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A Treatise of His Own

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Tags EducationMedia and CultureAustrian Economics Overview

03/10/2004Joseph R. Stromberg

The Ludwig von Mises Institute has published a new edition of Murray N. Rothbard's Man, Economy, and State, and united this great treatise with Power and Market, which was originally written as the final section of the book but was published only eight years later. (Buy it here; see full text here)

Rectifying that publisher mistake of 40 plus years ago is justification enough for this new edition, which runs fully 1,544 pages. The new edition includes other changes that have made it more useable for the reader: footnotes are at the bottom of the page, it has a complete bibliography, the index is complete and broken down by subject and name, and the quality of this beautiful hardback befits this landmark contribution to the revival of Austrian economic thought after World War II.

My introduction includes all new material from Rothbard letters on why and how the book came to be written, and the development of his thought during the seven years he spent writing it. Some of these findings are summarized below.

World War II and the subsequent cold war created a climate in which state prestige was at a high watermark. In these circumstances, most economists saw their role as one of advising governments on how best to organize, regulate, and plan "national" economies, whether to win wars or to provide social justice.

Friedrich A. Hayek's The Road to Serfdom (1944) and Ludwig von Mises's Human Action (1949) had made a dent in the consensus, but mainly in the ranks of the Old Right movement. Hayek's book drew violent criticism from New Deal academics, while Mises's treatise met with rejection, puzzlement, or silence.

Rothbard's book, undertaken in late 1949, was intended as "one of the few, if not the only, non-collectivist book suitable for the college level. . . ." It would set forth Mises's ideas in step-by-step fashion, in such a way that the educated reader could, with sufficient effort, grasp the basics and the applications of Austrian economics. Along the way, the "textbook" grew into Rothbard's own general treatise.  

In this form, the book achieved the goals of the textbook, and has served many who came into Austrian economics, from the 1960s onward, as a full-blown introduction to economic science, to be read before Human Action or alongside it. It quickly became a basic text of the Austrian revival, and, interestingly enough, the book has seen use as a textbook.

Despite less-than-sympathetic reviews in mainstream economics journals, Man, Economy, and State—like Human Action—became a sort of underground classic. It sold well enough to be reprinted in 1970, 1993, and 2001.  Man, Economy, and State came out in 1962 in "truncated" form, for reasons to be explained below. The new Scholar's Edition (2004) includes the sections published as Power and Market (1970), and thus realizes, as far as possible, Rothbard's original plan of the work.  

By about 1946, Murray N. Rothbard had begun work on his Ph.D., which would be awarded October 11, 1956. His studies at Columbia would hardly have led an outside observer to predict the work he came to pursue in his long career as a public intellectual committed to Austrian economics and libertarianism.

In a letter of April 1951, Murray Rothbard described his formal training in economics: "I myself took my education at Columbia, when that institution was transforming itself from Deweyan pragmatism to logical positivism—so I grew up surrounded by Positivists." Another "great tendenz in Columbia economics" was "Baconian institutionalism." Joseph Dorfman—historian of American economic thought and Rothbard's dissertation director—was himself an institutionalist.

In 1972, Rothbard recalled his formal studies: "there was something wrong with all the schools of economics. I was very unhappy with all the economic theory…. [T]hen when I read Human Action, the whole thing just slipped into place, because everything made sense."

Since his university instructors had almost entirely skirted the Austrian School, Rothbard had to learn of Austrian economics through his Old Right connections at the Foundation for Economic Education (FEE). The Old Right was a loose movement of opposition to the domestic and foreign policies of Franklin D. Roosevelt's New Deal, concentrated in the right wing of the Republican party and resting on a synthesis of classical liberalism and republicanism.

With varying degrees of "purity," Old Rightists stood for minimal government, laissez faire, and free trade as keys to liberty and prosperity. In the early 1950s, this program implied so-called "isolationism," strict construction of the Constitution, and support for "states' rights," as against New Deal centralization, economic "planning," and social engineering.

Through FEE, Rothbard learned that "Ludwig von Mises, whom I had heard of only as contending that socialism could not calculate economically, was teaching a continuing open seminar at New York University. I began to sit in on the seminar weekly." Thus Rothbard attended the now-famous Mises Seminar almost from its beginning in 1949. Rothbard's "right-wing libertarian" instincts matured into well-grounded theory when he became a student of Mises.

