Austrian Perspective on the History of Economic Thought
Metadata
- Author: Murray N. Rothbard
- Full Title: Austrian Perspective on the History of Economic Thought
- Category:books
Highlights
- The Whig theory, subscribed to by almost all historians of science, including economics, is that scientific thought progresses patiently, one year after another developing, sifting, and testing theories, so that science marches onward and upward, each year, decade or generation learning more and possessing ever more correct scientific theories. (Location 100)
- The concrete realization that important economic knowledge had been lost over time came to me from absorbing the great revision of the scholastics that developed in the 1950s and 1960s. The pioneering revision came dramatically in Schumpeter’s great History of Economic Analysis, and was developed in the works of Raymond de Roover, Marjorie Grice-Hutchinson and John T. Noonan. (Location 131)
- I came to the conclusion that the Calvinist emphasis could account, for example, for Smith’s otherwise puzzling championing of usury laws, as well as his shift in emphasis from the capricious, luxury-loving consumer as the determinant of value, to (Location 172)
- In the year 404 BC, the despotic state of Sparta conquered Athens and established a reign of terror known as the Rule of the Thirty Tyrants. (Location 327)
- The honour of being the first Greek economic thinker goes to the poet Hesiod, a Boeotian who lived in the very early ancient Greece of the middle of the eighth century BC. (Location 367)
- Hesiod adopts the common religious or tribal myth of the ‘Golden Age’, of man’s alleged initial state on earth as an Eden, a Paradise of limitless abundance. (Location 374)
- Democritus contributed two important strands of thought to the development of economics. First, he was the founder of subjective value theory. (Location 398)
- Moral values, ethics, were absolute, Democritus taught, but economic values were necessarily subjective. (Location 399)
- Democritus, having seen the contrast between the private property economy of Athens and the oligarchic collectivism of Sparta, concluded that private property is a superior form of economic organization. (Location 409)
- Plato contributed to genuine economic science by being the first to expound and analyse the importance of the division of labour in society. (Location 434)
- The three main schools of political thought: the Legalists, the Taoists, and the Confucians, were established from the sixth to the fourth centuries BC. Roughly, the Legalists, the latest of the three broad schools, simply believed in maximal power to the state, and advised rulers how to increase that power. The Taoists were the world’s first libertarians, who believed in virtually no interference by the state in economy or society, and the Confucians were middle-of-the-roaders on this critical issue. (Location 677)
- By far the most interesting of the Chinese political philosophers were the Taoists, founded by the immensely important but shadowy figure of Lao Tzu. (Location 684)
- Two centuries later, Lao Tzu’s great follower Chuang Tzu (369–c.286 BC) built on the master’s ideas of laissez-faire to push them to their logical conclusion: individualist anarchism. The influential Chuang Tzu, a great stylist who wrote in allegorical parables, was therefore the first anarchist in the history of human thought. (Location 701)
- Taoist thought flourished for several centuries, culminating in the most determinedly anarchistic thinker, Pao Ching-yen, who lived in the early fourth century AD, and about whose life nothing is known. (Location 727)
- In a happy and stateless world, declared Pao, the people would naturally turn to thoughts of good order and not be interested in plundering their neighbours. But rulers oppress and loot the people and ‘make them toil without rest and wrest away things from them endlessly.’ In that way, theft and banditry are stimulated among the unhappy people, and arms and armour, intended to pacify the public, are stolen by bandits to intensify their plunder. ‘All these things are brought about because there are rulers.’ The common idea, concluded Pao, that strong government is needed to combat disorders among the people, commits the serious error of confusing cause and effect. (Location 746)
- Augustine’s economic views were scattered throughout The City of God and his other highly influential writings. But he definitely, and presumably independently of Aristotle, arrived at the view that people’s payments for goods, the valuation they placed on them, was determined by their own needs rather than by any more objective criterion or by their rank in the order of nature. This was at least the basis of the later Austrian theory of subjective value. He also pointed out that it was the common desire of all men to buy cheap and to sell dear. (Location 850)
