At the midcentury mark, economist G. Warren Nutter (1923–79) provided one of the lone dissenting voices to challenge what had become a matter of conventional wisdom among Sovietologists. Whereas others perceived vibrancy and vitality in the socialist society’s industrial growth, Nutter recognized its long-term economic decline concealed behind a politically crafted veneer of propaganda about socialist industrial prowess.
From 1956 onward, he labored on providing a statistical corrective that painted a picture of a society gradually succumbing to the weight of its own central planning and the wasteful accretions of a graft-riddled and politically repressive bureaucracy. The early reception of Nutter’s work expressed doubt about its accuracy compared to more optimistic portrayals from the textbooks and accompanying Sovietology literature, yet history proved him right. Nutter had scooped the field and accurately identified an economy with deep structural problems—most of them directly traceable to its destruction of a functional price mechanism through the tools of state management.
Nutter’s assessment was no abstraction, but rather the result of years of close study of the relationship between state policy and industrial concentration in the United States – the subject of his dissertation at the University of Chicago. But he also possessed an uncommonly keen eye for extracting observations from his surroundings. He deployed the latter during a twenty-eight-day visit to the Soviet Union in 1956 as a self-described “tourist” researcher, which he contrasted with other American experts whose longer visits occurred under the heavy scrutiny and management of handlers from the Soviet government.
This is from Phillip W. Magness, “The Soviet Economy Was Not Growing; It Was Dying,” AIER, January 10, 2019.
Warren Nutter was an impressive man, as I think you’ll see if you read the whole of Phil’s piece. He went against the conventional wisdom of the day about economic growth in the Soviet Union and turned out to be, as Marisa Tomei’s character says in My Cousin Vinny, “dead-on balls accurate.”
When I took off the 1970-71 academic year to read economics on my own and worked my way through a huge percent of the back issues of the Journal of Law and Economics, I found Nutter’s 1959 piece on growth in the Soviet Union. I was lucky to have found that rather than the many inaccurate articles and books that were floating around. In fact, I drew on his piece in an undergraduate essay I wrote while at the University of Western Ontario from 1971-72. I didn’t know until reading Phil’s piece that Nutter had had a famous debate at UWO with U.S. Communist Herbert Aptheker in 1967.
One other personal note: When I was a summer intern with President Nixon’s Council of Economic Advisers from June to August 1973, I made a point of trying to meet every interesting libertarian or conservative intellectual in Washington. I found out that Nutter was at the American Enterprise Institute and I called him up to arrange a meeting. The main thing I remember is that he was a nice man.
READER COMMENTS
Mark Brady
Jan 12 2020 at 12:45am
“In 1969, Warren Nutter left the University of Virginia Department of Economics to serve as the Assistant Secretary of Defense for International Security Affairs in the Nixon administration. During his time in the Defense Department, Nutter was deeply involved in laying the groundwork for a military coup against the democratically elected president of Chile, Salvador Allende. Although Nutter left the Pentagon several months before the successful 1973 coup, his role in the ascendance of the Pinochet regime was far more direct than the better-known cases of Friedrich Hayek, Milton Friedman, James Buchanan, and Arnold Harberger. This paper describes Nutter’s role in Chile policy planning and generating a “coup climate.” It shows how Nutter’s criticisms of Henry Kissinger are grounded in his economics, and compares and contrasts Nutter with other economists who have been connected to Pinochet’s dictatorship.”
Abstract of Daniel Peter Kuehn, “‘We Can Get a Coup’: Warren Nutter and the Overthrow of Salvador Allende,” (June 19, 2019).
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3406799
Daniel Kuehn
Jan 12 2020 at 10:17am
Thanks for the share, Mark! I’m responding to revisions now and one of the suggestions was to clarify “laying the groundwork for a military coup,” which will read a little differently in the new abstract and text. As the paper shows Nutter was involved in lots of activities to prepare the ground, divide the military against Allende, etc., and the interest in a coup was explicit. However – to be completely clear – he was not involved in any planning of the Pinochet coup (he did authorize support for earlier opposition).
