By Llewellyn H. Rockwell, Jr.
Ludwig von Mises Institue
2006


Murray N. Rothbard (1926-1995) was just one man with a typewriter,
but he inspired a world-wide renewal in the scholarship of liberty.
During 45 years of research and writing, in 25 books and thousands
of articles, he battled every destructive trend in this century --
socialism, statism, relativism, and scientism -- and awakened a
passion for freedom in thousands of scholars, journalists, and activists.

Teaching in New York, Las Vegas, Auburn, and at conferences around
the world, Rothbard led the renaissance of the Austrian School of
economics. He galvanized an academic and popular fight for liberty
and property, against the omnipotent state and its court intellectuals.

Volumes one and two of his magisterial history of economic thought
appeared just after his death, published by Edward Elgar. Whereas
other texts pretend to an uninterrupted march toward higher levels
of truth, Rothbard illuminated a history of unknown geniuses and
lost knowledge, of respected charlatans and honored fallacies. A
large collection of Rothbard's best scholarly articles appears later
this year in the publisher's "Economists of the Century" series. In
addition, there are unpublished manuscripts, articles, and letters
to fill many more volumes.

Like his beloved teacher Mises, Rothbard wrote for the public as
well as professionals. "Civilization and human existence are at
stake, and to preserve and expand it, high theory and scholarship,
though important, are not enough," he wrote in 1993. "Especially in
an age of galloping statism, the classical liberal, the advocate of
the free market, has an obligation to carry the struggle to all
levels of society."

Rothbard's theory was his practice. He was involved in nearly every
political and social development of his time, from Robert Taft's
presidential campaign to the 1994 elections. His last article,
appearing in the Washington Post, warned that Newt Gingrich is more
likely to betray the revolution than lead it.

The Mises Institute is honored that Rothbard headed our academic
programs for 13 years. He spoke at all our conferences and teaching
seminars, edited the Review of Austrian Economics, consulted on our
books and monographs, and wrote for our Free Market. Most of all, he
taught and inspired our students, and they will carry his ideas into the future.

Building on Tradition

Rothbard has been compared to the greatest minds in social science,
but his wisdom and character led him to show gratitude to his
predecessors. His formative intellectual event was the 1949
publication of Mises's Human Action.

"I had gone through all the doctoral courses at Columbia
University," Rothbard wrote, "without once discovering that there
was such a thing as an Austrian School, let alone that Ludwig von
Mises was its foremost living champion." But this book "solved all
the problems and inconsistencies that I had sensed in economic theory."

Rothbard attended Mises's seminar at New York University from its
first meeting, and became the student who would defend and extend
Mises's ideas, push the Austrian School tradition to new heights,
and integrate it with political theory. He taught the movement how
to write, and was also an important cultural influence. (Rothbard
was a long-time resident of Manhattan: 215 W. 88th St., near
Broadway, Apt. 2E.)

The Austrian School had previously been a largely European
intellectual movement. Mises changed that with his migration to this
country. Rothbard completed this process, so that the locus of the
school is no longer Europe, but America, the nation whose founding
principles Rothbard and Mises so deeply admired.

The Last Real Treatise

Man, Economy, and State, Rothbard's great work, was the key to the
resurgence of Austrian economics after Mises's death. Beginning with
the philosophical foundation, Rothbard built an edifice of economic
theory and an unassailable case for the market. Instead of the
dismal and statist pseudoscience students are used to, Rothbard gave
us a sweeping and tightly reasoned case for economic liberty.

The book treated economics as a humane science, not as a branch of
physics. Every page took account of the uncertainty of economic
conditions, the certainty of change, and the central place of the
entrepreneur, while never losing sight of the implacability of
economic law. No wonder Henry Hazlitt, writing in National Review,
called it "brilliant and original and profound."

Since its publication, the treatise has only grown in stature.
Through it, Rothbard has taught countless students to think like
real economists instead of number crunchers. He explained and
applied the logic of human action in economic exchange, and refuted
its opponents. Like Mises, he looked not at "economic man," but
acting man who deals with the scarcity of time and resources.

