Murrray Rothbard was an economist, a political philosopher, historian, activist, essayist, and the prime mover in the 20th century for the libertarian movement. He was always entertaining to read; full of hyperbolic epithets and witticisms. He was the leader of the Austrian school of economic thought and he had such faith in free markets that he believed that there was no need to have any government at all. He believed that all government intervention was “not only ineffectual, but also pernicious and counterproductive.” Rothbard loved free markets to the extend that he regarded Milton Friedman and the rest of the Chicago School as a species of Keynesianism.
When Rothbard opposes all government intervention he truly meant all intervention. He faulted the radical reformers of the 19th century that we call “classical liberals” today for not finishing the job, but leaving government in control of all the “command posts” such as the currency and the army. Rothbard even defended the concept of private armies, private police agencies, and private courts.
Like von MIses, Rothbard believed that economics must be derived from axioms about individual human activity and deductions from them such as the obvious fact that people respond to incentives. Rothbard called economics “the logical analysis of the implications of human action.” Rothbard and the Austrian School rejected the equations and computer models of the Keynesians and other “mainstream” economists and argued that the key relationships of economics are not constant enough to be expressed in numbers. The Austrians are particularly skeptical about the possibility of precise predictions from econometric models and believe that only general predictions can be made with any degree of confidence.
The most famous example of the Austrian method may be von Mises’ conclusion in the 1920s that socialism could never work because no central authority could calculate and decide all the resource allocation decisions needed. The same calculations that are achieved automatically under laissez-faire capitalism by the price mechanism are impossible under socialism. Mises argued that the resource allocation calculations were far too complex and that no amount of computational power could solve it without market prices to tell the producers where to allocate resources. Mises’ analysis of socialism as early as the 20s was borne out by the economic failure of communism in the 20th century. Rothbard also predicted the failure of the USSR just before it happened even as the US CIA was handing out reports on how much stronger they were than the West.
Rothbard wrote that antitrust laws are aimed at a chimera and should all be abolished. The Austrian concept that monopolies can not exist in a truly free market and can only exist as a privilege granted by the State infuriates our fine leftist friends. They fail to see that the corporations they hate lobby government so hard for favoritism precisely because the government is the source of such power that it can make or break any business.
The Austrian School skepticism about macro-economic measurement precipitated a bitter conflict, led by Rothbard, between the Austrians and the Milton Friedman-style monetarists of the Chicago School. Rothbard argued that the monetarist idea of expanding the money supply at a fixed rate equivalent to the underlying growth rate of the economy would lead to disaster. Events later proved the Chicago boys wrong. Much later their agreement with the mainstream Keynesians on inflating the money supply helped to lead to the present day massive deficits.
Rothbard attacked the idea that fractional reserve banking, the system by which banks lend out more than their reserves, is anything but inherently fraudulent. He called it an economic crime. The Great Bailout of 2008 showed the dangers in not following Rothbard’s advice of forcing the banks to maintain full reserves, plus a rigorous gold standard. Ron Paul also preached that message in his campaigns echoing the message of the departed Rothbard. (and Mises too) Rothbard argued that a gold standard and full reserve banking should always result in a gradual and beneficent deflation as technology improved productivity like actually occurred in the 19th century. He noted the sharply lower prices for manufactured goods and the vast increase in the general standard of living back in the 1800s.
Murray Rothbard was also an activist. From founding the CATO think tank, to working with the early Libertarian Party, to heading up the Mises Institute, he was always interested in how the people could use the system against itself to promote freedom and liberty.
There is so much more that one could say about Rothbard and his life, but I am not the one to do that. It just so happens that Justin Raimondo who is the editorial director of Antiwar.com wrote a wonderful biography of Murray Newton Rothbard called An Enemy of the State: The Life of Murray N. Rothbard. I read the Kindle edition found it to be a wonderful look at a great man’s life. Raimondo did a great job. I highly recommend giving this book a read.
From the Inside Flap of the book:
Although libertarianism entered the American political vocabulary sometime in the 1970s, and is now one of the categories of political thought right up there with liberalism, conservatism, and all the other “isms,” the story of the movement’s founder has never been told–until now. This is the first biography of Murray N. Rothbard, the intellectual godfather of libertarianism and the author of twenty-eight books, hundreds of articles, and a social theorist whose writings encompass not only economics but philosophy, political economy, history, and virtually all the realms of social thought.
As an economist, he not only carved out a place for the insights of the “Austrian” (or pure free market) school on American shores, but also expanded and elaborated on the innovations of his mentor and teacher, Ludwig von Mises, the dean of the Austrian school.
As a political economist, he mapped out the contours of a truly free society, based on natural law and the concept of self-ownership. As a historian, he rescued the hidden history of liberty, and exposed the underbelly of the power elite. As a student of economic history, he traced the development of economic ideas and showed the way forward to a new way of looking at the evolution of thought – and of human society. As a teacher to a whole generation of libertarian scholars and activists, Rothbard was not only a source of ideas but of inspiration. He was an innovator who fought for his vision of the world, pioneering liberty at a time when they were neither popular nor understood. He dared to speak truth to power– and never shied away from controversy.
AN ENEMY OF THE STATE charts the intellectual odyssey of a man who went from the Old Right to the New Left, traveling through Ayn Rand’s circle as well as William F. Buckley’s before winding up at a position that transcends the traditional categories of Left and Right — and point in an entirely new direction. His life was an intellectual adventure — and an important chapter in the history of ideas. To anyone with an interest in the history of ideas in our time, AN ENEMY OF THE STATE is a must.