Eric Langborgh

As late as 1989, Lester Thurow, a professor at MIT, contended, “No one can deny that [the Soviet Union] has made great economic progress.” Similarly, John Kenneth Galbreath from Harvard said in New Yorker Magazine in 1984, “The Soviet economy has made great national progress in recent years.” And MIT’s Paul Samuelson remarked, “It is a vulgar mistake to think that most people in Eastern Europe are miserable.” Considering the fall of communism in Eastern Europe over the next few years, academic economists in general must have been quite delusional.

    This same Samuelson’s Economics has been the standard in economics texts since 1948, with over four million copies of his 16 editions sold in more than 46 languages. Though certainly not a Marxist—he declared Marx “quite wrong” in his assertion that the “poor are becoming poorer”—he has consistently defended activist government while giving little credence to the various schools of free market thought. Appropriately, it was Samuelson who made the well-known comment, “I don’t care who writes a nation’s laws—or crafts its treaties—if I can write its economics textbooks.”

    As a great advocate of Keynesian economics, this Nobel laureate has spawned a huge army of followers over the years who now hold sway in economics departments across America and in publisher review boards, effectively squashing attempts to question John Maynard Keynes’ suspect “New Economics” in textbooks and college curriculums. Economics may no longer be the top selling textbook, but Samuelson’s imprint is seen on virtually allof  the bestsellers in college bookstores.

    Much progress has been made in recent years, though, in bringing back the long-term growth Classical model of economics as ideas  to be taken seriously and relegating Keynes’ macroeconomic “stabilization” policies to the status of just another competing theory. Even Samuelson has undergone an ideological flip-flop of sorts. As recently as 1989 he proclaimed that “the Soviet economy is proof that…a socialist command economy can function and even thrive.” His  latest edition simply reads: “The failed model: Soviet Communism.” 

    He has also had a change of heart on savings rates, deficit spending, and the debate between fiscal and monetary policy. He now proclaims the savings rate as “too low,” after he had discouraged personal savings for years; he concedes that a “large public debt can clearly be detrimental to long-run economic growth;” and he has scrapped fiscal policy in favor of the Federal Reserve monetary policy that free market economist Milton Friedman has long favored for stabilizing the economy. Nevertheless, bad economics still reigns throughout academia, fueling faulty national policy.

    So, who will be writing the economics texts of the future? With any luck, it will be Mark Skousen with his brilliant work, Economic Logic. Though encouraged by the recent movement away from Keynesianism, Skousen grew weary of otherwise “good” economics textbooks being contaminated with the statist bent that still pervades academia and the textbook publishing houses. He has hence written what he calls “the first no-compromise free market textbook in college economics,” and has successfully found an outside publisher independent of the establishment to print and distribute his effort.

    The tone of his work is summarized in a personal note in his introduction: “The best teachers and writers in economics are well-read, well-traveled, and well-financed.” He continues, “Too often economics textbooks are written by thirty-something vunderkinds who know more about differential calculus than they do about managing a profitable business.”

    Samuelson was one of those vunderkinds, starting his brilliant career writing textbooks at 33 years of age; it only took him half a century to unlearn his early theories. Skousen, on the other hand, enters the business nearing 50. His experience includes “running a publishing business, living in six countries, travelling and lecturing in 58 nations, consulting with large and small businesses, writing several dozen books on financial and economic topics, building an investment portfolio, and all the while acting out the role of entrepreneur, capitalist, consumer, and investor.”

    While this vast array of experience doesn’t necessarily translate into good teaching, his ability as a professor (he also teaches economics at Rollins College in Florida) certainly shines through in Economic Logic.

    Fittingly, he begins his text with a profit-and-loss statement, a truly revolutionary notion. In fact, his is the first to successfully incorporate fields closely associated with economics, such as business, marketing, management, finance, and sociology, throughout his work.

    By focusing on the firm and what the author calls “the structure of production,” a certain logical consistency develops that the student can easily follow.  This  will enable him to come out of a course using this textbook enlightened, rather than confused. As Bronfenbrenner, Sichel, and Gardner remarked about their own textbook, “You may find yourself unlearning more than you learn, or operating in a fog of confusion” when using the standard textbooks.

    That is not the case with Economic Logic. 

    Nor is it the case that Skousen makes apologies for the profit motive or the role of the entrepreneur. Denounced by the Left and even some moderates as greed, profits are nevertheless essential for the proper functioning of the economy, and are even morally legitimate. “Profits and losses are the sin qua non of economic existence,” writes Skousen. “They determine what is produced, when it is produced, how much is produced, and how it is produced.”

    As he so aptly wrote, “If a company makes an economic profit, it usually indicates that it is responding to the needs and wants of the public.” Just as higher profit margins signal the marketplace that more resources should be devoted to that particular industry, so do non-profitable firms indicate fewer resources are needed in a given area. It is the entrepreneur—so neglected in most textbooks, but who Skousen devotes a whole chapter to—who assumes the risks involved in market dynamism and hence properly reaps the rewards when benefiting society, or who pays for miscalculation with financial losses. 

    It is this “universal language” of the market, the language of profit and loss and the action of entrepreneurs, which makes the market economy run efficiently. And it is the lack of private property, and hence the loss of the profit motive, that Ludwig von Mises declared would spell the doom of socialist and command economies. Yet, the mainstream economics profession continues to ignore his vast contributions to the field. Not so with Skousen. A unique and rewarding feature in Economic Logic is how Skousen includes bios and discussions of influential economists and their contributions at the end of each chapter. And so he does with Mises, Freidrich Hayek, James Buchanan, and other great free market economists who normally get short shrift in the standard textbooks. No longer ignored are Friedman’s and Murray Rothbard’s respective fingering of government as the culprit and not the savior in the Great Depression. No longer is market failure discussed while the far more prevalent and dangerous failures of government excluded. 

    As Skousen pointed out in another of his books, Economics on Trial: Lies, Myths, and Realities, the 10 bestselling textbooks index lists Mises and the Austrian School of Economics only 67 times. Contrast this with Keynesianism’s number of 442, or even Marxism’s 131, and the bias economics students face becomes clear. Indeed, even Ronald Reagan’s supply side economics, which brought communism to its knees, finds mention only 95 times, with few positive or fair appraisals among them. Economic Logic discusses them all, but it does it only after it lays down a sound, label-free lesson on how the market economy works, thereby enabling a reasoned assessment of the various schools of thought such as the Neo-Keynesians or the Chicago Monetarists.

    Skousen, then, has produced a gem. In a well-written and logically organized fashion, he has provided a sound background on which one can, and he does, evaluate schools of economic thought and policy decisions. He provides historical background in the profession, theory without the ambiguous econometric jargon that serves to confuse the student, and centers it all with a healthy dose of life’s experience. Brilliantly structured throughout with easy to follow lessons and challenging problem solving sections, it just  may be that while today’s law makers and educators have been corrupted through what even Samuelson now calls bad economics, tomorrow’s crop of leaders will  be enlightened by Economic Logic.