Rothbard wrote two reviews of Mises's great treatise Human Action not long after its 1949 publication. He characterized it as "a work of monumental grandeur" which presented "a complete structure of economic science," a structure "firmly grounded in praxeology, the general principles of individual action."

In the fall of 1949, Herbert C. Cornuelle, president of the Volker Fund, asked Rothbard to write an economics textbook that would present the main ideas of Mises's Human Action to the intelligent reading public. We can follow the unfolding of the work in Rothbard's correspondence, memos, and reports dealing with the project.

Writing to Herbert Cornuelle in November 1949, Rothbard said,

When Mises first discussed with me the project for an economics textbook and guide for the intelligent layman, he asked me to prepare an outline. I did so, and he likes the outline. Now, he suggests that I write a representative chapter.

The rest of the letter dealt with expenditures, time, and various arrangements.

Writing to Alfred D. Chandler in June 1950, Rothbard wrote that he saw "the 'pegging down' of Mises to be in the form of a college textbook," but that, Mises preferred "a book directed primarily toward the intelligent layman, but also usable in college courses."

Rothbard continued:

The book I have in mind would, at least for the first volume, steer entirely clear of all institutional and factual material… [and]… would be exclusively devoted to a rigorous, clear elucidation of basic economic principles, so written that each part flows logically from the part preceding. In such a way, the theory of the unhampered market, based on an analysis of individual action, would be completely developed.

The book would be

the only one to apply Misesian methodological principles, which demonstrate that historical facts cannot "prove" any theory; the theory must be used as an explanation of historical facts.

In February 1951, Herb Cornuelle recounted Mises's reaction to the "Money Chapter" which Rothbard had written:

I think that Rothbard's Chapter on Money and Banking is very satisfactory. It certainly proves his ability to write a textbook much better than all those I have had an opportunity to see. I hope he will continue his work as soon as he will have finished his thesis.

Cornuelle now offered Rothbard the Volker Fund's financial support for the project.

Writing to Herb Cornuelle in March 1951, Rothbard described a current textbook as a model of what not to do:

. . . take a very popular textbook of today, Bowman and Bach, Economic Analysis and Public Policy, 2nd ed., 1949. . . . It amounts in total to 931 pages. In this huge book we find a fantastic jungle, a hodgepodge of almost every conceivable fashionable doctrine and set of facts (most of them fallacious), and presented in an amazingly chaotic fashion.    

Categorically, I would say that there have been only two suitable textbooks printed in English, Taussig's Principles, 1911, and Fetter's Principles, 1915.

Hence, it was clear that

Not only have the great developments by Mises been neglected, but hodgepodges of newer fallacies have been hastily added, until economics, as presented in present-day textbooks bears little relation to the subject as it could be accurately presented.

It followed that

[what was needed] namely, a logical step-by-step development of the Misesian theoretical structure…. I am convinced, that, by this step-by-step method, the beginning reader, student or intelligent layman, can grasp the most difficult theoretical concepts. And since he would have to accept each step, he would then be prepared to digest and accept each further step.

Rothbard added that

the format [of the book] grows out of the writing itself. . . . Incidentally, I was pleased to learn from Mises that he is pleased with my recasting of format, rather than sticking to the format of Human Action. Human Action is more discursive in topics, and more condensed in its discussion of topics, assuming more or less the knowledge . . . that my textbook would contain. In short, I shall try to do for Mises what McCulloch did for Ricardo. . .

Toward the end of June 1952, Rothbard wrote to Herb Cornuelle:

I've written about 95 pages so far, and frankly I am highly enthusiastic about it. It is a patterned development of the fundamental implications of the assumption of Human Action—for the first time bringing to the surface and clarifying the step-by-step nature of the edifice which Mises had constructed, but more or less had taken for granted that his readers would understand.

In October 1952, Rothbard began submitting a series of Progress Reports to the Volker Fund, covering his work on the economics principles book and on other projects. In his first report, he wrote: "I turned from the money section to go back to the fundamentals chapter." Further work and reflection had led him to "a complete scrapping of the very tentative outline…."

Logical and methodological considerations had made him see:

. . . this book could not . . . proceed along the old lines of scattered treatment of isolated sections. Such a method is defective; it conveys no sense of the grand sweep, of the coherent system integrating and pervading all aspects of sound economic doctrines…. I realized that it is possible to begin with one simple, self-evident assumption: human existence, and deduce all propositions in economics from it. The essence of human existence is human action, and once action is defined, all further truths can be deduced by logical implication.

