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NOTE Roundtable on the Semicentennial of Rothbard’s 'Man, Economy, and State'

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Let's begin with our last session of the conference,

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our closing session.

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Yeah, I know, oh no, it's sad.

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Welcome to our roundtable on the semi-centennial

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of Man Economy and State.

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Of course, we've been celebrating Mises' great book,

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The Theory of Money and Credit, at this conference

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with several designated sessions,

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because of course, it's the centenary

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of the publication of that very important book.

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But let's not forget that it's also the 50-year anniversary

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of Murray Rothbard's seminal treatise, Man Economy and State.

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And by the way, I'm already planning the centenary sessions

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on Man Economy and State for the 2062

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Austrian Scholars Conference, so please send me

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your proposals and I'll consider them for those sessions.

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Man Economy and State has a widely acknowledged place in the Austrian canon, but even some of the books admirers tend to regard it not so much as an original theoretical contribution, but as sort of a more systematic, more carefully exposited version of Mises' Human Action.

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In other words, seeing the book more as, seeing the treatise more as a textbook

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than as an original scholarly contribution.

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Now it's certainly true that when Murray Rothbard, oh thank you very much,

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it's true that when Murray Rothbard began working on the book, he tells us,

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in the late 1950s, he had in mind

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to make a version of Mises' economics that would be more accessible

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to the non-specialist reader. As you know,

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Human Action is by no means an easy book

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and Mises assumes a great deal of knowledge on the part of the reader

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to make sense of Mises' arguments and Rothbard thought it would be useful to

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fill in some of those gaps

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to lay things out in a more systematic fashion and he originally imagined

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a relatively short book that would be a suitable introductory text

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for college courses. Of course as he began to work on the project he quickly

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Theoretically realized that something like that was not feasible.

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While Mises had laid out the foundations and many of the applications of his mature theoretical

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system, Mises had left many gaps in his treatment on important issues.

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Mises did not provide a very detailed account of the pricing process, for example.

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Ludwig von Mises saw an opportunity to integrate the price theory of the Austrian economist

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through Mises with the contributions of many other important economists, causal realist

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economists who had been somewhat neglected by Austrians such as Federer and Davenport

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and Wickstede and J.B. Clark and so forth.

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Also, there's not a very systematic treatment of the capital structure in human action.

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It's somewhat unsystematic, somewhat the remarks are scattered throughout various parts

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of the book.

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So what Murray Rothbard ended up producing was not only a systematic exposition and critique

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of previous views, existing views, both within the Austrian and the neoclassical literature,

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but a highly original treatise with a number of innovations in theory, in methodology,

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in application, in analysis and critique of other views, and so on.

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Now I should emphasize, and this is a theme of a 2008, sorry, 2010 article that I wrote

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called The Mundane Economics of the Austrian School, Rothbard's Man Economy and State

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is mostly about what I call mundane or what we might call plain vanilla

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or blue-collar economics. Not a lot of esoterica in the book.

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In fact, if you look at the table of contents, there are 12 chapters of the

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original edition.

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All but two focus on the sort of ordinary details of value, price, exchange,

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capital, money, competition, and so on.

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You know, there's one chapter on methodological issues. There's one chapter on the

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and The Theory of Government Intervention.

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Production theory alone gets five chapters,

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five of the 12 chapters are devoted to production theory.

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Even if you include Power and Market,

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which as most of you know was originally,

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was intended by Rothbard to be part of the book,

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but was cut out by the publisher

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and then only released several years later in 1970

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as a standalone work.

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Even if you include those chapters,

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there's virtually nothing in Rothbard's book

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about subjectivism, expectations, learning,

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equilibration, spontaneous order, and so forth.

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And of course, this is true of the earlier Austrians as well,

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Menger, Boehm-Bawerk, even Wieser, and of course, Mises.

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Now, perhaps for this reason,

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some contemporary Austrian economists

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have sort of disregarded Rothbard's treatise

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as too elementary, or too ordinary,

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or even backward-looking, rather than forward-looking.

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In my article, I deal a lot with Karen Vaughan's 1994 book, Austrian Economics in America.

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She says, for example, that Rothbard's book, quote, must have seemed to a typical reader

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to be more or less familiar economics, presented almost exclusively in words with a few controversial

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definitions and some strange discontinuous graphs.

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In other words, not much original contribution and very little that would interest Austrians

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as young Austrians of the so-called Austrian revival.

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And I mean, it is sort of true that Man Economy and State

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is a little bit out of step with some of the other

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contributions post-1974 within the Austrian tradition,

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works that dealt with, exclusively with subjectivism

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and spontaneous order and equilibration, et cetera.

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So, what is the proper place of Man Economy and State

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in the Austrian Canon. What did it contribute to the Austrian revival?

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What are its many innovations and not only pedagogical innovations but

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substantive theoretical innovations as well?

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Has modern Austrian economics fully incorporated

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the substantive contributions of Rothbard's treatise?

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Has modern Austrian economics moved beyond

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Man Economy and State or does the book still contain important insights

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that have not been fully understood, fully implemented, the details worked out and so forth, even within the Austrian camp.

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These are the kinds of issues that our panel will discuss, issues that we will explore together this afternoon.

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So the way we have this panel structured is in a fairly informal way.

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So we have five panelists, Professor Salerno, Herbiner, Rittenour, Gordon and Hulsman.

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And I'm going to ask each to offer just a few minutes of prepared remarks, reflections on the sorts of questions that I've just described.

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Then I'll give each of the panelists an opportunity to respond to remarks made by other panelists,

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and then we'll turn it over to the floor for some discussion and some interaction between the audience and the panelists,

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between the panelists, maybe even between the panelists and the moderator, I'm not sure about that.

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But we want to make this a fairly informal event, so no speeches, no PowerPoint, no lectures, but rather a discussion among all of us about the importance and the continuing importance of this great treatise in the Austrian tradition.

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So I'll first turn the microphone over to Joe Salerno.

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Thank you Dr. Peter and for taking most of what I was going to say.

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But let me start just by talking a little bit about what I perceive as the place of Man Economy and State in the revival of Austrian economics.

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I've argued that actually there are two approaches or there are two views of the Austrian revival, which occurred in the mid-1970s.

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There was a very famous conference held in South Royalton, Vermont. It's come to be known as the South Royalton Conference.

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and that occurred in 1974. Shortly thereafter in 1975, or rather in 1976 rather, what was it, 75 when Hayek received the Nobel Prize? 74, right, so June was the conference and Hayek received the Nobel Prize in 1974 and October and these two events together are taken at the beginning of the

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and the revival.

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Well, I call this the big bang theory of the Austrian revival.

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That someone all of a sudden decides, you know what, let's have a conference in North

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America on Austrian economics, where there had never been one before.

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And so it's sort of like the field of dreams, if you hold it, they will come.

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Well, where did they all come from?

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Where did the 30 of us that attended, graduate students and young PhDs, I was a graduate

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student at the time, where did we get the idea that Austrian economics would be something

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Well, my argument is that, in fact, revival did not really begin in 1974. It wasn't spontaneous.

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In fact, it arose out of the publication of Rothbard's Man Economy and State in 1962.

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So let me just give you some background on that. There were actually three great streams of price theory.

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I mean, today, in mainstream economics, there really are two that have been blended together.

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are all blended together. That is the Volrasian stream, which traces its roots back to the Swiss economist, Volras, and then the Marshallian stream.

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And they've been combined in different ways by the Chicago School, for example, by mainstream neoclassical priciers and so on.

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But my argument is that, in fact, there's a third stream stemming from Menger, and we have a distinguished Menger scholar here, Sam Bostaff, who actually got me very interested in Menger when I first read his article in the Atlantic Economic Journal, but stemming from Menger, and that actually became very, very popular and actually gained worldwide acceptance up until World War I, okay?

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Theoretical economists, Wichstead, Federer, Davenport, these are all great, J.B. Clark, all great theorists that have more or less been forgotten when the Marshallian theory or stream took over.

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At the end of, for various reasons, after World War II, after World War I, in the 1920s, the Mangerian stream continued in certain places, for example the London School of Economics in Great Britain.

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Britain, and at a few places in the United States, but it began to die out.

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Marshallian economics, the economics of Alfred Marshall, a partial equilibrium approach,

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began to take over in the 20s in the US.

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However, on the continent, there was still strong Mungarian stream.

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So there were three different streams.

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Eventually, by the mid-1930s, the Volrazian approach was actually brought to Great Britain

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and then later to the United States actually by Hayek who had J.R. Hicks read Pareto for

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the first time and then later on Samuelson with his book.

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So my thesis was simply that the Mangerian approach, the Austrian approach was really

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poured down the Orwellian memory hole.

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People just forgot about it.

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It was never refuted, it was never exposed as being deeply flawed or anything of that

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nature.

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It was just forgotten.

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Now, Mises made a heroic effort between 1934 and 1939.

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He worked single-mindedly on his book, Human Action, in which, though people tend to overlook

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this, a lot of it was devoted to reviving the price theory of Carl Menger.

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But by the time the book came out, World War II had broken out, at least in Europe, and

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the Swiss publisher who published it in German went bankrupt.

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There was no market in Germany.

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So the book was republished in the United States in an extended form as Human Action.

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By then though, there was no market for it.

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By then, Samuelson, Hicks and so on, and also the Chicago School, Stigler, they had taken

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over Price Theory.

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So the Chicago School had pretty much followed Marshall, and the neoclassicals combined Marshall

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with a few chapters of Al-Ras at the end of the post-war micro textbooks.

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and that was it for a long time and then Rothbard out of nowhere revived this whole tradition,

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worked on this book from 1951 and it was published in 1962.

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So to make a long story short, to tie this back into the Austrian revival, people began

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to read some of Rothbard's, began to read younger professors and graduate students became

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familiar with this work and began to read it.

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I read it in college. I'm not going to date myself, but it was a while after it was written.

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It was not a Kindle.

