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Chapter 2: A Conversation with Murray N. Rothbard

AEN: How did Man, Economy, and State come to be?

Rothbard: It ended up totally different from the way it started. After Mises had written Human Action, the Volker Fund—which promoted classical liberal and libertarian scholarship—was looking for a college textbook that would boil it down and spell it out. Mises hardly knew me at the time since I had just started attending his seminar. I wrote a sample chapter, “Money: Free and Unfree.” They showed it to Mises and he gave his endorsement. I then received a many-year grant to work on it. I thought it was going to be a textbook. But it grew and grew. New material kept coming in. As I kept going, I found ideas Mises had left out, or steps that were implicit in Mises that needed to be spelled out. I gave periodic reports to the Volker Fund. Finally they asked me: “Look, is this going to be a textbook or a treatise?” When I delivered a 1,900-page manuscript, they knew the answer. Power and Market was the final chapter called “The Economics of Violent Intervention.” They asked me to cut it out because it was too radical. It was published separately years later by the Institute for Humane Studies.

AEN: Did you write the book in sequence?

Rothbard: Yes. I started on page one with methodology and it wrote itself.

AEN: Did anything get left out of the final version?

Rothbard: I took chapter 5 out of Man, Economy, and State, which included the usual cost-curve analysis. I wrote the whole chapter before I realized my approach was nonsense. So I started over.

AEN: Is there any doubt that Mises was your primary influence?

Rothbard: I didn’t think so, but Joseph Salerno once gave a talk in which he said Man, Economy, and State is more Böhm-Bawerk-oriented than Mises’s Human Action. I never thought of it that way, but it may be true. When I was spelling out capital theory, I used Böhm-Bawerk primarily. I didn’t think about it since I thought Mises was a Böhm-Bawerkian and didn’t see any contradiction. I would like to see Professor Salerno explore this. It’s an example of the way an historian of economic thought can show something about a person’s work that he himself didn’t realize.

AEN: How many years did it take to complete Man, Economy, and State?

Rothbard: This is complicated. I received the grant in 1952, but shortly afterward I had to finish my doctoral thesis under Arthur Burns.1 From 1953–56 I was working partly on both. I finally finished Man, Economy, and State in 1960 and it was published in 1962.

AEN: How was your dissertation, The Panic of 1819, received?

Rothbard: Very well. In fact, much better than any other of my books. Maybe that’s because I didn’t analyze the causes. I only wrote about how people wanted to cure it. I could have done much more work on it, and there is still more to say, but I am pleased with it. Plus, it remains the only book on the subject.

AEN: Were scholars anticipating the publication of Man, Economy, and State?

Rothbard: Not really. Very few were even interested, except the Mises-seminar people and FEE people like Larry Fertig and Henry Hazlitt. Most were non-economists or friends and admirers of Mises. They were caterers, lawyers, clothing manufacturers. Other than Kirzner, Spadaro, Sennholz, Raico, Reisman, and Percy and Bettina Greaves, there was no Austrian movement to speak of.

AEN: Did you ever get discouraged and say “Why am I doing this?”

Rothbard: No. Any chance to write a book or meet new people was terrific. But I was lonely. Mises was in his sixties, Hayek and Machlup were in their fifties, and I was in my twenties. There was nobody in between. With the possible exception of Baldy Harper, who was a libertarian, but whose Austrian knowledge was limited, there was a missing generation. It had been wiped out by the New Deal.

AEN: If we do an It’s a Wonderful Life experiment—the state of Austrian economics without Man, Economy, and State—it looks pretty grim.

Rothbard: That’s an interesting point. Of the economists, Sennholz became a real-estate speculator, Spadaro didn’t write much, Reisman became a Ricardian, and Hayek had drifted into philosophy and social thought. Kirzner was doing good work on entrepreneurship, but nobody was doing methodology, monetary theory, capital theory, or much else.

AEN: What were your thoughts on Mises’s review of Man, Economy, and State when it appeared in the New Individualist Review?

Rothbard: I liked it, but he didn’t say much about the book. I would have preferred him to go into more depth.

AEN: Was he bothered by some of your corrections of his theories?

Rothbard: I don’t know because he never said. Mises and I had only two friendly arguments. One was on monopoly theory where he wound up calling me a Schmollerite. Although nobody else in the seminar realized it, that was the ultimate insult for an Austrian. The other argument was on his utilitarian refutation of government intervention. I argued that government officials can maximize their own well-being through economic interventionism, if not those of the public. He in turn argued that those kinds of politicians wouldn’t survive popular vote, thus changing the terms of debate.

AEN: Was there a difference on foreign policy?

Rothbard: In all the years I attended his seminar and was with him, he never talked about foreign policy. If he was an interventionist on foreign affairs, I never knew it. It would have been a violation of Rothbard’s law, which is that people tend to specialize in what they are worst at. For example, Henry George is great on everything but land, so therefore he writes about land 90 percent of the time. Friedman is great except on money, so he concentrates on money. Mises, however, and Kirzner too, always did what they were best at.

