WEBVTT NOTE Rothbard as Historian 1 00:00:00.000 --> 00:00:05.000 The subject of Rothbard as a historian is a gigantic one, so I'm going to offer some thoughts of my own 2 00:00:05.000 --> 00:00:10.000 that are different from the ones that you'll find in David Gordon's book, The Essential Rothbard 3 00:00:10.000 --> 00:00:13.000 so as not to cover the same material multiple times. 4 00:00:13.000 --> 00:00:21.000 Well, I, as a historian, am of the opinion that even if Murray Rothbard had not done any work in economics 5 00:00:21.000 --> 00:00:26.000 and he could rest only on the work he did in history, 6 00:00:26.000 --> 00:00:34.000 I think he could still be satisfied that he had led a productive life and had a distinguished career 7 00:00:34.000 --> 00:00:37.000 and made important contributions to his field. 8 00:00:37.000 --> 00:00:41.000 So it's quite astonishing to realize this. 9 00:00:41.000 --> 00:00:47.000 And when you look through the titles of his that are historical works, 10 00:00:47.000 --> 00:00:51.000 it's rather impressive and there's no need to catalog them all in a brief talk, 11 00:00:51.000 --> 00:00:58.280 But I recall when I was first at the Mises University in 1993, out on the west coast, 12 00:00:58.280 --> 00:01:05.720 I remember the initial talk was by Murray, and he said, just in an overview of American history, 13 00:01:05.720 --> 00:01:12.840 he paused to point out when he was talking about the Panic of 1819, that he was the world's foremost 14 00:01:12.840 --> 00:01:18.440 expert on the Panic of 1819. I remember thinking, wow, this guy is gutsy. And then he said, you know, 15 00:01:18.440 --> 00:01:30.440 The Panic of 1819, published by Columbia University Press, that he had worked on for his PhD. 16 00:01:30.440 --> 00:01:34.440 That's an excellent book, and it was extremely well received. 17 00:01:34.440 --> 00:01:37.440 It got excellent reviews in the top journals. 18 00:01:37.440 --> 00:01:44.440 I was either an undergraduate or graduate, I don't remember the year, 19 00:01:44.440 --> 00:01:49.440 I was reading a book on Jacksonian America for some of my studies. 20 00:01:49.440 --> 00:01:52.440 It's called Liberty and Power. I think it was written by Harry Watson. 21 00:01:52.440 --> 00:01:58.440 And doing my traditional geekly duty, I was reading through the bibliographical essay at the end. 22 00:01:58.440 --> 00:02:06.440 And sure enough, when he gets to the early 19th century, Watson says, and Watson is just a predictable mainstream, 23 00:02:06.440 --> 00:02:13.440 I can script everything that's going to come out of his mouth kind of guy, and yet he gets to the early 19th century 24 00:02:13.440 --> 00:02:19.440 and he says Murray Rothbard's book The Panic of 1819 is unlikely to be superseded 25 00:02:19.440 --> 00:02:26.440 and I remember cheering to myself, yeah, good for you Murray, you know, it's just great, you know, here we are in the mainstream 26 00:02:26.440 --> 00:02:33.440 and they're all saying, yeah, you know, there's no, see, what I tend to find is that the mainstream of the history profession 27 00:02:33.440 --> 00:02:38.440 they know so little economics that you can sneak in a book like The Panic of 1819 28 00:02:38.440 --> 00:02:43.840 in which at its core is actually a very radical book and is very important from our point 29 00:02:43.840 --> 00:02:49.700 of view. They're not educated enough to know that. They just think it's a really well-researched 30 00:02:49.700 --> 00:02:54.000 book and so they don't know anything about the panning of 1819, so it's great. So that's 31 00:02:54.000 --> 00:02:58.000 wonderful. Whereas his book on the Great Depression, I think people were sort of more on to him 32 00:02:58.000 --> 00:03:03.060 by then. They know the free market caused the Great Depression, don't tell me otherwise. 33 00:03:03.060 --> 00:03:08.260 But America's Great Depression is, again, an extraordinary contribution to the study 34 00:03:08.260 --> 00:03:09.260 of history. 35 00:03:09.260 --> 00:03:17.320 I mean, you read it, and it shows how theory and history are supposed to work together. 36 00:03:17.320 --> 00:03:19.980 It's an excellent example of that. 37 00:03:19.980 --> 00:03:24.820 His multi-volume work, Conceived in Liberty, which Floyd Lilly knows intimately because 38 00:03:24.820 --> 00:03:28.740 she's been recording it in this heroic labor of hers. 39 00:03:28.740 --> 00:03:32.260 She's been recording it so that people can listen to it in their cars if they're planning 40 00:03:32.260 --> 00:04:02.260 Then beyond that we've got of course his history of economic thought, which is a history. We have important articles of his on the origins of the New Deal, on the Progressive Era, on World War I. We've got the great collection of essays that he edited and contributed to with the new leftist turned neoconservative Ronald Radosh, who's now repudiating all his good work and playing up all his rotten ideas. 