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No, it was nothing like that. It was on a papyrus. But anyway, my contention is that

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to the man and woman, because there was at least one woman at South Royalton, maybe two,

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Everyone was a Rothbardian. Israel Kirzner, who was also one of the important figures in post-revival Austrian economics,

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had not written his great book, Competition on Entrepreneurship, until 1973, the year before South Royalton.

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It was Rothbard's books, and he had a few others that had come out during the 60s and early 70s,

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of Power and Market, America's Great Depression, and so on.

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So everyone was a Rothbardian at that point, and now what was it in this book that differentiated

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it in price theory, because that's what I think is the core of any economic system,

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is price theory, and a good deal of this book is devoted strictly to price theory.

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Basically what Rothbard did was to reintegrate price theory with monetary theory and with

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with Capital Theory. Now, in 1963, and I'll get about a minute or two more. In 1963, Israel Kirzner published a book called, and he by the way in the 50s was Mises' graduate assistant, he published a book called Market Theory and the Price System, and it was a price theory book, and it was a thin volume, a typical, I guess a length that any microeconomic book would be at the time.

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and he had some Austrian insights in it but it was just it's just been republished by Liberty Fund and it's been described by its editors of Pete Betky and Frederic Sauté as very Stiglarian that is following George Stigler and they try to argue in the introduction that in fact it wasn't yes it follows Stigler but it's really Austrian and Rothbard who wrote a huge memo to the publishers

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Rothbard claimed that Rothbard didn't understand the fact that he was using some equilibrium constructs that were consistent with Austrian economics.

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But that's beside the point. What I want to do is just to read you two short passages from the review, which I wrote an introduction to and then published this year in libertarian papers.

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This review is a memo that was written to the publishers and you can see the difference

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between this Mengerian approach which tries to integrate all aspects of human action in

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price theory and the Stiglarian Chicago approach, which Kirzner tends to follow.

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One thing Rothbard writes is, one fundamental flaw is the artificial and even disastrous

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isolation of price theory from monetary and from time phenomena.

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I know that questioning such isolation means bringing into question perhaps the very idea

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of a textbook devoted solely to price theory, but I'm afraid that this questioning must

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be done.

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The abstention from money is unfortunate, but not fatal, but the abstention from time

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and capital analysis is, and this cannot be remedied by an appendix that Kirzner promises

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us on time.

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This is before the publication of the book.

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Problems of time, capital interest must be infused into the price analysis.

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As a result of the failure to infuse, Kirzner ignores the vital structure of production analysis,

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which he claims makes little difference to one's view of the economy.

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Now here's where Rothbard demurs from Kirzner.

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He says, the result of abstention from capital leads to all of the crucial errors of the cost curve analysis,

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which fills Kirzner's book and is completely absent from this book, but it's cost curves.

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For example, it is the claim of the cost-curve theorists, in the ranks of which Professor Kirzner joins, that a firm will invest funds in production up to the point where marginal revenue equals marginal cost.

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And maybe I lost the rest of this quote. But he goes on to say that, in fact, that's not the case. If you look at it from a point of view of capital theory, everybody's looking to maximize their rates of return on investments.

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When you infuse that into the price analysis, then the MR equals MC thing, it doesn't work.

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It might work within the firm for batches of products that you're talking about,

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but everyone is continually searching the market to make investments where their capital is returning the highest possible returns.

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So the key is that firms are the capitalists. Firms are the ones that receive the interest return.

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Interest return. Interest is not a cost under your cost curve that you're paying to some

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bondholder to a stockholder. Stockholders and bondholders are the owners, are the capitalists,

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are the people who run the firm, and disinvest and reinvest. So it's a dynamic, forward-looking

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sort of price theory. I'll stop at this point. There are many other differences and many

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and many other objections that he has to Kirzner's, at this point, as a manuscript and I recommend

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that you read the article. It's in the libertarian papers and it's from this year. It's under

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my name and I write an introduction and then I reprint the memo.

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Thank you. Thank you. Let's go with David Gordon next.

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Peter has mentioned that this is the 50th anniversary of the publication of Man Economy and State.

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I remember very well when the book came out near the end of 1962, and I read it at that

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time.

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It came out, it was in two volumes, published by the Van Nostrand Company, it sold for the

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enormous amount of price of $20, and Human Action was available in the second edition

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published by Yale University Press was $15, so this was $5 higher.

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I want to say a little bit about what I think are some of the philosophical contributions

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of Man Economy and State.

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When Murray Rothbard attended Columbia University, he took a course in philosophy of science

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from Ernest Nagel, who was one of the leading authorities at that time on philosophy of

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science and logic. Rothbard liked this course very much. His notes are available on the

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course, and he told me very much on how impressed he'd been by Nagel.

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One idea I think he took from that course that has defined in Human Action is the notion

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of that Nagel stress is the notion of an operational definition and by that what is meant is that

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in science a term that's used in science has to have exact criteria for the use and

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and Application. If you can't give exact criteria for when the term applies, then it isn't

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a proper scientific term. I think we see the use of this concept in several areas in Manny

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Cunningham State. For example, in Chapter 10, the famous chapter on monopoly, Rothbard

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rejects the notion of there being a monopoly price on the free market.

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What he says is that economists can draw a diagram showing how there is a monopoly price

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is above the competitive price, but one could never show in practice or no way of establishing

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He's saying that any particular price on the free market is a monopoly price.

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He said, why, if you said, well, the monopoly price, the competitive price would be lower

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than a certain market price, he says, how would you know that the price you say is the

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real competitive price isn't the sub-competitive price and the alleged monopoly price is the

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real competitive price?

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There's no way you could establish this. So I think this is an example of how he was using the notion of an operational definition and applying it to economics.

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Again, I think we see this when he stresses demonstrated preference, which he takes in a very strict way to be preference that is expressed in action,

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as opposed to the notion of revealed preference found probably most famously in the work of Paul Samuelson.

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In revealed preference, what's involved is taking probability distributions over various bundles of goods

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and seeing when the people or the chooser is indifferent between various bundles of probability

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distributions and what Rothbard's objection is, again, we couldn't demonstrate in action

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that someone has such preferences and he takes only what can be demonstrated in action as

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Acceptable for Scientific Discipline of Economics.

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One last illustration of the operational definition occurs in the book where he's criticizing

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the once influential work of John Kenneth Galbraith, The Affluent Society, which came

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out in 1958.

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Galbraith said that he thought that a lot of consumer spending was wasteful.

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People were spending money on silly things like big tail fins on cars, when instead they

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should really be spending money on useful government projects.

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So, what Rothbard says is, well, he says, Galbraith says certain spending is wasteful, but he gives us no way of delimiting what is the wasteful spending, so again we have this demand for an exact criterion.

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Now he says Galbraith does appeal to the undoubted fact that as one gets more and more units

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of a good, the good will diminish in utility.

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But he said you can't use that point to show that there's waste because it doesn't follow

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from the fact that utility is diminishing, that the utility is diminished to zero, and

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And the fact that the person who spends the money on the good is doing so shows that the

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good has positive utility for him.

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So he dismisses what Galbraith says is useless for science.

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I want to turn now to, I think, very important contributions that Rothbard makes to get in

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And really, although the book is on economics, I think he makes very important contributions

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to political philosophy.

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One is, he extends an argument that Mises had for criticizing various measures of intervention

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in the free market.

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Mises famously argued that one could show that certain measures from the point of view

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of Money.

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A few of those who advanced them would fail to achieve the ends that those people wanted,

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and Rothbard had some criticism of that.

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What Mises was saying was, if you say you want to end unemployment, so you put in a

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minimum wage law, without making any value judgments, you could show that the minimum

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wage law won't get rid of unemployment, it will cause unemployment, it will hurt

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the workers it's supposed to help so what Rothbard's extension that was say in

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addition to means that won't achieve their ends there are some ends that one

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could show are impossible to realize for example he gave absolute equality would

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be one such and he said that since people are in different locations there

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There are always differences between the people, at least in some respects. You could never

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show that two people were absolutely equal, so absolute equality has to be ruled out as

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a possible goal, not on any controversial grounds of appeal to a value judgment, but

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simply because the goal couldn't be achieved, as he says it's praxeologically impossible.

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The last contribution I want to make is, one, he makes what I think is a brilliant section

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where he makes a remark that applies to a type of argument for egalitarianism and against

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the free market that since he wrote has become extremely influential.

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Some people say that John Rawls in his 1971 book, The Theory of Justice, is perhaps the

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the best example that it's very unfair that some people are much wealthier and earn much

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larger incomes than others because they have superior abilities in that the people have

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these superior abilities simply because they're luckier.

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They happen to be born with certain genes or they have better upbringings, better environment.

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So they are luckier than others, and there's a very influential school in political philosophy

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called luck egalitarianism that argues for redistribution on the basis that people shouldn't

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get rewarded based on luck.

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So Rothbard has one brilliant sentence, he says, there's no natural distribution for

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luck.

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means by that is until you specify some criterion for what the proper distribution is, you

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can't say that someone is unlucky, gives the example if you say that people should be get

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income in accord with their marginal productivity, it could turn out the people who are in higher

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incomes are actually unluckier because they're not getting their full marginal productivity

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even though they're earning higher incomes than others.

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So the basic point, which Susan Hurley had developed independently in a book that came

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out some years ago, is that until you specify a particular distribution, you can't speak

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of people being lucky or unlucky, and Rothbard anticipated that criticism in 1962, and so

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I think that's one of his most important insights.

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So I think one of my most important insights is it's time to stop now.

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David, do you have any sense from the reviews of the book, either friendly or hostile, that

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did anyone appreciate or recognize the significance of these philosophical contributions?

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I'm not aware of anyone who's mentioned those.

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All right, thank you. Let's turn next to Sean Rittenhour.

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All right. Although it's very clear from the remarks already made, and for anyone who's read Man Economy and State that it is a monumental economic treatise and in the classical definition a great book,

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That does not mean that it's not very useful for teaching economic principles, and that's what I want to comment on today.

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Man Economy and State's been very intimate in my career, intimately related to my career teaching principles of economics.

