Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Ludwig von Mises, Henry Hazlitt, and Murray Rothbard Sacrificing for an Idea

Economics / Economic Theory Oct 29, 2009 - 01:22 AM GMT

By: Gary_North

Economics

Best Financial Markets Analysis ArticleLew Rockwell gave a lecture on the trials and tribulations of three free market economists: Ludwig von Mises, Henry Hazlitt, and Murray Rothbard. He showed that their commitment to free market economic theory cost them their careers in an era of Keynesianism. Yet today, they are remembered by a growing number of readers. Their bureaucratic opponents are long forgotten: lost in the noise of "we, too."


Rockwell did not mention this fact, but his efforts have been important in preserving this legacy. So are the skills of his digit-master, Jeffrey Tucker. The technology of the Web – the ultimate price competition in mankind's history – favors ideas over institutional influence. The gatekeepers are now unable to restrict entry based on money and guild certification.

Ideas have more long-run clout that money does. Now the time frame grows ever-shorter. We have entered a new era: the triumph of digits. It is cheaper today to be a promoter of unpopular ideas than ever before. There are still career costs, but the barriers to entry for ideas are much lower. We should recall a fundamental insight of economic theory: At a lower cost, more is supplied. The gatekeepers today are on the defensive as never before. They are like elephants trying to stamp out ants. So many targets, so little time.

Mises, Hazlitt, and Rothbard were men of the pre-digital age, when access to book-publishing houses could make academic careers. Blocked ideas in their day had reduced consequences and longer time frames. Mises was blocked by his critics more successfully than Hazlitt was. Hazlitt had access to print media because he was a master of the written word. Rothbard labored in obscurity, but at least had some outlets, because of minor early funding by the William Volker Fund and later in the underground world of newsletters, the pre-digital realm of the dispossessed.

Rockwell did not have time to comment on the importance of all of the key gatekeepers who opened their gates. He did mention that Mises got Human Action into print at Yale University Press in 1949 because of the intervention of its editor, Eugene Davidson. Davidson was not afraid of controversy. A year earlier, he had succeeded in publishing Charles A. Beard's masterpiece of historical revisionism, President Roosevelt and the Coming of the War. That book would have ended Beard's career, had he not already been retired. The historical guild turned on him like a pack of jackals, for he showed that Roosevelt's foreign policy had deliberately provoked the Japanese to attack the fleet. Beard was one of America's most distinguished historians in 1947. By the end of 1948, he was a pariah.

Rothbard saw Man, Economy and State get into print in 1962 only because of the support of another anti-state economist, F. A. Harper. Harper had been with the Foundation for Economic Education, but his position on anarchism led to his dismissal by Leonard E. Read. Then he went to the Volker Fund. He ran it, but he did not control it. He was fired shortly before Man, Economy, and State appeared in print. Volker Fund money had funded it. He then founded the Institute for Humane Studies. In 1970, the IHS published Power and Market, the Volker Fund–suppressed final section of Man, Economy, and State.

THE LABOR THEORY OF VALUE

Rockwell made an important point regarding Rothbard's career in academia.

He taught for many years at a tiny Brooklyn college instead, at very low pay. But as with Mises, this element of Rothbard's life is largely forgotten. After their deaths, people have forgotten all the trials and difficulties these men faced in life. And what did these men earn for all their commitments? They earned for their ideas a certain kind of immortality.

This forgetfulness is altogether fitting and proper. Austrian School economists strive their entire careers against the widespread public acceptance of an idea that is incorrect: the labor theory of value. This idea was basic to classical economics. It was rejected most forcefully by the founder of Austrian School economics, Karl Menger, in 1871.

The labor theory of value teaches that the value of final production rests on the price of the inputs. Menger showed that this explanation is the mirror image of the truth. The price of a factor input is based on competitive bidding by producers. Entrepreneurs bid up prices because of their expectation of greater revenues in the future. Value moves from contemporary expectations to factor prices, not from factor prices to final output.