41 00:04:02.260 --> 00:04:09.260 So, I'm sure he hates the book A New History of Leviathan, so that's his highest endorsement, little does he know. 42 00:04:09.260 --> 00:04:15.260 And, you know, when you read David Gordon's treatment of Rothbard as historian, 43 00:04:15.260 --> 00:04:24.260 I think he gives a lot of important, makes a lot of important observations about Murray's willingness to consider, to look into people's motives, 44 00:04:24.260 --> 00:04:31.260 not just to assume that if somebody works for the government, he has the public good in mind 45 00:04:31.260 --> 00:04:36.260 and that all his efforts are directed selflessly toward increasing human well-being and so on. 46 00:04:36.260 --> 00:04:40.260 You know, Murray is a little more astute than that. 47 00:04:40.260 --> 00:04:48.260 And at one point he said that in a sense, you know, you always have to think about who benefits in various situations. 48 00:04:48.260 --> 00:05:05.260 When you consider legislation that is some kind of agricultural legislation, does it make the agriculture department more powerful? Does it give those people more money? Does it give certain favored sectors of agriculture more influence? Could it be that those people want the legislation? 49 00:05:05.260 --> 00:05:12.260 He would ask questions like this. He always wants to look at who's benefiting from this and then investigate, did they have anything to do with bringing it about? 50 00:05:12.260 --> 00:05:26.260 Which is why he once said that in a sense, sometimes the study of history is really the confirmation of your own initial paranoia through a deeper factual analysis, which I always liked. 51 00:05:26.260 --> 00:05:34.260 Now, in Conceived in Liberty, which is his multi-volume history of the colonial period of American history, 52 00:05:34.260 --> 00:05:42.260 he begins with a kind of an overview in which he lays out his own philosophy of history, 53 00:05:42.260 --> 00:05:46.260 the perspective that he brings to this study. 54 00:05:46.260 --> 00:05:50.260 That's very important. Most historians don't have the honesty to do that, 55 00:05:50.260 --> 00:05:53.260 or they pretend that they have no prejudices, or this or that. 56 00:05:53.260 --> 00:05:58.260 But what Rothbard is saying is that he's going to approach history from a particular perspective. 57 00:05:58.260 --> 00:06:07.260 And he's not giving you distorted history because he's doing this, but he's giving his history a structure. 58 00:06:07.260 --> 00:06:11.260 History technically consists of every single event that has ever occurred. 59 00:06:11.260 --> 00:06:18.260 So unless you are going to give it some kind of theoretical structure, it's going to be just a sterile catalogue of discrete occurrences. 60 00:06:18.260 --> 00:06:20.260 That doesn't help anybody. 61 00:06:20.260 --> 00:06:22.260 So he begins by saying, 62 00:06:50.260 --> 00:06:55.260 The secondary condition for the flowering of all the other goods that mankind cherishes. 63 00:06:55.260 --> 00:07:00.260 Moral virtue, civilization, the arts and sciences, economic prosperity. 64 00:07:00.260 --> 00:07:04.260 Out of liberty then stem the glories of civilized life. 65 00:07:04.260 --> 00:07:07.260 But liberty has always been threatened by the encroachments of power, 66 00:07:07.260 --> 00:07:14.260 power which seeks to suppress, control, cripple, tax and exploit the fruits of liberty and production. 67 00:07:14.260 --> 00:07:22.260 Power, then, the enemy of liberty, is consequently the enemy of all the other goods and fruits of civilization that mankind holds dear. 68 00:07:22.260 --> 00:07:29.260 And power is almost always centered in and focused on that central repository of power and violence, the state. 69 00:07:29.260 --> 00:07:38.260 With Albert J. Nock, the 20th century American political philosopher, I see history as centrally a race and conflict between social power, 70 00:07:38.260 --> 00:07:43.260 the productive consequence of voluntary interactions among men, and state power. 71 00:07:43.260 --> 00:07:53.260 In those eras of history when liberty, social power, has managed to race ahead of state power and control, the country and even mankind have flourished. 72 00:07:53.260 --> 00:08:00.260 In those eras when state power has managed to catch up with or surpass social power, mankind suffers and declines. 73 00:08:00.260 --> 00:08:15.260 Well, Rothbard goes on to comment on the debate among historians at that time as to whether the theme that is most evident in American history is a theme of consensus or conflict. 74 00:08:15.260 --> 00:08:25.260 Murray says that, of course, it's conflict, but not social or class conflict that's at the root of American history, but rather this conflict between power and liberty. 75 00:08:25.260 --> 00:08:53.260 The Social and Ideological Conflicts have been ancillary to the central one, which concerns who will control the state and what power will the state exercise over the citizenry. 76 00:08:53.260 --> 00:09:02.260 And one common example that he was fond of citing was the alleged conflict of interest between farmers and merchants. 