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When I got my first job, graduating from Auburn, I went and assigned Paul Hayne's Economic Way of Thinking,

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in large part because Murray Rothbard recommended that as a good book and but

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I used or I assigned supplementary pages for voluntary reading and put them in the

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syllabus from Man Economy and State and I lectured straight out of Man Economy

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and State. I once had a professor tell me that the secret to success teaching

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undergraduates is to assign them the second best text but lecture out of the

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The Best Tax. I think that's somewhat facetious, but it worked for me. When I was offered the

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position at Grove City College, Jeff Herbner was already using Man Economy and State for

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for Teaching Principles of Macroeconomics, and I thought, well, if our students at Grove City College could handle it, then I will sign it for Principles of Microeconomics.

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And the bookstore was swamped with orders. They were sold out of Man Economy and State within a matter of a week, and they had to restock.

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But it works fantastic, because although Man Economy and State has the two things that a good economics text needs to have,

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and the economics treatise needs to have.

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One, it's readable, and two, it contains a body of economic thought that is both universally true and thoroughly realistic.

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It is readable. That's one reason.

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I remember that Gary North said that Murray Rothbard would never win the Nobel Prize.

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It's because he wrote with extreme clarity, using logic,

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and then he committed the unpardonable sin of using italics when he wanted to emphasize a point.

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And so students, when you read Man Economy and State, you know what he says, you know

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what he means, you can understand what he is saying.

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And on top of that, because he builds his economics from the premise of human action,

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the idea that people engage in purposeful behavior, you get this sense that the economics that

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is being developed in that book is not something that rests on the shifting sands of arbitrary

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Hypotheses. But they are really true. They are reflective of the reality of the way people actually live and actually behave. And, for instance, when students read through Man Economy and State, perhaps guided by the professor, they see, for instance, that action implies choice, choice implies the necessity of evaluation, evaluation implies concepts of benefits and cost, implies the

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Concepts of Profit and Loss.

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And so we get all these economic principles just from

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our understanding of the reality of human action.

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And I want to sort of piggyback on what Joe mentioned about

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Rothbard's treatment of price theory.

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The one thing I liked the most about the book, as I use it to

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and the principles of microeconomics was that he begins with subjective preference rankings

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that manifest the law of marginal utility and the idea that if you obtain more units

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of a particular good, each unit, each subsequent marginal unit will be valued less than the

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previous unit.

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As someone does this, that implies the law of demand.

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So that the law of demand is not merely, again, hypothetical.

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It is something that is implied by the reality of human action.

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So it's something that's true, the idea that there is, in general, an inverse relationship

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between the hypothetical price of the good and the quantity of the good that people demand

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at the point of action.

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And just by way of distinguishing this, I want to read, I want to quote George Stigler

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from his theory of price.

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I came upon this when I was in graduate school as well.

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This is the way Stigler defends the,

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Rothbard defend, well doesn't defend,

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he demonstrates the law of demand using human action

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and the law of marginal utility

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that rests upon the premise of human action.

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Stigler says this, quote,

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how can we convince a skeptic that this law of demand

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is really true for all consumers?

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And this comes from Stigler's theory of price.

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That the law of demand is true of all consumers,

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all times, all commodities.

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Not by a few, four or 4,000 selected examples, surely.

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Not by a rigorous theoretical proof for none exists.

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It is an empirical rule.

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Note, not by stating what is true that economists believe it

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for we could be wrong.

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Perhaps as a persuasive, a proof as is readily summarized

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as this, if an economist were to demonstrate its failure

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in a particular market at a particular time,

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He would be assured of immortality, professionally speaking, and rapid promotion.

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Since most economists would not dislike either reward, we may assume that the total absence

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of exceptions is not from lack of trying to find them.

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And that's the basis of his defense.

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It doesn't get any better than that for George Stigler.

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Oh, I would argue that the explanation of law of demand is much better by Murray Rothbard

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because again, he traces it back to the reality of human action and as students read this and they understand how the laws of economics are not something that exists in an ivory tower of artificial ideal worlds then they learn that they can have confidence in the economics that they are learning and I think that we way undervalue that quality of good economics

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and Economics, that students are tired of getting fed economic principles that apply

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if the constraints of this model also happen to apply.

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They want economics that is true, and that is the kind of economics we get in Man Economy

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and State, the kind of economics you can take to the bank, a 100% reserve bank at that.

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One final point that I'd like to make. A conversation about using Man Economy and State appeared on an economic blog a few months ago, and one of the contributors to this discussion suggested that Man Economy and State should not be used to teach economics at the university level because it will not prepare them for the graduate school by exposing them to professional models. And I actually was able to contribute

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to that debate in a small way by just pointing out

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that look, especially at the principals level,

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at the beginning, the goal is not to train people

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for graduate school, the goal is to teach people

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how things really are.

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And so we build economic theory from human action on up

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to teach people how things really are.

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And then at the intermediate micro

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and intermediate macro stage of your education,

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you can then expose them to alternate theories,

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Thank you, Sean. I'm just curious, are there, for the professors and teachers in the audience, are there others who have used Man Economy and State as the primary text in an introductory course or an advanced course?

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A few? Okay, terrific. I hope that during the Q&A period you'll offer some comments on how you found that experience.

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Can I make one more addition? I should point this out too, that I'm still, although I don't use Man Economy and State as a text anymore per se,

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because I use my own foundations of economics book, the pedagogy, if you read Man Economy and State in my book, the pedagogy is drawn heavily from Man Economy and State.

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And so, I still see myself using Rothbard's pedagogy and his economics as I teach now for, I guess, 15, 16 years.

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Great. Thank you. Let's turn it over now to Guido Hulsman.

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My book is not the cited best.

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Yes. It was wise that you wrote it for that reason.

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I was amazed when David Gordon mentioned that he still remembered the year when the book

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first appeared, 1962. I didn't remember his first publication because I wasn't there.

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But I still remember how I first came across this book. So I had heard about the Austrians,

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I had read some Hayek, and that was in France, and when I returned to Berlin, I set out to study the Austrians in some more detail.

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I had a look at Human Action, wow, this was a very big book, so I just copied a few pages, what I needed for a research project.

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I had a look at The Theory of Money and Credit, of course, the good German edition, without translation for errors.

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And I had to look at Man Economy and State.

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Man Economy and State was different than the things that Mises had written.

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Two things that struck out right away.

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The first thing was this chapter or this section in which Rothbard discusses property rights.

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This I've never seen in an economics text.

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What had property rights to do with economics?

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Prices and quantities being produced and inflation or whatever and unemployment.

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and Unemployment, Property Rights, and you're kidding me, this is an ideologue, it's obvious.

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And then it was clear that he set out later on to criticize government interventions,

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so it was suspicious, because I was a good social democrat, I was on my way of healing,

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but I was still pretty social democratic.

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And then there were these weird chapters on production.

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So Mises' book by and large looked like a neoclassical book in the general structure

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of certain things that were different, but you had a big chapter on the market, you had

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a big chapter on money prices, and then a few remarks on capital theory.

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So without going into detail, without reading it, so I just looked at the structure, it

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looked somehow familiar.

418
00:42:28.100 --> 00:42:34.100
In Rothbard then come these three big chapters on production.

419
00:42:34.100 --> 00:42:40.100
Production of the structure, pricing of the interest rate, pricing of the factors of production.

420
00:42:40.100 --> 00:42:44.100
This was also very strange. I said, this is a very, very strange book.

421
00:42:44.100 --> 00:42:47.100
And I put it back onto the shelves.

422
00:42:47.100 --> 00:42:54.100
And then I started off and the first really Austrian treatise that I read and that I studied in detail was The Theory of Money and Credit.

423
00:42:54.100 --> 00:43:02.100
But I ordered Rothbard's book and had it then seven or eight months later on my table.

424
00:43:02.100 --> 00:43:08.100
Then I started studying Rothbard and then it made much more sense after having first read Mises.

425
00:43:08.100 --> 00:43:16.100
And I guess this is part of the, reflects in a way, right, the difficulties that a typical reader would have when he first confronts Rothbard.

426
00:43:16.100 --> 00:43:30.100
In a way, it's radical. It flies into your face and it's difficult to digest, much more difficult to digest at first than what Mises has to say.

427
00:43:30.100 --> 00:43:42.100
And this is not only because Human Action, for example, is a much more mature work than Man Economy and State, because Rothbard, after all, was just 36 years or so old when he published it.

428
00:43:42.100 --> 00:44:00.100
So in this book, let me just, as far as the book is concerned, let me just make a few comments on precisely those chapters dealing with the theory of production, which in a way can be said to restate Austrian capital theory.

429
00:44:00.100 --> 00:44:10.100
One reason why this subject has been dealt with just on a few pages, 30 or 40 pages in Human Action, so out of 900, that's not a big deal.

430
00:44:10.100 --> 00:44:16.500
One reason was that Mises felt Boehm-Bawerk had dealt with this question in great detail.

431
00:44:16.500 --> 00:44:24.400
So Boehm-Bawerk had written three volumes on capital theory, so Mises probably felt, well, there was no need to add on this,

432
00:44:24.400 --> 00:44:32.400
since any cultivated person was supposed to have read those thousand pages first, because he turned to human action.

433
00:44:32.400 --> 00:44:40.000
So Rothbard did us the great service to restate this, and restate this also in the light of the subsequent literature,

434
00:44:40.000 --> 00:44:46.920
in particular, especially elaborations coming from Hayek and from Mises himself, and also

435
00:44:46.920 --> 00:44:53.000
from the American Austrians, Vetter in particular, and of course Rothbard had digested Irving

436
00:44:53.000 --> 00:44:58.480
Fisher and all other works that had meanwhile been written on capital theory, revising also

437
00:44:58.480 --> 00:45:05.200
the debates on capital theory and the theory of interest between John Bates Clark and Boehm-Bawerk

438
00:45:05.200 --> 00:45:10.080
and also between Hayek and Frank Knight in the 1930s.