The first chapter included an appendix on "Praxeology and Economics—relationship of economics to ethics and psychology." The next chapter would bring "interpersonal relations into the analysis" and treat the "regime of hegemonic exploitation. . . . Society is defined as [a] pattern of interpersonal exchanges, free and coerced." He would treat direct exchange here "because it allows analysis of exchange, supply, and demand and its fundamentals without [the] disturbing factor of money."

Rothbard described how he worked:

The work that is put into a chapter is organized as follow[s]: first, decision on the general subject-matter that the chapter will cover. Next follows readings in books that, upon scanning, appear to have insights to offer. Notes are taken on the readings, developing the important points mentioned. [His preparation] include[d] old and obscure books and journal articles. After a sufficient amount of readings, I begin to write the chapters, and find that one section flows step by step from the preceding one. As a result, the completed chapter is in many respects an original product . . . it must be an elaboration of the implicit structure of praxeology that Mises has developed.

Rothbard announced a departure from Mises's system:

One important source of revision promises to be the philosophical system. . . . [Rothbard has abandoned] the standard Max Weber position that there can be no science of ethics, and that value-judgments are purely arbitrary. I have come to believe that there can be a science of rational ethics based on human nature and what is good for human nature.

He planned to break up his chapter on money. After sketching out a set of projected chapters for "Part I,"   Rothbard wrote that

Part II will introduce, step by step, the types of possible government intervention in the market, and the effects of such intervention. . . . Business cycles will be shown as consequences of government intervention. . . . Finally, the nature of Socialism and the impossibility to calculate will be analyzed. Also, the difference between bureaucratic operation and profit operation.  

By now he had written 366 pages; with 90 from the money chapter, this came to 456, but it would be impossible to predict the time needed for further sections, since each "presents its own problems which might require more or less reading, more or less writing and revisions."

Rothbard returned to the change in philosophical position early in January 1953, saying:

. . . the change in my philosophical position, and think it important. Mises, despite his bitter criticisms (and correct ones) against the positivists, has accepted the crucial point of their position—that values are only subjective and a matter of taste or "emotion" that cannot be decided on rational grounds. . . . "classical" ethical position that, aiming as we must at individual man's happiness, there is a "science" of ethics, which can formulate the rules for such "virtuous" action.

Soon Rothbard heard from Herb Cornuelle that he would be paid $1,500 quarterly "to enable you to prepare and write an economics book." The grant would run through 1954.

Early in February 1953, Herb Cornuelle wrote Rothbard regarding "considerable difficulty with Figure 6 in your manuscript." To this, Rothbard answered:

The whole point of the irregularity of scale, which I should have made clear in the text, is that values cannot be measured in any sort of scale, they can only be ordinally compared. . . . Hence, I deliberately made the distances between the numbers on the value-scale irregular in order to point up the fact that there is no sense in any concept of any sort of distance between the ranks on the scale.

By the second week of March, Rothbard had submitted Chapter 3 of the original "textbook."

In early April, Rothbard submitted his Progress Report for the period ending April 1, 1953. In these months, he had completed Chapter 2, which "first introduces interpersonal relations into the analysis." With regard to indirect exchange, Rothbard stressed that he was taking care "that each section flows logically from the section preceding."

The outline of Chapter 3, "The Pattern of Indirect Exchange," followed.

Next he submitted part of the outline of Chapter 4, "Money and Prices." So far he had analyzed the prices of consumer goods. Now came more of the outline. Eighty-eight pages had been written, he said, with some discussion of monopoly. Analysis of money-component would come next, but "this will have to be expanded and integrated into the previous price analysis."

Importantly, "[i]n addition to the above work, the philosophic change mentioned in the first progress report has been . . . carried through into a revision of sections of the previously-written material." Further:

The revision purged the original formulation of its definite philosophical pessimism, of the idea that human beings are constantly in a state of dissatisfaction and that man could only be happy in a state of inactive rest, such as in Paradise.

Thus, the new discussion of labor (six pages) in Chapter 1 "makes it clear that labor by itself can be either pleasurable, neutral, or painful as the case may be—although no one would engage in it if not for the end product to be derived." Rothbard mentions here two papers he had presented to Mises's seminar, which had some bearing on issues addressed in the textbook.

