Schumpeter's theory of self-restoration: a casualty of Samuelson's Whig historiography of science

Abstract

This article argues that Samuelson’s influential 1987 call for a ‘Whig history of economic science’ rests on a Whig historiography of the natural sciences. This contrasts with how science actually works: Samuelson neglects the critical role of controversy in the development of knowledge, leading to the misleading idea that scientists pursue discovery at the expense of reflection on the foundation and history of their subject. The consequence is institutional delegitimation: the exclusion of legitimate contrary hypotheses when economists test their theories, invalidating the test. Samuelson further confuses the history of ideas with the history of texts. This expands the scope of institutional delegitimation to a systematic misrepresentation of the actual ideas at stake in the economic controversies, erecting a permanent obstacle to the discovery of truth. I illustrate this with Samuelson’s exclusion from consideration of two ‘non-ignorable’ contributions to macroeconomic theory: Schumpeter’s Business Cycles, which he failed to recognise as a theory of endogenous capitalist self-restoration, and the concept of endogenous decline, excluded by his Whig reinterpretation of Marx’s theory of value. Schumpeter and Marx offered opposed, but legitimate, alternatives to the post-war macroeconomic consensus of which Samuelson was a major architect. In particular, both recognised that deep and prolonged crises were a natural product of capitalism, not an inexplicable exception. To respond to the 2008 downturn, economics needs to reopen a wide discussion without excluding, a priori, any of these opposed theoretical explanations, instead seeking to understand clearly what each of them actually says and testing them against the empirical evidence of history.