439
00:45:10.080 --> 00:45:17.240
So all of this creates these three or four chapters which are the most advanced statement

440
00:45:17.240 --> 00:45:22.440
of capital theory and I think they are still the most refined statement of capital theory

441
00:45:22.440 --> 00:45:24.440
that we have today.

442
00:45:24.440 --> 00:45:28.960
I need to open another parenthesis to say something about the use, pedagogical use of

443
00:45:28.960 --> 00:45:34.960
Man Economy and State, because actually I do use it in my classes, in Angers,

444
00:45:34.960 --> 00:45:37.960
because we are privileged to have a French edition.

445
00:45:37.960 --> 00:45:40.960
We have a wonderful, wonderfully translated French edition,

446
00:45:40.960 --> 00:45:44.960
this is a great guy who translated this, Hervé de Quengo.

447
00:45:44.960 --> 00:45:51.960
And so I'm using this text. But it's difficult for students of the first year.

448
00:45:51.960 --> 00:45:57.960
And the proper way to study Man Economy and State is to return to the book repeatedly.

449
00:45:57.960 --> 00:46:00.960
in the cause of one's studies.

450
00:46:00.960 --> 00:46:05.960
One cannot possibly expect that a student setting out to study economics in his first year,

451
00:46:05.960 --> 00:46:09.960
even if you manage, as a teacher, and usually you do not succeed,

452
00:46:09.960 --> 00:46:13.960
but even if you manage to get him through this book and actually read Lars Walswijk,

453
00:46:13.960 --> 00:46:18.960
it's impossible to expect that he would actually understand what he's reading.

454
00:46:18.960 --> 00:46:22.960
So it's a good book to learn economics,

455
00:46:22.960 --> 00:46:34.960
But probably, you can be happy if the students just absorb the essential lessons, therefore in my lectures, I don't go through all technical points, it's also a matter of time that's impossible.

456
00:46:34.960 --> 00:46:49.960
So you just focus on the essential points, right? The value process, the pricing process, speculation, the fine distinction between demand via exchange,

457
00:46:49.960 --> 00:46:56.960
and then eventually you get to capital theory and then my course is by and large finished once I'm done with capital theory.

458
00:46:56.960 --> 00:47:08.960
So this is all you can do and what you would have to do later on is to go through the same chapters again and then sort of say slowly turn sort of say to the footnotes and read also sections that you didn't read the first time.

459
00:47:08.960 --> 00:47:11.960
This is the proper way to study economics.

460
00:47:11.960 --> 00:47:15.960
and read also sections that you didn't read the first time.

461
00:47:15.960 --> 00:47:21.960
This is the proper way to study economics and in the mainstream of course we have a completely,

462
00:47:21.960 --> 00:47:28.960
it's a complete disaster how economics is being studied because the little theory that you actually do is all done in the first year,

463
00:47:28.960 --> 00:47:33.960
it's very superficial, necessarily so because they are all beginners.

464
00:47:33.960 --> 00:47:37.960
It's very superficial and then in the second year there's no more study of economics at all,

465
00:47:37.960 --> 00:47:39.960
The Theory of Money and State

466
00:48:07.960 --> 00:48:21.960
Maybe another text is somewhat lighter, Foundation of Economics or something like this, but then return to this text in the second year and also in the third year, and have them read different parts of this in order to grasp the fine points of economic theory.

467
00:48:21.960 --> 00:48:28.960
So it's a great way to use this. So what does he do in these production chapters? Parenthesis now closed. I will respect my time.

468
00:48:28.960 --> 00:48:37.460
So what he does here, he is the first of the Austrian Capital Theorists writing after Mises.

469
00:48:37.460 --> 00:48:42.960
So for Mises, of course, he benefits from the whole methodological discussion,

470
00:48:42.960 --> 00:48:45.960
methodological groundwork that Mises prepares.

471
00:48:45.960 --> 00:48:49.960
In particular, Rothbard uses the evenly rotating economy.

472
00:48:49.960 --> 00:48:57.960
Now, I do not think that one needs ERE strictly speaking for economic theory,

473
00:48:57.960 --> 00:49:06.960
But when the ERE is a highly useful construct, the imaginary image of a static economy is highly useful for pedagogical purposes,

474
00:49:06.960 --> 00:49:14.960
because it allows us to illustrate quantitative relationships between different spending streams,

475
00:49:14.960 --> 00:49:20.960
spending addressed to consumer goods as compared to intermediate goods, various intermediate goods, capital goods and so on,

476
00:49:20.960 --> 00:49:28.960
and so on, spending going on addressed to original factors of production, labor, landowners and so on.

477
00:49:28.960 --> 00:49:36.960
So we can get this and if we do not presuppose a static economy, it wouldn't make any sense to compare these different spending streams.

478
00:49:36.960 --> 00:49:38.960
So this is what you need it for.

479
00:49:38.960 --> 00:49:47.960
And Rothbard also introduced the crucial hypothesis that is very useful in this context in order to get to comparative statics,

480
00:49:47.960 --> 00:49:52.600
Statics, that is, for example, to compare a capital poor and a capital rich economy,

481
00:49:52.600 --> 00:49:57.720
you need to make the hypothesis that the monetary conditions remain constant.

482
00:49:57.720 --> 00:50:02.760
So in order to have analytically to separate a variation in the savings rate on the one

483
00:50:02.760 --> 00:50:06.400
hand from a variation of the money supply.

484
00:50:06.400 --> 00:50:12.720
That's of course the basic methodological procedure that Mises had already chosen in

485
00:50:12.720 --> 00:50:16.800
The Theory of Money and Credit, where he has in the second part, he discusses just the

486
00:50:16.800 --> 00:50:21.900
The pricing of money per se, money in the narrower sense, and then in the third part

487
00:50:21.900 --> 00:50:27.400
proceeds to analyze the pricing of money in the larger sense, so including fiduciary media.

488
00:50:27.400 --> 00:50:29.840
So you need to make this distinction.

489
00:50:29.840 --> 00:50:35.140
And Rothbard is the first one to apply this to the discussion, to the analysis of the

490
00:50:35.140 --> 00:50:37.520
capital structure.

491
00:50:37.520 --> 00:50:44.300
Many years later, George Reisman does the same thing, and George Reisman sometimes gives

492
00:50:44.300 --> 00:50:52.300
and it gives the impression that he himself has invented this methodological device where in fact he has adopted it from Rothbard 101.

493
00:50:52.300 --> 00:51:11.300
I'm a great admirer of George Reisman's too, but it would have been useful in his book if he had spent a few more pages just comparing his achievements to those of Rothbard in order to just demonstrate to which extent he was intellectually indebted to Rothbard.

494
00:51:11.300 --> 00:51:21.300
So we have the right methodological approach and on the basis of this methodological approach we have then a discussion of the pricing process, pricing of factors of production.

495
00:51:21.300 --> 00:51:39.300
To finish, there's one peculiar feature that we find in Rothbard's Capital Theory, which is the deduction of the pure interest rate in terms of

496
00:51:39.300 --> 00:51:45.300
Demand schedules and supply schedules. Demand for present goods and supply of present goods.

497
00:51:45.300 --> 00:51:51.300
And this might represent a difficulty, and I mention this because I just think of George Reisman.

498
00:51:51.300 --> 00:51:55.300
So George Reisman insists and says, yes, the interest rate is not a price.

499
00:51:55.300 --> 00:52:01.300
That's correct, because there's originally interest. You can imagine an economy without debt.

500
00:52:01.300 --> 00:52:07.300
All capital that is being invested is equity capital. And without debt, there are no debt contracts.

501
00:52:07.300 --> 00:52:13.300
In terms of contracts, therefore, in a technical sense, yes, we have no interest, there's no price being paid for capital. That's true.

502
00:52:13.300 --> 00:52:24.300
But still, we would have originary interest in the Boehm-Bawerkian sense, that is, there would be a remuneration of capital, remuneration of the savings that are being invested.

503
00:52:24.300 --> 00:52:33.300
This is, of course, a residual remuneration, what is left over of profits after a deduction of costs.

504
00:52:33.300 --> 00:52:39.740
So what Rothbard does is a very subtle discussion that brings these two elements together and

505
00:52:39.740 --> 00:52:44.860
shows us that we can derive a remuneration of capital, even though there might be no

506
00:52:44.860 --> 00:52:50.720
contractual remuneration, but you can derive it from demand and supply schedules.

507
00:52:50.720 --> 00:52:55.980
So he closes a big parenthesis, the theory of interest is no longer something separate

508
00:52:55.980 --> 00:52:57.540
from the rest of economic theory.

509
00:52:57.540 --> 00:53:02.820
It integrates fully well in terms of the same basic concepts, demand and supply, subjective

510
00:53:02.820 --> 00:53:05.540
Value, as all other prizes.

511
00:53:07.040 --> 00:53:08.040
Thank you, Guido.

512
00:53:08.040 --> 00:53:13.620
Incidentally, your remarks about reading and rereading Man Economy and State reminded me

513
00:53:13.620 --> 00:53:16.480
of something that Walter Block said in the previous session.

514
00:53:16.480 --> 00:53:20.200
Some of you were here about Ayn Rand's novel Atlas Shrugged.

515
00:53:20.200 --> 00:53:25.800
Walter said that he first read Atlas Shrugged as a young man in his early 20s, I guess,

516
00:53:25.800 --> 00:53:30.520
and that he rereads it every 10 years to gain fresh insight.

517
00:53:30.520 --> 00:53:33.840
So he's read it eight or nine times by now.

518
00:53:33.840 --> 00:53:42.400
And Walter slipped me a note while Guido was talking, asking me to identify the gentleman

519
00:53:42.400 --> 00:53:47.900
in the picture, going through a little slideshow of Rothbardian images.

520
00:53:47.900 --> 00:53:53.720
This is Murray Rothbard and his young friends in the late 1950s who called themselves the

521
00:53:53.720 --> 00:53:55.420
Circle Bastiat.