From Textbook to Treatise

In late 1953, the project took a decisive turn as the result of a discussion between Rothbard and Cornuelle. The topic under discussion was nothing less than a complete change in the direction. The question posed was whether he should continue the textbook or write instead a general treatise on economics. Full treatment of the matter is found in the memo Rothbard wrote to Dick Cornuelle in February 1954.

Rothbard wrote: "Ever since your last visit to New York, when you asked me about the status of my project as a textbook or a treatise, I have devoted considerable thought to this matter.

"The original concept of this project," he pointed out,

was as a step-by-step, spelled-out version of Mises's Human Action. However, as I have been proceeding, the necessary elaborations on the sometimes sparse framework of Mises has led inevitably to new and original presentations. Now that I have been proceeding to the theory of production where the whole cost-curve situation has to be faced, Mises is not much of a guide in this area. . . . I have come to the conclusion that the whole complex of cost curves is (a) based on anti-realistic assumptions, such as that of pure competition, and (b)—and here I derived much benefit from a recent remark of yours—errs in basing itself on technological rather than economic assumptions. The whole emphasis on size of firm, cost curves to plant, etc., I am convinced is all erroneous speculation on technological irrelevancies. . . . I am further convinced that the reason for this whole line of approach, now glorified in the texts as the "theory of the firm," is that these economists hope somehow to find statistical laws and constant relations. . . . It is this constant search, and futile one, for empirical "verification of theory" that has been responsible for all neoclassical errors and deviations from Marshall on.

There were other issues as well:

A further complication has arisen. . . . [N]ot only would my textbook fly in the face of the doctrine as received by 99 percent of present-day economists, but there is one particularly vital point on which Mises, and all other economists, will have to be revised: monopoly theory. . . . I am now convinced . . . that there is no such thing as "monopoly price" versus "competitive price" on the free market. This is indeed a revolutionary approach, and as far as I know no other economist has stated this. It is true that, in practice, lots of right-wing economists have maintained that examples of monopoly-price on the free market are "minor" and "unimportant". . . . But this concession, in principle, has always troubled me greatly. Mises takes the "neo-classical" position in holding, that there is competitive price and monopoly price . . .

Rothbard disagreed:

I have come to the conclusion that this theory is outright nonsense. I do not differ with Mises rashly on matters of economic theory, but in this particular case I think he has not freed himself from the shackles of the old neo-classical approach. The key question here is this: How do we know what the "competitive price" is? . . . But, in reality, we never know the competitive price. The competitive price is a result of action, and not a given. Even if we can observe a man restricting his investment and production in a product, and raising price, we can never know if this is a movement from "competitive price" to "monopoly price" or from "sub-competitive price" to "competitive price."

In the light of such problems, it "has become evident from my work on the book, that the result cannot be a textbook of general principles in the traditional sense. It is too revolutionary vis-à-vis received doctrine and even some areas of Misesian doctrine." Further: "Even if the work were put out as a general textbook, it would not be generally accepted as such."

Rothbard now addressed the advantages of doing a treatise:

We must understand, firstly, what has happened to the study of economics in the last generation. . . . [S]ince the First World War, Mises's Human Action has been the only general treatise on economics published. . . . ! The usual, perhaps the universal type of economics work written from, say, Ricardo to Fetter, was the general treatise. Since the classicists and Austrians were logical-economists, they developed their work covering the general field, and in clear, step-by-step fashion. The Austrians were considerably clearer than the early classicists precisely because of the greater clarity of their thought. These books almost always advanced the science . . .

Rothbard adduced the examples of Taussig and Wicksteed.

Since the World War, economics has taken an entirely different course. Quasi-mathematical and jargon-refinements, unrealistic concepts and faulty theories, have all proliferated to such an extent that every work on economic theory—even the most general such as Keynes or Hicks—has been highly fragmentary. This preciosity, this over-refinement and fragmentation of economics has resulted in the fact that 99 percent of present-day economists do not know economics; they only know erroneous refinements about artificially isolated segments such as "monetary economics," "labor economics," "welfare economics," "cost curves," etc.

