Journal of Economic Perspeaives—Volume 11, Number 2—Spring 1997—Pages 153-160
Credo of a Lucky Textbook Author
Paul A. Samuelson
When a scholarly discipline is in a fruitful phase of innovative advance, itspares little time in studying its own history. Few know the revolutionsthat hit economic introductory textbooks half a century ago. This is a
good occasion to sketch that story and, as Schumpeter would say, to review the
troops. Also, I conclude with notes for historians on ideological pressures brought
against postwar economics teachers.
The 1920s and 1930s were a fallow period in textbook writing. Frank Taussig's
(1911) classic was nearing its end: in 1940 at Harvard, we taught Economics I from
it. The bestseller out of Yale was still Fairchild, Fumiss and Buck (1936), a watered-
down version of Irving Fisher's (1911) text with coverage of Marshall's dd and 55
intersections. At Chicago in the 1931-32 years, Aaron Director assigned me Sumner
Slichter's (1931) new text, poor-mouthing it from the beginning. Actually, it gave
a pretty fair institutional picture ofthe 1920s: when I recendy reread Frank Knight's
(1932a,b) polemics in the Journal of Political Economy against it, what all the shooting
was about was hard to discern. The next quarter, Lloyd Mints shifted to Richard
Ely's Outlines of Economics, which dated from church materials in the 1890s. Ely's
later editions were written by a committee, presided over by the gifted Allyn Young.
The list of competing texts was not short. Among the competent was the Garver
and Hjmsen (1938) text (Alvin did the macro). Among the pedestrian were per-
ennials like Wisconsin's Kiekhoffer (1936) text: it was "institutional," but primarily
in the sense of being "NON-theoretical." Digression: just 60 years ago, Kiekhoffer
never began his lectures before a thousand Madison undergraduates until dele-
gated cheerleaders led the crowd in a Wisconsin locomotive. No kidding!
• Paul A. Samuelson is Institute Professor Emeritus of Economics, Massachusetts Institute
of Technology, Cambridge, Massachusetts.
154 Journal of Economic Perspectives
Book content is what matters. So much less was taught then in economics as
compared to today. When 5,000 banks failed and mortgage delinquencies were in
the millions, the bestselling texts limned the certainties of Say's Law! Taussig was
little better on that when Harvard gentlemen learned it from my knee. No wonder
economics enrollments eroded just when real-world problems and actions were
most dramatic.
An Offer I Couldn't Refuse
How did all this relate to brash Paul Samuelson, whippersnapper gogetter in
esoteric theory? I returned from the wartime Radiation Lab to rejoin the MIT eco-
nomics department. My department head and pal, Ralph Freeman, entered my
office and closed the door. This is what he said.
Eight hundred MIT juniors must take a full year of compulsory economics.
They hate it. We've tried everything. They still hate it. We even did a depart-
mental joint product. It was the worst editorial experience of my life. After
our senior colle^ue turned in his chapter, I had to say, "Floyd, this is not a
chapter on public finance. It's a chapter against pubhc finance." Paxil, will
you go on half time for a semester or two? Write a text the students will like.
If they like it, yours will be good economics. Leave out whatever you like. Be
as short as you wish. Whatever you come up with, that will be a vast improve-
ment on where we are.
Little did I know of the devil's blandishments. Why not give it a whirl? Here's
a window of opportunity when M the books are 15 years out of date at least. Then,
next summer I can put the finishing touches on Foundations, which has been await-
ing publication since before Pearl Harbor. Truth defies fiction. Three years later,
after night and summer slaving and following up on imcountable mimeograph
handouts, the deed was done. The rest, as they say, is history.