522
00:53:55.420 --> 00:54:02.780
That is Ralph Reiko on the left, then Murray Rothbard, George Reisman, mentioned by Guido,

523
00:54:02.780 --> 00:54:05.540
Robert Hessen and Leonard Ligio.

524
00:54:05.540 --> 00:54:09.760
And you can see that George Reisman is beaming, he's smiling happily because Rothbard has

525
00:54:09.760 --> 00:54:16.020
just given him some insights in Capital Theory that he will use later.

526
00:54:16.020 --> 00:54:20.380
So our last but not least panelist is Jeffrey Herbner.

527
00:54:20.380 --> 00:54:30.220
As Peter and Joe both mentioned, the core of economics is price theory, and I propose

528
00:54:30.220 --> 00:54:35.860
to talk for a few minutes about Rothbard's treatment of speculation in the formation

529
00:54:35.860 --> 00:54:44.460
of prices, and to see how distinct Rothbard's treatment is, I went through some other texts,

530
00:54:44.460 --> 00:54:54.060
mainly contemporary texts, just to see what their treatment of speculation is in the same context.

531
00:54:54.060 --> 00:54:57.060
And I started with George Stigler's The Theory of Price.

532
00:54:57.060 --> 00:55:07.460
I went up to the library and I pulled Rothbard's copy from his personal library, first edition published in 1946.

533
00:55:07.460 --> 00:55:12.460
And his typical Rothbard book, everything's marked up, total thing, everything, right?

534
00:55:12.460 --> 00:55:18.660
You've got the notes everywhere and everything's underlined and, you know, his egads and, you

535
00:55:18.660 --> 00:55:22.580
know, shocking, monstrous, all through it.

536
00:55:22.580 --> 00:55:26.100
But the one thing he did not find in that book is speculation.

537
00:55:26.100 --> 00:55:29.820
There's no entry in the index.

538
00:55:29.820 --> 00:55:33.420
There's no section in that book on speculation.

539
00:55:33.420 --> 00:55:38.620
In the third edition of the book, in 1966, there is one short section, two or three pages

540
00:55:38.620 --> 00:55:44.620
on Speculation, and what Stigler talks about is the futures market. If you look at Paul

541
00:55:44.620 --> 00:55:51.340
Samuelson's Foundations of Economic Analysis, 1947, nothing, nothing in the index, no entries,

542
00:55:51.340 --> 00:55:58.100
no sections in the book. Milton Friedman's Price Theory, 1962, nothing, no entries in

543
00:55:58.100 --> 00:56:05.580
the index, no sections in the book. J.R. Hicks' Value and Capital, 1946, has three entries

544
00:56:05.580 --> 00:56:08.820
on Speculation and No Section.

545
00:56:08.820 --> 00:56:13.420
The three things he talks about are futures markets, speculation in futures markets like

546
00:56:13.420 --> 00:56:15.580
Stigler.

547
00:56:15.580 --> 00:56:20.540
A second thing he talks about is how speculation can be destabilizing in markets.

548
00:56:20.540 --> 00:56:25.260
It's self-fulfilling, so you expect prices to go down, then you change your demands and

549
00:56:25.260 --> 00:56:30.640
prices go down, and then this feeds more speculation about falling prices.

550
00:56:30.640 --> 00:56:32.460
So it destabilizes markets.

551
00:56:32.460 --> 00:56:37.300
And the third thing he just mentions that if we're going to make models of the economy,

552
00:56:37.300 --> 00:56:44.940
we have to make assumptions about people's expectations in order to make the models tractable.

553
00:56:44.940 --> 00:56:51.820
Alchin and Allen's University Economics, 1964, has three entries on speculation in

554
00:56:51.820 --> 00:56:52.860
the index.

555
00:56:52.860 --> 00:56:54.580
It has one section.

556
00:56:54.580 --> 00:56:57.500
The section talks about futures markets.

557
00:56:57.500 --> 00:57:04.100
Kenneth Boulding, Economic Analysis, 1966, has four entries, one section, in addition

558
00:57:04.100 --> 00:57:11.340
to talking about futures markets, he also talks about this Hixian argument about destabilizing

559
00:57:11.340 --> 00:57:17.860
markets, and then he has a very interesting discussion of speculation, I'll tell you

560
00:57:17.860 --> 00:57:23.140
why it's interesting, we go through Rothbard's treatment, it's an interesting comment that

561
00:57:23.140 --> 00:57:31.140
on Speculation in a section he has on agricultural prices, and he says this, this isn't a quote, but a paraphrase, he says,

562
00:57:31.140 --> 00:57:41.140
even if speculative demand decreases price fluctuations in markets by making demand and supply more elastic,

563
00:57:41.140 --> 00:57:51.140
it thereby makes incomes of the farmers more variable, so he's again finding bad things about speculation.

564
00:57:51.140 --> 00:58:07.140
Man Economy and State has 11 entries in the index on speculation, it has five sections of the book on speculation, so it has three to four times as many entries in the index, it has five times the number of sections in any of these other books.

565
00:58:07.140 --> 00:58:18.140
Now when Rothbard theorizes about speculation, we can usefully break his treatment into these categories.

566
00:58:18.140 --> 00:58:23.980
He first points out how speculation works for the individual person.

567
00:58:23.980 --> 00:58:30.180
The individual person is speculating with respect to the future about his own actions,

568
00:58:30.180 --> 00:58:32.260
about the outcome of his own actions.

569
00:58:32.260 --> 00:58:37.900
And then the second category is the speculations that a person makes about the actions of others

570
00:58:37.900 --> 00:58:39.920
that he intends to interact with.

571
00:58:39.920 --> 00:58:42.160
So this is where we get the market.

572
00:58:42.160 --> 00:58:48.120
And within that category, he talks about speculation that people make on their own about what other

573
00:58:48.120 --> 00:59:18.120
In Man Economy and State, All Action is Speculative on Page 6.

574
00:59:18.120 --> 00:59:23.960
The general theory of human action doesn't apply to pricing per se, but Rothbard carries

575
00:59:23.960 --> 00:59:26.600
this through to the section on pricing.

576
00:59:26.600 --> 00:59:31.480
So when we get to the section on pricing with demand and supply, he explicitly points this

577
00:59:31.480 --> 00:59:32.480
out.

578
00:59:32.480 --> 00:59:35.940
He says, look, both demand and supply are speculative.

579
00:59:35.940 --> 00:59:41.960
When a person has a preference rank and they say, I prefer an iPad 2 to $500, both those

580
00:59:41.960 --> 00:59:44.880
entries in the preference rank are speculative.

581
00:59:44.880 --> 00:59:49.360
The person doesn't know before getting the iPad 2 and using it to attain his end what

582
00:59:49.360 --> 00:59:52.440
the realized value of having the iPad 2 is.

583
00:59:52.440 --> 00:59:57.680
He doesn't know until he gives up the $500 what exactly the opportunity cost is that

584
00:59:57.680 --> 01:00:02.480
he forgoes in the future.

585
01:00:02.480 --> 01:00:10.160
So speculation is in the very formation of demand and supply.

586
01:00:10.160 --> 01:00:18.040
Woodward builds this into his pedagogy when he develops his presentation of the theory

587
01:00:18.040 --> 01:00:22.080
of demand and supply with the total stock, total demand analysis.

588
01:00:22.080 --> 01:00:27.080
So here he's not just trying to show that prices must of necessity be determined just

589
01:00:27.080 --> 01:00:35.680
by preferences, but he explicitly brings out the speculative element in that presentation.

590
01:00:35.680 --> 01:00:41.400
So the conclusion from this, of course, that he arrives at is that prices themselves, both

591
01:00:41.400 --> 01:00:46.280
the level of prices in markets and changes in prices that come through shifting demands

592
01:00:46.280 --> 01:00:49.640
and supplies, both of these things are speculative.

593
01:00:49.640 --> 01:00:53.320
Prices themselves are not like facts of nature.

594
01:00:53.320 --> 01:00:58.600
They're results of human action that are based upon speculation.

595
01:00:58.600 --> 01:01:04.240
Here he's building on the point that Mises makes in Theory of Money and Credit.

596
01:01:04.240 --> 01:01:16.240
Okay, now to go on to the second category where he talks about how people speculate about the actions of others in markets, what are we to say about this?

597
01:01:16.240 --> 01:01:33.240
Here's where he makes this point that Bolding mentions, and notice again the date of Bolding's economic analysis is four years after Rothbard's work, so one wonders whether he's responding to Rothbard in the comment he made.

598
01:01:33.240 --> 01:01:40.440
Because what Rothbard points out is that when there's speculation, at least accurate speculation in markets,

599
01:01:40.440 --> 01:01:44.240
this makes both the demand and supply curves more elastic,

600
01:01:44.240 --> 01:01:50.240
because the persons will not supply or demand as much as they would have with inaccurate speculation.

601
01:01:50.240 --> 01:01:59.240
And what concludes from this is that because of this, any deviation in the price from market clearing

602
01:01:59.240 --> 01:02:03.240
will create these enormous excess supplies and excess demands.

603
01:02:03.240 --> 01:02:08.240
And as a consequence, the market will not deviate from the market clearing price,

604
01:02:08.240 --> 01:02:13.240
because even the slightest deviation creates these catastrophic

605
01:02:13.240 --> 01:02:16.240
discoordinations among people.

606
01:02:16.240 --> 01:02:21.240
And so this is actually a positive thing then in the market

607
01:02:21.240 --> 01:02:25.240
by bringing about market clearing, as he says, without trial and error.

608
01:02:25.240 --> 01:02:32.700
Then he moves on to the latter part of the speculating about other people where he introduces

609
01:02:32.700 --> 01:02:36.980
the specialist, the specialist in speculating.

610
01:02:36.980 --> 01:02:41.480
And he says, here, of course, this is another improvement in the way that the market works

611
01:02:41.480 --> 01:02:47.940
because entrepreneurial ability will not be evenly distributed among all people.

