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Economics

Paul Anthony Samuelson, William D. Nordhaus

posted on 29 May 2002

reviewed by Joe McCauley

When I was required to take econ as undergrad physics student and used this text, the professor made a big deal of econ students not
understanding 'curves', by which assertion he implicitly meant the plotting of y=f(x) when f is smooth and invertible. Well the professor
didn't understand 'curves' at a higher level: he failed to note that nearly all the 'curves' presented in the text were only 'cartoons', mere
mental constructions not based on real data, and agreeing with no real data (excepting corn flakes sales in British supermarkets, if Paul
Ormerod is correct). The idea of 'utility' is a useless fabrication that has no basis in empirical data. Those mental constructions represent
instead the expectations of neo-classical economic theory, the religion of the IMF, World Bank, and a host of other
neo-classically-educated economists. To be specific, the price-demand, price-supply 'curves' touted in the text do not exist in reality and
also not in theory: e.g., see Osborne's book Finance and the Stock Market from a Physicist's Perspective for the explanation why. See also
the economists' own proof that aggregate price-supply demand-suppy curves 'can be anything' even if individual supply-demand curves
would behave as they expect! Furthermore, no real market is approximately in equilibrium, all real markets are examples of far from
equilibrium systems. Unregulated free markets are unstable. None of this is hinted at in the text, where equilibrium and stability are implicitly
and unfairly assumed without warning the unsuspecting reader. Worse, in the introductory chapter Samuelson uses a hokey, irrelevant
pictorial argument to try to convince both himself and the reader that physics is as unscientific as neo-classical econ theory. For good
information about econ theory, see the following books: Ormerod's The Death of Economics, Mirowski's More Heat than light, and
Osborne's book. For those with enough intellectual stamina, there is also Giovanni Dosi's Innovation, Organization, and Economic
Dynamics, a collection of essays that also points out that the emperor wears no clothes and tries to find a reliable ruler to replace His
Uselessness. Instead of propagating misleading mythology it's now time for economists to face the facts and explain why, after convincing
governments to follow their advice and deregulate, we face one big financial instability after the other: LTCM, Argentina, Enron, .... .