Can Capitalism Survive?

By Benjamin A. Rogge

One of the signs of advancing age in the American college professor is a tendency for him to write less and publish more. This seeming paradox is easily explained by the phenomenon of
Collected Works, that is, by what on television would be described as reruns. As in television, no great public outcry is needed to bring forth the reruns; a question from his wife, a polite suggestion from a colleague, and the cut-and-paste operation is under way.I have put together here what I believe to be the best of the rather meager output of my professional career up to this point. For reasons (mostly financial) that always seemed adequate at the moment, I have been more of a speechmaker than a writer. Thus, you will find that many of the pieces in this collection are but speeches put down on paper…. [From the Foreword]

Book Cover

First Pub. Date

1979

Publisher

Indianapolis, IN: Liberty Fund, Inc. Liberty Fund, Inc.

Pub. Date

1979

Comments

Collected essays.

Copyright

The text of this edition is under copyright. Picture of Benjamin Rogge: file photo, courtesy of Liberty Fund, Inc.

Part III, 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:

A dramatic example of the importance of a pricing system is postwar Germany. In 1946-1947 production and consumption had dropped to a low level. Neither bombing damage nor postwar reparation payments could account for this breakdown. Paralysis of the price mechanism was clearly to blame: Money was worthless; factories closed down for lack of materials; trains could not run for lack of coal; coal could not be mined because miners were hungry; miners were hungry because peasants would not sell food for money and no industrial goods were available to give them in return. Prices were legally fixed, but little could be bought at such prices; a black market characterized by barter or fantastically high prices existed. Then in 1948 a “miracle” happened. A thorough-going currency reform set the price mechanism back into effective operation. Immediately production and consumption soared; again the
what, how, and
for whom were being resolved by markets and prices.

The fact to emphasize is that such so-called miracles are going on all around us all the time—if only we look around and alert ourselves to the everyday functioning of the market.
*48

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.