By dropping the plan for a textbook, Rothbard could address such matters:

I conceive of the role of my book, then, to present a general treatise in the Austrian-libertarian tradition—a treatise that will cover clearly, the entire economic field. This is not difficult precisely because the economics will be the Austrian type rather than the plethora of fallacious semi-mathematical refinements…. Since the book will not be shackled to the format of the general college text, the result will be that I will be able to include two very important philosopho-economic sections: one on methodology, and one on the relation between praxeology and ethics…. It is particularly important for libertarians to know exactly what we can say as economists about government policy, what ethical judgments we can make, etc. It takes on added importance because of my dissatisfaction with the Weber-Mises position which denies the possibility of any scientific ethics.

Nonetheless, the original point of the textbook would not be lost. It would

carry out in the main the original intention… but it will, I believe, command the attention of the profession as a treatise because of its considerable elaborations in those areas not developed by Mises; its differences from Mises in such areas as monopoly, banking ethics, and government (although I do not intend to cite any specific differences with Mises in the book); and its refutations of current economic theory.

In August 1954, Rothbard reported to Dick Cornuelle on his progress under the new plan:

Going step by step in logical progression turned out to involve a good deal of original contribution on my own part, plus some changes in the direction of purity which I felt impelled to make from Mises's position (such as in monopoly theory and consumers' sovereignty doctrine).  . . Mises has very little detail on production theory, and as a consequence it took me many false starts, and lots of what turned out to be wasted effort, before I arrived at what satisfied me as a good Production Theory. (It's involved emancipation from 90 percent of current textbook material.)

He was rewriting the sections on money and banking and was thinking about integrating the discussion of socialist calculation into the Monopoly-Competition chapter:

I've just been discussing it with George Reisman, and he raised the question of how extensive the number of firms in the economy must be in order to have calculation. . . . [W]e came to the conclusion that for every "vertical integration" within a firm, in order for the firm to allocate costs, etc., internally, there would have to be a market for that area external to the firm. Thus, the inability of a Socialist government to calculate is a special case of the inability of any firm to calculate for departments internal to itself, if there is no external market to which to refer.

He now needed to present the whole government intervention part in one logical organon, as I have been doing in the free-market section and by so doing to "tie them [the issues] together in a unifying principle."

This overall conception had resulted in a plan to include "the discussion of Business Cycles . . . where it always should have been, under the Government Intervention part!" New material, which he would send shortly, now totaled 350 to 400 pages. "[W]orking on several different chapters before finishing one" was a good method because his train of thought led him "to write some of one chapter, and then to shift to a previous or succeeding chapter—due to the interrelatedness of economics."

The next month, Volker Fund's directors approved a one-year extension of his research-and-writing grant. In early November, Rothbard wrote Dick Cornuelle, describing in the letter how his participation in Mises's seminar related to his (Rothbard's) work on Man, Economy, and State:

Mises's seminar is just about the best I've been to this year. The reason is that he's dealing strictly with the market—with monopoly, profit and loss, etc.—i.e., the strictly catallactic stuff that he hasn't really dealt with in class before. It's very helpful for my work, too.

In April 1955, Rothbard submitted his half-year Progress Report. "Part II" of the book was nearly done, with 165 pages added to Chapter 5, on production, for a total of 425 pages. He had added "a Cost section after the Joint Ownership by Factors section." Further:

The section on "Uncertainty and the Rate of Interest" has been eliminated and transferred to its proper place in Chapter 7 on Money. Instead, there is a Section j., Forces Affecting Time Preference . . . a brief section dealing with some of the effects on time preference of such events as immortality or the end of the world.

Rothbard had renamed the subsections of Section 5, Chapter 5: "Natural resources incompatible with ERE [evenly rotating economy]. Must be classified as land not as capital goods, in contrast to Hayek's classification." He was dealing with the Free Rider Problem and whether or not there could be One Big Cartel. Added to Chapter II were a few pages on cartels and contract enforcement, and land ownership."

He now had in mind "to finish reconstruction of organization of Chapter 5; and to complete Chapter 7," giving an outline of the subjects to be included. This writing would bring to a close,

. . . the Economics of the Free Market. . . . After this Part III will ensue: Economics of the Hampered Market. It is impossible to say at this point how long the latter part will be. I will try to evolve it step by step on the basis of analysis of the effect of different types of violent or fraudulent interference with the market. Monetary interference, and its concomitant business cycles, international trade and currency interference, grants of monopoly and quasi-monopoly privilege, price controls, taxes will have to be discussed, plus a section on economics and public policy—the conclusions of "welfare economics," etc.