Nutter is a brilliant economist with a complex life. I highly recommend him. I have been working on another Nutter project but that probably won’t see the light of day in any form for another several months.
Daniel Kuehn
Jan 12 2020 at 10:23am
Interestingly, Pinochet did first make his intentions known to the US through contacts in the arms sales program that Nutter directed. But there’s no evidence one way or the other that that contact made it up the chain to Nutter or that it was presented to the Senior Review Group Nutter served on when he was working on Chile policy.
Thomas Hutcheson
Jan 12 2020 at 4:40am
Whereas others perceived vibrancy and vitality in the socialist society’s industrial growth…
I think this is an exaggeration. I was an undergraduate in 1963 and recall clearly a “comparative economic systems” course — Capitalism, Communism, Socialism [note the distinction made between Socialism and Communism — that very clearly discussed the inefficiency of Soviet central planning. I was not aware that this was a “minority” view and I don’t think it was.
Dan
Jan 13 2020 at 1:32pm
Your experience may be the exception.
Jon Murphy
Jan 12 2020 at 9:25am
I bought AIER’s new edition of The Strange World of Ivan Ivanov based off Phil’s article. Nutter is someone I’ve read little of but I always wanted to read more.
Nutter’s study of the USSR really highlighted to me what I have since come to call the Metric Fallacy (I’m sure what I am about to describe has a proper name, but I don’t know it). The Metric Fallacy goes like this: some metric, like GDP, provides useful information. However, once the metric becomes the target of some policy or goal, then the metric loses all informational value and only seems useful based on the past. So, for example, GDP provides a good proxy for overall economic well-being. But if a policy becomes about creating GDP growth, then GDP suddenly is no longer a good proxy because the actions of the policy are designed to manipulate the metric rather than represent the underlying economic issues. World War 2 is an excellent example of this: GDP was skyrocketing, but standards of living either stagnated or even fell below that of the Great Depression (depending on how one measures the consumption statistics). All the GDP growth was driven entirely by the government spending on the war rather than any true economic experience.
The Soviet Union (and modern China) is similar: hit certain goals, like Industrial Production output, and see the “economic growth” happen. By devoting all their time and energy into hitting this or that output target, they ignored true economic growth, and many observers even bought into this wholeheartedly. Much of the present Administration has fallen into the same trap that Sovietologist economists did: confusing contrived metrics with actual economic activity.
Jon Murphy
Jan 12 2020 at 11:02am
I have since been informed that what I describe above as the Metric Fallacy is properly known as Goodhart’s Law. Thanks, Daniel Kuehn and James Hanley
David Seltzer
Jan 13 2020 at 3:28pm
Jon, Lucas argued, parameters of macroeconometric models were not invariant in changing economic environments. I worked for Fischer Black when I was a grad student at Chicago. I recall him distrusting econometric models because the coefficients were not policy invariant and sometimes collinear.
robc
Jan 12 2020 at 11:13am
A non-economic example would be the USN&WR college rankings. Schools now target the metric. In this case, however, the initial metric was bad, making targeting it even worse of a problem.
Alan Goldhammer
Jan 12 2020 at 9:31am
Murray Feshbach who passed away last fall was also someone who understood that the USSR was not sustainable (he was a member of our synagogue and I had a number of interesting discussions with him about his research into the demographics and health of the country). An appreciation is HERE. Feshbach was chief of the USSR Population, Employment, Research, and Development Branch of the Foreign Demographic Analysis Division (now the Center for International Research) of the U.S. Census Bureau for most of his career.
gwern
Jan 12 2020 at 3:31pm
“When I took off the 1970-71 academic year to read economics on my own and worked my way through a huge percent of the back issues of the Journal of Law and Economics, I found Nutter’s 1959 piece on growth in the Soviet Union.”
Not his 1957 Life article, “The True Story of Russia’s Weakness”? It seems far more compelling an expose and drew quite a reaction. (And is still worth reading, IMO, just to compare with the later cases of Japan and China.)
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