612
01:02:47.940 --> 01:02:52.800
And so if we're just left in markets to our own speculative anticipations, you know, some

613
01:02:52.800 --> 01:02:57.240
Some people will be better at this and other people's not as good, they'll be worse at

614
01:02:57.240 --> 01:03:05.600
it, but specialists can arise in the market to take on the task of making these speculations

615
01:03:05.600 --> 01:03:07.760
for us.

616
01:03:07.760 --> 01:03:12.840
And if we turn them over to the specialist, then we'll get even more accurate speculations

617
01:03:12.840 --> 01:03:19.000
and even more economizing activity in the market.

618
01:03:19.000 --> 01:03:49.000
And then the last thing I want to mention on this, he carries, this isn't price formation per se, but he carries over this insight into production theory where he points out that entrepreneurs are precisely the specialists in speculation and when they're forming their production plans, when they're making their production decisions, they're just doing the same thing that this specialist trader is doing in the market and forming speculations about the future

619
01:03:49.000 --> 01:04:08.000
The very efficiency of the market in matching production to our preferences also depends upon this entrepreneurial specialist engaged in speculation.

620
01:04:08.000 --> 01:04:16.600
And then just one last point on this.

621
01:04:16.600 --> 01:04:25.200
What he does with this analytically, of course, is completely separate the production decisions from pricing decisions.

622
01:04:25.200 --> 01:04:33.440
Again, very Austrian, very unusual, unorthodox from a mainstream viewpoint.

623
01:04:33.440 --> 01:04:48.440
He shows that these two things are not wedded together in markets, but they're separable precisely because the entrepreneurs are speculating on what future prices will exist in markets when they make their production decisions.

624
01:04:48.440 --> 01:04:52.440
But the prices that exist today in those markets are set by demand and supply.

625
01:04:52.440 --> 01:05:07.440
So we can have a separation of understanding. We can understand the separation of the prices that are formed for consumer goods today and the prices that are forming for factors of production, which are based upon the speculation of the entrepreneurs into the future.

626
01:05:07.440 --> 01:05:19.440
Thank you. Jeff, how do you explain the fact that many contemporary Austrians have charged Rothbard's framework as being sort of, you know, static, equilibrium bound,

627
01:05:19.440 --> 01:05:25.760
and not taking sufficient account of time, disequilibrium, subjectivity of expectations

628
01:05:25.760 --> 01:05:26.880
and so forth.

629
01:05:26.880 --> 01:05:27.880
Just a simple misreading?

630
01:05:27.880 --> 01:05:30.880
Yeah, it's hard to explain.

631
01:05:30.880 --> 01:05:35.280
It's so apparent as you read through it and maybe if you're not sympathetic, you miss

632
01:05:35.280 --> 01:05:36.280
these things.

633
01:05:36.280 --> 01:05:38.960
I'm not sure, but yeah, it's hard to explain.

634
01:05:38.960 --> 01:05:40.680
Okay, thank you very much.

635
01:05:40.680 --> 01:05:47.920
Let me just ask each of the panelists if you want to make a brief, Joe, brief comment on

636
01:05:47.920 --> 01:05:49.920
Something the other panelists have said, let's do that now.

637
01:05:49.920 --> 01:05:54.920
Yeah, I want to comment on Sean because Sean brought up a good point.

638
01:05:54.920 --> 01:05:59.920
When I first started teaching, I went to Murray Rothbard and I told him that I was teaching

639
01:05:59.920 --> 01:06:03.920
and he immediately interrupted me and said, of course, you know, the whole point of teaching

640
01:06:03.920 --> 01:06:06.920
is to minimize contact with the students.

641
01:06:06.920 --> 01:06:10.920
That was one of his many laws.

642
01:06:10.920 --> 01:06:13.920
But he discouraged me from using Hayne.

643
01:06:13.920 --> 01:06:18.720
He said, there's no analysis in it, Joe, no supply and demand, it's all just words.

644
01:06:18.720 --> 01:06:21.320
So he wanted analysis.

645
01:06:21.320 --> 01:06:27.800
So he used a series of textbooks, he never used his own stuff, he always used straightforward

646
01:06:27.800 --> 01:06:30.120
standard textbooks.

647
01:06:30.120 --> 01:06:37.360
And so he would use Courtney and Strupp, he used Roger Leroy Miller, Edwin Dolan.

648
01:06:37.360 --> 01:06:41.680
And he had a second law, the second law was that every edition of a textbook is worse

649
01:06:41.680 --> 01:06:46.440
is worse than the previous edition because it incorporates more of the fads and flaws

650
01:06:46.440 --> 01:06:51.400
but doesn't scrape away any of the other crap that was in there to begin with.

651
01:06:51.400 --> 01:06:54.520
So I remember him calling me up one day and he said, I found a great book.

652
01:06:54.520 --> 01:06:56.120
It's got the market for kidneys.

653
01:06:56.120 --> 01:06:59.520
He loved stuff that had a lot of drugs or kidneys or something like that.

654
01:06:59.520 --> 01:07:01.120
He wanted to entertain the students.

655
01:07:01.120 --> 01:07:10.880
But my last point about him, his courses were invariably a running commentary on neoclassical

656
01:07:10.880 --> 01:07:14.600
Economics, and it's ever since. He taught the supply and demand, he taught cost curves

657
01:07:14.600 --> 01:07:20.840
and so on, but he had very insightful comments in his courses that are missing from Man Economy

658
01:07:20.840 --> 01:07:27.200
and State because he doesn't deal with these things. And that is up on Mises.org, his course

659
01:07:27.200 --> 01:07:32.180
on microeconomics, and there's another course I think on free market economics, which incorporates

660
01:07:32.180 --> 01:07:33.920
some macro at the end.

661
01:07:33.920 --> 01:07:35.520
And it's economic history courses too.

662
01:07:35.520 --> 01:07:39.760
Yeah, but I'm saying, but just for the analysis, I mean he was an analytical economist. I mean

663
01:07:39.760 --> 01:07:47.840
He liked graphs, he liked careful analysis, careful logical analysis. He didn't like the

664
01:07:47.840 --> 01:07:51.280
Hain approach where you just tell a student, well this is opportunity cost and then you

665
01:07:51.280 --> 01:07:56.920
sort of talk about it for an hour. He wanted the analysis in it.

666
01:07:56.920 --> 01:08:00.400
Anybody else? David?

667
01:08:00.400 --> 01:08:09.920
Well, just one point I want to mention on why some Austrian economists tend to criticize

668
01:08:09.920 --> 01:08:14.560
Rothbard as too static or too oriented toward equilibrium.

669
01:08:14.560 --> 01:08:24.040
I think in some cases that some of those economists have the view they think we can't know anything

670
01:08:24.040 --> 01:08:30.240
at all about the future and they have what in my view are very bad or no arguments for

671
01:08:30.240 --> 01:08:31.240
for that view.

672
01:08:31.240 --> 01:08:39.560
And they overemphasize speculation to the point that they're denying all, they're really

673
01:08:39.560 --> 01:08:44.420
evacuating economics of any possibility of attaining knowledge.

674
01:08:44.420 --> 01:08:54.880
So I think the reason they think that is that they extend the point about speculation beyond

675
01:08:54.880 --> 01:08:57.200
what it's worth.

676
01:08:57.200 --> 01:08:58.200
Thank you, David.

677
01:08:58.200 --> 01:09:01.600
Let's turn it open to questions from the crowd.

678
01:09:01.600 --> 01:09:04.040
We have about 20 minutes and we have a microphone

679
01:09:04.040 --> 01:09:04.960
that will be available.

680
01:09:04.960 --> 01:09:06.080
So please raise your hand.

681
01:09:10.560 --> 01:09:11.480
Hi.

682
01:09:11.480 --> 01:09:15.840
So I fought my way through the book at high school.

683
01:09:15.840 --> 01:09:21.320
So I guess I misunderstood most of it, but I will reread it.

684
01:09:21.320 --> 01:09:24.960
But there is something I always wonder about,

685
01:09:24.960 --> 01:09:28.640
that when you read Mises, for example,

686
01:09:28.640 --> 01:09:33.000
its practical conclusions seems to be monarchist.

687
01:09:33.000 --> 01:09:35.040
And when you read Rothbard,

688
01:09:35.040 --> 01:09:38.640
and he should be relatively similar to Mises,

689
01:09:39.720 --> 01:09:44.720
he uses strictly or very methodological approach,

690
01:09:45.120 --> 01:09:50.040
and its practical conclusions are more anarcho-capitalistic.

691
01:09:50.040 --> 01:09:54.600
So I wonder, it's a huge difference

692
01:09:54.600 --> 01:10:01.120
in the conclusion, and I wonder why there is such a big conclusion, even though it shouldn't

693
01:10:01.120 --> 01:10:04.160
be such a big difference in their methodology.

694
01:10:04.160 --> 01:10:08.840
David, do you want to answer?

695
01:10:08.840 --> 01:10:13.960
Well I don't think the difference there is really a difference in economic theory or

696
01:10:13.960 --> 01:10:21.920
methodology, just a difference in really political philosophy, and I think particularly Mises

697
01:10:21.920 --> 01:10:30.500
just couldn't conceive that a society could exist without a state and he just I think

698
01:10:30.500 --> 01:10:37.620
blocked that possibility out and Rothbard from his natural rights point of view thought

699
01:10:37.620 --> 01:10:42.880
that no state was justified but it isn't a difference in economic methodology, it's

700
01:10:42.880 --> 01:10:49.780
more of a difference in ethical assumptions, certain assumptions about how the world works

701
01:10:49.780 --> 01:10:59.660
Other comments and questions, please, Conrad.

702
01:10:59.660 --> 01:11:03.220
This is for any takers.

703
01:11:03.220 --> 01:11:09.140
If you are recommending this book to a student, say this is a great book, it has all these

704
01:11:09.140 --> 01:11:15.520
things in it, but I would watch out for this one point.

705
01:11:15.520 --> 01:11:27.000
What would you think of that maybe, you know, since the book came out, something has been

706
01:11:27.000 --> 01:11:32.480
revised that wasn't quite on track to make sense.

