What’s in Your Wallet? Probably Not Money
Murray N. Rothbard. What Has Government Done to Our Money?, 6th edition. Auburn, Alabama: Ludwig von Mises Institute, 2024, softcover, 138 pages. (1st edition was in 1963.)
Introduction
In my last post, I noted how “I’m ill at ease with the emphasis on anarchism and preference for Hoppe and Rothbard in the [Mises] caucus” because “anarchism strikes me as unrealistic and Utopian, the same sort of ideology-driven fantasizing that created and sustains Marxism.” And it’s true, anarchistic libertarians’ too-rigorous application of Rothbardian principles does trouble me. Though the anarchists consider their approach “principled” and therefore praiseworthy, it strikes me as missing what may be the most essential quality of sound politics: prudence. Humble pragmatism in the face of a reality humans grasp imperfectly, not uncompromising adherence to ideological “principles,” should guide one’s politics.
But none of this should be taken to imply that I think Rothbard errs in his economics. Going too far does not mean one is going in the wrong direction. And one topic on which Rothbard — and when not too extreme and uncompromising, Rothbard’s followers — go in the right direction is in rightly understanding money.
The Author & His Text
Enter Rothbard’s short text, What Has Government Done to Our Money?, of which I recently acquired a box of copies to give to family, friends, and prospective clients. (While I only plan to give these hard copies to local contacts here in San Diego County, California, not to mail copies to anyone, readers who are not local and want to read the book may find an electronic version free on the Mises Institute Web site.) Because I disagree with some of the emphasis introduced by writers of the prefatory and closing remarks added to Rothbard’s text, and because even a few of Rothbard’s statements concern me, I’m preparing an introductory letter to include with the text. This “book review” post repackages my draft remarks for that letter.
Though, as I’ve noted, it is the emphasis introduced outside the text proper that most concerns me, Rothbard himself does tip his anarchist hand in a couple places. For instance, he concludes Chapter I with the following: “For money, as for all other activities of man, ‘liberty is the mother, not the daughter, of order’” (67, emphasis added). Whenever you run across this kind of sweeping generalization, you should realize the speaker is telling you an article of his personal faith, not making a justified empirical assertion. If what he’s saying is taught clearly by Scripture, or is a “good and necessary consequence” of what the Bible clearly teaches, his assertion may be justified as an assertion of Christian dogma. But when an agnostic, as I believe Rothbard was, makes such a grandly general assertion, you should raise a skeptical eyebrow at the overblown rhetorical flourish. Is there ever a case where imposed order is helpful or necessary to the thriving of liberty? I suspect there is, and Rothbard’s grand anarchistic assertion certainly does nothing to prove otherwise.
Another of Rothbard’s statements is less troubling and basically correct, but could do with some added nuance. A dire future now looming “can only be changed by a drastic alteration of the American and world monetary system: by the return to a free-market commodity money such as gold, and by removing government totally from the monetary scene” (127, emphasis added). Can a government tasked with enforcing laws to prevent (or, failing that, to punish) force, theft, and fraud in the marketplace ever be said to have been removed “totally” from the market? Can a government tasked with preventing or punishing force, theft, and fraud in the monetary marketplace be safely removed “totally from the monetary scene”? I’m inclined to say “no.” While I agree with Rothbard that government should not control or manipulate money, only ensure all actors in the monetary marketplace utilize “just weights and measures,” I’d much prefer less anarchistic wording to describe this.
On balance, though, Rothbard avoids being too obviously anarchistic through most of the text, and his insights into real (commodity) versus fake (fiat paper) money are excellent. Money is not the arbitrary creation of any authority; it is a commodity that free-market processes have found serves best for storing value and facilitating trade. Unbacked pieces of paper and digital representations of the same, aka currencies, are not real money. If you find yourself scratching your head at the inconsistencies and contradictions in popular news reporting about “inflation,” or if a mainstream economics course has left you feeling mildly uneasy and a bit confused, or if you loved every episode of Milton Friedman’s classic Free To Choose television series except the episode purporting to “explain” the Great Depression — Rothbard’s What Has Government Done to Our Money? should clear things up for you. I highly recommend it. And, if you live in my neck of the woods, and happen to prefer a printed softcover rather than an e-book, I might even have a copy I can give you — but only while supplies last.
Need Anarchism Be Emphasized?
Now, although Rothbard does not come across as extremely anarchistic or dogmatic in the book, other contributors to the 6th edition change the overall feel of the text to clearly anarchistic and possibly dogmatic.
In his preface, which has the tone of a panegyric, Jörg Guido Hülsmann makes these two statements:
- “Rothbard argued convincingly that a free society needs law and order but not a state. Police and court services can and should be private, provided by associations and companies operating in the market economy on the basis of contract” (16).
- “For Rothbard, the central issue is…whether there is a role for the state in the monetary system at all. On this question, Rothbard answers decisively in the negative” (20).
I’ve got to say, I think introducing these Rothbardian anarchisms at the beginning of a text many anti-anarchists would deem sound on the nature of money is a good way to minimize the book’s influence by causing some to stop reading at the preface.