- But St Augustine’s stress was on the individual’s personality unfolding itself and therefore progressing over time. Hence Augustine’s profound emphasis on the individual at least set the stage indirectly for an attitude favourable to innovation, economic growth and development. (Location 865)
- If St Augustine looked benignly on the role of the merchant, he was also favourable, though not as warmly, towards the social role of rulers of state. On the one hand, Augustine took up and expanded Cicero’s parable demonstrating that Alexander the Great was simply a pirate writ large, and that the state is nothing but a large-scale and settled robber band. (Location 869)
- In capitulary after capitulary, Charlemagne and his successors laid down detailed regulations for every aspect of economic, political and religious life throughout the empire. Many of these regulations became incorporated into the canon law of later centuries, thereby remaining influential well after the crumbling of the Carolingian Empire itself. (Location 894)
- Charlemagne revived, greatly broadened and imposed the old doctrine of turpe lucrum. But now the prohibition was extended from the clergy to everyone, and the definition broadened from fraud to all greed and avarice, and included any disobedience of Charlemagne’s extensive price regulations. Any market deviations from these fixed prices were accused of being profiteering by either buyers or sellers and hence turpe lucrum. As a corollary, all speculative buying and selling in foodstuffs was prohibited. (Location 898)
- Since the English common law was motivated, not by a misguided attempt to aid the poor but in order to confer monopoly privileges on local owners of market sites, it is highly probable that Charlemagne, too, was trying to cartelize markets and confer privileges on market owners. (Location 903)
- Huguccio began a radical reconstruction of Patristic teachings about private property. From the time of Huguccio, private property was to be considered a sacrosanct right derived from the natural law. The property of individuals and communities was, at least in principle, supposed to be free from arbitrary invasion on the part of the state. As ‘moderator and arbiter’ of his own goods, an individual owner could use and dispose of them as he saw fit, provided that he did not violate general legal rules. A ruler could only expropriate the property of an innocent subject if ‘public necessity’ required it. (Location 937)
- The canon lawyers adopted the same criterion for the just price. Influenced by Carolingian practice, and by hints from the sixth century Rule of St Benedict, the late twelfth century canonist and student of Gratian, Simon of Bosignano, first described the true value of goods as the price for which they commonly sold. (Location 1009)
- Hostiensis provided the first path-breaking argument for charging a rate of interest on a loan from the very beginning, a charge that does not involve delay or guarantees. This is lucrum cessans (profit ceasing), a legitimate interest charge by the creditor to compensate him for profit foregone in investing the money himself. (Location 1110)
- In short, lucrum cessans anticipated the Austrian concept of opportunity cost, of income foregone, and applied it to the charging of interest. Unfortunately, however, Cardinal Hostiensis’s use of lucrum cessans was limited to non-habitual lenders who lend money out of charity to a debtor. Thus lenders could not be in the business of charging money on a loan, even on the ground of lucrum cessans. (Location 1112)
- The German Dominican St Albert the Great performed the enormous service to philosophy of bringing Aristotle and Aristotelianism back to Western thought. (Location 1200)
- St Thomas was clearly an Aristotelian in adopting the latter’s trenchant view that the determinant of exchange value was the need, or utility, of consumers, as expressed in their demand for products. And so, this proto-Austrian aspect of value based on demand and utility was reinstated in economic thought. (Location 1230)
- It should come as no surprise that Aquinas, in contrast to Aristotle, was highly favourable towards the activities of the merchant. Mercantile profit, he declared, was a stipend for the merchant’s labour, and a reward for shouldering the risks of transportation. (Location 1266)
- Building on Aristotle’s theory of money, Aquinas pointed out its indispensability as a medium of exchange, a ‘measure’ of expression of values, and a unit of account. In contrast to Aristotle, Aquinas was not frightened at the idea of the value of money fluctuating on the market. On the contrary, Aquinas recognized that the purchasing power of money was bound to fluctuate, and was content if it fluctuated, as it usually did, more stably than did particular prices. (Location 1273)
author: Murray N. Rothbard title: “Austrian Perspective on the History of Economic Thought” tags:
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Austrian Perspective on the History of Economic Thought