Liberty magazine, March 1997: "
Smith's Follies
Rothbard's treatment of Adam Smith is the most surprising and most controversial aspect of the two volumes. Rothbard argues that Smith is not the founding figure of modern economics, as he is usually portrayed. Rather, partly because he was led astray by his strong Calvinist proclivities, Smith proved to be a significant retrogression. Scholastic and other writers before Smith had already worked out a reasonable approximation of the microeconomic insights that have been accepted in the twentieth century by the Austrian school and most other right-thinking economists:
a) Utility is the foundation of value;
b) marginal considerations determine prices;
c) the only way to know values and prices is to look to the actual workings of a functioning market.
As Rothbard tells the story, however, Smith undermined all these good efforts of prior economists with his Wealth of Nations , whose labor theory of value was an 'unmitigated disaster,' and whose theory of distribution and other key ideas are characterized by an 'inchoate confusion.' Not only was Smith 'a plagiarist,' but he typically 'originated nothing that was true, and . . . whatever he originated was wrong' -- and this is only a small sample of the barbs that Rothbard throws at Smith. Because he proved to have such a powerful influence, Smith's confusions led economics on a wild goose chase for 100 years, until Austrian and other marginal utility analysts of the late nineteenth century could finally set things straight again.
It is not only that Smith got it all wrong analytically. By injecting into economics the Calvinist doctrine that all true value lies in labor, Rothbard argues, Smith paved the way not only for Marx but for a whole host of later thinkers who were to find in landlords and capitalists the true exploiters of humanity -- thieves who without justification take what really belongs to the laborers. It is thus a huge mistake to consider Smith a great defender of markets and freedom. The truth is that he is the person 'who may plausibly be held responsible for the emergence and the momentous consequences of Marx-ism.'"
Smith's Follies
Rothbard's treatment of Adam Smith is the most surprising and most controversial aspect of the two volumes. Rothbard argues that Smith is not the founding figure of modern economics, as he is usually portrayed. Rather, partly because he was led astray by his strong Calvinist proclivities, Smith proved to be a significant retrogression. Scholastic and other writers before Smith had already worked out a reasonable approximation of the microeconomic insights that have been accepted in the twentieth century by the Austrian school and most other right-thinking economists:
a) Utility is the foundation of value;
b) marginal considerations determine prices;
c) the only way to know values and prices is to look to the actual workings of a functioning market.
As Rothbard tells the story, however, Smith undermined all these good efforts of prior economists with his Wealth of Nations , whose labor theory of value was an 'unmitigated disaster,' and whose theory of distribution and other key ideas are characterized by an 'inchoate confusion.' Not only was Smith 'a plagiarist,' but he typically 'originated nothing that was true, and . . . whatever he originated was wrong' -- and this is only a small sample of the barbs that Rothbard throws at Smith. Because he proved to have such a powerful influence, Smith's confusions led economics on a wild goose chase for 100 years, until Austrian and other marginal utility analysts of the late nineteenth century could finally set things straight again.
It is not only that Smith got it all wrong analytically. By injecting into economics the Calvinist doctrine that all true value lies in labor, Rothbard argues, Smith paved the way not only for Marx but for a whole host of later thinkers who were to find in landlords and capitalists the true exploiters of humanity -- thieves who without justification take what really belongs to the laborers. It is thus a huge mistake to consider Smith a great defender of markets and freedom. The truth is that he is the person 'who may plausibly be held responsible for the emergence and the momentous consequences of Marx-ism.'"
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