This tactical issue aside, I can, at present, endorse neither of the two assertions. I deem the first unrealistic and Utopian. I see public, common government, aka “the state” (a sort of reified bogeyman in anarchists’ parlance), as essential, though I hold that its proper functions are extremely limited. We who support such an essential but minimal government often dub it “the nightwatchman state.” If you want to believe that all the societal trial-and-error to date that has given us our legal system (and the government tasked with enforcing it) can safely be jettisoned in favor of experiments with private security and legal corporations (which will, you trust, never themselves transform into governments as bad or worse than those they replaced), and if you want to reject (or apply strained reinterpretations to) the Bible’s teaching that governments are God-ordained to perform essential functions (Romans 13), you may feel free to do so. But I have no interest in playing along. Such proposals seem to me the height of Utopian imprudence.
Since money is foundational to the free market, and since I do endorse government noninterference in that market, I mostly agree with the second statement. All the same, I can’t endorse it because it is too extreme. I do not agree with Hülsmann and Rothbard that there is no role at all for government in the monetary system. While I affirm that government has no legitimate authority to create or control money, I also affirm that it serves an essential function in the monetary system. That role, as I noted earlier, is to identify, prosecute, and punish acts of force, theft, and fraud in the monetary marketplace. If, for instance, a private mint represents its silver coins as 99.9% pure and 1 oz in weight, but investigation shows that some of its coins are a bit less than 1 oz or somewhat less pure than claimed, government may and should step in to punish the offender. In biblical terms, it must ensure just (equal, accurate, consistent) weights and measures (Deuteronomy 25:13—14, Proverbs 20:10). If government could not just punish but prevent these evils in the first place, and if it could do so without interfering in market processes, such prevention would also be a legitimate government activity.
Is Anything Self-Evident?
My preference for conservative care and prudence over unrealistic, Utopian anarchism likely won’t win over any committed Rothbardians, sadly. Statements by Rothbard himself may discourage his followers from taking the prudent, pragmatic path. In his introduction, for example, Rothbard speculates that “Perhaps the Babel of views on money questions stems from man’s propensity to be ‘realistic,’ i.e., to study only immediate political and economic problems…[and, as a result,] cease making fundamental distinctions, or asking really basic questions” (23). While there is doubtless some truth in this, I believe Rothbard and his anarchistic disciples suggest another speculation, one which I believe is equally or more true: extreme, unrealistic, Utopian views often result from abandoning epistemic humility and realistic pragmatism in order to pursue purity in ideology, aka fundamental principles. “Principled” answers to “really basic questions” often produce misguided attempts to impose abstract, lifeless theories on concrete, lived reality. The results are typically catastrophic.
In his afterword, Joseph Salerno says that, in another of his texts, “Rothbard used the praxeological method formulated by his mentor Ludwig von Mises to derive, step by step, the entire system of economic theory from the indisputable fact that human beings act — that is, employ means to achieve ends — and a handful of other self-evident truths about reality” (129, emphasis added). Could this preference for terms like “indisputable” and “self-evident” suggest a lack of epistemic humility on the part of Rothbard and his disciples? It’s tempting to think so.
As for me, I’m not sure I believe anything is genuinely “self-evident.” One’s cultural embeddedness and deeply ingrained worldview makes one find certain propositions impossible to deny without feeling insincere, or dishonest, but this subjective sense of things doesn’t prove anything objective about those propositions. Thomas Jefferson’s “We hold these truths to be sacred and undeniable” draft was surely more honest and accurate than Benjamin Franklin’s pompously philosophical “We hold these truths to be self-evident” revision. This, at least, seems self-evident to me. (That Jefferson’s rejection of orthodox Christian faith means he probably lacked justification for holding to truths that were “undeniable” because “sacred” is another matter. If you construct your religion as you’d construct a meal from selections at a buffet, picking only the elements you personally like, your religion can’t very well justify beliefs built upon it.)
When we want to assert something we feel sure about without justifying our assertion, what better way to do so than to declare what we assert “self-evident”? Now, I do believe that our trustworthy God has constructed our sensory, perceptual, and mental faculties in such a way that any human with properly functioning faculties will rightly intuit — feel to be self-evident — certain propositions that are, in fact, true. So, within my faith-grounded Christian worldview, granting credence to some claims to self-evident knowledge could have merit, as could a realism in epistemology bordering on outright objectivism, or on “naive” common sense. But in this case the beliefs in question derive justification, not from themselves, but from the comprehensive system of which they are a part, meaning they are not so much self-evident as self-within-system-evident. They may be undeniable within a system, but it doesn’t follow that they are undeniable in any system. (Related reading.)
Closing Remarks
So, though anarchism and dogmatism do not stand out with much prominence in Rothbard’s text, Rothbard’s disciples have made sure readers won’t fail to perceive the anarchism. I think this is unfortunate, but who listens to me? How many readers will judge Rothbard or his disciples extreme or dogmatic based on this edition of What Has Government Done to Our Money? remains to be seen. Provided you are not easily radicalized by everything you read, you’ll profit from reviewing this useful, brief text on the nature of money and how dishonest actors have used government power to replace real money with fake, impoverishing the many to enrich the few.