77 00:09:02.260 --> 00:09:10.260 Supposedly they have completely disparate interests, and Rothbard's view was that in the market, of course, they have harmonious interests. 78 00:09:10.260 --> 00:09:20.260 They each buy and sell the products of the other. This is an example of economic harmonies, as the famous title of Frederic Bastiat put it. 79 00:09:20.260 --> 00:09:26.260 So it is only through and by state action that so-called class conflicts can ever arise. 80 00:09:26.260 --> 00:09:35.260 So yes, there are exploiters and exploited, but the parties whom these terms describe are rather different than in the standard narrative. 81 00:09:35.260 --> 00:09:44.260 Now, in the early 20th century in the United States, that's when the study of history became professionalized and you'd get degrees in it. 82 00:09:44.260 --> 00:09:58.260 And if you were just an amateur historian, you weren't credentialed, you didn't have some fancy degree from a university, you began to be looked down upon, you weren't really scientific, you weren't really scholarly, you needed this kind of professional training. 83 00:09:58.260 --> 00:10:28.260 And when this professionalization of history in effect took over the profession, one of the key features of the history profession and one of the qualities of the good historian that the profession began to boast of was an impartiality, you know, was you don't favor one side or the other, you rather look at things dispassionately and you simply record the events as they occurred and you don't make your own prejudices. 84 00:10:28.260 --> 00:10:58.260 and so some people took this to the extreme of arguing that even bringing of any kind of theoretical apparatus to the study of history was not allowed because what non-arbitrary way was there of choosing a theoretical apparatus that was arbitrary to anyone it was just a value judgment on your part so anything that you would embrace theoretically and then bring to the study of history was in effect automatically building a bias into your work 85 00:10:58.260 --> 00:11:08.260 And so, for example, one scholar criticized this practice whereby we begin the examination of historical facts with any theory of interpretation. 86 00:11:08.260 --> 00:11:19.260 And he went on to say that the simple but arduous task of the historian is to collect facts, view them objectively, and arrange them as the facts themselves demanded. 87 00:11:19.260 --> 00:11:27.260 And this historian, Edward Cheney, said that facts, when justly arranged, interpret themselves. 88 00:11:27.260 --> 00:11:34.260 Well, Rothbard never believed that, that facts interpret themselves. 89 00:11:34.260 --> 00:11:37.260 How are you going to account for the Great Depression? 90 00:11:37.260 --> 00:11:42.260 By just staring, as he says in the beginning of that book, 91 00:11:42.260 --> 00:11:48.260 that gazing at sheaves of statistics is not going to yield you any knowledge whatsoever, 92 00:11:48.260 --> 00:11:54.260 unless you have some antecedent theory that can help you make sense of the data of history. 93 00:11:54.260 --> 00:12:05.260 And of course Rothbard is following in the path of Mises here, who is very clear about this inhuman action and his epistemological works and theory and history. 94 00:12:05.260 --> 00:12:11.260 He's very clear about the relationship between history and theory. 95 00:12:11.260 --> 00:12:16.260 Mises, Rothbard's great teacher, says, History cannot be imagined without theory. 96 00:12:16.260 --> 00:12:25.260 The naive belief that, unprejudiced by any theory, one can derive history directly from the sources is quite untenable. 97 00:12:25.260 --> 00:12:29.260 No explanations reveal themselves directly from the facts. 98 00:12:29.260 --> 00:12:37.260 And so we can understand the economic facts of the past only with the help of some sound theoretical apparatus. 99 00:12:37.260 --> 00:12:52.260 And in the preface to theory and history, Mises' work, Rothbard pointed out that Mises was fond of giving, as an example of what he's talking about, the comings and goings of people at New York's Grand Central Station. 100 00:12:52.260 --> 00:13:05.260 And that if you were to observe this, not through the lens of theory, but just observing this crazy quilt of people coming and going hither and thither all day long, it would look to you as if there was no order to this whatsoever. 101 00:13:05.260 --> 00:13:09.260 This was just a chaotic, random series of events one after the other. 102 00:13:09.260 --> 00:13:13.260 But as soon as you understand that these are people who have motivations 103 00:13:13.260 --> 00:13:18.260 and that, in fact, what's really happening here is most people are simply arriving at work 104 00:13:18.260 --> 00:13:25.260 and then going back home at the end of the day, suddenly this crazy quilt of seemingly unconnected events 105 00:13:25.260 --> 00:13:27.260 is coherent and makes some sense. 