Paul Samuelson is the most influential American economist ‘mong people who have actually read economics (i.e. doesn’t include the average dope who claims Paul “Baby-Sitter’s Club” Krugman or Helicopter Milton Fucking Friedman as filling that role). He wrote the most influential American textbook, the creatively-named Economics, for half a century. Then he let some drunken slob William Nordhaus dumb it down by shoving in mo’ references to the need to maintain market freedumbs & other propagandist noise that gets in the way o’ Paul Samuelson’s sexy curves o’ relationships based on assumptions that he himself within the text admits are probably wrong.
Thus, we will getting this from the 1976 edition, a classic that was unsoiled from Nordhaus’s lecherous grip (&, as a bonus, cost only $5 on Amazon, as opposed to $200 mo’ than I’d e’er pay for a fucking economics book–¡just look @ how that price drop causes the substitution effect to come into place!) To be specific, we’ll look @ page 600 for 1 o’ Samuelson’s sadly underrated theories that proves the net productivity o’ capital:
To see this, imagine two islands exactly alike. Each has exactly the same primary factors of labor and land. Island A uses these primary factors directly to produce consumption product [sic]; she uses no produced capital goods at all. Island B, on the other hand, for a preliminary period sacrificed current consumption; instead, she uses some of her land and labor to produce intermediate capital goods such as plows, shovels, and synthesized chemicals. After this preliminary period of sacrificing current consumption pleasures in the interests of net capital formation, she ends up with a varied stock of capital goods, i.e., with a sizable amount of capital. Now let us measure the amount of consumption product [sic] she can go on permanently producing with her land, labor, and constantly replaced capital goods.
Careful measurement of Island B’s “roundabout” product shows it to be greater than Island A’s “direct” product. Why is it greater? Why does B get more than 100 units of future consumption goods for her initial sacrifice of 100 units of present consumption? That is a technological engineering question. To sum up, the economist traditionally takes the following answer as a basic technical fact:
There exist roundabout processes, which take time to get started and completed, that are more productive than direct processes. [All bolding mine; italics in original.]
A few points to note:
- In Samuelson’s fantasy archipelago, Island A’s resident feeds herself on dirt, while Island B magically makes shovels & synthetic chemicals through only dirt & her brute force.
- This “preliminary period of sacrificing current consumption pleasures” becomes threatening to the whole productivity o’ the operation if it leads Island B’s resident to starve to death before finally producing food–& considering how long it takes to make shovels out o’ dirt, that’s a likely scenario.
- Samuelson’s vague ’bout what “equal primary factors of labor” is, but I’ll assume it’s time spent working. Otherwise we might have to imagine someone not only creating shovels out o’ dirt, but also doing so while only holding said dirt up to their mouth & opening & closing their mouth–& I don’t think a simple time difference in scheduling these actions would change the outcome much, other than the aforementioned starvation problem.
- Samuelson spews random #s that have no basis in the 1st paragraph &, ‘pon asking rhetorically how he arrived @ those #s, turns that rhetorical question into a real question (something I’ve ne’er seen before, but intrigues me on a literary level immensely) by noting that “this is a technological engineering question,” which means that Samuelson essentially admits that his #s were completely made up.
- Samuelson “sums up” by simply noting that economists take some arbitrary, & quite vaguely worded, claim as a traditional given. Acute readers will note that this does not “sum up” this entire thought experiment so much as have nothing to do with said story. “To sum up my story, economists believe for reasons completely unrelated to my story @ all that there are some circular actions that take any real # o’ time–which is to say, they are any kind o’ actions–that are mo’ productive than just eating dirt.” (I may have misinterpreted something.)
I don’t know why people bitch ’bout economics being “boring”: if you pay attention, it’s hilarious.
Still, you can’t argue with his central point: if you had a choice ‘tween an island in which you just eat dirt all day or an island in which you can use magic to create all kinds o’ tools & chemicals out o’ just dirt, ¿why would anyone want boring ol’ Island A?