What Rothbard Missed: Error or Demagoguery?
By Bryan Caplan
Murray Rothbard seems to misunderstand some elementary lessons about monetary economics. He was a brilliant polymath, so it’s hard to believe that this was simple ignorance. Perhaps he got locked into these errors early in his career, and never broke out of them. But a passage from his The Betrayal of the American Right makes me wonder.
Context: Rothbard is talking about his strategy to bring down the welfare state during the McCarthy era:
It was a comfortable alliance of Wall Street, Big Business, Big Unions, and liberal Ivy League intellectuals; it seemed to me that while in the long run this unholy alliance could only be overthrown by educating a new generation of intellectuals, that in the short run the only hope to dislodge this new ruling elite was a populist short circuit. In sum, that there was a vital need to appeal directly to the masses, emotionally, even demagogically, over the heads of the Establishment… (italics original; bold-face mine)
Of course, this hardly proves that Rothbard was playing the demagogue when he railed against central bank independence, or claimed that the Fed shot for high inflation on purpose in order to fund Big Government. But the shoe fits: He admits his willingness to demagogue, and embraced some indefensible views about monetary economics despite his encyclopedic knowledge. Furthermore, Rothbard’s populist objections to central bank independence are consistent with his proclivity for bizarre “strategic alliances.” If William Greider asked Rothbard to form a left-right alliance against the Fed, Mr. Libertarian might have jumped at the chance.
So what do you think – did Rothbard know better, or not?