106 00:13:27.260 --> 00:13:31.260 And that, in effect, is a kind of a microcosm of what we're talking about 107 00:13:31.260 --> 00:14:01.260 I think Hans Hoppe explains this well as well, when he says the benefits to be gained from the study of political economy and philosophy by the historian include the knowledge he gains of pure a priori social theory, which enables him to avoid otherwise unavoidable errors in the interpretation of sequences of complex historical data and present a theoretically corrected and reconstructed set of knowledge. 108 00:14:01.260 --> 00:14:06.620 and a decidedly critical or revisionist account of history. 109 00:14:06.620 --> 00:14:09.380 One or two Austrian scholars conferences ago, 110 00:14:09.380 --> 00:14:12.700 I actually gave a paper called, What Austrian Economics Can 111 00:14:12.700 --> 00:14:13.660 Teach Historians. 112 00:14:13.660 --> 00:14:15.580 I'd been meaning to do this for a long time, 113 00:14:15.580 --> 00:14:17.300 because I thought to myself that I almost 114 00:14:17.300 --> 00:14:19.860 have kind of an unfair advantage as a historian who's 115 00:14:19.860 --> 00:14:21.280 been exposed to all the good work 116 00:14:21.280 --> 00:14:22.700 that you folks have been doing. 117 00:14:22.700 --> 00:14:25.660 But I wanted to give a kind of as thorough a catalog 118 00:14:25.660 --> 00:14:30.180 of these advantages as I could, so I wrote this paper. 119 00:14:30.180 --> 00:14:35.180 And a little bit of what I'm saying to you today is kind of derived from the thoughts I had at that time. 120 00:14:35.180 --> 00:14:39.180 Now, for instance, just beginning with the colonial period of American history, 121 00:14:39.180 --> 00:14:44.180 if you were to read colonial newspapers like the Pennsylvania Gazette, for example, 122 00:14:44.180 --> 00:14:48.180 you'd read a lot of complaints that there's a scarcity of money in the colonies 123 00:14:48.180 --> 00:14:53.180 and that the way out of this is we need the government to produce paper money for us. 124 00:14:53.180 --> 00:14:56.180 And this complaint is heard again and again. 125 00:14:56.180 --> 00:15:02.180 There's a shortage of money and we need paper money printed and that will help us. 126 00:15:02.180 --> 00:15:05.180 And Rothbard doesn't fall for this. 127 00:15:05.180 --> 00:15:14.180 He says, well, either these people misdiagnose the problem or rather these are people who in some way or another benefit from the production of paper money. 128 00:15:14.180 --> 00:15:19.180 For example, Ben Franklin's printing firm gets the contract to print the money. 129 00:15:19.180 --> 00:15:23.180 He might have a little bit of a bias in this matter. 130 00:15:23.180 --> 00:15:28.180 It might not be a pure scientific judgment he's making when he says that these things need to be done. 131 00:15:28.180 --> 00:15:34.180 Or likewise, trying to study an event like the Great Depression is not possible 132 00:15:34.180 --> 00:15:38.180 unless you have some kind of theoretical apparatus to help you. 133 00:15:38.180 --> 00:15:43.180 Now I recall in my own experience as a graduate student at Columbia University, 134 00:15:43.180 --> 00:15:48.180 I was auditing an undergraduate course just to sort of refresh my memory on some things 135 00:15:48.180 --> 00:15:55.180 and, I think, to be seen by my dissertation advisor, Alan Brinkley, who was teaching the course. 136 00:15:55.180 --> 00:15:58.180 And it came time to talk about the Great Depression. 137 00:15:58.180 --> 00:16:06.180 So he went to the board and he listed some theories that have been advanced to account for the initial downturn, 138 00:16:06.180 --> 00:16:09.180 if not necessarily for the length of the Depression. 139 00:16:09.180 --> 00:16:17.180 So he went and he explained, you know, well, underconsumption is a big theory, you know, and that's the one that I subscribe to, he said. 140 00:16:17.180 --> 00:16:26.180 So he went and explained that, you know, there are all these goods produced, people just couldn't buy enough of them, and so everything just collapsed, it's sort of a standard thing. 141 00:16:26.180 --> 00:16:31.180 And then he went and listed some other ones. He gave, he did talk about Milton Friedman briefly. 142 00:16:31.180 --> 00:16:39.180 And then he picked Jude Wineski, who is a late Jude Wineski, who's a great guy in some ways, a heroic figure in some ways. 143 00:16:39.180 --> 00:16:50.180 But Wienyski placed a lot of emphasis on taxes and tariffs as having been a triggering mechanism that really made the Depression particularly severe. 144 00:16:50.180 --> 00:16:55.180 But, you know, relatively speaking, I don't think that is the key to the issue. 145 00:16:55.180 --> 00:17:02.180 But this way, Brinkley could make it seem as if he has presented a right-wing theory of the Depression and then shown, you know, 146 00:17:02.180 --> 00:17:09.180 Well, international trade was a relatively minor aspect of the economy, so tariffs, increased tariffs can't really account for this. 147 00:17:09.180 --> 00:17:14.180 So this way he could satisfy his conscience, I suppose, on this. 148 00:17:14.180 --> 00:17:18.180 But needless to say, do I need to tell you there was no mention of the Austrian theory? 