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Book Review: Making Economic Sense

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Making Economic Sense
by Murray N. Rothbard (Auburn, Ala.: The Ludwig von Mises Institute, 1995); 435 pages.

Murray Rothbard was an exceptional interdisciplinary scholar. He was a master of economic theory (and, himself, one of the major 20th-century contributors to Austrian economics), an original political theorist defending human liberty, and a wide-ranging multisubject historian. His death last year, in 1995, was a great loss for the cause of liberty. He was without a doubt one of the most important figures in the post-World War II revival of a tradition of individual freedom in America.

In the mid-1970s, I had a summer research fellowship with the Institute for Humane Studies, when it was still located in Menlo Park, California. At the same time, Murray Rothbard was spending that summer on the Stanford University campus, just one township away. One afternoon I was invited over to the house he was renting with a few others for an evening of drinks and conversation. When we arrived, Rothbard’s wife, Joann, greeted us and said that Murray was under a deadline to finish an article, and he would be joining us soon. From a bedroom that he was using as a study, we heard the tapping of a typewriter that sounded more like the rapid fire of a machine gun. In the half hour or so that we were waiting for him, he had whipped out an entire article of several pages, with his first draft being a perfect last draft. It was a piece that was to appear in an issue of the monthly publication that he then was editing, called Libertarian Forum. I remember thinking that the piece was politically insightful, polemically hard-hitting, and rich in historical detail. And all written in not much more than half an hour!

The late Roy Childs, who was editor of Libertarian Review in the 1970s and long served as book reviewer for the Laissez Faire book catalog, was for many years a close friend of Murray Rothbard’s. He told that he was once staying over at Rothbard’s New York City apartment. In the living room one day, Roy was slowly reading through a book, while Rothbard sat on a couch across the room rapidly turning the pages of a book he was going through.

Roy asked him how he could absorb what the author was trying to say going through the volume that quickly. Rothbard threw the book across the room and said, “Roy, open it to any page, any page and I’ll tell you what he says.” Roy randomly opened the book, started reading from a passage, and Rothbard finished it for him. Practically every room in Rothbard’s large apartment was lined from floor to ceiling with bookcases. Murray said, “Roy, pick any book, any book off any shelf, open the book to any page and I’ll tell you about the author’s argument.” Roy picked a dust-covered book about ethics from a top shelf, opened it, and began to read aloud. Rothbard not only finished explaining the author’s theory, but critically analyzed it and told Roy the other books that needed to be read to fully understand why the author was wrong!

From 1982 until his death, Murray Rothbard served as academic vice president of The Ludwig von Mises Institute, headquartered at the Auburn University campus in Auburn, Alabama. For those dozen years, Rothbard published a column in the Mises Institutes’ monthly publication, The Free Market. Now, the Mises Institute has brought together practically all of those columns in a volume entitled Making Economic Sense. And it is Murray Rothbard at his very best.

Divided up topically, the book touches upon almost every important policy issue that has been before the public during the last decade. The volume begins with a critical analysis of many of the sacred cows of modern economics: an unreflective acceptance of statistical model-building; the fundamental errors of Keynesian economics; the limits of supply-side economics; common myths about deficits, inflation, and the influence of government taxing and spending on consumption, savings, and investment.

In a series of pieces on the welfare state, Rothbard not only discusses the effect of welfare spending and regulations on work incentives, family life, and individual responsibility; he also takes to task conservative and neoconservative critics of welfarism, who, in spite of their rhetoric, invariably end up actually advocating solutions that enhance government control, raise taxes, and add layers of even more state regulations.

In a section on “politics as economic violence,” Rothbard gives further examples of how supposed conservative “free-market” solutions could in fact increase government power. In a discussion of school vouchers, for example, Rothbard points out:

“Vouchers would greatly extend the welfare system so that middle-class taxpayers would pay for private as well as public schooling for the poor. People without children, or parents who home school, would have to pay taxes for both public and private schools. On the critical principle that control always follows subsidy, the voucher scheme would extend government domination from the public schools to the as — yet more or less independent private schools.”

In an excellent series of articles in sections on “economic ups and downs” and “the fiat money plague,” Rothbard debunks many of the common beliefs and myths about inflation, depression, deflation, and government cures for the business cycle. One of the most common of such myths is that unless the government centrally manages the nation’s money supply, the country might find itself short of enough money to prevent falling prices. But Rothbard demonstrates that historically there have been several periods of American history in which price deflation went hand-in-hand with robust and high rates of general economic growth and rising prosperity. Falling prices have only been one of the symptoms of a depression in the wake of prior government monetary manipulations that have set in motion inflations and false investment booms, the unavoidable result of which is a recessionary or depressionary correction to put the economy on a sustainable, balanced course when the monetary expansion has ended or slowed down. The only real and lasting cures for artificial booms and resulting busts is, as Rothbard clearly explains, an end to central banking and a gold standard outside of government control.

The volume concludes with a previously unpublished 23-page piece that Rothbard wrote following the Republican “November Revolution” of 1994. Alas, he correctly anticipated most of the contradictions, compromises, and unprincipled inconsistencies that have plagued the conservative majority in Congress over the last two years. His explanations as to why this was likely to happen makes the essay worth the read.

I first began reading Murray Rothbard’s works — Man, Economy, and State (1962) and America’s Great Depression (1963) — when I was a teenager in the 1960s. He influenced my thinking a lot and in fact was one of the primary forces in my life leading me to a classical-liberal and libertarian philosophy of politics and social life. Reading through these over 100 articles reminded me just how deep my intellectual debt to him really was, and how richer the cause of freedom has been because of his writings over the decades.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).