My local library has a copy of the tenth edition of Samuelson's Economics, from 1976 (with assistance from Peter Temin). In an early chapter, Samuelson distances himself from the notion that interest is a reward to a contribution to production, while not exactly denying this idea:
"Part Four will show that, just as wages and rent are the factor-prices of primary labor and land, the 4 or 6 or 10 per cent interest rate per annum can, in a more subtle way, be regarded by the apologists for capitalism, as the factor-price that rations and rewards society's scarce supply of various capital goods and investment projects." (Chap. 3)Part 4 begins with the statement that the theory of distribution is controversial:
"The theory of distribution is still in an unsettled state." (Chap. 27)Samuelson says the issue is how much of distribution can be explained by market forces and how much by power.
In Chapter 27, Samuelson explains distribution with a model with labor and land. He later introduces capital goods and argues that, in equilibrium, the marginal product of capital is equal to the "price charged for use of capital good." This is distinguished from the interest rate. Chapter 27 also presents the "aggregate american production function."
Chapter 30 is more explicitly about capital. Samuelson talks about "roundabout processes." Samuelson also says:
"At this point we can greatly simplify the exposition of the traditional theory if we agree to concentrate on the case where all physical capital goods are exactly alike and highly versatile." (Chap. 30)An appendix to Chapter 30 has a section titled, "Reswitching and all that", with a footnote:
"This section may be skipped. Footnote 5's fine point provided an example of reswitching for a durable machine."
I don't recall that I found all these distinctions when dipping into later editions. As I recall, Samuelson deleted that appendix and all mentions of reswitching. He had firms "usually" adopting more capital-intensive techniques at lower rates of interest. I read that qualification as referring to the Cambridge Capital Controversy, but did not see how students could get that. They might read Samuelson as merely acknowledging the possibility of entrepenuers making mistakes.
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2 comments:
I remember reading Rothbard's review of Samuelson's book and he complained that he mentioned the Cambridge Capital Controversy but failed to discuss "Austrian" economics.
Rothbard, if I remember correctly, attributed that to the CCC showing the limitations of the market system. As a Keynesian, even a neo-classical one, Samuelson obviously did not worship the market enough...
Also, I think I read somewhere that subsequent editions of Samuelson's book did drop the CCC.
Iain
An Anarchist FAQ
I believe Samuelson's treatment of the history of economics and contemporary alternatives has also varied through the editions of his textbook. This is Chapter 42 in the tenth edition. The Austrians are confined to footnote 5, and I don't think the student would get the sense that they are still a current school. But, the "Italo-Cantabridgian School" is also confined to a footnote, namely footnote 14. Left-leaning schools of thought, though, get more treatment in the main text of Chapter 42 than does the right. Samuelson evens has an appendix presenting "Rudiments of Marxian Economics", not that Marxists were all that happy with his research summarized here.
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