149 00:17:18.180 --> 00:17:21.180 Well, I will tell you anyway. There was no mention of the Austrian theory. 150 00:17:21.180 --> 00:17:27.180 So I thought to myself, dare I become that species of animal I so despise? 151 00:17:27.180 --> 00:17:32.620 The guy who sits in the back of the lecture hall, raises his hand and lectures the professor. 152 00:17:32.620 --> 00:17:34.740 Dare I go into this? 153 00:17:34.740 --> 00:17:38.060 But I thought, you know, I've got two bad options here, you know. 154 00:17:38.060 --> 00:17:43.860 I become what I hate or I let this stand. 155 00:17:43.860 --> 00:17:45.480 That was just much worse, much worse. 156 00:17:45.480 --> 00:17:50.340 So I raised my hand, he calls on me, and I took about two solid minutes, which when you're 157 00:17:50.340 --> 00:17:57.160 doing this is an eternity, and I sort of roughly explained the Austrian theory, snuck in the 158 00:17:57.160 --> 00:18:04.160 Hayek won the Nobel Prize for this sort of thing, so that it wouldn't seem like I'm just some crazy guy in the back. 159 00:18:04.160 --> 00:18:08.160 It's a crazy guy plus one Nobel Prize winner. 160 00:18:08.160 --> 00:18:11.160 Which is usually two crazy guys, of course. 161 00:18:11.160 --> 00:18:14.160 So I went through and explained the whole thing very quickly. 162 00:18:14.160 --> 00:18:17.160 And of course, poor Alan Brinkley. I even hated to do this to him. 163 00:18:17.160 --> 00:18:20.160 As much as he deserved it, I hated to do this to him. 164 00:18:20.160 --> 00:18:24.160 And he was very gracious and he noted the importance of Hayek and then moved on. 165 00:18:24.160 --> 00:18:38.160 But he admitted to us, he made a very important admission to us, he said that as a non-economist, he said, he was not really trained to be able to decide which of these theories is the correct one. 166 00:18:38.160 --> 00:18:49.160 So he chose the one that fits in the best with his own political prejudices, namely that we need a central government to manage the economy. 167 00:18:49.160 --> 00:18:54.160 And, well, that seems to work with this theory that the economy has this tendency to break down, 168 00:18:54.160 --> 00:19:00.160 that the market price system doesn't really work all the time, and all these other problems. 169 00:19:00.160 --> 00:19:04.160 That fit in with Brinkley's way of thinking, so he latched on to it. 170 00:19:04.160 --> 00:19:11.160 Well, that's a problem, and if you don't have economic training, you're liable to just accept whatever seems to float your boat, 171 00:19:11.160 --> 00:19:14.160 and that's not going to advance human knowledge. 172 00:19:14.160 --> 00:19:21.160 So we have to have a sound theory, and of course the Austrian business cycle theory gives historians a great advantage. 173 00:19:21.160 --> 00:19:27.160 They know what to look for. They know immediately, start looking, what was the central bank up to in the previous number of years? 174 00:19:27.160 --> 00:19:32.160 You know where to look. That is hugely important for a historian. 175 00:19:32.160 --> 00:19:40.160 But then we have the fact that we don't simply have a downturn in 1929, but particularly 1931, 176 00:19:40.160 --> 00:19:45.160 The 31 is what Benjamin Anderson called the tragic year. Things get really bad. 177 00:19:45.160 --> 00:19:51.160 But what we also have is a persistent depression. I mean, it just goes on year after year after year. 178 00:19:51.160 --> 00:19:55.160 All through the 30s, you've got double-digit unemployment, all these other problems. 179 00:19:55.160 --> 00:20:01.160 It just persists. And so you have a second question, not simply what caused it, but why won't it go away? 180 00:20:01.160 --> 00:20:06.160 And there are a variety of answers to that question. There's a variety of answers to that. 181 00:20:06.160 --> 00:20:13.160 But what's significant is that we know, as Austrians, we sort of know to look, we know that this shouldn't be happening. 182 00:20:13.160 --> 00:20:22.160 And when I say that, I have in mind the at least two times, possibly three or more, in Man Economy and State, 183 00:20:22.160 --> 00:20:28.160 in which Rothbard refers to the market economy with the word beautiful. 184 00:20:28.160 --> 00:20:31.160 I mean, he can't sort of restrain himself from pointing this out. 185 00:20:31.160 --> 00:20:36.160 I mean, he's very, very technical and clinical throughout most of the presentation. 186 00:20:36.160 --> 00:20:40.160 You know, he doesn't use the word thug or anything like that, you know, very... 187 00:20:40.160 --> 00:20:48.160 But at least a couple of times he describes this wonderful edifice of order as being beautiful. 188 00:20:48.160 --> 00:20:54.160 And he does so because he's saying, isn't it wonderful how production is coordinated in this wonderful way 189 00:20:54.160 --> 00:20:57.160 and the needs of society are met in this wonderful way. 190 00:20:57.160 --> 00:21:02.160 So he's acknowledging and he's pointing out that the market is a kind of self-correcting... 