707
01:11:32.480 --> 01:11:33.480
Right.

708
01:11:33.480 --> 01:11:39.280
So what are some of the weaker areas, places where further clarification is needed or came

709
01:11:39.280 --> 01:11:40.280
subsequent?

710
01:11:40.280 --> 01:11:41.280
Yeah.

711
01:11:41.280 --> 01:11:50.280
The text is of extraordinary quality. In fact, there's no chapter where I would say, I mean,

712
01:11:50.280 --> 01:11:55.000
this chapter is really complete, is awful, is even bad or something, or is weak. All

713
01:11:55.000 --> 01:12:00.680
chapters are very strong. But there are certain issues, I mean, some of it is a quibble, right,

714
01:12:00.680 --> 01:12:04.960
but it's nothing that comes to my mind right now. There are certain things that he doesn't

715
01:12:04.960 --> 01:12:11.120
deal with, but that would have been interesting, too. For example, there's no comparison, competitive

716
01:12:11.120 --> 01:12:14.120
Comparative Statics of the Savings Process.

717
01:12:14.120 --> 01:12:15.120
This is lacking.

718
01:12:15.120 --> 01:12:21.120
So, George Reisman, one of George Reisman's contributions that does precisely this, right?

719
01:12:21.120 --> 01:12:23.120
So, there would have been other elements, right?

720
01:12:23.120 --> 01:12:27.120
There would have been interesting that Rothbard does not get into it, but we will excuse him

721
01:12:27.120 --> 01:12:31.120
because he has already delivered us a thousand pages.

722
01:12:31.120 --> 01:12:36.120
They cut a few off, so he had to stop somewhere.

723
01:12:36.120 --> 01:12:37.120
Joe?

724
01:12:37.120 --> 01:12:46.120
I would just say that there has been a lot of research since that point in Austrian economics, in Austrian theory, a lot of it is in our quarterly journal of Austrian economics.

725
01:12:46.120 --> 01:12:57.120
For example, just recently, maybe two years ago, Xavier Mira wrote an article extending the monopoly theory that Rothbard talked about into factor markets.

726
01:12:57.120 --> 01:13:05.120
So there are advances and there are a few points where Rothbard was a little confused or a little mixed up.

727
01:13:05.120 --> 01:13:09.920
Next up, for example, Jeff talked about speculation, and earlier we had the talk about the different

728
01:13:09.920 --> 01:13:11.920
equilibrium constructs.

729
01:13:11.920 --> 01:13:18.560
Rothbard tended to confuse the basic moment-to-moment equilibrium on occasion with a Marshallian

730
01:13:18.560 --> 01:13:26.560
short run, or let's put it, sort of a fully arbitraged sort of equilibrium.

731
01:13:26.560 --> 01:13:27.560
Every once in a while he'd shift back.

732
01:13:27.560 --> 01:13:33.720
For example, he would say markets clear very quickly, but the point is that whenever there's

733
01:13:33.720 --> 01:13:48.720
In the beginning of the book he sort of says that, he gives you that analysis, but then later on, I think you've seen this too, Peter, in the book.

734
01:13:48.720 --> 01:13:52.720
Yeah, there are some inconsistencies, just loose phrasings and so on.

735
01:13:52.720 --> 01:13:59.220
His price theory, he went to Columbia and he learned price theory using Alfred Marshall's

736
01:13:59.220 --> 01:14:06.880
text and even though he criticizes Marshall extensively in parts of the book, he lapses

737
01:14:06.880 --> 01:14:11.480
into sort of a Marshallian analysis on very few occasions.

738
01:14:11.480 --> 01:14:17.380
Another thing that's worth pointing out is there are two tracks or two lines of thought

739
01:14:17.380 --> 01:14:18.380
in the book.

740
01:14:18.380 --> 01:14:24.460
in Text, which, I mean, as Sean nicely described, is, you know, sort of written for the ages

741
01:14:24.460 --> 01:14:29.500
in the sense that he's expounding truth without going into a lot of, you know, historical

742
01:14:29.500 --> 01:14:36.100
detail about history of doctrine or criticizing other approaches, but if you look at the footnotes,

743
01:14:36.100 --> 01:14:42.460
the footnotes provide an amazingly detailed kind of commentary on the scholarly literature

744
01:14:42.460 --> 01:14:48.900
at the time, very insightful criticisms of neoclassical economics, of Keynesian economists

745
01:14:48.900 --> 01:14:49.900
and so forth.

746
01:14:49.900 --> 01:14:53.820
And of course the problem with that is that the footnotes are dated, right?

747
01:14:53.820 --> 01:14:59.600
I mean it's references to the cutting edge mainstream scholarly journals up through the

748
01:14:59.600 --> 01:15:01.980
end of the 1950s.

749
01:15:01.980 --> 01:15:07.980
And it's extremely valuable insight in there, but has the advantage, disadvantage of course

750
01:15:07.980 --> 01:15:10.100
that it's 50 years old.

751
01:15:13.020 --> 01:15:16.140
Walter, yeah, actually, let's do Fritz first on the way

752
01:15:16.140 --> 01:15:16.980
and then Walter.

753
01:15:18.260 --> 01:15:19.980
Thank you, since you invited comments,

754
01:15:19.980 --> 01:15:22.220
I'll make a comment instead of a question.

755
01:15:23.620 --> 01:15:26.140
I come from Francisco Marroquin University in Guatemala

756
01:15:26.140 --> 01:15:29.780
and we were basically brought up with the idea

757
01:15:29.780 --> 01:15:32.500
that Austrian economics was the normal economics

758
01:15:32.500 --> 01:15:36.740
and the neoclassical was the weird economics.

759
01:15:37.980 --> 01:15:44.980
And from the very beginning, when I studied there, we didn't really feel that we had a textbook.

760
01:15:44.980 --> 01:15:52.980
And Joe Kaikisen, that some of you may know, who was in the Mises Seminar for a number of years,

761
01:15:52.980 --> 01:16:01.980
and who was my teacher, basically put together the program using different readings from different authors,

762
01:16:01.980 --> 01:16:06.980
where Rothbard was an essential part of that program.

763
01:16:09.020 --> 01:16:12.740
In our experience, we tend to concur with Professor Holzman

764
01:16:12.740 --> 01:16:16.660
that it's pretty difficult to digest Rothbard

765
01:16:16.660 --> 01:16:19.140
for like first year students or principal students

766
01:16:19.140 --> 01:16:21.980
in the same way that Mises would be extremely hard

767
01:16:21.980 --> 01:16:25.820
to digest for starting students.

768
01:16:25.820 --> 01:16:29.380
Our experience is that he is very good to come back to

769
01:16:29.380 --> 01:16:51.380
When students have had some principles and then they've had the weird economics, which is the way we do it, we do Austrian principles or Austrian economics, then we give them some standard neoclassical models, then they have to come back, so they get kind of confused and we use Rothbard to come back.

770
01:16:51.380 --> 01:17:13.380
Another observation that I would make in Man Economy and State is that for someone who is trying to teach economics where students are supposed to learn these definitions and regurgitate back what the teacher is teaching them, Rothbard is no good.

771
01:17:13.380 --> 01:17:38.880
and Haynes for example much better. For a more Socratic type method of discussion, Rothbard is excellent because that's what he does, really go through a elaborate discussion of concepts as opposed to trying to teach like definitions and catchy words.

772
01:17:38.880 --> 01:17:45.880
So, we find Rothbard extremely useful for what we call a Socratic discussion.

773
01:17:46.000 --> 01:17:50.520
Thank you. A small addendum that occurred to me when someone else was talking about

774
01:17:50.520 --> 01:17:55.000
pedagogy. You know, while Rothbard, when he set out to write the book, he did have in

775
01:17:55.000 --> 01:18:01.160
mind, you know, making Mises' ideas more accessible. But I think he was thinking of the reader

776
01:18:01.160 --> 01:18:07.080
as sort of the intelligent lay reader, not necessarily the college student. It might

777
01:18:07.080 --> 01:18:12.080
It might be worth noting that during the time when Rothbard was writing the book, he was not a college professor.

778
01:18:12.080 --> 01:18:15.080
He was a research economist with the Volcker Fund.

779
01:18:15.080 --> 01:18:18.080
And he did not have any daily contact with undergraduate students.

780
01:18:18.080 --> 01:18:20.080
He was not himself teaching out of a textbook.

781
01:18:20.080 --> 01:18:22.080
He wasn't teaching at all during that period.

782
01:18:22.080 --> 01:18:29.080
So, you know, again, his intended audience may have been other sort of mature thinkers

783
01:18:29.080 --> 01:18:32.080
who perhaps were not as well versed in the Austrian School,

784
01:18:32.080 --> 01:18:35.080
but I don't think he had in mind the college students.

785
01:18:35.080 --> 01:18:40.520
I wasn't sort of thinking about, okay, how do I get this idea across to a 19-year-old or a 20-year-old

786
01:18:40.520 --> 01:18:45.080
because he wasn't in daily contact with those folks. Walter Block?

787
01:18:45.080 --> 01:18:52.840
I wanted to, is this on? I wanted to say I had the honor of once substituting for Murray as a professor.

788
01:18:52.840 --> 01:18:57.800
He was teaching at Brooklyn Poly and he had to be out of town for some reason and I took his class.

789
01:18:57.800 --> 01:19:03.480
It was a highlight of my career. I asked him what to do. He said, do rent control.

790
01:19:03.480 --> 01:19:10.480
Well, that was my PhD dissertation and I asked, you know, any specifics and just go get them or something like that.

791
01:19:10.480 --> 01:19:16.480
I wanted to correct Jeff when he said in Murray's margin he had things like EGAD and monstrous.

792
01:19:16.480 --> 01:19:20.480
He had that, but he had other things that were quite a bit more pithy.

