My colleague David Levy, along with his co-author Sandy
Peart, have discovered a rather amazing error extending over various editions of Paul
Samuelson’s famous textbook, Economics (now in its 18th edition). The following is reported in their paper "The Fragility of a Discipline When a Model has Monopoly Status," in the Review of Austrian Economics, 2006, pp. 125-136.
In the 1961 edition, Samuelson offers a graph showing the
projected growth rates, from the year 1960 to 2000, of the economies of both the United States and the U.S.S.R. The U.S. economy
starts off, in 1960, with (according to Samuelson) real GNP twice that of the U.S.S.R. But the U.S.’s projected rate of economic
growth over the next forty years was depicted as lower than that of the
Indeed, a range of growth rates for both countries was
shown. But even the most pessimistic growth-rate
projection for the U.S.S.R. was higher than the most optimistic growth-rate
projection for the U.S. If you were Premier Krushchev looking at this
graph in 1961, you would have been pleased to see that the most famous economist
in the English-speaking world predicted that Soviet real GNP would start to
surpass America’s real GNP as early as 1984 – or, if things went as well as possible for both the Americans and the Soviets, no later than 1997.
That is, Samuelson predicted in 1961 that if the Soviets
achieved their maximum possible economic growth over the next four decades, they
would have to wait no more than 36 years for their output to surpass that of America’s.
In the 1970 edition of the textbook a similar graph is
displayed, this time showing projected rates of growth for the two countries
from 1970 to 2010. As with the graph in
the 1961 edition, projected Soviet economic growth is substantially higher than
projected U.S. growth. And as with the 1961 graph, U.S. real GNP starts off as twice that of the Soviet Union – but this time, remember, the starting year
is 1970, rather than 1960.
The 1970 graph shows that if the Soviets achieved their
maximum possible economic growth over the next four decades, they would have to
wait no more than 35 years – to 2005 – for their output to surpass that of America’s.
In short: Samuelson’s readers were told in 1961 (and shown in
a graph) that the economy of the Soviet Union was growing, and would continue to grow, significantly faster than the American
economy. Nine years later, readers were
told the very same thing – even though, according to Samuelson’s own 1970 graph,
the ratio of Soviet GNP to U.S. GNP in 1970 was the same as it was in 1961.
A Soviet miracle: its real GNP grew faster than America’s real GNP without ever getting closer
to America’s real GNP.