This is my third reading on Murray Rothbard. I actually attempted to read his book, Man, Economy, and State with Power and Market, but its size is too big for me at present. It is 1,506 pages and the chapter titles do not make sense to me. I still need some preparation.
The first two articles I read on Rothbard are Milton Friedman Unraveled and Six Myths about Libertarianism. The first article exposed the true economic position of Milton Friedman where Rothbard claimed that the former is no real free market advocate, but espousing the government’s version of free market. Friedman’s influence therefore confused most libertarians and dilutes the voice of free market.
The second article is aimed at clarifying the misconceptions about libertarianism. The charges and associations of libertarianism with atheism, materialism, utopianism, etc. are explained and its real character is introduced.
The present article, The Solution is my third reading and I hope that readers would understand that even though I am not a professional economist, I am simply following the advice of Ludwig von Mises that the study of economics is part of the solemn duty of a responsible citizen (Human Action, Chapter 38).
The article was originally written in 1995 when the price of gold according to Rothbard was still $350 per ounce (I checked it and I found a little discrepancy that as of January 3, 1995, the price of gold was actually $380.90). Now, the price of gold per ounce is $ 1,615.00. All throughout the past 17 years, the analysis of the Austrian school concerning gold has been proven correct.
The position of Austrian school concerning gold is contrary to the mainstream, especially influenced by Keynesian and post-Keynesian thinking (the Chicago School). Mainstream economists are repeatedly sending a message to the public that gold as monetary unit is obsolete. And yet we could not understand why history shows us that both the US government and central banking hold unto it. If gold is really not that important, why cling to it?
As a whole, I find the article very informative and yet not easy. Many questions are popping out into my mind and I came up with some tentative answers.
Murray Rothbard claims that the only solution to avoid the collapse of global economy is to restore the money back to the free market from the hands of both the states and financiers. By this proposal, he meant abolition of Federal Reserve by repealing the Federal Reserve Act of 1913 and a return to gold standard. To him, the abolition of central banking and the return to gold standard are the common sense solutions to put an end to inflation and the business cycle. But the problem is, those in power do not want such “unrealistic” solutions for these would restrain the economic and political powers that they have been enjoying so far at the expense of the public.
We face one economic problem, but generally, there are two proposed solutions, the solutions coming from the free market thinkers and the power elites. The power elites through their professional economists dismissed the solution of free market thinkers as simplistic. We have a complex economic problem that requires complex solution. On the other hand, free market thinkers respond that professional economists are offering complex solution to simple problems. What we need are simple solutions – abolition of Federal Reserve and a return to gold standard.
Which analysis and solution are correct? In fact, the details of the solution offered by Rothbard are not as simple as I think. It requires rigid thinking to fully grasp the entirety of his proposal and that is beyond the comprehension of a neophyte in the field of economics.