This article reconstructs his intellectual biography. His biographical trajectory diverged sharply from his Austrian brethren. Beginning as an economic historian trained by Werner Sombart, he became a devotee of marginalism in his thirties. A lack of academic recognition limited his research opportunities and theoretical work, yet he shaped the later Austrian movement by tutoring a young Ludwig Lachmann on marginal utility theory.
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Donate On Aug. Rothbard wrote to Richard C. The memos he wrote for the Volker Fund, from the early fifties down to , on a large variety of books and scholarly journals, show off his growing knowledge of the subject. Rothbard, as much a historian as an economist, was well-placed, not only to assess books for the Volker Fund, but also to grasp and synthesize economic doctrines logically and in historical perspective.
His last major published work, his two-volume History of Economic Thought certainly stands as proof. The modern spirit of scientific inquiry defeated scholastic dogmatism and enabled growth of a generally individualist and rationalist spirit; casting off of Church authority led to a general individualism in all fields; the Calvinist spirit and ethic, emphasizing the positive value of hard work, thrift, and money-making, led to a flowering of capitalism as compared to the effect of Catholic frowning on money-making; laissez-faire economics grew in the Protestant atmosphere of Britain Adam Smith, etc.
There is, however, another side to the coin, and contrasting interpretations, particularly in the fields of political philosophy the effect of natural law, for example and economic thought, have appeared in the last couple of years. Recommended is the critique of Weber by H.
Robertson, Aspects of Economic Individualism London, Robertson and others have pointed out, for example, that capitalism really began flourishing, not in Britain, but in 14th-century Italian cities, i.
In fact, the main point of the Revisionist critique, in all the fields, is continuity — that capitalism, liberalism, rationalism, economic thought, etc. And that the later developments built on, and in some cases retrogressed from, earlier Catholic views. Kauder, in fact, turns the Weber thesis 1 on its own followers by attacking Smith and Ricardo for being influenced by Protestantism to develop the "labor theory of value.
Here I might add that the labor theory of value has had many bad consequences. It, of course, paved the way, quite logically, for Marx. Secondly, its emphasis on "costs determining prices" has encouraged the view that businessmen push up prices or that unions push up prices, rather than governmental inflation of the money supply. Third, its emphasis on "objective, inherent value" in goods led to "scientistic" attempts to measure values, to stabilize them by government manipulation, etc.
Kauder maintains, first, that utility theory was developed to a high degree by, first Aristotle, and then, the scholastics, particularly the neglected late Spanish scholastics of the late 16th and early 17th Centuries.
Most historians have ignored the late scholastics and their influence, at least until recently. The standard idea is that the scholastics died out with the Middle Ages, and the gap in between was peopled only by the mercantilists.
The mercantilists, however, were pro-statist ad hoc pamphleteers, and contributed less to economics and to liberalism than the late scholastics. See DeRoover. Emphasis on subjective values of individuals and utility was also continued by the great Protestant political philosophers Grotius and Pufendorf, who were directly influenced by the Spanish scholastics also, as we will see below, in the field of natural law , and by Italian economists de Volterra midth century , Davanzatti late 16th , Montanari late 17th , and especially Galiani about Theory was further developed by Turgot and Condillac, French Catholics midth century.
By the time of the latter three, in fact, Kauder claims that the "value paradox" gold vs. I might add that the resultant holistic approach by Smith and Ricardo was subtly socialistic in still a fourth way: it established the fashion of separating Distribution from Production, and of talking only about groups of factors instead of individual factors — labor instead of laborers. Now, Kauder goes on to point out that the Italian-French subjective value, utility theorists were Catholics, while the labor-value theorists: Petty, Locke, and Smith were British Protestants.
Kauder attributes this precisely to the Calvinist emphasis on the divinity of work, as opposed to Catholic thought, which only considered work as a means to making a living. The Scholastics, then, were free to come to the conclusion that the "just price" was essentially the freely competitive price set on the market, whereas the Protestant-influenced British had to say that the fair price is the "natural" price where the "amount of labor exchanged in each good is the same.