In this memo Rothbard mentioned papers written for Mises's seminar. His Ph.D. dissertation had been revised and was being retyped.

In a letter of July 19, 1955, Rothbard notes further reorganization of the book:

My last alteration was to split that gigantic Chapter 5 on Production into five separate chapters. . . . To Chapter 10 I have added a brief final section presenting a new theory of Patents and Copyrights, in which I demonstrate that copyrights are essential to the free market, whereas patents are monopoly grants by the State.

In addition: "Chapter 11, on Money, has been completed," at 146 pages.

In the course of this, for the first time, the Keynesian system gets the full treatment that it deserves, raked from every important angle. In Section 5h I come out with another component in the interest rate, since I believe there is a flaw in the Fisher-Mises "purchasing power" . . . component. The flaw comes from their dealing in terms of the loan-market rate of interest instead of the "natural" rate, i.e., the interest margins earned by businessmen on the market.  

He had also written Chapter 12—a transitional chapter leading into Part III:

This purely free market, of course, is our purist system, and so for the first time, this system sees the light of print. All done very scientifically, with no views of my own exhorting the reader. But, in the process, I refute the logic of the position of the typical laissez-faire right-winger (and everybody else) that our pure system [stateless market economy] couldn't exist.


Section 2 is on "Marketable Defense," which outlines the purist system. Part of my proof that our Austro-anarchist system could exist overlaps with part of the Festschrift article where the theory of "collective wants" is criticized.

Proceeding to Part III, the Economics of Violent Intervention in the Market:

As you know, what I had always been searching for in discussion of the hampered markets is some sort of integrating explanation, which would permit me to do for the hampered-market part what I did for the free-market part, deducing everything step by step from the original axioms of action. Mises showed the way for the free market, but even he did not accomplish this for analysis of intervention. . . . It had always been my hope to find the logical integration for the praxeology of intervention.  

He was working on a division of the subject into "(1) 'autistic interventions'; (2) binary interventions; (3) triangular interventions."

At the beginning of October 1955, Rothbard reported to the Volker Fund directors: "Great progress . . . as the work rapidly rounds into shape. In this period, Part II—the analytic bulk of the book—has been completed. . . . Furthermore, a large part of Part III . . . has been written."

He included the usual table of contents and an outline for the balance of his new "Money" chapter. Some 1,590 pages or so were done. He summarized Chapter 12:

Section 2 sets forth briefly, for perhaps the first time in many decades, the outlines of a possible marketable defense system, or marketable government, not advocating such a system (since this is a scientific treatise) but pointing out that such a system could exist.

He had begun Part III, violent invention: "Here I had very little in previous literature to serve as a guide. Even Mises's discussion of this material is sketchy and fragmented." Thus, "[t]he task I set myself was one of weaving the whole part, for the first time, into a logical structure, one which would give a comprehensive view of all possibilities of intervention, flowing in a logical process." His threefold typology of invasive action might accomplish this. After giving some details, he wrote: "Each of these types of intervention has two types of effect, what I call the direct and indirect. Most economists, including Mises, have dealt only with the indirect effects. It is true that the indirect effects require more complex analysis," but direct ones have been "neglected." The direct effects were these:

Autistic interventions prevent people from doing what they would like—they therefore lose in utility. Binary interventions do the same, coercing a sacrifice to the intervener, therefore the subjects lose in utility. Triangular interventions injure one or both of the would-be parties. Governments are erected on the basis of binary intervention (taxes, inflation).

Further: "For taxation, Calhoun's inspired division of society into taxpayers and tax-consumers is applied. Inflation is shown to be binary intervention because it consists of fraudulent issuance of 'counterfeit' warehouse receipts."

As for indirect effects, "[u]nfortunately, none of the Austrian economists applied their theory to the problem of shifting and incidence of taxation, and therefore it has been necessary for me to carve out a new theory of incidence. . . ." This was not yet finished. "The usual theory," Rothbard continued, "rests on old classical 'cost of production' theories of price, which assume that certain taxes on business can be shifted to consumers," but Austrian analysis "reveals that no tax can be shifted forward, but can only be shifted backward, reducing the incomes of original productive factors: land and labor." Hence "the tax falls on businesses, eventually on original factor incomes. . . . The sales tax, it is concluded, is a tax on income rather than on consumption."