191 00:21:02.160 --> 00:21:08.160 I even hate to say it's a thing, of course it's not a thing, it's a collection of people's activities, 192 00:21:08.160 --> 00:21:15.160 but in effect it runs itself, it doesn't need some exogenous force, it runs itself, it is a beautiful structure. 193 00:21:15.160 --> 00:21:20.160 So when we see that this beautiful structure, somehow there's something stuck in one of the gears, 194 00:21:20.160 --> 00:21:26.160 you see long-term unemployment, you see all these problems, but you know you've got this beautiful structure, 195 00:21:26.160 --> 00:21:32.160 To understand the logic of how it works based on Rothbard's edifice, then you have to start 196 00:21:32.160 --> 00:21:37.360 looking around as to what is preventing a recovery that we should expect, what's preventing 197 00:21:37.360 --> 00:21:38.360 that? 198 00:21:38.360 --> 00:21:42.120 And so you start looking around, are wage rates being held artificially high? 199 00:21:42.120 --> 00:21:47.480 Are there various measures being taken that are undermining investment or making investors 200 00:21:47.480 --> 00:21:49.360 cautious? 201 00:21:49.360 --> 00:21:55.240 We have the fact that, well, I point out that in another piece of writing that in the early 202 00:21:55.240 --> 00:22:03.240 The President declared that all incomes over $25,000 a year are going to be confiscated. 203 00:22:03.240 --> 00:22:07.240 That has an effect on investment, I would say. 204 00:22:07.240 --> 00:22:13.240 But the Congress, by the way, later overturned that on the grounds that it might undermine the war effort. 205 00:22:13.240 --> 00:22:15.240 We're telling people that we're going to take all... 206 00:22:15.240 --> 00:22:20.240 We want them to get rich so then we can exploit them partially for military purposes, 207 00:22:20.240 --> 00:22:23.240 but if we take all their money, then they'll stop working. 208 00:22:23.240 --> 00:22:31.080 So, there was that great unquenchable thirst for justice we see on the part of Congress. 209 00:22:31.080 --> 00:22:38.140 We also have historians constantly, in my experience, saying things like, people's purchasing 210 00:22:38.140 --> 00:22:43.020 power needed to be increased during the 30s, you know, and so, how do we increase purchasing 211 00:22:43.020 --> 00:22:44.020 power? 212 00:22:44.020 --> 00:22:47.380 I mean, in some certain sense that's correct, but what do they mean by that and how do they 213 00:22:47.380 --> 00:22:48.380 do it? 214 00:22:48.380 --> 00:22:52.600 They don't mean, let's increase production and make the society wealthier and therefore 215 00:22:52.600 --> 00:22:55.200 or Make Goods Easier for People to Acquire 216 00:22:55.200 --> 00:23:00.800 No, by purchasing power, we mean we have to force everybody's wages up through various 217 00:23:00.800 --> 00:23:01.800 measures. 218 00:23:01.800 --> 00:23:06.760 But, as some observers have noted, you don't have any purchasing power at all when you're 219 00:23:06.760 --> 00:23:11.560 unemployed, and that's what these wage measures typically did. 220 00:23:11.560 --> 00:23:15.960 Well, yeah, I suppose it might have increased my purchasing power in some sense if I don't 221 00:23:15.960 --> 00:23:17.360 look at any other sector of the economy. 222 00:23:17.360 --> 00:23:21.960 If I just look at my own pocketbook, that might have increased my individual purchasing 223 00:23:21.960 --> 00:23:26.440 Power, but unfortunately I have no job, so I don't even have that benefit. 224 00:23:26.440 --> 00:23:32.920 So these are things that one would know if he had some kind of understanding of the market. 225 00:23:32.920 --> 00:23:41.760 Now beyond even this, I'm particularly interested in Rothbard's article from 1956, Toward a 226 00:23:41.760 --> 00:23:45.360 Reconstruction of Utility and Welfare Economics. 227 00:23:45.360 --> 00:23:49.480 As I say, I'm a non-economist who's very much interested in the subject, but I remember 228 00:23:49.480 --> 00:24:00.480 I remember reading that article and thinking, man, here this guy is, you know, barely 30 years old and making, you know, making just a fantastic contribution from what I can see. 229 00:24:00.480 --> 00:24:04.480 I mean, extremely persuasive and important. 230 00:24:04.480 --> 00:24:13.480 But in that article, you know, where you see Rothbard's welfare economics worked out, you know, you realize that this article has extremely radical implications. 231 00:24:13.480 --> 00:24:22.480 What he's doing is, of course, building on the Austrian understanding of exchange, that exchange is mutually beneficial or otherwise it wouldn't take place. 232 00:24:22.480 --> 00:24:31.480 And there's the fact that the thing that I sell, I value less than the thing I acquire, and the other person has a reverse valuation. 