In fact, Smith and Locke were influenced both by the scholastic stream which they acquired from their philosophic training, and the Calvinist emphasis on the divinity of labor. It is true that Smith believed that free competition would eventually bring market prices around to the "just price," but it is evident that a danger has been introduced — a danger that Marx fully exploited and, in fact, that lingers on in the imperfect competition theories, which are akin to emphasis on some juster world where the "natural" or "optimum" prices reign.
Thomists, on the other hand, always centered their economic studies on the consumer as the Aristotelian "final cause" in the economic system, and the ends of the consumer are "moderate pleasure-seeking.
He does point out, however, the importance of his strict Evangelical background for Alfred Marshall. Perhaps this is why Marshall resisted utility theory, and insisted on retaining much of Ricardian cost-theory, which even yet persists as a result. I would like to add further comment, however. The most "dogmatic" laissez-fairists in the 19th century were not the British, but the French Catholic economists.
Bastiat, Molinari, etc. Further, laissez faire theory was developed in fine flower by the Catholic Physiocrats, who were directly influenced by natural law-natural rights thought. This brings me to the second great influence of the Catholic scholastics — the natural law, natural rights theory.
Certainly natural law was a great hindrance on state absolutism, and it began in Catholic thought. Schumpeter points out that the divine right of kings was a Protestant theory. The natural law, natural rights theory, also came down from the scholastics to the French and British moral-philosophers. The connection was obscured by the fact that many of the 18th-century rationalists, being bitterly anti-Catholic, refused to acknowledge their intellectual debt to Catholic thinkers.
Schumpeter, in fact, claims that individualism began in Catholic thought. The people are the sovereign and an unworthy ruler may be deposed. Duns Scotus came still nearer to adopting a social-contract theory of the state. This… argument is remarkably individualist, utilitarian, and rationalist….
Schumpeter particularly mentions the anti-statist spirit of the scholastic Juan de Mariana, He also treats their adoption of the market price as essentially the just price, utility theory, subjective value, etc.
He says that while Aristotle and Scotus believed the normal competitive price was the just one, the later Spanish scholastics identified the market price with any competitive price, e. They also had a gold standard theory, and opposed debasement.
Schumpeter also says that de Lugo developed a risk-theory of business profits, which, of course, was only fully developed at the turn of the twentieth century and later. The same is true for Rationalism, reason having been the main device used by Aquinas, and reason having been fought by Protestants, who place their theology — and their ethic — on a more emotional, or direct Revelation, basis.
I would also recommend, for a chilling example of Protestant-Calvinist influence leading to a philosophy of altruist socialism, reading Melvin Richter, "T. I am not prepared to say that the Protestant case should be thrown overboard completely and Catholic view adopted wholly. But it seems evident that the story is far more complex than the standard view believes. Certainly, the Revisionists supply an excellent corrective.
I have felt for a long time that Adam Smith has been considerably overrated as a laissez-faire stalwart. Notes all supplied by the editor Cf. The Protestant Reformation is just a particular crisis at the end of a long-term cycle; it gave rise to a second takeoff, which we mistakenly see as the first" p. Joseph A. Rothbard later developed this line of attack at great length; see Murray N.
Murray N. The Best of Murray N. Rothbard Tags: Murray N. Rothbard — was dean of the Austrian School, founder of modern libertarianism, and academic vice president of the Mises Institute. See his books.
The Forerunner of the Marginal Utility Theory, pg. The Bon Marche Michael B. Citing articles via Web of Science You do not currently have access to this article. Measures and Men Witold Kula. Other books in this series. Development Untilpg.
History of Marginal Utility Theory
EMIL KAUDER PDF
Science lost, science found in the post WWII Austrian economics movement: The case of Emil Kauder