Revising History

Rothbard breathed life into economic theory with his historical
works, and refuted the charge that Austrians are only concerned with
high theory. He was also one of the few intellectuals on the Right
to champion revisionist history. Other historians have since picked
up his works and built on them to create entire schools of thought.
He wrote America's Great Depression, applying the Misesian theory of
the business cycle to show that the 1929 crash resulted from Federal
Reserve credit expansion. He also refuted the then-dominant view of
Herbert Hoover as a laissez-faire conservative, by showing that he
was actually a premature New Dealer.

In journal articles, he showed that the New Deal followed logically
from the economic regimentation of World War I and the Progressive
Era, which gave us central banking and the income tax.
Conceived in Liberty is a four-volume narrative account of early
American history, 1620-1780. His purpose was to highlight forgotten
events that demonstrate the libertarian character of our history and people.

The American revolution threw off tyranny, he argued. It was not
simply a continuation of British-style statism in another guise, as
Hamilton claimed. The new social order would protect communities,
properties, and essential rights. Rothbard also proved to be as
proficient a military historian as he was an interpreter of
ideological history.

In his work, as in his life, he always sided with the pro-liberty
forces against the welfare-warfare state. He especially liked the
anti-New Dealers, the anti-imperialists, the Confederates, the
anti-federalists, the tax resisters, the underground businessmen,
the anti-state pamphleteers, and other unsung heroes. Throughout
history, the power elite has found profitable uses for the state.
Rothbard never passed up a chance to name them, to explain how they
did it, and to show how their actions harmed everyone else in society.

Mixed-Economy Myths

Conflict was the central theme of Rothbardian political economy: the
state vs. voluntary associations, and the struggle over the
ownership and control of property. He showed that property must be
in private hands and owners must be free to control it as they see
fit. The only logical alternative is the total state. There is no
room for a "third-way" like social democracy, the mixed economy, or
"good government," and the attempt to create it is always disruptive.

Power and Market, another enduring contribution, zeroed in on this
conflict, and attacked every form of government intervention,
confounding one anti-market cliche after another, and defending
market competition as essential to social peace. Where others looked
for "market failure," Rothbard found only government flops.
The book discussed the most common intervention in the market:

taxation, the direct taking of someone's property by a group
claiming a monopoly on coercion, i.e. the state. The taxing power
defines the state in the same way that theft defines a robber.
He also showed that there can be no neutral tax, that is, one that
leaves the market exactly as it would be without the tax. All taxes
distort. And all taxes are taxes on production and hinder it, even
so-called consumption taxes.

Taxation takes capital from private hands and prevents it from being
used to serve private interests and the consuming public. This is
true regardless of the tax. Also, the government spends taxes in
ways that alter the production patterns of the market. If money is
spent on market-oriented projects, it unjustly competes; if it is
spent on non-market projects, it is economically inefficient.

Taxes are never "contributions," he argued. "Precisely because
taxation is compulsory there is no way to assure -- as is done
automatically on the free market -- that the amount any person
contributes is what he would otherwise be willing to pay." As
Rothbard said, it is not utopian to work for a society without
taxation; it is utopian to think that the power to tax won't be
abused once it is granted.

No principle of taxation, he argued, can equal a market system of
fairness. A progressive tax discriminates on the basis of income;
the rich aren't forced to pay more for bread than the poor. Even a
flat tax forces that result, since higher incomes contribute a
greater dollar amount than lower ones. The least harmful tax is a
head tax or equal tax: a flat fee low enough for even the poorest to pay.

As a steadfast believer in free trade, Rothbard argued that peace
between nations cannot rest on negotiations between state managers.
Peace is kept by the network of exchange that develops between
private parties. This is why he opposed false "free trade" such as
Nafta and Gatt, which have more in common with neo-mercantilism, and
he was the first to forecast the disaster Nafta has become.

Interventionists have long used the language of markets to advance
statism. Consider anti-trust law enforced in the name of
"competition." Rothbard showed that the only authentic monopolies
are those created by law: the government subsidizes a producer at
others' expense (public hospitals and schools) or forbids
competition altogether (the postal service).