Now came full outlines of Chapters 13, 14, and 16, substantially done. Chapter 15 was partly done. Rothbard included here an outline of the completed section and one for the balance of Chapter 15. He outlined his projected Chapters 17 through 20. His Ph.D. dissertation had been revised and submitted.

In a letter to Dick Cornuelle, Rothbard—ever an optimist—wrote: "I believe that about 300 more pages will be required to finish the book, i.e., to finish Chapter 15 and write Chapters 17 through 20 and Introduction." He asked for a three-month extension.

Now that the end of the book is in sight, my "blood is up," or whatever the expression is, and I am eager to see the book finished. . . . Mises often says that the best thing for a young economist to do is to write a book dissecting some fallacy, but I don't see how anything could be better than to write a systematic general treatise of this type. Of course, the fact that the field was practically uncharted, with only Human Action as a guide, presented me with a golden opportunity.

With the treatise gathering momentum, Rothbard began looking for a publisher. In early December, George B. de Huszar sent Rothbard some suggestions. Rothbard should try textbook publishers such as Harper and Row or university presses (e.g., Yale). A third possibility was Van Nostrand.

On December 13, Rothbard reported to Dick Cornuelle, on his progress with potential publishers:

Everyone says that the big problem I face is not so much the ideological one, since publishers will not be deterred by this (in fact, controversy stirs up sales) but by the extreme length of the book.

Rothbard's Progress Report of April 1956 stated that the book had "been brought close to conclusion. Of the approximately 1,900 pages (typewritten) the work will contain, all but an estimated 80 pages have been completed."

Chapters 15, 17, and half of 18 were done. He had reduced the total from 20 to 19 chapters. He intended "to include the Economics of Slavery and Socialism in Chapter 17 on Government Expenditures." The detailed outline of chapters completed in this period includes an interesting summary of Chapter 17, section 6:

Special aura of war, where all economic truths are supposed to be suspended. Particularly important for efficiency to preserve market during war. Self-defeating effects of price controls, priorities, excess profits, taxes, etc. War and extension of govt. power over the people. War places the State itself in jeopardy, hence its alarm. "National defense" enables the State to increase its power over the citizens without risking defeat in war.

Appendix A to Chapter 17 was to deal with slavery.

Rothbard was now in the middle of Chapter 18: "Anti-Market Ethics: A Praxeological Critique."

This does not mean that praxeology can set forth its own ethical conclusions; but it does mean that praxeology can demonstrate either (a) the conceptual impossibility of various ethical goals, and therefore their meaninglessness and absurdity for human action; and (b) their inconsistencies and self-contradiction.

He had written an addition to Chapter 16 on Public Borrowing: "Fallacy of warnings about imminent 'governmental bankruptcy.' Dangers of reducing public debt. Debt repudiation. . . . Printing money less inflationary than selling government bonds, and less distortive effects."

In a letter of April 2 to Ludwig von Mises, Rothbard wrote that he had applied to the Earhart Foundation for a grant to work on a book on the Great Depression. At the end of May, he reported to Dick Cornuelle that he had successfully defended his Ph.D. dissertation. Rothbard not only worked on several chapters of his treatise at once, but he seems always to have had several major projects going at the same time.

Now, for nearly three years, the economic treatise dropped out of Rothbard's correspondence. Nothing in the record suggests that he did any major work on Man, Economy, and State in this period. On May 5, 1959, Rothbard wrote triumphantly to his mentor Ludwig von Mises:

E finito! At last, after more than seven years, I have finally finished the General Principles book…. I can never adequately thank you for the inspiration, both scientific and personal, that I have received from you, and for your interest in my work. I regret that I have only been able to attend your seminar rarely this year.

The search for a publisher for Rothbard's treatise was a difficult one. He heard from Praeger, for example, that the market for such a book "is far too limited and the manuscript itself is far too lengthy for us to be able to undertake the financial risk involved in its publication."  This reaction proved to be typical.

In the end, the Volker Fund provided the solution. Ivan R. Bierly informed Rothbard in January 1960 that, "The Directors have just approved the inclusion of your book… in the Van Nostrand series, provided we can get together on some basis similar to that suggested by Frank Meyer in his comments, which are attached."34

Frank Meyer, an ex-Communist "libertarian conservative," worked as a consultant to the Volker Fund and a contributing editor of National Review. Rothbard first met him in October or November 1954 and maintained a friendship with Meyer until the latter died in 1972, while disagreeing sharply with his cold war–interventionist views on foreign policy.

