Rothbardin muistokirjoitus

[Kimmo Kuusela]

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Llewellyn H. Rockwell, Jr.

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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there are unpublished manuscripts, articles, and letters to fill many more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
our 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.

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 entre 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 great 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.

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