Other forms of monopoly include licensure, that is, deliberately
restricting the supply of labor or number of firms in a certain
industry. Government monopolies always deliver inferior service at
exorbitant prices. And they are "triangular interventions," because
they subsidize one party while preventing others from exchanging as
they would in a free market.

He showed that unemployment insurance (actually, unemployment
subsidies) increases the number of people out of work. Child labor
laws, a favorite of unions and the Department of Labor, subsidize
adult employment while preventing young people from gaining valuable
work experience. Even eminent domain ("a license for theft") fails
under Rothbard's property-rights strictures.

What about "intellectual property rights"? Rothbard defended the
copyright as a contract made with consumers not to reprint a work,
resell it, or falsely attribute the source. A patent, on the other
hand, is a government grant of monopoly privilege to the first
discoverer of certain types of inventions to get to the government patent office.

And under public ownership, he argued, the "public" owns nothing,
and the ruling officialdom owns all. "Any citizen who doubts this,"
Rothbard suggested, "may try to appropriate for his own individual
use his aliquot part of 'public' property and then try to argue his case in court."

The government sector focuses on the short run, he argued; there is
no such thing as "public-sector investment." It is only the private
sector, which is the real public sector, Rothbard said, where
property owners take long-run considerations into account. Unlike
government, they preserve the value of resources, and do not plunder or waste them.

His pioneering studies of private courts predated the increase in
private arbiters (Rothbard wanted to abolish "jury slavery" and make
courts pay a market wage). His work on private law enforcement
predated the popularity of home protection and private security. His
promotion of private roads predated their wide use in suburbs and
malls. His promotion of private schools predated the anti-public school revolt.

The Trouble With Data

Many economists think numbers are the sum of the discipline.
Rothbard turned the tables to argue that government data are
gathered and used for piece-meal planning and the destruction of the
economy. Whatever information markets need about economic conditions
can be garnered privately.

A good example is the "trade deficit" between nations, which he said
is no more relevant than the trade deficit between towns. There is
no justification for assuming that trade must equal out in accounts.
The important point is that people are benefiting from exchange,
whether across the street or across the world.

Aren't historical statistics useful for research? Many are
misleading. The Gross Domestic Product counts government spending as
production, when it should be counted as consumption. Also,
government taxing is considered neutral when it's destructive.
Deficits, which drain savings and crowd-out production, also need to
be accounted for when assessing productivity.

Rothbard looked at private production by subtracting out the
government component. The result is the Private Product Remaining,
or PPR, which has served scholars as a basis for more accurate
historical work. Using the PPR, for example, we see national product
increasing at a much slower rate than the GDP, thanks to big government.

Even money-supply statistics were in need of revision in Rothbard's
view. Long before people gave up on the Fed's ability to generate
anything useful (the "M's" are laughable these days), Rothbard
proposed his own measure based on the Austrian School theory of
money. It counts cash, deposits easily turned into cash, and all
other liquid financial assets.

Banking on Gold

The state and its banking cartel is the worst possible money
manager, Rothbard argued, and free enterprise is the best. He
produced many studies on the abuse of money and banking by central
bankers and the central state. They include his doctoral thesis, The
Panic of 1819, The Mystery of Banking, and papers on the banking
debates of the mid and late 19th century, the monetary debauchery of
FDR, the fiasco of Bretton Woods, and the following age of inflation
and monetary chaos. Just out is his Case Against the Fed, the best
book ever written on the subject.

See the Federal Reserve as a counterfeiting syndicate, and we have
Rothbard's view of the central bank. But, he pointed out, at least
the counterfeiter doesn't pretend to be working in the public
interest, to be smoothing out business cycles, and to be keeping
prices stable. He was also the first to analyze in depth and from a
free-market perspective the special-interest groups that created the Fed.

Rothbard added to Austrian theory a systematic model for how money
is destroyed. The state conspires with the central bank and the
banking industry to enhance their mutual power and wealth by
devaluation, the equivalent of coin clipping. Little by little,
society's money has less to do with its original form, and
eventually it is transformed into paper created out of thin air, to
best serve the state's interest.