AEN: Did Hayek ever attend Mises’s seminar in the US?

Rothbard: No. They had a very strange relationship. Hayek began making very arcane anti-Misesian comments in his books, but nobody knew it, not even Mises. For example, it turns out that the anti-Walras footnote in Individualism and Economic Order was really an anti-Mises footnote, as Hayek admitted a few years later. When Mises read the article, he called Hayek up and said he liked it as an attack on formalism and equilibrium. He didn’t realize that some of it was directed against himself. Gradually, Hayek became more and more anti-Misesian without actually refuting what he had to say. Yet Mises and Hayek are still linked in academic minds.

AEN: What happened in the twelve years between Man, Economy, and State and Hayek winning the Nobel Prize?

Rothbard: Very little. There were various informal meetings, with Walter Block, and R.J. Smith. During the fifties, we had a whole group in New York, but it disbanded when Hamowy, Raico, and Liggio went to graduate school. There was another group coming up in the sixties, students of Robert LeFevre’s Freedom School and later Rampart College. At one meeting, Friedman and Tullock were brought in for a week. I had planned to have them lecture on occupational licensing and on ocean privatization, respectively. Unfortunately, they spoke on these subjects for thirty minutes and then rode their hobby horses, monetary theory and public choice, the rest of the time. Friedman immediately clashed with the Rothbardians. He had read my America’s Great Depression and was furious that he was suddenly meeting all these Rothbardians. He didn’t know such things existed.

AEN: What happened to the Volker Fund?

Rothbard: The Volker Fund collapse in 1972 destroyed a major source of funding for libertarian scholarship. The president was a follower of R.J. Rushdoony, who at the time was a pre-millenialist Calvinist, later converting to post-millenialism. He had sent me a Rushdoony book, which I blasted. Combined with other reviews, he became convinced he was surrounded by an atheist, anarchist, pacifist conspiracy to destroy Christianity. So he closed the Volker Fund in early 1972. It was a great tragedy. IHS [Institute for Humane Studies] was supposed to be established with the $17 million from the Volker Fund as an endowed think tank—publishing books, sponsoring students, funding research, and holding conferences. Instead, Baldy Harper had to start from scratch.

AEN: How did the Ethics of Liberty come about?

Rothbard: I received a Volker Fund grant to write it. It was supposed to be a reconciliation of libertarianism with conservative culture and personal ethics, what is called paleolibertarianism today. But as I worked on it, it turned into an anarcho-libertarian treatise. By the early sixties, conservatives had become pro-war and the whole idea of reconciling us with them had lost its attraction for me.

AEN: What about Conceived in Liberty?

Rothbard: After the Volker Fund collapsed, I got a grant from the Lilly Endowment to do a history of the US, which I worked on from 1962–66. The original idea was to take the regular facts and put a libertarian assessment on everything. But once I started to work on it, I found many facts that had been left out, like tax rebellions. So it got longer and longer. It turned into the five-volume Conceived in Liberty, covering the colonial period to the Constitution. I don’t like to completely chart out my research in advance. I go step by step and it always seems to get longer than anticipated. After Arlington House published volume four, they went out of business. Volume five, on the Constitution, was written longhand and no one can read my handwriting.

AEN: What about conferences during the early seventies?

Rothbard: The first was conducted at Cornell, the summer of 1973. Forrest McDonald and myself were giving papers. At the 1974 conference, we added Garrison, Rizzo, O’Driscoll, Salerno, Ebeling, Hutt, Grinder, and others. It was held in a tiny town in Vermont, which we called a Walrasian-General-Equilibrium town because there was no action, no competition, no interest rates. In 1976, we had a wonderful conference at Windsor Castle, but after that there was nothing.

AEN: Just so that we’re clear, between the 1940s and the early 1970s, you were practically the only one that did serious scholarly work in Austrian economics?

Rothbard: Well, Henry Hazlitt did some excellent work. But then he was un-credentialed. Hutt did some, but it wasn’t really Austrian. Kirzner had written some serious articles. But basically the tradition had stagnated. By the late seventies, Austrian economics was considered Hayekian, not Misesian. Without the founding of the Mises Institute, I am convinced the whole Misesian program would have collapsed.

AEN: How is your history-of-thought book coming?

Rothbard: Fine. I start with Aristotle, but don’t spend much time on the Greeks. I leap to the early Christians. Economic theory became pretty advanced in the Middle Ages and only started falling apart later. Most history of thought assumes linear growth. But I am trying to show that there is slippage.

Unfortunately, there is a hole in my book. I got to the English mercantilists and Francis Bacon, which took me to 1620, but then bogged down and leaped ahead. This summer I am going to repair the hole. Aside from the hole, I have just finished the laissez-faire French school. The next step is to cover the pre-Austrians of the mid-nineteenth century.

