I had not been able to find a reference for the supposed comment. But an article about Khrushchev visiting Mao in 1958 that appeared in the Smithsonian in May 2012 cited an essay by James Kenneth Galbraith as a source of the quotation. The essay, called "The Day Nikita Khrushchev visited the Establishment," was published in Harper's in February 1971, and reprinted in the compilation of Galbraith's essays called A Contemporary Guide to Economics Peace and Laughter that was also published in 1971.
The context is a visit from Khrushchev to the United States in 1959, and more specifically, the part of the visit where he visited the Manhattan house of Averill Harriman, a Democratic politician and power-broker who among other roles was US Ambassador to the Soviet Union from 1943-1946, US Secretary of Commerce in the Truman administration, Governor of New York, and held several positions in the State Department during the Kennedy and Johnson administrations.
Galbraith is discussing a period toward the end of the evening, which is supposed to be devoted to asking questions, but in which various members of the US establishment are instead making little mini-speeches to impress each other--followed by dry comebacks relayed through Khrushchev's translator. As Galbraith writes of the questions that were asked:
"Almost all began with a disavowal of Communist sympathies and a strong affirmation of faith in the American free enterprise system. In light of the asset position of the speakers, neither disavowal nor avowel seemed absolutely essential. All of the questions were phrased to convey information, not to elicit it. A Ring Lardner parent once responded to his offspring, "`Shut up,' he explained." On that afternoon there was a slight variation. "`I would like to tell you something,' they asked." However, the questions did not convey much information and not because they were brief. As he spoke, each interrogator covertly eyed the others present to see whether he was making a decent impression."Finally it came time for Galbraith's own question/mini-speech, which he described in a delightfully self-deprecating tone.
"Harriman nodded at me and I came through with a question urging Khrushchev to accept the thesis of American Keynesians, such as myself, that the capitalist crisis was now under control. I developed the question with care and at considerable length for I had concluded that the other men present could do with a lecture on modern economics. Many were still very suspicious of Keynesian fiscal policy: they, as well as Mr. Khrushchev, needed to understand the true foundations of American well-being. As my question continued I watched my audience out of the corner of my eye. I could see that they were following me closely. Presently I finished. Mr. Khrushchev replied that I was entitled to my views, that he was sure I took them seriously and that he was glad I had confidence in the system. He added that economics is a subject that does not greatly respect one's wishes."So the good news is that the quotation is authentic in the sense that it has an actual source! The bad news is that the quotation is Khrushchev as filtered through his translator, and then remembered and paraphrased by the witty and sardonic Galbraith a dozen years later. And the unexpected twist is that while the quotation is often deployed today as a way for conventional market-oriented economists to put down those who substitute wishful thinking for the clear-eyed analysis of tradeoffs, it was originally deployed as a communist put-down of those who believed in Keynesian economics and free markets. (For an earlier blog post on Galbraith as a master of writing and rhetoric, see here.)
