Friday, 18 June 2010

Paul Samuelson misread Hayek (updated)

Hands up who is surprised to hear that!

Donald J. Boudreaux writes to the Wall Street Journal
Justin Lahart accurately reports that, as recently as last year, the late Paul Samuelson dismissed F.A. Hayek’s book The Road to Serfdom as alarmist and wrong: “Sweden and its Scandinavian neighbors are among the most socialistic countries in the world, as Mr. Hayek defined them, Mr. Samuelson pointed out. ‘Where are their horror camps?’ he [Samuelson] wrote” (“The Glenn Beck Effect: Hayek Has a Hit,” June 17).

But Mr. Samuelson profoundly misread Hayek’s book. Hayek said that “the planning against which all our criticism is directed is solely the planning against competition – the planning which is to be substituted for competition.” So because Scandinavian countries emphatically do not plan in this way, Samuelson was mistaken to say that their socialism is of the sort that Hayek believed paved the road to serfdom. Those countries have reasonably free trade, only light regulation of capital markets and business, and strong private property rights. In short, all Scandinavia retains what for Hayek was the most significant protection against serfdom: competitive economies.

And while Hayek would disapprove of the size of Scandinavian welfare states, he stated explicitly that “Nor is the preservation of competition incompatible with an extensive system of social services.”

Paul Samuelson’s long history of misrepresenting Hayek’s arguments has done a great disservice not only to one of the 20th century’s wisest minds but also – and more importantly – to the countless people who would have read Hayek but for Mr. Samuelson’s mischaracterization of The Road to Serfdom.
While I'm not surprised to read that Samuelson misrepresented Hayek's work I do sometimes wonder why people focus so much on The Road to Serfdom when talking about Hayek's work. It isn't his best stuff. To me his papers like "Economics and Knowledge", "The Use of Knowledge in Society" and "Competition as a Discovery Procedure" are much more interesting and important.

Update: In the comments Eric Frampton points us to this interesting looking paper on the Hayek-Samuelson debate: Hayek, Samuelson, and the logic of the mixed economy? by Andrew Farranta and Edward McPhail.

1 comment:

Eric Crampton said...

Contrast against Farrant & McPhail, 2009, JEBO, "Hayek, Samuelson, and the logic of the mixed economy?"