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Rothbard and Hayek

February 1, 2010

Rothbard’s article “Hayek and the Nobel Prize” posted today as a Mises Daily article is an insightful and moving tribute to Hayek. It should finally lay to rest the unfounded claim that Rothbard did not appreciate and build upon Hayek’s immense contribution to economics. One of Rothbard’s greatest contributions to economics was his integration of the Wicksell-Hayek structure-of-production analysis with the Fetter-Mises time preference theory of interest. Mises never employed the structure of production in his capital and interest theory, perhaps because of its vague association with Böhm-Bawerk’s erroneous backward-looking formulation of the “average period of production.” In any event, Hayekian capital theory is at the very core of Rothbard’s reconstruction of Austrian production theory that extends for more than 300 pages in Man, Economy, and State.

Among numerous other intellectual debts to Hayek, Rothbard’s rigorous anti-scientism and anti-positivism was as much an inheritance from Hayek’s Counter-Revolution of Science and related writings as it was to Mises’s works. It is true that Rothbard differed with Hayek on narrow questions of economic theory, most notably the importance of knowledge in the problem of socialist calculation and the degree to which actual market prices approximated long-run equilibrium prices. But Rothbard also profoundly disagreed with Mises on such issues as the theory of monopoly and the possibility of a “neutral” tax that did not distort the market.

Despite his differences and disagreements with them, Rothbard was steeped in the works of both Mises and Hayek and used their writings as the foundation for his own theoretical system. In his work on pure economic theory, there can be no question that Rothbard was clearly intent on advancing the broad tradition represented by these two giants of 20th-century economics.

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