AEN: There seems to be a lengthening pattern to your projects.

Rothbard: Maybe so. What is happening to my history of thought is the same thing that happened to Man, Economy, and State and Conceived in Liberty. It was originally going to be a short book on the history of thought, taking the same people the orthodox people do, reversing the judgment, and giving the Austrian view. Unfortunately I couldn’t do that since Smith was not the beginning of economics. I had to start with Aristotle and the Scholastics and work up. I found more and more people that couldn’t be left out.

AEN: How many volumes have been completed so far?

Rothbard: I can never estimate things like that, but probably two or more. And I keep underestimating how much work I have to do. I thought I could finish off Marx in one chapter, but it took five. So I cannot give a projected date for finishing.

AEN: You have apparently taken an interest in religion as it affects the history of thought.

AEN: Religion was dominant in the history of thought at least through Marshall. The Scholastics emerged out of the Catholic doctrine. And John Locke was a Protestant Scholastic. I am convinced that Smith, who came from a Calvinist tradition, skewed the whole theory of value by emphasizing labor pain, typical of a Puritan. The whole objective-cost tradition grew out of that.

AEN: Why has all this been overlooked?

Rothbard: Because the twentieth century is the century of atheistic, secular intellectuals. When I was growing up, anyone who was religious was considered slightly wacky or even unintelligent. That was the basic attitude of all intellectuals. This is the opposite of the attitudes of earlier centuries when everyone was religious.

The anti-religious bias even shows up in the interpretations of the history of art, for example, in the secularist and positivist interpretation of Renaissance painting. When Jesus is painted as a real person, they assume that means it is a secular work. Whereas the real point of the Renaissance was to emphasize the Incarnation, when God became flesh. Even if art historians aren’t interested in theology, they should realize that the people they study were. The same is true for economics. In doing history, you cannot read your own values into the past.

AEN: The anti-socialist revolution seems to be the fulfillment of everything Austrians have worked for.

Rothbard: That’s right. We are living through revolutionary times. It’s like living through the French or American Revolution and being able to watch it on television every night. Now the difference between the United States and the Eastern Bloc is that the United States still has a communist party.

AEN: This seems to be a vindication for your article, “Left, Right: the Prospects for Liberty.”

Rothbard: Damn right. Western conservatives cannot take credit for this. They always argued that socialist totalitarianism couldn’t reform from within. Only the libertarians considered and gloried in this possibility.

AEN: Did you see the seeds of anti-socialist revolt when you visited Poland several years ago?

Rothbard: Yes. At the first conference I attended, several dissident Marxists were there. But the next year, the organizers said they didn’t need them. We went expecting dissident socialists and we found followers of Hayek, Friedman, Mises, and Rothbard. The economists and journalists that I met with had read many of my books and were publishing underground books on free markets.

AEN: Now that Marxism is dead where it has been tried, is there anything that is useful and important that should be remembered or kept?

Rothbard: There is one good thing about Marx: he was not a Keynesian. I recently asked Yuri Maltsev, former soviet economist, why is it that things seem to have fallen apart so rapidly in the Soviet Union in the last twenty years. He said in the last twenty years, the leaders of the Soviet Union have relaxed the money supply and have used inflation to solve short-term problems. That spelled doom for the system.

AEN: What about the prospects for liberty and a freer economy in the United States?

Rothbard: Everything is getting worse, and very rapidly. Few favor central planning, but the battleground has shifted to interventionism. There are three areas of interventionism which are the big issues, now and in the future: (1) Prohibitionism and the attempt to eliminate all risk. If, for example, automobiles cause accidents, they should be eliminated. (2) Egalitarianism and the idea that victim groups should get special treatment for the next 2,000 years for previous oppression. (3) Environmentalism or antihumanism. The implicit idea is that man is the lowest creature and every creature or inanimate thing has rights.

AEN: How are things in Las Vegas?

Rothbard: Great. Every semester we get more students, and the Austrians are at the top of their classes. We have a Human Action study group. I’m teaching a graduate seminar in Austrian economics this term and Hoppe will be teaching a seminar in the spring.

AEN: What in Austrian economics is most and least advanced?

Rothbard: In methodology, we are pretty advanced, thanks to the work of Hans Hoppe. But we can always use more since that is what sets us apart from the rest of the profession. And Joe Salerno is going great work on calculation.

Banking theory, however, has taken a very bad turn with free banking. We have to show that this is the old Currency and Banking school argument rehashed. They have adopted the Banking school doctrine, that the needs of business require an expansion of the money supply and credit. Moreover, the free banking people violate the basic Ricardian doctrine that every supply of money is optimal. Once a market in money is established, there is no longer a need for more money. That is really the key point.

[Reprinted from the Austrian Economics Newsletter 2, no. 2 (Summer 1990).]
  • 1. Editors note: Rothbard’s dissertation adviser was Joseph Dorfman.