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Murray Rothbard: In Memoriam by Harry C. Veryser

Thornton, Knut Wicksell, Ludwig von Mises, and F.A. Hayek. In short, this theory of the trade or business cycle points out that downturns in the cycle are caused by an inflation of bank credit which distorts the market, causing malinvestments and over- expansion of capital. The downturn is sim- ply a cleansing-out process.

In his magnificent and well researched books, The Panic of 1819 and America’s Great Depression, Dr. Rothbard studied two

attention on the rise of mercantilism and the classical school beginning with Adam Smith. Unlike most free-market economists, Rothbard was critical of the work of Adam Smith, and identified many value theory errors in The Wealth of Nations. In essence, Rothbard claimed that in many ways the teachings of Adam Smith constituted a wrong turn in economic theory.

He claimed that the scholastics—par- ticularly Spanish thinkers like Suarez and

major economic down- turns in the American economy. In both in- stances he showed that each depression or panic was preceded by an in- flation of bank credit. In America’s Great De- pression, he gave what is perhaps the most thor- ough explanation of trade cycle theory avail- able. In addition, he challenged the myth that most American stu- dents are given regard- ing the Depression— namely, that the 1930s downturn was caused by

Murray Rothbard

Vittoria—were far ad- vanced over the teach- ings of the classical school. Rothbard stressed that major teachings regarding value theory, money, and trade, were fore- shadowed by the work of the scholastic school of Salamanca in the early 1500s, and in ef- fect served to lay the foundation for what we now call the Austrian school of economics. The scholastics or schoolmen, the greatest of which was St. Tho-

“unbridled” capitalism and was made worse by the “hands-off” attitude of Herbert Hoover. Rothbard clearly shows that it was government intervention that created the Depression, through the inflation caused by the Federal Reserve Sys- tem in the 1920s. To make matters worse, each government intervention served to exacerbate the downturn, rather than re- verse it.

In addition to his work in economic his- tory, Rothbard made significant contribu- tions to the history of economic thought. Most histories of economic thought pay scant attention to the contributions of the scholastic school. They prefer to focus their

mas Aquinas, took their teachings from Aristotle to synthesize clas- sical philosophy and the truths of revealed religion. Throughout his work, Dr. Rothbard shows a tremendous respect for their work and strives to make their contributions known.

Rothbard’s respect for St. Thomas and Aristotle also appears in his epistemology. Though a student of Mises, Rothbard dif- fered substantially from his mentor in this regard. In the first chapters of Human Ac- tion, Mises explains the epistemological foundations of economics from a definite Kantian perspective. Rothbard, on the other hand, starts out with a very direct and



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