As a part of this process, the state intervenes to forbid customers
from insisting on 100% reserves in checkable deposits. From there,
it is progressively easier to move from gold to paper, as happened
in this country from the turn of the century.

Like Mises, Rothbard saw inflation as a policy pursued by the
banking industry in league with the government. Those who get the
newly created money first--banks, government, institutional
securities traders, and government contractors, for example--win out
because they can spend it before prices go up and investments are
distorted. Those who get the new money later lose.

A Rothbardian gold standard is no watered-down version. He wanted
convertibility at home and abroad. Only that system--which would put
depositors in charge of insuring the financial soundness of the
banking system--can prevent the Fed's monetary depredations, which
have reduced the value of the 1913 dollar to a penny today.

The ultimate guarantor against inflation is a private banking system
with private coinage, a great American system that was squeezed out
by the central state. Rothbard's writings on money and
banking--extensive and deep--may eventually become the single most
influential aspect of his thought.

Freedom's Moral Foundation

Economists rarely talk about liberty and private property, and even
less about what constitutes just ownership. Rothbard did, arguing
that property acquired through confiscation, whether by private
criminals or the state, is unjustly owned. (He also pointed out that
bureaucrats pay no taxes, since their entire salaries are taxes.)
Ethics of Liberty was his moral defense. "Liberty of the
individual," Rothbard wrote, is "not only a great moral good in
itself" but "also as the necessary condition for the flowering of
all the other goods that mankind cherishes": virtue, the arts and
sciences, economic prosperity, civilization itself. "Out of liberty,
stem the glories of civilized life."

Once we understand why private property should be inviolable,
troublesome notions fall by the wayside. There can be no "civil
rights" apart from property rights, because the necessary freedom to
exclude is abolished. "Voting rights" are also a fiction, which --
depending on how they are used -- can also diminish freedom. Even
the "right to immigrate" is phony: "On whose property does someone
else have the right to trample?" he asked.

Thus, the Rothbardian social order is no ACLU free-for-all. The
security of property provides lines of authority, restraints on
behavior, and guarantees of order. The result is social peace and
prosperity. The conflicts we face today, from affirmative action to
environmentalism, are the result of false rights being put ahead of
private property.

In defense of capitalism, Rothbard was uncompromising. But he did
not see the market as the be-all and end-all of the social order.
For him, capitalism was not a "system," but a consequence of the
natural order of liberty. Neither "growth" nor "greed" is the
capitalist ideal. In the free economy, leisure and charity are goods
like any other, to be "purchased" by giving up alternative uses of
time and money.

And with growing prosperity, the need for material goods falls
relative to nonmaterial goods. "Rather than foster 'material'
values, then, advancing capitalism does just the opposite." No
society has ever been as grasping and greedy as the Soviet Union,
although the left is still trying to convince us that state power
equals compassion.

A Man of Principle

Rothbard was called "the state's greatest living enemy" because he
applied traditional standards of morality to government. If it is
wrong for a person to demand your money or your life, it is also
wrong for a band of criminals calling themselves the government to
do so. Rothbard's "anarchism" only sought to make the government
subject to the rule of law.

But he was no "extremist"; while upholding the radical ideal, he
happily cooperated with anyone who wanted to limit government power,
no matter how gradually. The perfect was never the enemy of the good
in his mind; the good was always an improvement. He combined
idealism with realism, scholarship with accessibility, and boundless
curiosity with commitment to truth.

What he wrote about Ludwig von Mises applies to Rothbard as well:
"never would Mises compromise his principles, never would he bow the
knee to a quest for respectability or social or political favor. As
a scholar, as an economist, and as a person, Ludwig von Mises was a
joy and an inspiration, an exemplar for us all."

Like Mises, Rothbard gave up money and fame in academic economics to
promote what is true and right. And he set all who knew him an
example of how a man should live his life.

The Mises Institute was blessed to be associated with him, and he
credited the Institute with having "at last forged an Austrian
revival that Mises would be truly proud of."

Rothbard's ideas and character, like those of Mises, must be always
before us, and before new generations as well. The Mises Institute
will ensure that it is so.
--------
Llewellyn H. Rockwell, Jr., is president of the Mises Institute.