233 00:24:31.480 --> 00:24:38.480 He draws a lot of important implications from this, which, of course, would be that any kind of coerced transaction, 234 00:24:38.480 --> 00:25:03.440 Transaction, 235 00:25:03.440 --> 00:25:23.440 Taxation is a radical statement. We cannot say that anything that government does, the vast bulk of which is financed by taxation, improves human welfare. There is no unambiguous way to make that statement. 236 00:25:23.440 --> 00:25:30.440 So, this is an important point because it actually can help us understand history, believe it or not. 237 00:25:30.440 --> 00:25:38.440 Because a lot of times historians rely on economic aggregates like, statistical aggregates like gross domestic product. 238 00:25:38.440 --> 00:25:44.440 To say the country was doing really well in this year because look at its gross domestic product figures. 239 00:25:44.440 --> 00:25:46.440 But this can be extremely misleading. 240 00:25:46.440 --> 00:25:53.440 And for one thing, we have to understand that a substantial portion of that figure involves government. 241 00:25:53.440 --> 00:26:02.440 And we cannot assume that those figures involve unambiguous increases in people's welfare when a lot of this is carried out through coercion. 242 00:26:02.440 --> 00:26:13.440 So when we see, for example, that people are alleging that World War II was a time of great prosperity in America, what are they basing that? 243 00:26:13.440 --> 00:26:21.440 Sometimes they're basing this on anecdotal evidence that everybody had a job and so this must have been a great thing. 244 00:26:21.440 --> 00:26:26.440 Well, everybody had a job because 11 million people were drafted into the military and some of them died. 245 00:26:26.440 --> 00:26:33.440 Well, yeah, I suppose unemployment was reduced, but I don't think that's the best way. 246 00:26:33.440 --> 00:26:40.440 As Bob Higgs says, you don't need any kind of macroeconomic model to understand what happened to unemployment in that situation. 247 00:26:40.440 --> 00:26:47.440 But specifically, I think Rothbard's concept of private product remaining is very valuable here. 248 00:26:47.440 --> 00:26:54.440 He says that in America's Great Depression, he says that what we ought to do to get a better, 249 00:26:54.440 --> 00:27:03.440 if we insist on using some kind of aggregate, in order to get a better understanding of the health of the people economically, 250 00:27:03.440 --> 00:27:06.440 we ought to use PPR, private product remaining. 251 00:27:06.440 --> 00:27:13.440 And so he deducts product or income originating in government and government enterprise from gross national product. 252 00:27:13.440 --> 00:27:21.440 And this figure is the gross private product from which Rothbard then deducts the resources that government activity drains from the private sector. 253 00:27:21.440 --> 00:27:28.440 So the larger of either government expenditures or receipts to get the private product remaining in private hands. 254 00:27:28.440 --> 00:27:37.440 And so, it seems to me that if economists or historians want to understand the American standard of living today or over time, 255 00:27:37.440 --> 00:27:44.440 they're better served by calculating this PPR than they are by following the Department of Commerce and its figures. 256 00:27:44.440 --> 00:27:54.440 So, historians who don't have insights like this have fallen into this trap of arguing that World War II was a time of great prosperity in American history. 257 00:27:54.440 --> 00:28:24.400 Well, here's a response, a very Austrian type of response, by Robert Higgs, very much a 258 00:28:24.400 --> 00:28:41.400 Consider that between 1940 and 1944, real GDP increased at an average annual rate of 13%, a growth spurred wholly out of line with any experienced before or since. 259 00:28:41.400 --> 00:28:47.400 Moreover, that extraordinary growth took place notwithstanding the movement of some 16 million men, 260 00:28:47.400 --> 00:28:55.400 Equivalent to 28.6% of the total labor force of 1940 into the armed forces at some time during the war 261 00:28:55.400 --> 00:29:04.400 and the replacement of those prime workers mainly by teenagers, women with little or no previous experience in the labor market and elderly men. 262 00:29:04.400 --> 00:29:12.400 Is it plausible that an economy subject to such severe and abruptly imposed human resource constraints 263 00:29:12.400 --> 00:29:19.400 could generate a growth spurt far greater than any other in its entire history? 264 00:29:19.400 --> 00:29:25.400 Further, is it plausible that when the great majority of the servicemen returned to the civilian labor force, 265 00:29:25.400 --> 00:29:29.400 some nine million of them, in the year following VJ Day, 266 00:29:29.400 --> 00:29:34.400 While millions of their relatively unproductive wartime replacements left the labor force, 267 00:29:34.400 --> 00:29:41.400 the economy's real output would fall by 22% from 1945 to 1947. 268 00:29:41.400 --> 00:29:48.400 Well, of course, the answer is that the statistics on which all this stuff relies are utterly meaningless. 