793
01:19:20.480 --> 01:19:28.480
Somebody asked how about the weaknesses of Manning-Conestay and I forget what Murray wrote where

794
01:19:28.480 --> 01:19:31.480
because I've read a lot of it and it sort of fades as to where I got it,

795
01:19:31.480 --> 01:19:36.480
I don't know if I got it, but there are two issues where Murray himself changed his mind.

796
01:19:36.480 --> 01:19:41.480
One was immigration, and the other was IP.

797
01:19:41.480 --> 01:19:46.480
He used to have the view, I think, that patents were legit, but...

798
01:19:46.480 --> 01:19:51.480
Illegit, but copyright was okay, but then he changed to the Consolian view that...

799
01:19:51.480 --> 01:19:56.480
He didn't do that? I'm not a historian.

800
01:19:56.480 --> 01:20:02.480
I screwed that one up, I'm sorry. I just wanted to mention one other thing, and thanks for the correction, Joe.

801
01:20:02.480 --> 01:20:07.480
One of the things I got, whether it's Man Economy and State or somewhere else that hasn't been mentioned,

802
01:20:07.480 --> 01:20:12.480
that I thought I'd quickly mention, and that is his attack on math econ or mathematical economics,

803
01:20:12.480 --> 01:20:19.480
which assumes very small changes. In order to differentiate a curve, you have to be able to differentiate,

804
01:20:19.480 --> 01:20:25.480
you have to have infinitesimal changes, and infinitesimal changes are not compatible with Human Action.

805
01:20:25.480 --> 01:20:35.480
One of the diagrams that I loved the most was this thing where if you have a U-shaped smooth cost curve and a downward sloping demand curve,

806
01:20:35.480 --> 01:20:40.480
it has to be tangent at a point other than the bottom point of the average cost curve.

807
01:20:40.480 --> 01:20:52.480
So Murray had this U-shaped average cost curve with a little dip at the bottom of it and then the demand curve could intersect that.

808
01:20:52.480 --> 01:20:57.480
And I just thought that was the cat's pajamas. I thought that was the greatest diagram I'd ever seen.

809
01:20:57.480 --> 01:21:02.480
Stigler actually had that in his Price Theory textbook. He drew a jagged cost curve.

810
01:21:02.480 --> 01:21:07.480
And then he said, this is more realistic. But then, of course, he goes off to U-shape once.

811
01:21:07.480 --> 01:21:13.480
Please.

812
01:21:13.480 --> 01:21:19.480
Are there any economic contributions of Rothbard that have been maybe accepted

813
01:21:19.480 --> 01:21:31.480
Have you accepted or filtered the way more into mainstream? Particularly, I'm thinking about his monopoly theory. Has it even been addressed or discussed, debated, refuted at all into mainstream?

814
01:21:31.480 --> 01:21:42.760
Not really, but his theory, he took it a step further, was the theory that most American

815
01:21:42.760 --> 01:21:50.120
economists accepted well up to what's called the perfect competition, monopolistic competition

816
01:21:50.120 --> 01:21:51.960
revolution.

817
01:21:51.960 --> 01:21:57.120
So what he did was he took that theory and then he took it a step further.

818
01:21:57.120 --> 01:22:01.840
But that was sort of the theory of Wichstede and many of the early American economists who

819
01:22:01.840 --> 01:22:04.560
were mainstream price theorists.

820
01:22:04.560 --> 01:22:10.360
And more generally, as I mentioned in the introduction, Rothbard was not simply drawing

821
01:22:10.360 --> 01:22:13.640
on Mises, Menger, Boehm-Bawerk and so on.

822
01:22:13.640 --> 01:22:18.960
If you find upstairs his copies of Wichstede, his copies of Federer's Principles, they're

823
01:22:18.960 --> 01:22:23.840
marked up in the more or less colorful way that these guys describe.

824
01:22:23.840 --> 01:22:28.680
you know lots and lots of in fact I remember remark something like I think

825
01:22:28.680 --> 01:22:33.520
it's something in Wigstead he says you know use this like use this in my treatise

826
01:22:33.520 --> 01:22:37.840
so he was really studying the some of the great works in causal realist

827
01:22:37.840 --> 01:22:41.140
price theory which he thought he was you know he situated his work as a

828
01:22:41.140 --> 01:22:44.840
continuation of that tradition rather than as something that he was creating

829
01:22:44.840 --> 01:22:48.880
out of whole cloth you know I want to make a correction to what I just said

830
01:22:48.880 --> 01:22:57.360
His theory of the business cycle and its application in America's Great Depression, which came

831
01:22:57.360 --> 01:23:04.080
out the next year, is now being cited and quoted from by a top UCLA macroeconomist, Leo

832
01:23:04.080 --> 01:23:08.160
Haney, who has written two papers pointing out that the 1930s, contrary to what Friedman

833
01:23:08.160 --> 01:23:14.400
says, did not involve a failure of monetary policy, but a failure of labor policy, that

834
01:23:14.400 --> 01:23:21.600
is the Rigid Wages, and he explicitly cites Rothbard, and one of them was a JPE article

835
01:23:21.600 --> 01:23:27.000
and then there's a second article, an MBER paper maybe or something, but that's a very

836
01:23:27.000 --> 01:23:31.120
exciting development. That was two years ago.

837
01:23:31.120 --> 01:23:32.120
Yeah.

838
01:23:32.120 --> 01:23:33.120
GP?

839
01:23:33.120 --> 01:23:41.840
I just had a question about, I think, I might be wrong on this, but Rothbard developed significantly

840
01:23:41.840 --> 01:23:48.120
the marginal productivity theory of factor pricing, I don't know if the earlier economist

841
01:23:48.120 --> 01:23:54.120
had such a detailed analysis of, you know, within the firm and throughout the economy

842
01:23:54.120 --> 01:24:00.080
the two different applicability of marginal productivity theory, I was wondering if someone

843
01:24:00.080 --> 01:24:02.040
could comment on that?

844
01:24:02.040 --> 01:24:06.040
I'll comment on it.

845
01:24:06.040 --> 01:24:11.400
That is probably the most neoclassical part of Man Economy and State, and that's all to

846
01:24:11.400 --> 01:24:17.700
to the Good, because marginal productivity theory was developed in the US, starting with

847
01:24:17.700 --> 01:24:21.180
John Bates Clarke, and it was pretty much accepted throughout.

848
01:24:21.180 --> 01:24:27.280
Now what happened was after the monopolistic competition revolution, cost curves began

849
01:24:27.280 --> 01:24:28.280
to come in.

850
01:24:28.280 --> 01:24:31.160
Actually before that with Jacob Weiner in 1926, you had cost curves beginning to come

851
01:24:31.160 --> 01:24:32.160
in.

852
01:24:32.160 --> 01:24:39.320
So now you have, as Rothbard points out, a redundant analysis of the quantity of production,

853
01:24:39.320 --> 01:24:40.720
of output.

854
01:24:40.720 --> 01:24:45.360
One stressing the combination of factors and using marginal productivity analysis and the

855
01:24:45.360 --> 01:24:50.080
other stressing sort of given factor prices and theory of the firm.

856
01:24:50.080 --> 01:24:53.680
So what Rothbard basically said was that the productivity analysis is right, marginal productivity

857
01:24:53.680 --> 01:24:59.280
analysis, and the cost curve analysis is at least redundant.

858
01:24:59.280 --> 01:25:00.520
Why do we need it?

859
01:25:00.520 --> 01:25:05.260
And it makes the further error of taking input prices as fixed, even though from the point

860
01:25:05.260 --> 01:25:09.600
of view of the firm they are, but they're never explained within cost curve analysis.

861
01:25:09.600 --> 01:25:12.600
Oh, he was actually more neoclassical than neoclassical in that sense.

862
01:25:12.600 --> 01:25:17.600
Okay, I think we have maybe time for one more question, anyone care to have the last word?

863
01:25:17.600 --> 01:25:24.600
I just have a quick question. I know it was briefly remarked on how textbooks be revised,

864
01:25:24.600 --> 01:25:29.600
and he was sort of saying that every new textbook is worse than the earlier edition.

865
01:25:29.600 --> 01:25:36.600
And sometimes when authors, they look back at things they write, they sort of say,

866
01:25:36.600 --> 01:26:06.600
I wish I commented on this more or maybe I didn't say that right. I don't know if you guys knew that any of his after because he had a very productive career after he wrote the book in the early and you know in the 50s if you ever thought that maybe like there was something that he didn't talk about or he you know maybe he would have revisited not not like revision but maybe he just oh I wish I elaborated on that more kind of in terms of economic theory pure economic theory he was supposed to write a second edition

867
01:26:06.600 --> 01:26:13.600
When did the second edition come out? At first he was going to revise the whole thing, and then he realized it would take a long time.

868
01:26:13.600 --> 01:26:25.600
His mind had changed on many things, and then he was going to write a very, very long introduction to it, pointing out where he would say things, have said things differently, had he knew at that point.

869
01:26:25.600 --> 01:26:34.600
And again, he was busy with other projects, writing his History of Economic Thought book, and so it just came out with a very short introduction and really no revisions.

870
01:26:34.600 --> 01:26:49.600
I went through and I found some of the diagrams that were a little bit off and I fixed some of the diagrams in another edition after that, but you don't want to touch his work because I don't know what else he would have said.

871
01:26:49.600 --> 01:26:59.600
In talking to me he would say, I wish I said this differently or that, but you can only speculate, so to speak.

872
01:26:59.600 --> 01:27:09.600
Thank you, Joe. Before we break, I'd just like to take a moment to thank the people who made the conference possible.

873
01:27:09.600 --> 01:27:14.600
The supporters of the Mises Institute for a generous financial support,

874
01:27:14.600 --> 01:27:20.600
Lew Rockwell, the founder and chairman of the Mises Institute, Doug French, President of the Institute,

875
01:27:20.600 --> 01:27:25.600
Joe Salerno, Vice President for Academic Affairs and the Conference Director,

876
01:27:25.600 --> 01:27:33.600
All of our presenters, discussants, commenters, and of course all of you for coming, so let's all thank each other.