For the average genius Murray Rothbard's body of work could consume most of one's lifetime just to read, let alone comprehend, even as he makes it easy for the reader with wit, exactitude, and clarity of style. For me, reading Rothbard's What Has Government Done to Our Money? was like discovering gold in my backyard. I followed that with The Case Against the Fed, which along with other Fed critiques, especially those by Ron Paul, Gary North, and G. Edward Griffin, led me to write a novel about a renegade Fed chairman.
It wasn't easy reading Rothbard's claim that the Fed and other central banks were counterfeiters with a grant of monopoly from government. Counterfeiters? Counterfeiters are crooks. Surely the public would catch on . . .
But when I read "helicopter" Ben Bernanke's 2002 speech in which he boasted that "the U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost," he became a self-confessed counterfeiter while rubbing it in our faces. Yet I doubt that Bernanke then or now thought of himself as engaged in a criminal operation, thanks to the Keynesian corruption of the economics profession and the world at large.
Having a counterfeiter determine our fate while hailing it as a savior shows how far we've distanced ourselves from the free market. How about W's claim in 2008 that "I've abandoned free-market principles to save the free-market system"? What did that do to the public's understanding of the free market?
Fortunately, Rothbard has made it clear what constitutes a genuinely free market. I present his lucid summary as a tribute to his wisdom (everything in bold is mine):
(From Power and Market, Chapter 7 “Conclusion: Economics and Public Policy,” Economics and Social Ethics)
On the free market, every man gains; one man’s gain, in fact, is precisely the consequence of his bringing about the gain of others.
When an exchange is coerced, on the other hand—when criminals or governments intervene—one group gains at the expense of others.
On the free market, everyone earns according to his productive value in satisfying consumer desires. Under statist distribution, everyone earns in proportion to the amount he can plunder from the producers.
The market is an interpersonal relation of peace and harmony; statism is a relation of war and caste conflict.
Not only do earnings on the free market correspond to productivity, but freedom also permits a continually enlarged market, with a wider division of labor, investment to satisfy future wants, and increased living standards.
Moreover, the market permits the ingenious device of capitalist calculation, a calculation necessary to the efficient and productive allocation of the factors of production. Socialism cannot calculate and hence must either shift to a market economy or revert to a barbaric standard of living after its plunder of the preexisting capital structure has been exhausted.
And every intermixture of government ownership or interference in the market distorts the allocation of resources and introduces islands of calculational chaos into the economy.
Government taxation and grants of monopolistic privilege (which take many subtle forms) all hamper market adjustments and lower general living standards.
Government inflation not only must injure half the population for the benefit of the other half, but may also lead to a business-cycle depression or collapse of the currency.
Suffice it to say that in addition to the praxeological** truth that (1) under a regime of freedom, everyone gains, whereas (2) under statism, some gain (X) at the expense of others (Y), we can say something else. For, in all these cases, X is not a pure gainer.
The indirect long-run consequences of his statist privilege will redound to what he would generally consider his disadvantage—the lowering of living standards, capital consumption, etc. X’s exploitation gain, in short, is clear and obvious to everyone. His future loss, however, can be comprehended only by praxeological reasoning.
A prime function of the economist is to make this clear to all the potential X’s of the world.
It is certainly conceivable that X’s high time preferences, or his love of power or plunder, will lead him to the path of statist exploitation even when he knows all the consequences. In short, the man who is about to plunder is already familiar with the direct, immediate consequences. When praxeology informs him of the longer-run consequences, this information may often count in the scales against the action. But it may also not be enough to tip the scales.
Furthermore, some may prefer these long-run consequences. Thus, the OPA director who finds that maximum price controls lead to shortages may (1) say that shortages are bad, and resign; (2) say that shortages are bad, but give more weight to other considerations, e.g., love of power or plunder, or his high time preference; or (3) believe that shortages are good, either out of hatred for others or from an ascetic ethic. And from the standpoint of praxeology, any of these positions may well be adopted without saying him nay.
** Note: Praxeology rests on the fundamental axiom that individual human beings act, that is, on the primordial fact that individuals engage in conscious actions toward chosen goals. This concept of action contrasts to purely reflexive, or knee-jerk, behavior, which is not directed toward goals. The praxeological method spins out by verbal deduction the logical implications of that primordial fact.
See Rothbard, Praxeology: The Methodology of Austrian Economics
George Ford Smith is a former mainframe and PC programmer and technology instructor, the author of eight books including a novel about a renegade Fed chairman (Flight of the Barbarous Relic), a filmmaker (Do Not Consent), and an advocate of stateless market government. He welcomes speaking engagements and can be reached at gfs543@icloud.com.
