Paul Samuelson and the Provision of Collective Consumption Goods: A Rejection of Competitiveness Logic
Paul Samuelson pioneered the mathematical models of maximisation that today form a central part of the economics of competitiveness. It is significant, then, that the pioneer himself deployed his method of difference equations to come to a conclusion that is wholly opposed to modern-day competitiveness mantra. This post by Matthew Watson brings Samuelson’s argument to a wider audience as the latest instalment in our series tracing the intellectual underpinnings of contemporary competitiveness discourse. It reviews his defence of collective provision of the public goods that enhance individual welfare and his view that the funding of public goods should be protected from race-to-the-bottom dynamics.
Do nations or states ‘compete’ with each other in a meaningful way? We have already explored the thinking of Paul Krugman, Adam Smith, Robert Reich, and the Tax Justice Network on this question. Their answers are, to summarise broadly: ‘no – or at least not in the way people commonly suppose.’
This ‘competition’ between states, we’ve argued, bears no economic relation to the microeconomic competition between firms or companies in a market. The shortest way to illustrate this, perhaps, is to note that a failed company is one thing: a failed state is another beast altogether.
But there are influential people who disagree.