Meyer's memo torpedoed Rothbard's pure theory of invasive action—Part III of the manuscript. Meyer lauded the manuscript as "an exhaustive treatise on economics," noting that such works were no longer done. Schumpeter and Keynes "have failed to do so. The same, of course, can be said of Hayek." Even better:

Murray Rothbard has broken sharply and clearly with that aspect of the economics of a free society which has always seemed to me its weakest point . . . utilitarian philosophy. Firmly grounded upon an epistemology based in natural law, Man, Economy and State has an integrated wholeness that founds the economics of freedom on the same solid basis upon which the central tradition of the West is founded.

Then came the blow: "Chapters 12 through 19 [Part III] should be removed." They should be "replaced by a single chapter summarizing the economic themes discussed in this group. These chapters are fundamentally political in their scope and written from the point of view of an uncompromising anarchism." These chapters should be a separate book. Further, Rothbard needed "to excise some of the 'cracks'" which, were "obviously for the sake of shocking" people.

In a letter of January 17, 1960, to Ivan Bierly, Rothbard expressed his gratitude to the Volker Fund for "publish[ing] my book in the Van Nostrand series," but protested the decision to cut Part III: "For the record, I would like to take vigorous exception to Frank's references to the last part as 'dogmatic' and 'political' rather than 'economic.'" He had never advocated policy in the treatise. To hold that a "price control leads to shortage and misallocation of resources" is "in no sense a value-judgment or a political stand on my part; it is purely a scientific economic conclusion of an economic analysis." Thus, he wrote,

I am strongly opposed to economists simply leaping from their economic analysis to a political stance, without bringing in a coherent ethical system, a coherent political philosophy. I do not oppose ethics and political philosophy, far from it; it is just that economics by itself is not sufficient for a political conclusion, although it helps immensely by providing data for a political philosophy.

(Rothbard later grounded his ethical position in The Ethics of Liberty [1982; 1998]. Hans-Hermann Hoppe insightfully writes that the concept of property provides the bridge between Rothbard's economics and his ethical theory. In this fashion, Rothbard spelled out the relationship between economics and ethics as parts of his overall goal of creating, in effect, a science of liberty.)

Nonetheless, removing some of Part III was better than cutting the main body of the book internally. (The full manuscript already came to over 1,500 pages.) The dedication at the front of the two-volume Man, Economy, and State read, "To Ludwig von Mises."

The balance of Part III appeared in 1970 as Power and Market: Government and the Economy, published by the Institute for Humane Studies. Rothbard's stateless market society, too "controversial" in 1959, now saw daylight, as did his important "Praxeological Critique of Ethics." Power and Market mainly incorporated those sections of the old Part III not used in the 1962 treatise. Hence there is fairly little repetition between Chapter 12 (1962) and Power and Market.

As for the reception of Rothbard's treatise, mainstream reviews tended to be unfavorable, while favorable reviews came from Henry Hazlitt and Ludwig von Mises, and a few others. Hazlitt highlighted Rothbard's

excellent description of the enormous benefits of a money economy over one of direct exchange; his explanation of why a separate theory of "international" trade is unnecessary and why the "balance of payments problem" for a nation is no different from that for an individual; his rigorous exposition of a pure time-preference theory of interest; his mordant exposure of labor union fallacies; his beautiful explanation of why the free market, far from being "anarchic" or "planless," is the only organization under which true economic balance and order are possible.

Hazlitt concluded: "It is in fact the most important general treatise on economic principles since Ludwig von Mises's Human Action in 1949." For Mises, the book meant that Rothbard "joins the ranks of the eminent economists by publishing, as the result of many years of sagacious and discerning meditation, a voluminous work, a systematic treatise on economics."

I could not conclude a discussion of a work of Murray Rothbard's without saying something about his manner of writing. There is humor—the "cracks" that so alarmed Frank Meyer. Noting that some writers condemn alleged monopolists for restricting production, he writes: "the production of any product is necessarily always 'restricted.'" Then there are Rothbard's footnotes, which repay serious reading, develop arguments beyond what is in the main text, and lead the reader on to hitherto unknown sources. They are often very funny.

In making Rothbard's treatise available in its original intended form, the Ludwig von Mises Institute is performing a signal service to the Austrian economic and, indeed, the larger scholarly community.


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