuelson responded, "It is a vulgar mistake to think that most people in Eastern Europe are miserable."12 As late as 1989 Samuelson was still defending the performance of the Soviet economy stating that it was, "proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.”13 

            Samuelson was not alone in his confidence in a planned economy.  In 1982 Columbia University political scientist Seweryn Bialer claimed in a Foreign Affairs article: "The Soviet Union is not now nor will it be during the next decade in the throes of a true systemic crisis, for it boasts enormous unused reserves of political and social stability that are sufficient to endure the deepest difficulties."14 Historian Arthur Schlesinger Jr. declared after a 1982 visit to the Soviet Union, "Those in the U.S. who think the Soviet Union is on the verge of collapse" are "only kidding themselves."15 Times editor and future Deputy Secretary of State in the Clinton Administration, Strobe Talbot, asserted that it was “wishful thinking to predict that international Communism some day will either self-destruct or so exhaust itself in internecine conflict that other nations will no longer be threatened.”16

            Ann Coulter refers to a 1983 study by thirty-five Soviet experts from Harvard, Columbia, Cornell, and other elite institutions that predicted, “The Soviet Union is going to remain a stable state, with a very stable, conservative, immobile government. . . . We don’t see any collapse or weakening of the Soviet system.”17 In 1984 Harvard economist John Kenneth Galbraith wrote in a The New Yorker magazine article, "That the Soviet system has made great material progress . . . is evident both from the statistics and from the general urban scene. . . . One sees it in the appearance of solid well-being of the people on the streets. . . . Partly the Russian system succeeds because, in contrast with the Western industrial economies, it makes full use of its manpower."18 

            In 1989, on the eve of the collapse of the Soviet Union, M.I.T economics professor Lester Thurow, proclaimed, “Can economic command significantly compress and accelerate the growth process?   The remarkable performance of the Soviet Union suggests that it can.  In 1920 Russia was but a minor figure in the economic councils of the world.  Today it is a country whose economic achievements bear comparison with those of the United States.”19  

            The Soviet Union is now on the trash heap of history.  Yet its supporters have not abandoned their belief in a command economy.  They plan on achieving their goal incrementally.  A command requires coercion.  We can look forward to greater and greater government involvement in our lives.

1 Etzioni - The Knowledge Elite p. 74
2 The Paper Aristocracy, p. 62 Katz
3 The Crooked Timber of Humanity, Isaiah Berlin, Princeton University Press, Princeton NJ, 1959, p. 177
4 The Coercive Utopians, Rael Jean Isaac, and Erich Isaac, Regnery Gateway, Chicago, 1983, p. 296
5 The Socialist Phenomenon, Igor Shafarevich, Harper & Row, New York, 1975, p. 207
6 P. 62 Paul Johnson, Intellectuals
7 Neo Conservatism, Irving Kristol, The Free Press, New York, 1995, p. 302
8 Policy Review, Summer 1994, Serfdom USA, Milton Friedman, p.16
9 May Day For Marxist Profs, Deborah Lambert, Washington Inquirer, p. 1
10 10 "Displaced" Marxism on the campus, Jeffrey Hart, Washington Times, April 29, 1986, p. 3d
11 The Wall Street Journal, November 17, 1994, p. A25 How Wrong Can You Get?, Arnold Beichman
12 Ronald Reagan vindicated at Cambridge, Warren T. Brooks, Conservative Chronicle Jan 2 1991, p. 5
13 National Review, November 29, 1993, p. 13
14 Natioinal Review, October 27, 1997, p 53 The President Did It, Mathew Scully
15 National Review, October 27, 1997, p 53 The President Did It, Mathew Scully.
16 Treason, Ann Coulter, p. 169 
17 Treason, Ann Coulter, p. 169
18 The Wall Street Journal, November 17, 1994, p. A25 How Wrong Can You Get?, Arnold Beichman.
19 U.S can do little to promote peaceful change, Cal Thomas, Conservative Chronicle Oct 9, 1990, p. 13

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