If this is true, then the value of an idea is not based on its cost of production. The cost of production is a factor cost. It is a barrier to entry. To overcome this barrier, an entrepreneur of an unpopular idea must find a way to fund the production and distribution of the idea. As Rothbard taught, it is not possible conceptually to separate production from distribution. (Man, Economy, and State, 1962, 1993 reprint, pp. 554–56) The same principle of non-separation applies to ideas.

There are some people who select their ideas in terms of the existing market. Rockwell summarizes the career of one such economist, Hans Mayer. He is forgotten today. As a university bureaucrat, he compromised with the Austrian government and the hierarchy of the University of Vienna. Then Mayer compromised with the Nazis. Then he compromised with the Communists. He never lost his job, but his name is not associated with an idea or anything else. He is forgotten.

He cared about his job and his bureaucratic power. That was what he got. He cared nothing about ideas. He is forgotten. His actions cost him little, because he did not care for ideas or fame.

Mayer distributed ideas that the academic system wanted promoted. He produced none. He was well paid for his efforts. But ideas that are subsidized by the state and its apparatus in one era do not survive the demise of that state and apparatus.

In 1972, I heard a lecture by the conservative Austrian scholar and gadfly, Eric von Kuehnelt-Leddihn. He delivered it to a well-named little group, Ed Opitz's "Remnant." I remember only one point in that speech. It was a profound insight. He said that his father had been the loyal servant of four nations. First, he swore allegiance to the Austrian emperor. Then he swore allegiance to the post-war Austrian republic. Then he swore allegiance to the Nazi regime. Then he swore allegiance to the second post-war Austrian republic. There was no oath-bound continuity in his father's life. There was only a series of broken oaths and defeated armies. There was no loyalty to any idea. The ideas changed. The governments changed. The oaths changed. Employment was the only constant.

He who is in the business of producing and distributing unpopular ideas can rejoice in such a world. The success or failure of ideas is not based on the labor theory of value. Idea-mongers may forecast incorrectly about future demand for their ideas, but the value of those ideas will not be determined by how hard they work. Someone else may work even harder. So what? The ideas will survive or perish, not in terms of whatever price a producer pays, but on whether consumers of ideas see a benefit in holding them.

So, a good marketer of ideas should begin with the old marketing principle: "Lead with the benefits. Follow with the proof."

Today, distributors of Austrian School economic ideas should begin here: "Well, here's another fine mess Keynesianism has gotten us into." We should make it clear that "not Keynesianism" is a major benefit. This message has begun to get across. Demand is increasing. It will have an expanding market over the next decade.

Isn't digital price competition grand?

CONCLUSION

Mises cared about ideas. His lack of stable employment was an annoyance to him, but career success was not high on his value scale. The same was true of Rothbard. Both men got what they paid for. They paid in a currency that did not matter much to them, especially Rothbard.

I think this is why heroes dismiss their own heroism. They paid for their acclaim in a currency that matters more to the general public than it matters to them. They faced a lower subjective barrier to entry than the public imagines.

If you believe in an idea, and the market is not responding as fast or as widely as you would prefer, donate some money. Or write something. Create a blog. Shoot a YouTube video. Ideas have consequences. Digits are cheap. Your time is short. The gatekeepers are in trouble. The elephants are stamping. The ants are winning. Climb on board. The feast has only just begun, one byte at a time.

However, don't expect many thanks in the future. Your sacrifice today may be a good story for your posthumous print-on-demand paperback biography, but it is irrelevant for ideological success.

As Leonard E. Read used to say, "Here is how you will know when your idea has been a success. Someone will repeat it to you, and he will have no idea where it came from."

    Gary North [send him mail ] is the author of Mises on Money . Visit http://www.garynorth.com . He is also the author of a free 20-volume series, An Economic Commentary on the Bible .

    http://www.lewrockwell.com

    © 2009 Copyright Gary North / LewRockwell.com - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

David Singhiser
06 Nov 09, 21:52
Heroism

"I think this is why heroes dismiss their own heroism. They paid for their acclaim in a currency that matters more to the general public than it matters to them."

I had never thought of it that way, but you're right.

Great article. The more I read about them the more I want.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in