269 00:29:48.400 --> 00:29:54.400 If they're giving us results like this, there's got to be something wrong with them, because this doesn't make any sense. 270 00:29:54.400 --> 00:30:04.400 And Higgs' diagnosis of all this is to say that there cannot be any kind of, to the extent that you want to do national product accounting, 271 00:30:04.400 --> 00:30:11.400 if you're not going to do it with market prices, then right away you're simply adding up a series of nonsense numbers. 272 00:30:11.400 --> 00:30:21.400 And given how much of the US economy was either directly controlled or the ripples of control, again, reached more and more sectors of the economy, 273 00:30:21.400 --> 00:30:28.400 When you consider that, then really the prices that are being generated have nothing to do, have no foundation in consumer choice. 274 00:30:28.400 --> 00:30:32.400 They're just arbitrary nonsense numbers that have been slapped onto various products. 275 00:30:32.400 --> 00:30:39.400 So then you add up these arbitrary nonsense numbers, you get a gigantic nonsense number and say, look at how great the economy is. 276 00:30:39.400 --> 00:30:41.400 That's basically Higgs's critique. 277 00:30:41.400 --> 00:31:01.400 When we recall particularly Rothbard's point that voluntary transactions are the only ones we can be sure improve consumers' well-being, we can conclude that the greater the government's coercive power over the economy, the less meaningful in terms of consumer welfare any of these output statistics become. 278 00:31:01.400 --> 00:31:14.400 So you wind up getting arbitrary figures, and the sum of these is a great big arbitrary figure, and yet these are the figures that historians have used to make these judgments about the state of the economy. 279 00:31:14.400 --> 00:31:29.400 Well, these figures also obscure the performance of the US economy after World War II, because if you rely on these very figures, you would have to conclude that 1946 was one of the most catastrophic years in American history. 280 00:31:29.400 --> 00:31:35.400 You've got dramatically falling output, all the statistics seem to be down, it's just terrible. 281 00:31:35.400 --> 00:31:42.400 Private output, though, which is the key, because usually you just look at all this big aggregate and it looks terrible, 282 00:31:42.400 --> 00:31:48.400 but private output increased by 30% in the one year in 1946. 283 00:31:48.400 --> 00:31:53.400 So if you actually look at the private sector, that is a fantastic, we've never had a year like 1946. 284 00:31:53.400 --> 00:32:08.400 And in 1946, people were not depressed. There was no depression. The economy was not in the doldrums. Just read the papers, look at people at the time. Things were great. People were happy. The war was over. Everything was doing well. People were working. 285 00:32:08.400 --> 00:32:16.400 The problem is that, okay, a lot of the so-called defense establishment expenditure has gone down, but that's a good thing for the economy. 286 00:32:16.400 --> 00:32:17.400 for the economy. 287 00:32:17.400 --> 00:32:22.200 As I say, the private economy is producing at absolutely record levels, and you would 288 00:32:22.200 --> 00:32:27.600 know that if you used Rothbard's figure, but you would not know that if you used the official 289 00:32:27.600 --> 00:32:31.800 figures that basically every historian relies on. 290 00:32:31.800 --> 00:32:37.920 So you can avoid embarrassing mistakes like this if you are schooled in this tradition. 291 00:32:37.920 --> 00:32:43.040 So this, in a nutshell then, is a kind of an overview of some of Rothbard's contributions 292 00:32:43.040 --> 00:32:46.380 that even when he's not making a contribution directly to history, like when he's talking 293 00:32:46.380 --> 00:33:16.380 about welfare economics, inadvertently he is, because he's giving us a tool that can help us to understand history better, so as to elucidate our own principles all the more effectively, so as to show people that what you superficially think is going on in the economy at this time is not what is going on at all, and so Rothbard is constantly, he can't help himself but be interdisciplinary, even when he's not even trying, the guy can't help but make multidisciplinary contributions. 294 00:33:16.380 --> 00:33:46.380 If only this were a problem that I had, you know, I would love to have this problem, but if you continue to look through his work in history though, you'll notice that he is a fantastic storyteller, he uncovers all kinds of fascinating connections between, it turns out this was this guy's father-in-law, and this guy got this connection for this guy, and these people are lobbying for this legislation because they own all the land out there, and they know that values are going to increase. There's no way I can sum all that up in a paper. The best way that you can learn about 295 00:33:46.380 --> 00:33:53.380 Rothbard as historian is to read his works of history or so. Okay, thanks.