Skousen's Critique
When you read the novels of Jane Austen, never do you leam that the Napo-
leonic wars were going on while her characters were angling for life-cycle security
with amiable spouses. When I read Mark Skousen's account of how macroeconom-
ics and public policy discussions evolved in the successive editions of Samuelson's
Economics, I was left with something of the same feeling as Jane Austen's readers:
missed in his Whiggish retrospective is all of the drama that went into the decisions
to revise; and, what matters to an audience of economist teachers and researchers,
scarce hints are given about the scientific developments and innovations impinging
on me as the textbook writer and teacher. (Since Bill Nordhaus cannot be held
Paul A. Samuelson 155
liable for my imperfections, the present pages concentrate mosdy on those 11
Samuelson-only editions before the last decade. No distortion of the debate is
thereby entailed.)
The bare facts are simple. My 1948 first edition's macro concentrated on the
early General Theory paradigm in which the level of money and real aggregate in-
come, Y, got determined by the interplay of saving and investing propensities: y*
is the (diagrammatic) root where an ascending Saving schedule rises to intersect
an Investment schedule. Fed interest rates were at that time frozen by President
Truman's fiat; in consequence, there was no great need to go into Keynesian li-
quidity preference schedules, a la Hicks and Hansen; and postwar price levels had
not yet the impetus (nor the freedom!) to soar. By the second edition, these things
were changing outside the scholar's window, and his quill was busy sketching those
changes. Already I lost some Keynesian partisans, a process that turned out to be
"perseverant."
I am pleading no alibi nor extenuation. My present-day eyes do discern re-
grettable l ^ s in sloughing off earlier skins. My kind of Keynesianism was never a
religion. "What have you done for me lately?" was always the batde cry. Besides,
the American Keynesians—Alvin Hansen, James Tobin in his 1939 Harvard under-
graduate thesis that had already added wealth to income as a determinant of spend-
ing. Franco Modigliani during the war itself—all these were evolving beyond Model
T Neanderthal Keynesianism. I raced along with the avant gjtrde.
The recent biography of Abraham Lincoln by David Herbert Donald (1995) is
such great history because its author endeavors at every stage to describe Abe's
acdons and decisions using only that knowledge which at each moment was available to
his protagonist. When Milton Friedman wrote for the Treasury in 1943 about war
finance or proposed a 1948 macro stabilization program, no latter-day commenta-
tor can validly indict him for not employing his own later Model T Monetarism
model.
When you use paleontological fossils to oudine the history of species, use them
all. Was the Samuelson elementary text lagging behind the plethora of emerging
intermediate macroeconomic textbooks in the 1948-1985 era or a pioneering en-
gine in evoludonary progress? I know the answer to that, but will Professor Skou-
sen's readers?
Objecdvity is in the eye of the beholder. By my third edition, the "neoclassical
synthesis" got set forth. To Joan Robinson, diis was surrender to the enemy: one
more Keynesian friend lost. To Mark Skousen, this, incredibly, boils down to "de-
mand management.'' What actually was it? And why in later edidons did those words
get revised out? The "neoclassical synthesis" was no more and no less than a matter-
of-fact statement that there are alternadve mixes of central bank money/credit
configuradons and fiscal expenditure/tax configuradons that are compatible with
full employment and price-level stability. By logical implicadon, arbitrary configu-
rations of these—demand mismanagement?—can and will induce hyperinfladons
and recessionary unemployments.
For two reasons I later dropped the "neoclassical synthesis" verbiage. First, it
156 Journal of Economic Perspectives
smacked too much of complacency: perfection is at hand, economics is an exact
science, blah, blah. Second, and more important, from early on I (along with Lord
Beveridge and Alvin Hansen) was fearful of a stagflation problem in a mixed-
economy welfare state that strove hard for full employment while at the same time
helping the unemployed in a humane way. In Camelot counsels, I was at first too
pessimistic about stj^ation ahead. Alas, by 1965 and for 15 years, my fears proved
only too prescient. The post-1965 decline in Keynesianism's esteem was wonor to the Joseph McCarthy era of witch-hunting
in government, academia and the clergy. During that period and still afterwards,
there was often a full